>>Social Security could be next to need a bailout THIS YEAR!
Well it has happened. The most outrageous welfare program Ponzi Scheme ever to be pressed on the nations young has finally run out of money. This year the outlay will exceed the in come. The Ponzi Scheme that President Franklin Roosevelt pulled off in 1935 has finally collapsed.
Now the way that Social Security works is : you pay a percentage of your income and your employer matches it and sends it to the federal government. The federal government then takes this money and buys Treasury Notes with it (Treasury Notes are simply IUO’s) which it puts in a so called “Social Security Trust Fund. The government used the actual money to pay the current Social Security recipients and anything left over is of course used for other things.
This Social Security Trust Fund looks good on the outside because it has had these Treasury Notes (IOU’s) for the ENTIRE amount of funds paid in by workers and employers. It has nothing showing for the amount of these funds that has already been paid out to Social Security Recipients. This is why so many people can say, “There is plenty of money in the Trust Fund if the government hadn’t used it for other things. Well, not really. Yes there would have been some funds still left that was actually paid in and not used to pay out to Social Security recipients, but not anywhere nearly the amount of the Trust Fund as based on the entire amount paid in with no discounting for the funds paid out for Social Security benefits. But you see that was the scam. The federal government had to make it look like there was REAL money there and plenty of it. And on top of that the federal government agreed to pay interest on those Treasury Notes (IOU’s) but that too was just an accounting trick, or scheme, or scam. So Social Security is broke folks and the bill is coming due this year. The young workers are not paying in enough to pay the retirees the benefits they are getting so money for Social Security will have to come from somewhere else.
This Ponzi Scheme, this welfare for the elderly, has finally gone bust. Unfortunately there is no Bernie Madoff to blame and send to jail. And also unfortunately for the young workers who are having this one more burden placed on their backs there will be no investors who have paid into the scheme who will lose out because this is a federal government Ponzi Scheme so the investors will get their money from the young workers come Hell or High Water as they say.
Read the article and then perhaps you can tell me what you would propose be done about this whole scam. Keep in mind if you will just to be fair that ALL the money you paid in to this Ponzi Scheme you got back within two years after beginning to draw a monthly Social Security check. After that time every check you have received or will receive in the future is welfare. By welfare I mean someone elses money, not yours.
Social Security could be next to need a bailout
By Allan Sloan
Tuesday, February 2, 2010; A13
Don’t look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.
A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.
Instead of helping to finance the rest of the government, as it has done for decades, our nation’s biggest social program needs help from the Treasury to keep benefit checks from bouncing — in other words, a taxpayer bailout.
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn’t provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.
Social Security hasn’t been cash-negative since the early 1980s, when it came so close to running out of money that it was making plans to stop sending out benefit checks. That led to the famous Greenspan Commission report, which recommended trimming benefits and raising taxes, which Congress did. Those actions produced hefty cash surpluses, which until this year have helped finance the rest of the government.
But even then, it was clear the surpluses would be temporary. Now, years earlier than projected, Social Security is adding to the government’s borrowing needs, even though the program still shows a surplus on paper.
If you go to the aforementioned pages in the CBO update and consult the tables on them, you see that the budget office projects smaller cash deficits (about $19 billion annually) for fiscal 2011 and 2012. Then the program approaches break-even for a while before the deficits resume.
Social Security currently provides more than half the income for a majority of retirees. Given the declines in stock prices and home values that have whacked millions of people, the program seems likely to become more important in the future as a source of retirement income, rather than less important.
It would have been a lot simpler to fix the system years ago, when we could have used Social Security’s cash surpluses to buy non-Treasury securities, such as such as government-backed mortgage bonds or high-grade corporates that would have helped cover future cash shortfalls. Now it’s too late.
Even though an economic recovery might produce some small, fleeting cash surpluses, Social Security’s days of being flush are over.
To be sure — three of the most dangerous words in journalism — the current Social Security cash deficits aren’t all that big, given that Social Security is a $700 billion program this year, and that the government expects to borrow about $1.5 trillion in fiscal 2010 to cover its other obligations, about the same as it borrowed in fiscal 2009.
But this year’s Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it’s a problem for the present.
One other thing I would like to point out while we are at it. President Obama and Congress has spent 2009 spending money like there was no end. Money the United States does not have. It was borrowed from China, Japan and India among other countries. Now just this week President Obama presented a budget for 2010 that is so huge the taxes that will be taken in will only cover about 38% of it so the rest will have to be borrowed. And nowhere in this huge budget is there a provision for the Social Security Ponzi Scheme blow out. So when this is figured in and any other unforeseen happening that will take money then you can see that even the figure of 38% covering our nations debts for the year is far too high an estimate. BB