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PNJ Front Page - (The Social Security trustees project the surplus will be gone in 2033.)

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That sir is crap. The secret to maintaining Social Security Funding levels is nothing more than "political will." You'll notice our military (which has no funding pot of money at all) doesn't have any such warning of a shortage in the future. Why you ask. It's because politicians on the other side will say, "Why are you willing to let America be attacked again?" Remember "FEAR" sells. If there was a the possibility that America's senior citizens were going to show-up in Washington, guns in hand, and ready to take out any politicians who wouldn't support keeping Social Security funding solvent. Why there'd be no problem at all with Social Security. As I say, it's all a matter of political will.



I think it was you who recently pointed out that SS projections could be vastly improved by raising the cap on who contributes.


Absolutely, the cap of $106,800 should be eliminated.

For those who aren't up on this set up note that SS tax (FICA), is withheld on all paychecks up to the point where the person's wages exceed $106,800 per year. After that no SS tax is withheld. Why this is thought to be a good idea I have no clue. To me it is just another example of how the taxing functions are used to the advantage of those who already have considerable advantages.


I read a book this year that states the generational cohort born between 1924 and 1942 (the Silent Generation which preceded the Baby Boom generation) will be the last generation to receive full Social Security. Older Boomers will get it for a while, but younger Boomres and those that follow are not going to get it.

Ya'll have to understand the ideological differences which are going to keep the Congress and Senate from doing anything to fix Social Security. It ain't gonna happen in your lifetime or mine.

The Social Security trust fund has no real money in it, and the IOUs within it must be monetized by further deficit spending. When the federal government reaches the point where it can no longer borrow money, that's where anyone who gets a government check of any kind is in trouble. We are fast approaching that day.

You can blame one side of the aisle or the other. There are too many differences ideologically to expect bipartisanship to prevail and save the day for Social Security or any of our other fiscal dilemmas.


Z, I've heard the statement before about the SS fund being "empty". Then I saw another explanation that said the funds were invested in government securities of some sort and that this made more sense than to just have all that money in a different kind of account and/or not earning any interest. What's with this whole IOU thing anyway? Can you give us an overview of what's actually going on? There are so many claims floating around. Inquiring minds want to know...


This is the "Social Security Trust Fund." It is a bunch of bonds in a file cabinet at the SSA headquarters in Washington:
PNJ Front Page - (The Social Security trustees project the surplus will be gone in 2033.) 32084_bush_holding_ss_bond

The tax money that you and I (and our employers on our behalf) have paid into the SS trust fund over the years was spent by the government buying aircraft carriers, funding wars, and anything else Congress fancied to spend money on. The SS surplus was spent this way by Congress, and the SSA was given interest bearing bonds to replace the tax money collected for the surplus. Those bonds are going to need either be monitized by further taxation or further deficit spending. That is the dilemma Congress finds itself in as we Baby Boomers move into retirement. Taxation and the debt ceiling both seem to be "third rail" issues with the current Congress, and I don't see that changing in future Congresses. So, you can see where that leaves us.

The book that I read on this predicts further rough waters ahead. It said when the Millenial generation starts assuming control of the reigns of government (within 20 years), they are going to do what our generation of leaders had no courage to do--they are going to take whatever steps are necessary. This will likely mean breaking promises made to their parents' generation. Government transfer payments will be slashed and taxation will likely be increased. They will be moving to remove the burdens our generation helped place on those behind us. And, this book predicts that most Baby Boomers are going to spend their golden years living on far less money than they thought they would.

The book I am talking about is The Fourth Turning, which I purchased in the Spring after reading a series of blog articles that frequently cited from it. It was written in 1997 by William Strauss and Niel Howe, and is a book about the ebb and flow of generations throughout history. In their book, they predicted the first couple of decades after 2000 of being decades of crises--which will reach the same level of crises as the periods of the Revolutionary War, the Civil War, and the period from 1929-1946. After the crises ebbs, a new social order forms and society moves forward. I don't think Strauss and Howe had any way of predicting the events of 9/11, Iraq/Afghanistan, or the 2008 stock market crash; but they would say that these are but preludes to something afoot that is bigger that has not happened yet.


There was no "surplus" and the money was no more spent on aircraft carriers than on any one of the more then 70 welfare programs. It was supposed to pay out less than paid in so that there was enough for future generations.

Progressives, when Social Security was established, what was the age benefits would begin and what was the average life span? Social Security was supposed to help in the last few years of live, not be retirement for fifteen or twenty years.

From "Answers"

The Social Security Trust Fund was established in 1939 to receive monies collected for Social Security through payroll taxes. The monies in this fund are managed by the Department of the Treasury; they are not, nor have they ever been, put into the "general operating fund."

However, the Social Security Act specifies that the monies in the fund may "be invested in securities backed by the full faith and credit of the Federal government," such as treasury bills, treasury notes, and treasury bonds, as well as special issue bonds. So, essentially, the government can "invest" Social Security funds by lending them to itself, then spending that money on programs not related to Social Security (e.g., defense, foreign aid, education). This has always been the case.

During the Johnson administration, Social Security and other Federal programs that operate through trust funds were counted officially in the budget. This did not mean that it was actually part of the general fund, rather that it was finally recorded as part of the budget.

Read more:

The government collects Social Security and then lends the money to itself. The "IOU's" pile up in a filing cabinet. Of course, now we no longer take in more than is paid out. We are having to pay back those IOU's, there are only a couple of workers for each person receiving benefits.

Social Security did not start out as a Ponzi Scheme, it ended up that way.

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