In my last post, I touched on the problem of our huge unfunded entitlement liabilities, primarily Social Security and Medicare. Yesterday, the Obama administration admitted the problem exists. Yippee ! This may not seem like such a big step forward, but it is. Remember, for years the Democrats in Congress denied there was any problem whatsoever. They kept saying SS and Medicare were in fine shape for decades. Little to worry about. As Senate Majority Leader Harry Reid (D-NV) said in 2005:
“Today’s report confirms that the so-called Social Security crisis exists in only one place — the minds of Republicans. In reality, the program is on solid ground for decades to come.”
That Harry is such a kidder. Fellow kidder and Speaker of the House Nancy Pelosi (D-CA), said this in 2005:
"There is no Social Security crisis. We all agree that there is a problem down the road that we should address before it becomes a bigger problem.”
But Pelosi has taken no action on Social Security or Medicare since becoming House leader. None. She also helped shoot down all previous Republican attempts at reform.
The Associated Press reports on the Obama administrations response to a Trustee report detailing the dire financial straits of SS and Medicare:
Social Security and Medicare are fading even faster under the weight of the recession, heading for insolvency years sooner than previously expected, the government warned Tuesday. Social Security will start paying out more in benefits than it collects in taxes in 2016, a year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner, trustees reported.
Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year, just as it did for the first time in 2008. The trustees project that the Medicare fund will be depleted by 2017, two years earlier than the date projected in last year's report.
The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.
Medicare's condition is more precarious.
The trust funds — which exist in paper form in a filing cabinet in Parkersburg, W.Va. — are bonds that are backed by the government's "full faith and credit" but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.
Did you catch that last part ? SS and Medicare are NOT BACKED BY ANY ACTUAL ASSETS, and funding them would require the government to BORROW MONEY OR RAISE TAXES. In other words, the government spent your trust funds. I've been trying to make people aware of this for years, and this has to be the first time in recorded history that our mainstream media has admitted the truth about our Ponzi scheme SS and Medicare "trust funds." Halellujah !!!
The first step to recovery is admitting you have a problem.
Of course, the AP is also admitting that our wonderful, compassionate politicians in Washington D.C. have been ripping us off for trillions and trillions of dollars for several decades, but I don't expect Obama or Congress to appoint any blue ribbon investigative panels or independent prosecutors to look into the matter anytime soon. We'd have to put a LOT of people in jail, and if we did put the deserving Congressers in jail for SS and Medicare fraud, well, let's just say the Democrats wouldn't be the majority party any longer.
Hate to say 'I told you so' to some of my more doubting readers, but I told you so. The federal government is worse than Enron and worse than Madoff. Far worse.
Here's Treasury Secretary Tim Geithner:
"The longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be."
That's right, Tim. Btw, haven't Republicans been saying the same thing for years and years ? Yes, they have, including former President Bush.
The bottom line here is – get ready for massive tax increases. Massive. And lots of them.
The coup de grace of Democratic bs also came from Pelosi yesterday. Guess who San Fran Nan blames for the SS and Medicare crises she didn't think even existed previously ? If you said "Bush," you win a cigar. From cnsnews.com :
"The Trustee's reports reveal that, just as they left behind a record of recession, deficits and debt, the Bush administration's economic and fiscal mismanagement undermined the strength of Social Security and Medicare,” Pelosi said Tuesday in a news release. "The previous administration's shortsighted economic policies and fiscal recklessness have made the task of strengthening Social Security and Medicare for the future more difficult."
Un-be-liev-able. I better stop now, before I unleash a string of profanity aimed at our "esteemed" Speaker of the House. Is this woman genetically incapable of honesty ? She has no business leading the Democratic party in the House, or leading anything else, for that matter.
{ 25 comments… read them below or add one }
Pelosi has brain damage. She is also the biggest liar and crook I have ever seen. She is as unqualified to run the house as Obama is to run the presidency, although I feel he is at least trying. Just like MSNBC if something is revaled to the press that has a negative impact on her, she goes for her old stand by excuse…"well, uh, er, um the bush administration left us………..(problem) Yeah that's the ticket, it was Bushes fault."
I've gotten to the point that I cannot understand why Pelosi has been re-elected repeatedly. She sounds like she needs a good 12 Step program. Maybe they've got something at Celebrate Recovery for her? A Liberal-Democrats-Who-Blame-Bush-For-Budgets-They-Voted-For group? LDWBBFBVF is too long, though. Maybe just Anti-Bush Blame Deflectors?
With all of Obama's starry-eyed big spending, I don't expect that things will get any better in the next four years, BUT maybe we'll learn our lesson about how not to do things before he loses the next election. I'm as compassionate as the next person, but bankrupting our country to help some of its citizens is irresponsible. Long before G.W.B., our Congress made the decision to tap social security funds for other purposes, and our country has never paid itself back. We haven't even tried, we just keep taking. I am as responsible for this as anyone. I have known since writing a paper on the subject in college what was going on. I knew that the social security taxes I was paying probably wasn't going to be there for me to collect, but I never worried about it, just kept plugging money into my 401K.
Even without the excess spending of the past few months, social security was/is an issue that needs to be addressed. I'm not saying to be rid of it. There are too many people currently dependant on it to do that. But maybe our country can do the unfair thing and only make certain seniors eligible. My husband's grandmother, for example, is a SS recipient who doesn't really need all that much money. She does need the Medicare, but she has no rent, no bills, and money in savings. (She lives with one of her daughters.) Maybe people like her could bge eliminated from the SS rolls? Maybe reduce the standard federal exemption per person on income tax by $10. $10 isn't going to hurt anyone too badly, but with a population of 304 million, that would be $3.04 billion a year. But there I go, talking about taxing people fairly. You know the liberals can't stand the thought of a fair tax!
What Pelosi said was correct. The handling of the economy by the Republicans the last number of years has led to the deep recession we're now in. That recession has led to a drain on SS and Medicare revenues.
So, Pelosi is correct.
And this piece of…writing…is what I've come to expect from the AP….
"The trust funds — which exist in paper form in a filing cabinet in Parkersburg, W.Va. — are bonds that are backed by the government's "full faith and credit" but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes."
That's straight out of a Bush early 2005 blustery talk. Everyone who understands anything…understands that the trust fund is really future T-bills that we'll sell to raise money. King thinks that this well-known fact is a worse crime than, say, torture.
Even in the midst of a generational recession, the trust fund is 100% good until 2037…umm…that would be decades away.
Why American far righters seek to slowly eliminate SS is beyond my comprehension. SS is not in crisis, and a cap raise will take care of any shortfall decades away.
Medicare IS a problem. But Medicare can't be fixed until medical costs come down. The quickest way to cut 25% of all medical costs is to take out the profit motive. Single payer is the best solution, pragmatically.
So what Reid and Pelosi said was actually correct and Obama is smart enough to know that he must include SS in with Medicare in order to woo the SS hating Republicans to the table. So, factor that in.
"The trust fund is 100% good until 2037"
In 6 years, we'll have to start selling of those T-bills… like cashing in your savings account to make ends meat. That's 100% good?
You're a moron (oops)… if the trust fund as $10 left in it on December 31, 2036, is it still 100% good?
"Oh snap Rev, we've been spending more than we bring in for the last 20 years, and now we're down to 50 cents in our checking account!"
"We still got 50 cents? Aw yeah baby, it's 100% good."
Mr. King,
Seems to me that this is no immediate crisis. But please explain the difference of the government's debt and its debt to foreign sources. I see none. If those on Social Security have to worry about being repaid, shouldn't all of the government's foreign creditors have similar worries? Perhaps all that is needed is legislation that states that the Social Security trust fund has priority for repayment of debt over other creditors.
Yes frank, because when you beg countries to buy your debt, you should tell them that paying them back is not at the top of your list.
It is a commonly known fact that S.S. had become a shell game. The actuary tables demonstrated that amount of current workers supporting S.S. payments was increasingly unable to support the increasing % receiving benefits. Secondly the assumed lockbox was a hoax. The arrangement was that money collected was to put aside and it wasnt. The few lonely voices that attempted to unmask the charade and correct the ulimate collapse were ignored at best. What party or politican wanted to expalin the fact to the public and tell them there would be a need for sacrifice to save the system? Only one that wanted to commit political sucide. "why worry be happy"
pdt1420,
That's not what I said. I just said that SS should be first in line to be repaid.
angryconserv,
The imbalance between those paying into SS and those receiving benefits was addressed in 1982 by doubling SS tax rates and raising the cap. That imbalance was caused by the post WWII baby boom. After the baby boom, the birth rate stabilized, so this imbalance will begin to dissipate as the boomers die off. By 2037, when the surplus caused by the 1982 changes is gone, so will most of the boomers, and the imbalance between payers and receivers will begin to return to disappear.
Prior to the 1982 changes, SS would in some years take in more than it paid out and in others spent more than it received. In 1968, LBJ began the accounting fiction that counted the surpluses against budget deficits. The amounts were relatively small and it was hardly noticed. With the 1982 changes came huge surpluses which were put into t-bills, the safest investment (at least at the time). But for accounting purposes, the surpluses masked the true deficits being run at the time. So for all practical purposes, excess SS taxes subsidized the tax cuts by Reagan and Bush and allowed Clinton to claim a budget surplus. But there is not difference between the IOUs held by foreign governments and IOUs to SS. If SS goes under it will be because the entire federal government goes under.
joe,
Did you see Pelosi's jittery press conference about waterboarding today ? She was so full of it. Now she's accusing the CIA of lying to her. I think that's about her fourth different position on the EIT's. First, she didn't know about them. Second, she was told they were legal. Third, she knew about them but couldn't do anything about it. Now, fourth, the CIA misled her.
The woman is an amazing idiot. If she was any more transparent, you'd be able to see through her.
Tory,
I wouldn't have a problem with SS if it were run honestly, but Congress spent the trust fund money, and then try to tell us we still have a trust fund. That's such an obvious fraud that anyone should be able to see right through it (even though the Reverend and frank can't).
It's because of the fraudulent nature of SS that we have to keep raising the SS tax, cut benefits, etc. It isn't at all the fault of the SS recipients who faithfully paid into the system their entire lives. I'd be against eliminating any of those honest people from the SS rolls. It wouldn't be fair, and it wouldn't be what was promised to them by our government.
Rev,
What part of "there are no assets in the imaginary SS trust fund" don't you understand ???????????????
frank,
See my comment to Rev.
She is going down. This morning they were talking about an investigation. Boehner wants to get to the bottom. SHe better be careful the Com's will use you if you are an asset to "the cause". However, what happens to people that become liabilities. HHHmmmmmr let's see…what would Lenin do.
Frank
One of the unstated reasons some in Wash. view massive illegal immigration as a positive is it has a band-aid effect on the S.S. problem. While delaying the inevatible it is a mirage because of all of the other costs associated with illegal immiagration.
King, I know it's not fair to take money from someone and then not give them what they were told they'd receive. But, I know there are many people like GiGi out there. She doesn't need the money, doesn't really use much of it, and it wouldn't hurt her if the checks stopped. (She's 92 and lives free with a relative, so her expenses are few.) It should never have come to this, but I just believe that that might be one option for this country to get out of the mess we've put ourselves into.
I'm not wild about the idea of an across-the-board reduction in the federal exemption amount, but I really feel that *something* has to be done to start digging us out of this hole we've gotten ourselves into. $10 or more wouldn't be very noticeable for the majority of us (especially those who live in states like CA or NY). And, no, it's not fair. It actually sucks, but if the money ALL is funneled directly into the SS program, we might be able to cover ourselves.
Mr. King,
No one says that there is a pile of cash locked away somewhere. The money will have to be borrowed, just like the rest of the money needed to cover the federal deficit. By using SS surplus funds for general expenditures, the government obligated itself to have payments come from general funds.
Therefore, SS's solvency is a subset of the federal government's solvency. As long as the federal government survives, so will SS.
frank,
Doesn't it bother you that the federal government stole our SS trust funds ? Isn't that criminal ? We ALREADY PAID FOR OUR SS ONCE with our payroll taxes. Now we have to pay for it all over again because Congress spent the money. No private company could do this. If not for the fraud, we wouldn't have to raise SS taxes over and over, cut benefits, or borrow the money that was already contributed previously. If run honestly, the trust fund would have been funded forever. People should be in jail over this. It's the biggest ripoff in American history, by far.
It's also a great argument against nationalized health care. Why would we hand all that health care money over to known criminals like the U.S. Congress ?
Mr. King,
Sure it bothers me that the money was spent. But, hopefully, the money will be repaid out of general government revenues where it was spent and from who benefitted instead of another round of benefit cuts, SS tax increases, and delays in retirement. If SS recipients and SS taxpayers are forced to replenish the trust fund, then that will be a crime.
If the rabbit hadn't stopped to take a whizz. We must deal in reality…not what ifs.
frank is quite correct about this stuff. The SS trust fund is made up of borrowed money…just like the national debt is being handled by borrowing money. Is the national debt a scam, too? Should China be worried? Moreover, should all those pension and retirement funds carrying T-bills be worried?
The government borrowed the trust fund monies and will have to pay it back as needed. Don't blow a gasket over basic accounting.
How about we cut our defense spending by 50%…thus saving 2 1/2 trillion over 10 years? How about that? Additionally, is it okay for the government to borrow money….relying on those Chinese…..to pay huge deficits caused by bloated defense budgets? Or would that be a crime, like you say borrowing for SS is?
Don't worry, King, frank and the Reverend are right on this one. We'll just borrow more–it's basic accounting!
frank,
By definition, the same people who built the SS fund that the government stole are the ones who must replenish it all over again. It all comes from the taxpayers in one way or another, either now (higher taxes) or later (borrowing + interest, repaid with higher taxes).
The crime doesn't come when we decide who repays SS. The crime happened when the money was spent in the first place.
Let's count the Rev as being in favor of basic accounting, Enron style. Let's get Bernie Madoff out of jail and let him run SS. He's also quite familiar with this type of basic accounting.
Rev says, "The government borrowed the trust fund monies and will have to pay it back as needed"
And how does the government pay back that money it "borrowed" (with 'borrowed' meaning 'spent') ????
Answer – The taxpayers pay it. Again. After they already paid for it the first time.
If you think this is basic accounting, you need to go back to school.
But given your version of basic accounting, let's do a SS style deal right here between you and I. I'll borrow $1,000 from you. Then I will spend it. Following that, you can give me another $1,000 to replenish my funds. Then I will pay you back the $1,000 and we'll consider ourselves even. Works for me, and that's a fair deal according to you, because that exactly how SS works.
Mr. King,
No. It is one branch of the government borrowing funds from another branch. Since each branch has different funding sources, the branch doing the borrowing should replenish the funds from its source. Having SS replenish the trust fund would be like expecting the bank to pay off your mortgage.
Thank you very much, frank.
As I mentioned earlier…..King calls accounting mechanisms within the government a crime….but transparently illegal and savage acts of torture acceptable, necessary and unworthy of prosecution.
What are you fellas smoking ?
What part of "Congress spent the SS trust fund money" don't you understand ?
This is like trying to discuss economics with my cat.