what is the truth regarding SS funding?

[miamited]

Hi all,

Now that the mid-term election is over and all the players are in place, there's been some noise from some members of our legislative body, that social security is one of the programs that is causing such dire financial consequences that affects the budget losses and increased debt. I've always understood that SS was self funded by the FICA taxes paid through payroll deductions, that is separate from the 'income tax' burden that is also found on our paychecks.

So, what's the truth? Are social security payments that the government sends out each month to millions of retirees and disabled really adding to our national debt? Or, is this just another bugaboo that some want to scare the voters into believing that if changes aren't made in the budget process, social security will be effected?

What do you think? Is the SS program adding to our total budget deficits? Or is SS, as has been reported, really self funded and have nothing to do with the increasing national debt?

God bless,
Ted

 

[miamited]

I present as evidence that SS is not a part of the general budget and is, therefore, not creating any drain on our national budget deficit. Now some $31T.

10 Myths and Misconceptions About Social Security


Social Security plays a vital role in the financial health of older Americans, so we checked the accuracy of 10 common myths about the program.

www.aarp.org

God bless,
Ted

 

[miamited]

Now, some may ask why I bring this subject up?

Well, there is a small faction of our legislative body that seems to be trying to tell us that SS is causing a lot of the budget deficit. However, as far as I can tell, SS doesn't have anything to do with our budget deficit. SS is self funded and has, over the last 50 years or so, been building up a surplus which is invested in government bonds. It has only been in the last couple of years that SS is beginning to pay out more than it brings in, but it isn't borrowing the needed money from the general fund. It is using the surplus, by cashing in those bonds, to continue payments. Current thinking is that SS will have used up its own surplus and then only be able to pay 80% of benefits sometime around 2035. But there are at least a half a dozen good ways to beef up SS taking in or paying out that can easily fix that problem. I just don't see why a small segment of our legislature, and it seems to be most of the idiots clowns that are in residence there now, want to scare you into believing that some legislators are destroying our budget because of SS payments. It has to be either a scare tactic...or they're just too stupid to understand how SS funding works. They seem to think that all those SS checks that come out each month are written against the general fund, and are, therefore, increasing our budget deficit. BUT THEY'RE WRONG!!! According to the above article.

Why can't we elect legislators that have some understanding and knowledge of the things of which they have control over?

Of course, that begs the question: If the current legislature, or a future one, were to cut the SS payments that people receive, would they then try to figure out a way to 'steal' that money as they have been accused of before. Only this time, unlike before when it was just an unfounded rumor, they do it. Lower your SS income so that it creates a funding overage that they, instead of investing in bonds, then take to use as they see fit for other projects. I mean, if the system is self funded then why is it even in the discussion unless they want to figure out a way to lower your income and steal the overage that would come from that?

By law, Congress cannot use SS funding for general budget projects.

God bless,
Ted

 

[Christ_empowered]

Some elites have always wanted to get rid of social security. Lots of opposition from day one then lots of super rich people doing what they can to destroy any safety net programs especially social security. It’s anti democratic nonsense through and through.

 

[miamited]

Some elites have always wanted to get rid of social security. Lots of opposition from day one then lots of super rich people doing what they can to destroy any safety net programs especially social security. It’s anti democratic nonsense through and through.

Hi Christ_empowered

I agree! However, the vast majority of those 'elites' seem to be in the Republican party. The majority of Democrats and the majority of Independents fully support, and are prepared to see to it, that SS gets the slight adjustment that it needs to remain solvent for many years hence. It has always been a plan for the betterment of our older citizens, and as a christian nation, as some seem to think we are, I see that as a good service of government.

And honestly, judging from the excesses of our financial situation over all, I don't think, especially when people get to where they use it, that they see it as a particularly onerous burden to bear. I mean really, does a person making a million dollars, or even half a million dollars a year really miss5,000 bucks? Does a person making 2-4 hundred K really miss $1,500 a year? Is that person's lifestyle really in danger of going to the poor house over such small contributions to the whole? And for SS, even that rich person will see a return. If he/she is willing to make the small sacrifice necessary today to see that it's there for them in the future.

Sure, they're rich and don't ever see that they'll ever need the money. But fate has a way of hurting some people and who knows whether that 'rich' 30 year old will still be rich at 70?

So, I have no problem with any 'social' issue being made for the good of the whole. And while I can hear the roaring cries now...no!! That is not socialism. We live under a system of capitalism, as far as the basic structure of our laws and economy. But capitalism left unchecked, in the hands of what God has already warned us are people with wicked hearts, will cause pain for some.

Consider, the entire reason slavery was as popular as it was, was that land owners could get rich producing and selling a product without having to pay fair wages for the laborer doing the work. A couple of generations grew up with the idea that killing a black person was absolutely necessary to keep him under your thumb. Then we had a couple of generations who believed that killing a black person was ok no matter what the reason. All of that came about ultimately because of the evils of a capitalistic economy that greatly rewarded someone who could sell goods with little to know cost for production.

There are ills that come from pure capitalism. So, we adjust places where people tend to use the system to prey on others. Some of that adjustment is going to look like we're using some of that great amount of capital to provide for the wellness of everyone as a part of a huge community of like minded people, for the most part, living under the rule of a sovereign nation. Yes, those who would gobble up all the goodies and leave none for everyone else don't like such ideas. It holds them back...restrains them...from doing the will of their wicked hearts.

Anyway, that's my winded treatise on the matter.

God bless,
Ted

 

[Christ_empowered]

I skimmed your post. I saw your ability to see through the double speak and…thank you.

 

[miamited]

goods with little to know cost for production.

Sorry, should be 'little to no cost for production.

Darn that edit button!!!

 

[miamited]

Please understand that I am not pushing for any of the dozen possible changes to the SS system. My intent here is just to clear up this matter of whether or not SS payments and operation are costing us money out of other government funding sources. Or, is the system still, as it was begun, operating on a pay as you go, using only its own money from FICA taxes and the interest payments and money from invested overage funds, as the sole source of any monies needed to run the system and make the monthly checks good.

If I'm correct, as my source seems to point out, then we should all tell our leaders to shut up about SS funding and quit using it as some fake bugaboo to scare others. Let them know that we know the truth better than they do on this particular matter. Social Security is not a burden on our budget deficits or national debt. Beyond what the government owes the Social Security system for the funds they have given over for investment bonds with the government.

I mean, according to my source, SS had a $2.85T surplus invested with the federal government in the way of bonds in the year 2021. That's not so long ago. Now, we are spending more and having to use up some of that surplus each month and year as SS continues to pay out its obligations. But it is still SS's money that it is using to make up the shortfall. It has just been invested all these 50 previous years in government bonds. Just waiting for this day to come.

Now, we can, with very little adjustment either increase funding somehow, or decrease payouts somehow to get the system back in balance and maybe even putting more money into the federal coffers as interest bearing bonds. Personally, I'm for increasing the base wage that FICA taxes are collected on. But I won't ever have to pay them again, so I'm ok with whatever they do on the 'increase income' side of the equation. LOL

God bless,
Ted

 

[miamited]

Another truth to consider, is that this claim that SS is going to go broke in a few years is poppycock.

Here's what's actually happening. The system has always been pay as you go and up until just a couple of years ago was collecting enough to cover its payouts. Now it is not, but it is using the 'invested funds', you know, a few billion here and a few billion there to make up the shortfall of current collections and current payouts. Should this situation continue, and it could change depending on people living or dying over the next few years. I mean Covid killed a lot of people that the actuaries hadn't figured for, 5 years ago. Who knows what might happen 10 years from now, but...

The general consensus built on standard expectations is that the current surplus will be used up in about 10-12 years. At that point, SS doesn't 'go broke'. There will still be a FICA tax collected and funds will continue to roll in to the SS coffers, but the payouts will just have to be cut...unless the demographics changes by then to provide more workers and fewer recipients. But the SS system, as it stands today, will never go broke!

That's another fake bit of politiking that we are hearing in these budget discussions. I'd really rather we all work from a position of truth in all of this so that an informed and fair decision can be made.

God bless,
Ted

 

[WIP]

Some elites have always wanted to get rid of social security. Lots of opposition from day one then lots of super rich people doing what they can to destroy any safety net programs especially social security. It’s anti democratic nonsense through and through.

And yet they still apply for SS when the time comes.

 

[WIP]

Another truth to consider, is that this claim that SS is going to go broke in a few years is poppycock.

Here's what's actually happening. The system has always been pay as you go and up until just a couple of years ago was collecting enough to cover its payouts. Now it is not, but it is using the 'invested funds', you know, a few billion here and a few billion there to make up the shortfall of current collections and current payouts. Should this situation continue, and it could change depending on people living or dying over the next few years. I mean Covid killed a lot of people that the actuaries hadn't figured for, 5 years ago. Who knows what might happen 10 years from now, but...

The general consensus built on standard expectations is that the current surplus will be used up in about 10-12 years. At that point, SS doesn't 'go broke'. There will still be a FICA tax collected and funds will continue to roll in to the SS coffers, but the payouts will just have to be cut...unless the demographics changes by then to provide more workers and fewer recipients. But the SS system, as it stands today, will never go broke!

That's another fake bit of politiking that we are hearing in these budget discussions. I'd really rather we all work from a position of truth in all of this so that an informed and fair decision can be made.

God bless,
Ted

I can understand a shortfall, sort-of. Those of us baby boomers, and I think you are in this group, have been paying SS for most of our adult lives. Because of that, here should be a surplus but it should end when we baby boomers retire and begin to draw our SS payments. The money should have and by law was required to be invested in Treasury Securities to help the fund grow.

I think one of the difficulties has been that when it was first set up, it did not include Medicare or payments to minors of deceased parents. Adding these expenses may have put some additional strain on the plan although there is a separate Medicare tax. When the SS fund was first set up the tax was 1% of the first $3,000.00 of a worker's income but over the years it has grown to 12.4% for SS and 2.9% for Medicare for a total of 15.3% of total payroll.

 

[miamited]

Hi WIP

I think one of the difficulties has been that when it was first set up, it did not include Medicare or payments to minors of deceased parents.

Medicare has never been a part of SS funding and is a completely separate government program. The only connection that medicare has with SS is that SS generally, through withholding, takes your medicare premiums to give to medicare. Here's a quote from 'healthline.com': Social Security does not pay for Medicare, but if you receive Social Security payments, your Part B premiums can be deducted from your check.

I can have a discussion on payments to minors of deceased parents. I'd have to get some knowledge on the issue first.

I also have no problem with our lawmakers including Medicare as a growing cost against our national deficits. I do understand the question, Alex. It is strictly and only the federal program of Social Security that I am working on.

God bless,
Ted

 

[WIP]

Hi WIP

Medicare has never been a part of SS funding and is a completely separate government program. The only connection that medicare has with SS is that SS generally, through withholding, takes your medicare premiums to give to medicare. Here's a quote from 'healthline.com': Social Security does not pay for Medicare, but if you receive Social Security payments, your Part B premiums can be deducted from your check.

I can have a discussion on payments to minors of deceased parents. I'd have to get some knowledge on the issue first.

I also have no problem with our lawmakers including Medicare as a growing cost against our national deficits. I do understand the question, Alex. It is strictly and only the federal program of Social Security that I am working on.

God bless,
Ted

One of the concerns with payments to children of deceased parents is this. When my father died, my mother was able to file a claim against his SS. That's all fine and good. But, two of my sisters were also awarded claims because they were minors and collected those monies until they turned 18. My concern is not that I didn't get some but why were the checks written to them and not the custodial parent or caregiver? Logically, the monies should be to help support their everyday living such as providing food, clothing, shelter, etc. In my view, our mother should have received the additional benefits to help cover those costs rather than giving the funds to the children.

In my sisters' cases, my mother didn't ask for them to contribute to their living costs and they were smart enough to use the monies to pay for education beyond high school. I hold nothing against them and am happy things turned out the way they did but it could easily have gone another way.

 

[miamited]

Hi again WIP

but it should end when we baby boomers retire and begin to draw our SS payments.

Ok, I'll bite. Why would that be? Aren't your children still having children and their children still having children and...well,...surely you get the idea. It's all a matter of how much we collect towards the program as to whether or not there will ever be overages or shortages.

Now, when there are more working people to cover the costs, then the percentage can be low. When there are more retired people living longer, then the percentage needed to collect would be higher. But in either case, I believe, so long as the amount that someone gets for SS is reasonable as a decent secondary income, then the tax should not be onerous to any wage earner.

God bless,
Ted

 

[miamited]

WHAT!!!!!!

My concern is not that I didn't get some but why were the checks written to them and not the custodial parent or caregiver?

Your whole issue over this is that you think the checks should be made out to other people's names? Really??????

OK, thanks for stopping in!!

God bless,
Ted

(wait a minute, I can't hit the send button from down here on the floor LMS)

 

[WIP]

Ok, I'll bite. Why would that be? Aren't your children still having children and their children still having children and...well,...surely you get the idea. It's all a matter of how much we collect towards the program as to whether or not there will ever be overages or shortages.

I think you're misunderstanding.

While we're working we don't pay into a fund for ourselves like a retirement account. The monies we pay in are placed into an account to cover the cost of the payouts at that time. During the years that we baby boomers were working, there were a lot more of us paying in than average so the fund should have grown accordingly. When we retire, there will be a higher demand on the account than normal and fewer people paying in, so the account which had built up quite nicely over the years when we were paying in, would now be adequate to support our withdrawals. Am I explaining it clearly?

 

[WIP]

WHAT!!!!!!

Your whole issue over this is that you think the checks should be made out to other people's names? Really??????

OK, thanks for stopping in!!

God bless,
Ted

(wait a minute, I can't hit the send button from down here on the floor LMS)

Social Security was originally intended for the covered worker and nobody else. It was also not intended to provide a full retirement plan but only a supplement.

You are really not hearing what I'm saying. I'm saying that minor children should not get a payment but rather, the custodial parent should get a little higher payment to help with the cost of the minor children for which he/she is responsible for. In other words, my mother should have been paid a higher amount because she still had the responsibility of raising my two sisters that were still minors at the time of my dad's death.

SS is not supposed to be a benefit for people that don't need it and my sisters certainly didn't need it. My mother did.

 

[miamited]

Hi WIP

While we're working we don't pay into a fund for ourselves like a retirement account. The monies we pay in are placed into an account to cover the cost of the payouts at that time.

That's correct and knowledge I've long had.

When we retire, there will be a higher demand on the account than normal and fewer people paying in,

Sezzz who? I think the workforce today is much bigger than the workforce 50 years ago when I started out. That's really been the beauty of the system that we've generally always had enough workers to pay in. And even now we're not really short of workers. We just have to adjust the percentage of contribution by a very small amount. We've had to do that a half dozen times over the life of the program. This isn't some terrible new issue that's never happened before, Oh woe is us!!

Population growth and demographics change over 20-30 year periods of time. Sometimes up and sometimes down. Sometimes more older people and sometimes less.

But again, my issue for this thread isn't what it's going to take to fix SS, but rather whether or not it is the drain on our national finances and debt, as some are trying to convince us it is.

As far as particular and specific issues with the system, sure those can be discussed and if anyone knows a Congressperson they can ask them to write up a bill.

Social Security was originally intended for the covered worker and nobody else.

That's true. But it very quickly changed. In fact, it was only four years later in 1939 that survivor benefits were added. Then in 1956 disability benefits were added. Oh, and none of these changes had anything to do with the communist, pinko, liberal, church hating Democrats that it's being blamed on. So, while I hear your complaint, these issues have been a part of the system for almost 75 years or better now. So removing them is going to bring about a fight. But still, even with all of these newly added benefits, SS built up a pretty sizeable nest egg and has continued now for these last 75 years, paying its own way with its own money. With a little bit of tweaking, and yes, that can include tightening up on some of the added benefits, but the basic SS program of the U.S. can go on for another 75 years.

I think one should consider that the program is called social security, and while its primary goal is funding for retired people, there is something to be said for a program that also provides some social security for those who are permanently disabled or have lost a parent who did pay into the system, but won't ever be drawing out.

As for the rest of your gripe, I hear you. But it isn't something that I think we should use to seriously consider gutting or making drastic changes to the system over. Write your congressperson and tell them your concerns. If other people share them, then a bill could be drawn up. I honestly can't imagine that a minor doesn't get a check that says to pay 'in care of' someone. After all, they can't legally have their own bank accounts. Those are all just minor tweaks and twists within the system and I'm all for working them out, but it has no bearing on the national debt that we're being told it is a part of.

God bless,
Ted

 

[WIP]

Sezzz who? I think the workforce today is much bigger than the workforce 50 years ago when I started out. That's really been the beauty of the system that we've generally always had enough workers to pay in. And even now we're not really short of workers.

Yes and no. There actually is a shortage of workers right now, at least around here there is. There is no excuse for not having a job if you want one. Employers all over are asking for help.

Oh, and by the way, I agree with your assessment of the SS drain on our national budget. In fact, the law was intended to be self-funded from the get-go through dedicated payroll taxes.

 

[miamited]

Yes and no. There actually is a shortage of workers right now, at least around here there is. There is no excuse for not having a job if you want one. Employers all over are asking for help.

Oh, and by the way, I agree with your assessment of the SS drain on our national budget. In fact, the law was intended to be self-funded from the get-go through dedicated payroll taxes.

Hi WIP

Well yes, I freely admit that over the last two years we've witnessed some pretty major changes in our workforce. But the GAO has long known that we were getting to the point of having to dig into the invested 'savings'. Even now, these predictions are telling us, based on what are expected demands on the program, what will be 10-12 years out. So we need to plan for them and not get into this last minute save the world and politicize it event that we're now witnessing over the debt ceiling.

SS is a good program. I think it would be very shortsighted of us to severely cut it back or stop it. Of the 330 million people living in this country, about a quarter of them have no savings to count on after their working days. They work all their lives at jobs that barely provide for month to month expenses and their employer doesn't care enough about them to have any kind of 'retirement plan'. Some of them are pretty transient jobs, and even if retirement plans were offered many probably wouldn't stay employed, at least with that company and its plan, for more than a couple or three years.

I have supplemental income from investments that I made. So for me, SS allows me to have a more comfortable life, but is probably just under half of my monthly income. I wouldn't be as comfortable without it.

God bless,
Ted