Where's the Trust Fund?
"I cannot guarantee that those [social security] checks go out on August 3rd if we haven't resolved this issue, because there simply may not be the money in the coffers to do it." President Barack Obama, July 12, 2011.
Social Security was sold by yesterday's compassionate liberals as a secure, fair way for workers to save for retirement. The money deducted each week from millions of paychecks across the land is supposedly deposited in a trust fund--remember Al Gore's lockbox? Conservatives are ridiculed whenever they point out that the trust fund contains only IOUs from the Treasury, not money; that social security is a Ponzi scheme paying today's retirees with today's payroll taxes; and that property rights to privatized accounts would offer seniors real security from the whims of political policy changes.
President Obama knows that there will be ample funds available in the federal treasury on August 3rd to pay interest on our sovereign debt, Social Security and Medicare payments, military salaries and veterans' benefits. However, he also knows that there won't be enough cash to fully fund his massive expansion of statist priorities such as transforming the Environmental Protection Agency into a national industrial planning board.
So Obama issues a threat: Unless Republicans sign on to higher taxes and continued out-of-control spending, which every actuarial authority describes as "unsustainable," our "progressive" president will first cut off those made dependent upon government-run retirement "insurance" in order to score political points against the opposition.
The president is threatening to punish the proles who swept the liberals out of power in the House of Representatives last November.
Imagine how much more secure you will feel about your family's health after Obamacare is fully in place after 2014.
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May '10
Re: Where's the Trust Fund?
What I wonder is why have so many people chosen to be ignorant of this? Have you ever tried to explain how Social Security works to someone?
So many people are convinced that their Social Security Number is an account number, not an identification number. That there is an actual account somewhere in their name where their "contribution" is safely stored against the day they will begin to draw on it.
They don't know, and don't want to know the truth.
Aug '10
Re: Where's the Trust Fund?
This is devastating proof of what liars the Democrats are. And of the venality, perfidy, and rot of the Lamestream Media that won't report it.
Jan '11
Re: Where's the Trust Fund?
Two comments:
Jun '10
Re: Where's the Trust Fund?
Back in 2005 when GW attempted to address the unsustainable, yet untouchable "third rail" by offering an eventual change to actual individual ownership and privatization of SS, I had a discussion with my very smart and leftist oriented sister. Her point was simple. Ordinary rubes knew nothing about managing money, therefore could not be trusted to look after their own accounts, only the government could guarantee the security of the little guy. I pointed out that as smart as she was, she really knew nothing about markets and stocks and used brokers (professionals) to manage her money. Why should she be allowed this freedom with her excess wealth while the little guy, whose only savings are social security moneys, must rely on the government for management? I called her an elitist and the conversation ended. This is an excellent opportunity, with Obama's pronouncement, to harp on the poor management ability of government. We have to borrow money from the Chinese to pay seniors the SS dividends that were supposedly tucked away in their "lockbox" but in reality were spent by the government years ago. In the private world, our Congressmen would share a facility with Bernie Madoff.
Feb '11
Re: Where's the Trust Fund?
The way the SS trust fund operates is somewhat like a corporate pension fund which chose to invest ALL of its assets in the debt of the company for which its beneficiaries work/worked. Except it's actually even worse than that....the IOUs which the trust fund "owns" are special *non-marketable* Treasury securities. If they were *ordinary* treasury securities, the trustees would be able to sell them in the open market at discretion and hence raise funds to meet the trust's obligations.
Jun '11
Re: Where's the Trust Fund?
If the situation is so dire, why is the 10 year note yielding 2.9%?
Markets discount the future and at this point, Obama's scare tactics set aside, the government paper markets look pretty quiet.
I trust traders before I trust the One.
Apr '11
Re: Where's the Trust Fund?
I was dismayed to hear Bachmann, who I like, repeat the fantasy of a trust fund. Facepalm.
Jun '11
Re: Where's the Trust Fund?
Great point, David. If someone in the real world pulled that type of stuff, it would be a violation of their fiduciary responsibility and they would do some soft time in a federal pen.
Talk about reckless misuse of funds.
Jul '11
Re: Where's the Trust Fund?
I'm still wondering why there isn't a line of politicians out the door, waiting to speak in front of a microphone, to tell voters that the dollars they paid into Social Security are completely gone, spent, vanished right into the air, and now those same politicians who helped perpetrate this fraud continue to do so, but hide in plain sight behind a debt elevator, er, "ceiling".
The only reason no on is explaining what's going on in plain English to the people is that all the people responsible for it are mostly still in office, and want to stay there. Again, the GOP would be well served with a couple of very straightforward ads talking about where your dollars went - and then the public might not be so willing to let Congress spend like maniacs, knowing that some of those dollars they're spending are dollars that were paid into Social Security.
All of this is an argument for a flat or simple progressive tax, remove all deductions, and disallow the annual financial mis-management in DC, which only exists to support re-election bids; it does not exist in the interest of the people.
May '10
Re: Where's the Trust Fund?
For an institution, the press, that has constitutional protection, their intentional failure to vet this arrogant incompetent should guarantee some of these fools jail time. As for the president, you can give him a new name...the Pander Bear.
Edited on July 17, 2011 at 8:58pmJul '10
Re: Where's the Trust Fund?
From mere thug to despicable thug wasn't much of a stretch for Obama. In other news, I saw the senior senator from Arkansas on local TV the other day. Pryor is a member of yet another of our political dynasties. Are we headed toward the Middle Eastern style of government where each state will be headed by a strong man? I would have thought the Kennedys proved that doesn't work. The politics become corrupted and the family sinks into depravity. Pryor looked nervous and even scared talking about the debt crisis. The Democrats have gotten used to the Republicans throwing in the towel in the later rounds; the whole system in the capitol is designed around that. With the Tea Party stiffening the spine of the GOP and a malignant narcissist accustomed to getting his way in the White House, Pryor and others might see the abyss approaching.
Jan '11
Re: Where's the Trust Fund?
Social Security is a collective gamble that workers will contribute more, over their career, than everyone will take out. That was true when workers worked for 45 years, and then died soon after. The government takes any of their unused money and lays it off to pay for others' disability, retirement, or other disasters.
Why would a healthy worker agree to pay extra money that he didn’t actually use? It’s the premise of all insurance: there’s a chance that even the healthiest worker may face a disaster and need other people’s help. Like all insurance, you’re paying extra for the security.
Because only half the population pays taxes, workers live longer after retirement, and health disasters are more expensive, the percentages driving the gamble are narrowing. It’s no longer a good gamble.
Democrats scare voters by saying that the GOP wants to turn the “security” of a government program into a risky investment. No. Social Security isn’t an investment (now), but it’s still a gamble – and a bad one.
Re: Where's the Trust Fund?
KC Mulville: Two comments: · Jul 17 at 11:18am
KC, great question. I'm wondering also about the lack of the obvious follow-up: "But Mr. President, the government will take in nearly $200 billion in July. Isn't there enough cash to avoid a default on US debt and send out checks to seniors even if the debt ceiling remains where it is.?"
Jun '10
Re: Where's the Trust Fund?
Obama got elected with majorities in both houses of Congress. The dream of a fully socialist America seemed suddenly within reach. So like a gambler who thinks he holds all the cards, the Democrats put all their chips on the table. But like thieves who suddenly find the vault door left open, they tried to carry off more loot than they could carry. The "stimulus" plan degenerated into the greatest heist in human history. A rigorous plan to ensure statism now and forever might have worked, but the Democrats became arrogant, greedy, and drunk on power. The Tea Party reversed the momemtum in short order and began the rollback in 2010. Obama is now fighting a rearguard action to hold his gains, but he's losing. Expect him to do and say anything no matter how outrageous from here to election day.
Edited on July 17, 2011 at 9:47pmMay '10
Re: Where's the Trust Fund?
I wonder why there seems to always be a lack of obvious follow-up [Jake Tapper was doin' it right with Jay Carney last week, for once]
I hear that all the time, even when people are talking about themselves.
BTW the actual Treasury debt certificates in which the "trust fund" is invested are in 3-ring binders in file cabinet in West Virginia.
Feel better?
Edited on July 17, 2011 at 10:24pmJun '11
Re: Where's the Trust Fund?
michael kelley
Great point, David. If someone in the real world pulled that type of stuff, it would be a violation of their fiduciary responsibility and they would do some soft time in a federal pen.
Talk about reckless misuse of funds. · Jul 17 at 11:45am
Corporations have to reasonably fund their pensions. Uncle Sam funds the Social Security pension fund worse than Madoff.
David, the fact is the Social Security Fund doesn't function. Its a stack of IOUs. It effectively doesn't exist.
May '10
Re: Where's the Trust Fund?
Maybe because the Fed is slurping up about 80% of the Treasuries being issued? What would the rate be if all those bonds actually had to have a real buyer....
Jan '11
Re: Where's the Trust Fund?
I didn't say it (Bill Whittle did), but everyone here knows that I believe it:
“Just because someone is Democrat doesn’t mean that everything he says is suspect, but that’s the way to bet.”
Stop taking Democrats' arguments seriously. You do damage to your own perception of the truth.
Apr '11
Re: Where's the Trust Fund?
On this very same topic, I've been sharing this with my family and friends in social media. The creator is Don Boudreaux from GMU..http://www.xtranormal.com/watch/11226537/government-accounting
For whatever reason, these points seem more palatable coming from crudely animated web videos than from me.
Sep '10
Re: Where's the Trust Fund?
S.S. was a pay as you go Ponzi scheme until a certain Senator was tasked with coming up with a plan to “save” it. He proposed a scheme that would collect more than the amount needed, the extra money, he said, would be put into a separate account which would eventually be used for future retirees. This account has been referred to as a “lock box”. Besides resulting in the largest jobs killing tax increase ever, this scheme defrauded US workers in two ways, it allowed the federal government to mask the real size of the deficits, resulting in more spending and bigger government, and the bonds issued by the treasury carried a lower rate than normal treasury bonds. The name of the Senator was Bod Dole and he went around the country bragging about his accomplishment when he ran for President on the Republican ticket. Seems to me the Dems came up with horrible idea and both the Dems and Republicans managed to make it worse.