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The Social Security program has an independent budget that is separate from the rest of the federal government.  So why is it necessary to reform Social Security in order to fix our National Debt? 

To understand what is happening to Social Security visit Just the Facts, the folks operating this site unlike our politicians tell the real story of how we got here. 

Here are some excerpts.

* Since 1982, Social Security has had surpluses ranging from $89 million to $190 billion per year.  By law, these surpluses must be loaned to the federal government, which is obligated to pay the money back with interest.  This is referred to as the “Social Security Trust Fund,” and at the close of 2009, it had a balance of $2.5 trillion.

 

Basically we, the boomers agreed to pay higher Social Security payroll taxes in advance to build up a trust fund for our retirements.

* In 2010 and 2011, Social Security is projected to spend a total of $48 billion more than it collects in taxes.

* In 2012-2014, Social Security is projected to collect a total of $10 billion more in taxes than it spends.

 * Beginning in 2015, Social Security is projected to spend more than it collects in taxes every year into the foreseeable future.

 

So what happens in 2015?  Is this the beginning of the end?  Well it should not be.

* When Social Security spends more than it collects in taxes, it makes up the difference by tapping the Trust Fund, or in other words, by collecting on the money it has loaned to the federal government.

 

The projected future is-

* The Social Security Trust Fund is projected to grow every year up through 2020 because the interest it collects from the federal government is projected to exceed the program’s shortfalls. 

* At the end of 2020, it is projected that the federal government will owe $3.1 trillion to the Social Security Trust Fund or about $9,000 for every man, woman, and child living in the U.S. at the time.

Now the federal career politicians would have us believe that we are not paying enough Social Security payroll taxes.  When in fact since 1982 all of them have spent our Social Security trust fund on everything else. 

Now the bill is coming due, they plead ignorance and claim we must “reform entitlements” or tax the life out of our children.

Is anyone else feeling dismayed at this sorry state of affairs?

 

 

 

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5 Responses to Social Security – What’s Going Wrong?

  1. Dale on May 8, 2012 at 5:19 pm

    I had forgotten this history. This is what they used to call “the Social Security Lockbox”. Right? Guess the lock got picked!

  2. wizconie on May 10, 2012 at 1:44 pm

    The lockbox idea has always been nonsense. SS is paid out of the general fund like everything else. The trust fund idea is just an accounting gimmick. There never has been money set aside in some special bank acount for SS. BTW – explain how and where the federal govt saves and stores our SS tax money.

    • Avatar of Tim Barton
      Tim Barton on May 11, 2012 at 11:02 am

      This is a common misconception; SS is not paid from general tax revenue it is paid out of current payroll taxes. Currently there is more money collected via SS payroll tax than is paid out in SS benefits. This surplus money by law is suppose to be held by the U.S. Treasury in the form of interest bearing U.S. bonds. For the last 29 years members of Congress have been using these surplus SS funds for general spending with a promise to pay back SS when the money is needed for SS benefits.
      Your comment is appreciated wizconie, thanks.

      • Avatar of wizconie
        wizconie on May 11, 2012 at 4:44 pm

        Doesn’t tax revenue from all sources gto into the general fund? Out that fund SS is paid. I’m only saying that SS has never had its own special account and “checkbook” or “savings” account. It goes into and out of the general fund. People seem to think that the $ they pay in is held somehow for them. That just isn’t the case.
        If someone in the private sector run a “pay as you go” program with new money coming in to pay much larger amounts out to those who got in earlier that person would be arrested for running a Ponzy scheme.

        • Avatar of Tim Barton
          Tim Barton on May 11, 2012 at 5:07 pm

          Thanks for checking back in wizconie,
          No, many special taxes and user fees go directly to the designated agencies. In the case of the SS tax it goes directly to the SS Administration who pay all current claims, the over payments are sent to U.S. Treasury and then Congress appropriates those funds for general payments. Basically leaving SS an IOU. U.S. Treasury does by law have a designated SS account.
          You are correct there is no special account per person earning interest for their future use as in an annuity. SS recipient payments come from SS as they are collected. The idea of the SS fund created in 1982 was to take some tax pressure off workers as boomers retire.

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