Thursday, January 27, 2011

Umm, your pessimistic forecast is way too optomistic

and just plain wrong!

There's an awesome AP article this morning with the headline "Social Security Fund Now Seen To Be Empty by 2037"

People, I've got news for the AP: That sumbich is empty now!

Ahorita mismo!

Every penny of payroll tax revenue is spent to help cover current general expenditures. We can't even really say which general expenditures because money is fungible.

Payroll tax revenue is not being saved or invested.

If payroll tax revenue was really in a "lockbox", then it wouldn't count in figuring out the current deficit would it? Well it certainly is counted as general revenue when the government calculates its deficit.

Your payroll taxes do NOT fund your personal social security retirement benefits. Future social security benefits are unfunded liabilities of the federal government, payable out of future tax revenues.


mjh said...

Isn't this a little bit misleading, in that the money is being invested in government bonds? Said bonds being the safest - if poorest performing - investments available.

Whar are they supposed to do with it?

Steve said...

Last month someone in our local paper likened social security to "a savings deposit".

Amazing what passes for the truth these days.

Anonymous said...

Speaking of pessimistic(ish) forecasts, do y'all have any thoughts on Tyler's *Stagnation*? I'm sure you do. Gimmegimmegimme!

Bill said...

I can't understand why some economists continue to refer to the "Clinton Budget Surpluses."

Anonymous said...

mjh, maybe this will answer your question:

John said...

I first learned about Social Security when I was in Navy Boot Camp in 1967. In a session on pay and benefits they told us about SS but told us that it would go broke in a few years. We would never see the benefits. Now, 45 years, later, it is still going to go broke in a few years.

The problem is that most people, including many politicians, seem under the impression that SS is some sort of insurance plan. It is not. It is straight welfare. The fact that we have paid into it does not mean that the govt has to pay us out.

SS is nothing more than a welfare system similar to Food Stamps or AFDC.

It can only run out of money in the sense that the pols can decide not to fund it anymore.

John Henry