凍結 天然氣 火車

In the printed version the title was

"How Social Security falls short by 28% over the next 24 years"

"Government accounting for Social Security has devolved over time from deceptive to dishonest to desperate"

And sorry Jason, I know you don't like it when I call him Emperor Obama! But any freedom fighter will agree with me on that.

Source

Cash Gap: Social Security Puzzles For Next President

By JED GRAHAM, INVESTOR'S BUSINESS DAILY

Posted 04/30/2012 06:46 PM ET

Government accounting for Social Security has devolved over time from deceptive to dishonest to desperate.

The latest Social Security Trustees report says that benefit promises are fully financed until 2033 and three-fourths financed after that. In short: no crisis.

Here's the truth, embedded between the lines: At the current payroll tax rate, Social Security would only bring in enough revenue to pay for 72% of all benefits through 2036.

Filling that gap would require an immediate and permanent 28% benefit cut — including for current retirees and disabled beneficiaries — or a 4.4-percentage-point payroll tax hike, equal to $250 billion this year.

Cash Chasm

While the 2-percentage-point payroll tax cut since the start of 2011 has made sense to spur a struggling economy, it has helped turn Social Security's serious and worsening cash flow gap into a cash chasm.

Although Treasury is crediting the Social Security trust fund for foregone payroll tax revenue, the lack of consensus on what to do when the temporary tax cut expires at year-end is among the Social Security election-year puzzles demanding answers.

Here are some others:

Even ignoring the payroll-tax cut, unfunded outlays for Social Security are on a course to raise federal debt by a further 18% of GDP by the start of 2033 — just before the trust fund's legal claims on Treasury run dry.

Candidates need to address how they'll fix Social Security's disability insurance finances, whose dedicated trust fund is ex pected to run out in 2016 — which would trigger a 19% cut in benefits without action. Under current law, Social Security's retirement and disability trust funds (often accounted for as if they are one) can't co-mingle funds.

Midcareer Crisis

Finally, even if Social Security were fully financed through 2033, that still means a worker halfway through a 40-year ca reer is running out of time to save. An IBD analysis finds that an average earner (about $43,000 a year) with 20 years left until retirement would have to set aside more than 5% of wages each year to make up for a nearly 25% automatic benefit cut under current law. (That assumes Treasury returns and a lifetime annuity.)

Will workers be asked to save more on their own, will the government mandate more saving — or will political leaders do nothing?

Social Security's trust fund balances — now $2.7 trillion — don't mean much for the government's ability to afford benefits; rather, they represent a promise from Treasury to cover any cash shortfall in Social Security until the trust funds are spent.

Including interest payments on Treasury borrowing to redeem trust fund bonds, the cost of Social Security would grow 50% faster than the economy over the next two decades — from 4.9% of GDP last year to 7.3% in 2033 ( with interest adding 1% of GDP).

So how is it that, back during last year's debt-ceiling debates, groups such as AARP demanded that Social Security be left untouched because it didn't contribute to the deficit?

That was only true in a technical sense in which Social Security's cash deficits are treated as Treasury Department deficits.

Until 2010, when Social Security ran its first cash deficit since 1983, trust fund accounting was merely an accident waiting to happen.

Over the prior quarter-century, Social Security had taken in about $1 trillion in surplus revenues. But the government ran cumulative deficits of about $5.5 trillion from 1984 to 2009, so in no sense was it really saving up resources to pay for the retirement of baby boomers.

Even Democrats have, at times, treated the Social Security trust fund as an accounting scam. Back in 1990, 43 Democrats voted to cut worker payroll taxes to eliminate the Social Security surplus — an admission that the government couldn't be trusted to save trillions for the retirement of the baby boomers.

Harry Reid, now Senate Majority Leader, suggested at the time: "(R)ather than having it called the Social Security trust fund, why do we not change it and call it the 'Social Security slush fund?' "

In 2006, Nancy Pelosi, shortly before becoming House speaker, said that Democrats were determined to "pay the trust fund back" funds that weren't really set aside under President George W. Bush.

Not only did that idea go out the window, but Social Security has now also been tapped as a source of emergency economic stimulus.

All along, the Democratic rank and file has fought back the idea of reforming Social Security to align costs and resources. But with workers halfway through their careers facing a large savings gap, time has about run out for political gamesmanship.

If the rest of the budget was in reasonably sound shape, trust fund accounting for Social Security wouldn't matter much. But unfortunately, the rest of the budget is in worse shape and doesn't have money to spare.

What Happened to the $2.6 Trillion Social Security Trust Fund?

7/13/2011 @ 2:25PM

What Happened to the $2.6 Trillion Social Security Trust Fund?

WASHINGTON, DC - APRIL 13: U.S. Sen. Rand Pau...

Here’s how President Barack Obama answered CBS’s Scott Pelley’s question about whether he could guarantee that Social Security checks would go out on August 3, the day after the government is supposed to reach its debt limit: “I cannot guarantee that those checks [he included veterans and the disabled, in addition to Social Security] go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”

And Treasury Secretary Timothy Geithner echoed the president on CBS’s Face the Nation Sunday implying that if a budget deal isn’t reached by August 2, seniors might not get their Social Security checks.

Well, either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades. It must be one or the other.

Here’s why: Social Security has a trust fund, and that trust fund is supposed to have $2.6 trillion in it, according to the Social Security trustees. If there are real assets in the trust fund, then Social Security can mail the checks, regardless of what Congress does about the debt limit.

President Obama’s budget director, Jack Lew, explained all this last February in USA Today:

“Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries. … Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years.”

Notice that Lew said nothing about raising the debt ceiling, which was already looming, and it shouldn’t matter anyway because Social Security is “entirely self-financing” and off budget. What could be clearer?

Unconvinced, syndicated columnist Charles Krauthammer wrote a subsequent column questioning Lew’s assertions. “This [Lew’s] claim is a breathtaking fraud. The pretense is that a flush trust fund will pay retirees for the next 26 years. Lovely, except for one thing: The Social Security trust fund is a fiction. … In other words, the Social Security trust fund contains—nothing.”

Social Security status-quo defenders have assured us for the past 25 years that Social Security is fully funded—for the next 25 years, or 2036. So if there are real assets in the Social Security Trust Fund—$2.6 trillion allegedly—then how could failure to reach a debt-ceiling agreement possibly threaten seniors’ Social Security checks?

The answer is that the federal government has borrowed all of that trust fund money and spent it, exactly as Krauthammer asserted. And the only way the trust fund can get some cash to pay Social Security benefits is if the federal government draws it from general revenues or borrows the money—which, of course, it can’t do because of the debt ceiling.

Thus, the answer to my initial question is that the president is telling the truth now in the sense that he is conceding there’s no money in the trust fund to pay benefits; but he and other Social Security status-quo defenders have been deceiving the public for decades.

And here’s the real irony: Anytime someone has proposed personal Social Security retirement accounts as a way to ensure that people have real assets in their own account without bankrupting the government or future generations, defenders of the status quo would pounce, calling such a reform, in Al Gore’s words, a “risky scheme.” They have vociferously claimed that those trust fund assets are real and that only by having the government manage and control the accounts would seniors be guaranteed to get their retirement checks.

Well, we have the status quo and seniors may not get their checks. Had we shifted to a system of pre-funded, personal Social Security retirement accounts years ago, this wouldn’t even be an issue—because retirees would have their own money in their own accounts.

Yes, the accounts likely would have declined when the stock market went down, though not if the reform were structured like three Texas counties did 30 years ago (see here). But in case you haven’t noticed, Social Security revenues also declined during the economic downturn—because fewer people were working—so that the government is paying out more in benefits than it is taking in, and hence needing additional federal revenues, a fact admitted by Lew.

If the budget crisis has done nothing else, it has exposed the decades-long lie about the solvency of the Social Security trust fund. The trust fund may be backed by the “full faith and credit of the federal government,” as defenders constantly remind us, but if it had real assets the president wouldn’t be talking about seniors missing their checks.

(Update: For a second opinion, on July 16 an editorial in the Wall Street Journal made the same argument as this piece, even to the similar title.)

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. http://twitter.com/MerrillMatthews