Social security is self-funded. It has literally no impact on the deficit or our ability to pay off debt. By statute.
Edit: i am flabbergasted at how low literacy is about how our government works.
Edit: i am flabbergasted at how low literacy is about how our government works.
There is a very real problem that social security is project to be no longer solvent in 2035. (see here: https://www.congress.gov/crs-product/RL33028) It may require either transfers from the general budget or structural changes to remain solvent.
Actually, SS was going to go insolvent when it was first written. The benefits were far too generous for what was affordable, even with the population pyramid at the time.
Then it actually was going to go bankrupt and the benefits were reduced in real dollars, because it turned out at one point we were dramatically overestimating inflation, and we couldn't afford it.
If social security was an actual insurance or pension plan, it would have been shut down by a state regulator or the PBGC. It's a horrifyingly bad plan for the simple reason that it's structurally insolvent. Even the concept of "uncap the tax" just kicks the can down the road: you now need to pay those people benefits.
The issue is we don't actually know what we want from it, which I alluded to in another comment. If we want some sort of "social insurance" plan where you just get back a portion of what you pay in, we have it and it's functionally in default. If we want a social safety net, we need to have a serious discussion about means testing.
And I say this as someone who unabashedly supports allowing it to revert to its statutory payout rat, even if it is below what was promised.
But seriously, nobody was promised anything not dictated by statute. Who gives a shit about what you, specifically understood the statute to mean? By any reasonable understanding of the law it's not even possible for SSI to go without funding, assuming the government is still operational.
What's more real and relevant is that the government only cares about your insofar as you contribute to the private economy. Like what can we do to make those fucks actually pay out and take care of us?
Technically, yes. Practically, it’s a pair of income and expense streams. Slashing social security payouts to pay for some nonsense is tempting.
My guess is we’ll stick it to Gen X.
My cat's incredibly convinced of a global scheme against his caviar budget, that doesn't really cause any consequence.
> Intragovernmental debt holdings represent federal debt owed by Treasury to federal government accounts—primarily federal trust funds such as those established for Social Security and Medicare—that typically have an obligation to invest their excess annual receipts (including interest earnings) over disbursements in federal securities.
> Debt held by the public represents a claim on today’s taxpayers and absorbs resources from today’s economy, meaning that when an investor buys Treasury securities it is not investing that money elsewhere in the economy.
> Intragovernmental debt holdings reflect a claim on taxpayers and the economy in the future. Specifically, when federal government accounts redeem Treasury securities to obtain cash to fund expenditures, Treasury usually borrows from the public to finance these redemptions.
From memory I believe we're at ~100% publicly held debt to GDP and ~122% gross debt to GDP.
The Social Security surplus is pretty much required to purchase US bonds and other guaranteed Federal securities.
But saying that "contributes to the Federal debt" is like saying your 401k contributes to corporate debt.
I am still not convinced that Social Security causes Federal debt the way that a trillion-dollar military budget does.
A small group of people considers itself superior to the rest of the population. As a group it is convinced it deserves every break, benefit, privilege, and handout, while the second group is only worthy of intrusive oversight, abuse, exploitation, and punishment.
This isn't hyperbole. This is the political belief system that drives the rhetoric about the government spending and debt.
The proof is simple - government debt always increases when the first group is in power.
Always.
This wouldn't happen if it was really about the deficit.
Yes this is it and this is all it ever was. The second the pen was put to paper and SS was made law it has been under attack. People have been proclaiming it'll go insolvent any day now for almost a century.
It's an ideological attack and we shouldn't even humor these people. The idea of essentially retirement insurance feels unfair to a ton of people and that's that.
So you're right that it's not the same as publicly held debt. Rather intragovernmental debt is deferring the decision of how to pay for some governmental services to a later time, although usually it becomes publicly held debt. One way or another, the tax payer is on the hook for this spending which is part of the gross national debt, just like they're on the hook for publicly held debt.
No, this is pretty explicit. To rephrase what the GAO said when the Social Security Administration takes in more than it sends out it invests the difference in special Treasury securities (that's the trust fund(s)). The money the Treasury gets is spent on general government operations (education, healthcare, etc). The treasure must pay this money back, with interest.
> But it certainly is not to blame for our inability to balance the budget
When the Treasury pays the principal and interest it needs to either have enough tax dollars (higher tax rates or spending cuts) or issue debt to the public. So yes, it does factor into a balanced budget. It still must be paid back and the taxpayer will foot the bill one way or another, now or in the future.
> which seems easiest to explain with nearly sixty straight years of cutting marginal tax rates while claiming to be fiscally conservative.
This is a gross oversimplification. If you think just one side is the issue you're not going to be able to fix the problem.
And what is the other side, pray tell?
Don't worry, I gave up on this country's ability to fix any problem a long time ago.
If we restrict our view to programs like Social Security or Medicaid we see that demographics are also straining the system. For instance I believe the number of people contributing to Social Security vs the number of people receiving benefits in the 70s was around 3.7 (payer/beneficiary), we're currently around 2.6 and in 10 years that will go down to 2.1. Put simply we're unhealthy, we're getting older, and we're not having enough kids to contribute to these programs that pay for all of these old, sick, childless people to retire and have healthcare.
From a philosophic point of view I would say the fact that about half of the electorate do not want higher taxes while the other half wants more government services should mean that these extra services are non-viable politically. What we've essentially done instead is "compromised" by not having higher taxes but still expanding government services which is contributing to our debt issues. We simply can't have it both ways, but that's exactly what the people voted for through their representatives.
> Don't worry, I gave up on this country's ability to fix any problem a long time ago.
While we are likely on opposite ends of the political spectrum, I can agree that I don't see us actually fixing this problem. I made a comment elsewhere in this thread discussing the fact that Congressional Republicans appear to be going for lower taxes and higher deficits right now while the Democrats are in disarray and not particularly focused on this problem. The unfortunate fact is that this problem is going to get worse and the solutions will get more painful over time. Congress as a whole has really dropped the ball here.
Are these not the same people? One half can convince themselves they don't get any payoff from their taxes; the other sees the payoff. Ultimately both expect services from their government they aren't getting, and are upset with services the government does render that seem inherently injust.
The difference is that those who most adamantly state they contribute the most while getting the least actually contribute the least while getting the most.
Eventually reality comes calling and problems resolve themselves. You just might not like the resolution.
If you fail to proactively address a cancerous growth, health problems compound but eventually disappear entirely.
Social security itself does not take in any income whatsoever.
Social security is a debt. Therefore it itself directly affects the US' ability to pay off it's debts.
Eh, that's partly true. The true statement is that social security tax revenue must eventually go to fund social security.
Before it's needed (i.e. while tax revenue exceeds benefits), it has been used to buy US treasuries -- the funds used to do so then appeared for Congress' general use.
You can see the US treasures the social security trust fund is currently holding here: https://www.ssa.gov/OACT/ProgData/investheld.html
The money goes to the trust fund, the trust fund buys treasuries and meets it's outlays using the maturing treasuries.
Or to put it another way, buying special issue treasuries isn't functionally different than Congress directly spending excess money in the trust fund and guaranteeing to pay more back later.
Just with additional steps and a thin veneer of impartiality and financial standards.
Is there any other way to run a currency? Serious question.
Just posting this to see if people will also flag this random ish
> It has literally no impact on the deficit or our ability to pay off debt. By statute.
This however is wrong.
As a simple proof: let's just up social security payments by 3000x... social security is still "self-funded" and "separate" but that would be an untenable debt and the US would immediately default on that obligation. The amount and structure of social security debt matters to the US' ability to pay.
Social security is a promise to pay an amount of money in the future and it is backed by the "full faith and credit" of the US government. The bigger it is, the bigger the debt, the hard it is to pay off. It's a big impact.
Just because it's specifically funded and tied to a precise specific tax does not make it immune from debt considerations.
https://www.ssa.gov/cgi-bin/investheld.cgi
Cash money from payroll tax is sitting there collecting interest and being drawn down by Social Security disbursements.
So we pay taxes, that revenue holds a gun to Congress and forces them to buy another aircraft carrier... That's semantics for you.
Sorry. The aircraft carrier thing is bitter sarcasm on my part. But I'm put off by dismissing the funded nature of Social Security as the root cause of the Federal debt.
The root cause is deficit spending.
They'yr not paying for their own, they're paying for the receivers of it. The debt has already accrued. and worse yet, those that did not pay for the social security they're receiving are now living longer and costing more. Its like a "life interest".
If you have issues with what it is, that's fine. But it still doesn't impact our deficit or ability to pay off debt.
https://en.wikipedia.org/wiki/Social_Security_(United_States...
[1] We only recently just reached the tail-end of the 1983 reforms' gradual shift in retirement age.
Or...raise the contribution limit which fixes the whole thing easily without having to screw over the people that paid in and just want to get back what they were promised.
Raise the retirement age? Really? All this advancement to make our lives better and more efficient, and we're going to conclude that we all need to to work more?
And meanwhile we can piss away cash by the trillion but when it comes to social security suddenly there's no money to be found anywhere.
They've fooled everyone into believing "the fund will be depleted" in x years. Then put some more money in assholes.
Considering that the population has decided it doesn't want any more significant immigration, ensuring the median age (along with median working age) will increase faster than lifespans, it seems foolhardy to think we can have our cake and eat it, too. Any kind of tax increase is a difficult sell.[1] If we can successfully raise the limit on payroll taxes, we better make it count. Note that social security disability benefits exist and presumably would remain an option for those unable to work.
That said, I appreciate you pointing that out. I hadn't realized how much revenue there was still to be had in lifting the payroll cap, at least according to https://crr.bc.edu/to-fix-social-security-increasing-the-wag...
[1] How quickly the left forgets that the president who pushed through devastating tax cuts in 2018 was just recently re-elected.
>Without legislative changes, trust fund reserves are projected to be depleted in 2033 for the OASI fund.[16] Should depletion occur, incoming payroll tax and other revenue would be sufficient to pay 77 percent of OASI benefits starting in 2035.