It’s Unofficial: Social Security Is Broke
The bureaucrats at Social Security will not admit it. Congress will not admit it. Obama and Romney will not admit it. Social Security is broke.
How do I define “broke”? When you have no assets to pay your bills and you must borrow money to pay old bills, you're broke.
The Social Security system in 2010 started cashing in its IOUs that it had been given for 70 years to the Treasury. The Congress had spent all of the money. Finally, the money coming in from FICA taxes was less than the money being paid out.
Congress had no money to pay to the Social Security Administration for the cashed-in bonds. So, Congress borrowed the money.
Unless FICA taxes are hiked or payments cut, SSA will continue to cash in its IOUs. It’s broke. Congress must bail it out.
The Ponzi scheme has hit a brick wall.
The media are slowly beginning to write stories on this.
First, there are benefits.
People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It’s a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press.Previous generations got a much better bargain, mainly because payroll taxes were very low when Social Security was enacted in the 1930s and remained so for decades.
“For the early generations, it was an incredibly good deal,” said Andrew Biggs, a former deputy Social Security commissioner who is now a scholar at the American Enterprise Institute. “The government gave you free money and getting free money is popular.”
As with any Ponzi scheme, it’s great if you got in early. Today’s workers now get to pay the early entrants.
They won’t keep doing this. They have more votes than oldsters. At some point, they will elect a Congress that pulls the plug on granny.
If you retired in 1960, you could expect to get back seven times more in benefits than you paid in Social Security taxes, and more if you were a low-income worker, as long you made it to age 78 for men and 81 for women.
This deal has ended.
A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85, according to a 2011 study by the Urban Institute, a Washington think tank.
Here come the baby boomers!
Then there is the Great Lie: that there is a Social Security Trust Fund. There isn’t. There is a pile of IOUs from Congress. Congress must now borrow money to pay the SSA, which is cashing in these IOUs. But the lie goes on. The Trustees continue to deceive the rubes.
The trustees who oversee Social Security say its funds, which have been built up over the past 30 years with surplus payroll taxes, will run dry in 2033 unless Congress acts. At that point, payroll taxes would provide enough revenue each year to pay about 75 percent of benefits.
Result:
“Future generations are going to do worse because either they are going to get fewer benefits or they are going to pay higher taxes,” said Eugene Steuerle, a former Treasury official who has studied the issue as a fellow at the Urban Institute.
Sorry, granny. The gravy train is ending.
Today, 56 million people receive checks. It will go to 90 million in 2035. This assumes no unexpected increase in life expectancy. This figure can be reduced through assisted suicide. You know: put granny on the floating ice and wave goodbye. This is the Kevorkian solution.
Social Security provides most older Americans a majority of their income. About one-quarter of married couples and just under half of single retirees rely on Social Security for 90 percent or more of their income, according to the Social Security Administration.
The system will be modified. Either more money must come in or less money must flow out.
The question will be decided by Congress. Who has the most votes on election day?
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Published on August 9, 2012. The original is here.