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  • Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

    By now we are all familiar with Goldman Sachs involvement in the Greek government's financial problems. First they helped hide Greek debt:
    Goldman Sachs, Greece Didn’t Disclose Swap Contract

    Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.
    Then, they positioned themselves to profit from the possible Greek default on it's debt:
    Banks Bet Greece Defaults on Debt They Helped Hide

    Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.

    Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.

    These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit.
    But now it seems they have done something even more unsavory. They have stuck it to local governments that participated in the Building America Bonds program started by the Obama stimulus package:
    Goldman Sachs Asked By Senator About Fees on Build America Bond

    The bond program, created as part of last year’s $862 billion economic-stimulus package, lets state and local governments raise money for infrastructure projects by selling an unlimited amount of federally subsidized, taxable bonds through 2010.

    By November, local governments had paid an average 37 percent more to banks underwriting the Build America Bonds program than for handling tax-exempt sales. The difference translated to $100 million in added costs for the $55 billion in bonds sold by that point. Offerings of the subsidized taxable debt began in April.

    Grassley pointed to a Goldman Sachs ad that said it is a “principal” underwriter for the program. He said he is “concerned that American taxpayers are subsidizing larger underwriting fees for Wall Street investment banks.”
    But lets get to former Golman Sachs CEO and Treasury Secretary Henry Paulson, who is now calling for cuts in entitlement programs to help deficit spending. In a recent New York Times op-ed article he made this statement:
    We must also tackle what is by far our greatest economic challenge — the reduction of budget deficits — a big part of which will involve reforming our major entitlement programs: Medicare, Medicaid and Social Security.
    Yes, thats right. The world renowned banking criminal who orchesrated the bank bailouts, helped his buddies at Goldman Sachs eliminate their competition and get a $13 billion dollar gift from the AIG bailout - among other egregious acts of corporate cronyism- is now saying that it's grandma's Social Security check that's the problem. It can't be that America has a global military empire and two very expenseive wars that it has to pay for, or that the US government went into tremendous debt over the bailouts and stimulus spending. Not to mention the fact that a majority of the Federal debt we now have came to us under the Bush adminisration when Paulson was Treasury Secretary. No, it must be Social Security, that is actually a pay-as-you-go earmarked tax. Why would Paulson advocate reducing entitlement program spending without even metioning the outrageous Department of Defense budget? Because lets face it, the War on Terror, Military Industrial Complex, and Homeland Security culture has become an entitlement program of its own at this point. With its millions of employees and annual budget of almost $700 billion dollars, its just become a very powerful entity dependent on taxpayer money. It used to be that Social Security was the untouchable government program. Sadly, the 'War on Terror' is now the untouchable entitlement program.

    Now, I'll be the first to admit that the entitlement programs need some work, and there is a good argument for cutting or eliminating them. But, Paulson's comments just show whats really important in government and banking institutions - stick it to the little guy. You know, the over taxed older couple that lost most, or all, of their savings when the economy collapsed - mostly due to Wall Street schemes. Then, was forced to pay for the very banks that caused the collapse, in the form of taxpayer funded bailouts. Is now more than likely going to have their benefits - wich they payed for their entire life - cut, sooner or later. Because, guys like Paulson and many others in Washington are going to put Social Security on the chopping block, eventually. So now the average citizen - who can't even find a job because greedy corporations have moved their manufacturing base overseas - will have what little they have left taken from them once again.
    |TG-X| mp40x



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  • #2
    Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

    I can empathize with you a little bit, but I don't think you're quite on track here.

    Originally posted by mp40x View Post
    No, it must be Social Security, that is actually a pay-as-you-go earmarked tax.
    Social Security has never been pay-as-you-go. It is, in essence, a giant ponzi scheme. For the last 50 years, it has been "pay far MORE than you need, as you go, so we can siphon the extra off to pay for all our other programs". And now, finally, we've reached the point where the earmark tax is NOT ENOUGH to pay as you go anymore. It was an inevitable turning point that has been creeping up on us for decades, but as long as the economy kept expanding and new people kept being added fast enough, we could hang on a little longer and ignore it for a short while.

    Now you can't do that anymore. Now social security has to go back to the bank and try to redeem all the money from its trust fund...except there isn't any actual money IN the trust fund. It has all been spent already. The Social Security Trust fund holds trillions of dollars worth of US Government debt, but the US Government doesn't have any available money to pay that back with. It's like Bernie Madoff's investors coming back to him now to ask if they can withdraw their investments. What? You thought you had an investment here? Sure, I sent you a statement every month that had ever-increasing numbers on it, but no, there's no actual money here. You have nothing, sorry.

    And Social Security? They have nothing too.

    Comment


    • #3
      Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

      They have nothing because they took the excess accumulations that would balance the program were spent on other things, as you noted. That is like saying that saving for retirement is a broken system because you spent it on college for your kids instead of leaving it in retirement. Had you not taken out the saving the system would have worked.

      A pay as you go system isn't a Ponzi scheme. A Ponzi scheme involves screwing the final level, while SS is a continuous self sustaining system like taxation, where costs are estimated and money is collected to pay the estimated expenses over years and overall the system is designed to even out the highs and lows of the economy. If they hadn't been robbing SS's excess collections the system wouldn't appear to be 'broke'.
      |TG-6th|Snooggums

      Just because everyone does something does not mean that it is right to do.

      Comment


      • #4
        Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

        Allow me a comparison here. Bernie Madoff's scheme had reported total assets of $65 Billion when it was revealed to be a fraud. Investors thought they had $65 Billion but actually had nothing, because Madoff had already spent it all.

        But the amount Madoff collected and spent wasn't anywhere close to $65 Billion. He had skimmed off somewhere in the region of $18 Billion. Still a big sum, but not nearly enough to pay back all of the fictitious gains. So suppose Madoff had never stolen a dime from his investing scheme, and lived off some other source of income. If that had happened, instead of the scheme being uncovered last year, it could have continued to operate off that $18 Billion for several more years. But eventually, some time down the road, that $18 Billion still would have run out because the scheme wasn't designed to be solvent in the first place.

        Social Security is like that. Yes, its been robbed of hundreds of billions by the politicians, but that only sped up the problem. It didn't CAUSE the problem. The problem is that it wasn't designed to be long-term solvent in the first place.

        Comment


        • #5
          Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

          Originally posted by Kerostasis View Post
          Allow me a comparison here. Bernie Madoff's scheme had reported total assets of $65 Billion when it was revealed to be a fraud. Investors thought they had $65 Billion but actually had nothing, because Madoff had already spent it all.

          But the amount Madoff collected and spent wasn't anywhere close to $65 Billion. He had skimmed off somewhere in the region of $18 Billion. Still a big sum, but not nearly enough to pay back all of the fictitious gains. So suppose Madoff had never stolen a dime from his investing scheme, and lived off some other source of income. If that had happened, instead of the scheme being uncovered last year, it could have continued to operate off that $18 Billion for several more years. But eventually, some time down the road, that $18 Billion still would have run out because the scheme wasn't designed to be solvent in the first place.

          Social Security is like that. Yes, its been robbed of hundreds of billions by the politicians, but that only sped up the problem. It didn't CAUSE the problem. The problem is that it wasn't designed to be long-term solvent in the first place.
          It was always solvent if people had died when they where expected to. Or if the retirement age had increased with life expectancy. Or if FICA payroll tax had increased to reflect longer life spans/changing age ratios. If the excess in the early years had not been spent.

          etc, etc
          Iím not racists, I have republican friends. Radio show host.
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          - If software were as unreliable as economic theory, there wouldn't be a plane made of anything other than paper that could get off the ground. Jim Fawcette
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          - "Don't waist your time on me your already the voice inside my head." Blink 182 to my wife

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          • #6
            Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

            I thought social security was going by the wayside way before paulson opened his trap.

            Welfare programs
            , now that is something that needs to be erased or put on a very limited basis.
            Randy = Ace ! - Warlab
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            • #7
              Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

              Originally posted by Delta*RandyShugart* View Post
              I thought social security was going by the wayside way before paulson opened his trap.

              Welfare programs
              , now that is something that needs to be erased or put on a very limited basis.
              Clearly you are unaware of the many people are are truly unable to work, have lost a job due to unforeseen circumstances like a recession or injury that make up the vast majority of people who use welfare programs. Saying we should get rid of welfare systems that primarily benefit those who are truly in need of it is like saying we should ban returns at stores because a few people abuse the system.
              |TG-6th|Snooggums

              Just because everyone does something does not mean that it is right to do.

              Comment


              • #8
                Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                Originally posted by Kerostasis View Post
                I can empathize with you a little bit, but I don't think you're quite on track here.
                No, I'm actually right on track wth the theme of my post, wich is. Isn't it ironic that a guy like Paulson would start this "we need to address entitlement program spending", without even mentioning the Defense, TARP, and stimulus spending. Lets be totally honest with ourselves, you can't even start talking about reducing deficit spending without including Defense spending as well. The debate over whether Social Security is a 'scheme' has been going on for years, but that was not the intention of my post. Right now in the current economic climate it is not wise to cut spending for Social Security. People really need that money, not to mention the fact that they are actually entitled to the money as they have payed into the system for their entire life. That fact also eliminates the "Social Security is welfare" fiction, becuase how could it be welfare if you payed for it? What they are NOT entitled to pay for is an American global military empire. But, the bankers get no value out of grandma getting her check every month. However, they do get a lot of value out of the 'War on Terror' entitlement program. Our yearly Defense budget is outrageous, Lets look at what we spend comparatively to other countries:

                Rank Country Spending ($ b.) World Share (%)
                World Total 1464.0 100
                1 United States 607.0 41.5
                2 Chinaa 84.9 5.8
                3 France 65.7 4.5
                4 United Kingdom 65.3 4.5
                5 Russiaa 58.6 4.0
                6 Germany 46.8 3.2
                7 Japan 46.3 3.2
                8 Italy 40.6 2.8
                9 Saudi Arabia 38.2 2.6
                10 India 30.0 2.1
                11 South Korea 24.2 1.7
                12 Brazil 23.3 1.6
                13 Canada 19.3 1.3
                14 Spain 19.2 1.3
                15 Australia 18.4 1.3 Source.
                Notice that the so called 'axis of evil' - wich included North Korea and Iran - doesn't even make the list. Iran's yearly defense budget is a measly $18 billion. Is this a joke? Are we supposed to be afraid of Iran? Iran could never even begin to threaten the United States in any rational scenario. Such is the grand illusion that we need an armed forces with a budget that dwarfs even China by roughly $500+ billion.

                Now, I know that the entitlement programs have to be addressed from a sustainability perspective. And, that their are good arguments for reforming, cutting, or eliminating some of the programs. But, that does not change the fact that duechbags like Paulson are going to promote cutting the only thing that some people have left -Social Security - without addressing the most obvious unsustainable program -The War on Terror. Also, the total TARP and stimulus spending could have almost payed for ALL the entitlement programs for one fiscal year. Instead, the US government borrows to save the very bastards that got us into this mess. The nerve of Paulson's comments are simply unbelievable in my opinion.

                Watch the comments of John Duncan [R-TN] to put this whole issue of the War on Terror spending into the proper perspective:

                |TG-X| mp40x



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                • #9
                  Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                  National Defense is one of the few government programs that is actually directly mandated by the Constitution. It's smaller than TARP, smaller than the stimulus plan, and smaller than Social Security. I would cut all three of those others before I cut national defense.

                  Iran's yearly defense budget is a measly $18 billion. Is this a joke? Are we supposed to be afraid of Iran? Iran could never even begin to threaten the United States in any rational scenario.
                  The total budget for the 9/11 attacks was somewhere in the $10,000 range. Sadly, the realities of assymetric warfare dictate that outspending someone does not make us proof against their attacks. That $18 billion that Iran spends may not be enough to defeat our armed forces in open conflict, but it's enough to inflict massive damage on un-protected civilian targets if they so desire. They have self-proclaimed nuclear capabilities, and even the UN recently decided that Iran is probably nuclear-capable. It would only take a single nuclear weapon attack against the US to make your whole chart worthless.


                  While we're at it, you didn't mention the OTHER chart, military spending sorted by % of GDP.

                  Rank Country Military expenditures as % of GDP Date of information
                  1 Oman 11.4 2005 est.
                  2 Qatar 10 2005 est.
                  3 Saudi Arabia 10 2005 est.
                  4 Iraq 8.6 2006
                  5 Jordan 8.6 2006
                  6 Israel 7.3 2006
                  7 Yemen 6.6 2006
                  8 Armenia 6.5 FY01
                  9 Eritrea 6.3 2006 est.
                  10 Macedonia 6 2005 est.
                  11 Burundi 5.9 2006 est.
                  12 Syria 5.9 2005 est.
                  13 Angola 5.7 2006
                  14 Mauritania 5.5 2006
                  15 Maldives 5.5 2005 est.
                  16 Kuwait 5.3 2006
                  17 Turkey 5.3 2005 est.
                  18 El Salvador 5 2006
                  19 Morocco 5 2003 est.
                  20 Singapore 4.9 2005 est.
                  21 Swaziland 4.7 2006
                  22 Bahrain 4.5 2006
                  23 Bosnia and Herzegovina 4.5 2005 est.
                  24 Brunei 4.5 2006
                  25 Greece 4.3 2005 est.
                  26 Chad 4.2 2006
                  27 United States 4.06 2005 est.
                  Todays numbers would move us up slightly on that list, to about 22nd place. Still, 22nd in the world isn't nearly as extreme as you're making it out to be.

                  Comment


                  • #10
                    Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                    Originally posted by snooggums View Post
                    Clearly you are unaware of the many people are are truly unable to work, have lost a job due to unforeseen circumstances like a recession or injury that make up the vast majority of people who use welfare programs. Saying we should get rid of welfare systems that primarily benefit those who are truly in need of it is like saying we should ban returns at stores because a few people abuse the system.
                    I'm aware, but I think you would be surprised at the total amount of people who take advantage of it in general, and how welfare programs at least in the area I live/work are hurting the taxpayers more than helping those who are on it.

                    Most if not all major stores require receipts if you plan on returning items, if you don't have a receipt than you are SOL.
                    Randy = Ace ! - Warlab
                    Level II Volunteer FireFighter
                    Level I HazMat Technician
                    NYS EMT-B
                    Town of Mamaroneck Fire Dept.

                    sigpic




                    Bring On Project Reality 1.0!!!
                    RSS Feeds:Bamboo | | 9/11 - Never Forget |
                    Apophis - "TG was created to cater to a VERY specific type of gamer rather than trying to appeal to the greater gaming population.
                    Tactical Gamer is not mainstream.
                    We are not trying to attract mainstream gamers."

                    Comment


                    • #11
                      Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                      Originally posted by Kerostasis View Post
                      National Defense is one of the few government programs that is actually directly mandated by the Constitution. It's smaller than TARP, smaller than the stimulus plan, and smaller than Social Security. I would cut all three of those others before I cut national defense.
                      Say what?

                      Originally posted by The constitution
                      To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

                      To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

                      To provide and maintain a Navy;

                      To make Rules for the Government and Regulation of the land and naval Forces;

                      To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

                      To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
                      Maintaining a standing Army is not required by the Constitution at all. Congress gets past the 2 year limit on funding by simply approving new spending bills for it in two year or less cycles. It is also unnecessary, there is no need for us to spend hundreds of billions of dollars to go kill people in the Middle East every decade. The use of the Army as an invading force is actually against the wishes of the founders, the structure was to encourage a defensive approach, hence the Milita being called to repel invasion.

                      Yeah, times have changed, but the Constitution can't be used as an excuse for the military spending at the level we have it now. Social Security has been robbed and it should be the absolute last federal program to have funding reduced or taken as the funds to pay for it are collected directly for that one program.

                      Originally posted by Delta*RandyShugart* View Post
                      I'm aware, but I think you would be surprised at the total amount of people who take advantage of it in general, and how welfare programs at least in the area I live/work are hurting the taxpayers more than helping those who are on it.

                      Most if not all major stores require receipts if you plan on returning items, if you don't have a receipt than you are SOL.
                      Actually, I was surprised by how few people take advantage of welfare systems when I saw the actual data. I have had little trouble in getting a reasonable resolution for returned items without a receipt (like gifts) through store credit.
                      |TG-6th|Snooggums

                      Just because everyone does something does not mean that it is right to do.

                      Comment


                      • #12
                        Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                        Originally posted by Kerostasis View Post
                        National Defense is one of the few government programs that is actually directly mandated by the Constitution. It's smaller than TARP, smaller than the stimulus plan, and smaller than Social Security. I would cut all three of those others before I cut national defense.
                        Seriously, I respect your opinion, but, no reasonable person would ever say that Social Security should be cut before Defense spending at it's current level. Only a zealot would make such a proposal.

                        Originally posted by Kerostasis View Post
                        The total budget for the 9/11 attacks was somewhere in the $10,000 range.
                        That number you stated intrigued me a bit, there is this article from CNN wich says:

                        The plot cost an estimated $400,000 to $500,000, not including the hijackers' training in Afghanistan. The hijackers spent about $270,000 in the United States, mainly on flight training, travel, housing, and vehicles.
                        Originally posted by Kerostasis View Post
                        Sadly, the realities of assymetric warfare dictate that outspending someone does not make us proof against their attacks.
                        Bingo, we have a winner.

                        Originally posted by Kerostasis View Post
                        That $18 billion that Iran spends may not be enough to defeat our armed forces in open conflict, but it's enough to inflict massive damage on un-protected civilian targets if they so desire. They have self-proclaimed nuclear capabilities, and even the UN recently decided that Iran is probably nuclear-capable. It would only take a single nuclear weapon attack against the US to make your whole chart worthless.
                        It's all in the world of 'what if's'. What if they had another military coup in Turkey, and a radical government took over? What if the hardliner's in Israel finally had their way? What if the Pakistanis shifted away from being our little pro-American military culture we created and embraced Sharia? Who knows, all the countries mentioned are nuclear states. We simply can't keep playing 'Minority Report' throughout the world at GREAT cost to our country and soldiers.

                        Have you ever thought about the arguable fact that Iran has been driven to seek nuclear weapons because of our overt military aggressiveness and campaigns in the Middle East? That they feel threatened by the US and Israeli military power, and only hope to level the playing field by having a nuke of their own. That maybe they don't want to actually bomb Israel as soon as they get it, but just want to be respected for having it, despite their hostile rhetoric. I'm sure you know that more sanctions will only further distance Iran and push them into a corner, and really only hurt the citizens - who are not as radical as the government - of Iran.

                        Originally posted by Kerostasis View Post
                        While we're at it, you didn't mention the OTHER chart, military spending sorted by % of GDP.
                        Ok, lets talk % of GDP for a moment, the US Federal debt is 95.9% of GDP. Thats a good reason to stop spending money on a crusade to rid the world of 'evil doers'. Not to mention our exausted soldiers -who make VERY little money compared to the military contractors and suppliers, who don't do ANY of the fighting - who pay the ultimate cost for this very un-American War on Terror.
                        |TG-X| mp40x



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                        Comment


                        • #13
                          Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                          Originally posted by mp40x View Post
                          Seriously, I respect your opinion, but, no reasonable person would ever say that Social Security should be cut before Defense spending at it's current level. Only a zealot would make such a proposal.
                          Allow me to rephrase. Social Security doesn't need to be cut specifically, it needs to be fundamentally reworked into a self-sustaining model. However, so long as that fundamental re-work is not done, Social Security will continue to bleed money and will eventually require cuts just to remain temporarily solvent. I would not favor staving off those cuts by instead slashing defense spending (or anything else) and pumping the extra money into Social Security as a sort of bailout. When Social Security runs dry, its time to face the facts and fix it, not sacrifice everything else for the privilege of ignoring it awhile longer. And quite frankly, waiting for it to run dry will only make those fixes more painful. The easier solutions require years of lead-up time to phase in, which we won't have available after the money runs out.

                          Have you ever thought about the arguable fact that Iran has been driven to seek nuclear weapons because of our overt military aggressiveness and campaigns in the Middle East?
                          I have. But have you ever thought about the equally arguable fact that Iran has been driven to seek any avenue available to fulfill their 50-year old goal of remedying the tragic problem of the continued existence of the Israeli nation?



                          Ok, lets talk % of GDP for a moment, the US Federal debt is 95.9% of GDP. Thats a good reason to stop spending money on a crusade to rid the world of 'evil doers'. Not to mention our exausted soldiers -who make VERY little money compared to the military contractors and suppliers, who don't do ANY of the fighting - who pay the ultimate cost for this very un-American War on Terror.
                          Its a good reason to stop spending so much money in general. But why do you leap specifically to defense spending first? We have a lot of unnecessary expenses that I would fully support cutting to trim that debt, but instead we've been ramping spending UP dramatically over the last year, mostly on non-military expenses. If we can show some real progress towards getting a handle on our domestic spending, then I'd be a lot more amenable to looking into how much military spending we feel we can afford. Right now we could abolish the entire military overnight and STILL have a larger deficit than any year before the current administration. That doesn't make me feel good about their spending priorities.

                          Comment


                          • #14
                            Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                            Originally posted by Kerostasis View Post
                            Allow me to rephrase. Social Security doesn't need to be cut specifically, it needs to be fundamentally reworked into a self-sustaining model. However, so long as that fundamental re-work is not done, Social Security will continue to bleed money and will eventually require cuts just to remain temporarily solvent.
                            Good grief, people don't know jack about SS:
                            Myth No. 1: There is no Social Security trust fund. You may have heard this assertion so often that you'll be surprised to learn that there really IS a Social Security trust fund that collects our payroll taxes and invests the surplus. It's called the Old-Age and Survivors Insurance and Disability Insurance Trust Funds.

                            What isn't in the trust fund is a big hoard of cash.

                            Three-quarters of the money that's collected in Social Security taxes goes right out the door again in the form of benefits to Social Security recipients. The surplus that isn't needed to pay benefits is loaned to the federal government to pay for other programs.

                            In return for this loan, the trust fund gets IOUs in the form of special-issue, interest-paying Treasury bonds. The interest isn't paid in cash, however; the Treasury issues the fund additional bonds for the interest amount. In 2006, the fund was credited with more than $102 billion in interest; the total value of the securities is about $2 trillion.

                            Critics often deride these bonds as "a bookkeeping entry" or a fiction, but they're real obligations of the U.S. government, said Steve Goss, Social Security's chief actuary. In the past, they've been cashed in when Social Security or its sister program, Medicare, temporarily ran low on funds. The last time was in the early 1980s.

                            "They're backed by the full faith and credit of the U.S. government," Goss said. "They're every bit as real . . . as any savings bond or Treasury bond any individual might hold in society."

                            The problem, of course, is that the government now owes the trust fund so much money -- and relies on its surplus so heavily -- that real problems will be created when it comes time to cash in those IOUs. Uncle Sam is going to need to find another source of income to replace the surplus (or cut spending, or borrow money from somewhere else), plus come up with cash to pay the bonds it's already issued.
                            and

                            Myth No. 4: Social Security will run out of money in 2041. Social Security will still be receiving payroll taxes from workers in 2041. What may have disappeared by then are the assets in the Social Security trust fund.

                            Even that isn't cast in stone, however. The Congressional Budget Office in June 2006 projected that the trust fund wouldn't dry up until five years later, in 2046. The CBO used different assumptions than those used by the Social Security Administration, projecting faster growth in worker earnings, higher interest rates and lower inflation.

                            Here's how the Social Security Administration projects the timeline:

                            * In 2017, Social Security will begin paying out more than it takes in. For the first time, it will have to use the interest being paid on the securities it holds in order to meet its obligations.

                            * In 2027, Social Security would have to start redeeming the securities themselves.

                            * By 2041, Social Security would have cashed in the last security, and the system would have enough revenue to pay out only 75% of promised benefits. That percentage would drop over time if Congress failed to act.
                            From here: http://articles.moneycentral.msn.com...ty.aspx?page=1

                            SS isn't bleeding money, Congress is not doing their part to return the funds just like every other government program is underfunded. If you note the ratio of pay in to out is in 2017 when they have to start using their interest from their surplus because SS is much better than even self sustaining. By 2027 when they actually have to hit up the securities the ratio of collection to payouts will have changed, the estimated number of workers vs retired may change as well as a change in the economy could increase the incoming funds.

                            Social Security is a self sustaining system, not a bleeding sore on the national budget. The government's use of the surplus is the real problem if they cannot manage to pay back the SS system.
                            |TG-6th|Snooggums

                            Just because everyone does something does not mean that it is right to do.

                            Comment


                            • #15
                              Re: Goldman Sachs, Henry Paulson, and "Lets Cut Social Security"

                              That article was written in 2006. Back then, we weren't expecting Social Security to run a deficit for another decade or two, but back then we weren't expecting a major recession either. Times have changed, and 2009 saw Social Security actually run a deficit. Yeah, we thought it wouldn't happen until 2017/2027, but we were wrong.

                              Link, in case you don't believe me about the 2009 deficit.

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