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The problem is the Treasury is redeeming then now and the money has to be borrowed because the gov't is broke.
Each time they borrow the U.S. debt INCREASES.
We are on the edge where the revenues are not enough to cover our expenditures.
Thank you, quick. I can see from your response that you're the first poster on this thread who actually understands the real problem.
The fact that the US treasury bonds SS holds are special interest doesn't concern me at all. SS used to buy regular treasury bonds, but it worked out a deal where it gets bonds that can be redeemed any time at a lower rate. Big whoop -- basically, it's a treasury bond. It's backed the exactly the same way regular treasury bonds are.
However, you put your thumb exactly on the real problem. It's that the US government will have to borrow to pay some future SS benefits.
So, the American workers -- and please don't take that as a class term .. all American workers, rich, poor, middle, etc. -- currently hold 2.5 trillion in US treasury bonds. Do you think we should forfeit our right to collect because of the debt problem? We've paid into this for years. (I'm only 35, but I have 20 years of payroll taxes contributions, plus my employers matching payroll contributions.)
That's what certain politicians are really trying to convince us to do. They're not putting it like that, but they're basically saying -- what assets? those worthlesss things? they were raided years ago!!! just give them up ... in fact, hell, we'll give you a few pennies on the dollar for those worthless things.
Nope. No dice. I'm not a sucker. The US government should try to convince China its treasury holdings are a "ponzi scheme." It might have better luck. I recognize the value of the assets I hold. I'm not giving mine up for less than they are worth. Are you?
Birch, please back up what you're saying with a source. There is a trust fund of over $2.5 trillion dollars of US treasury bonds. You can argue that these are "worthless" and explain your reasoning, but you're not going to find anyone with even a modicum of real knowledge on this topic who says it doesn't exist.
If there was a 2.5 trillion dollar fund that pays SS checks then why did the Dems say the government might not be able to pay SS benefits to the elderly if we did not raise the debt ceiling?
If there was a 2.5 trillion dollar fund that pays SS checks then why did the Dems say the government might not be able to pay SS benefits to the elderly if we did not raise the debt ceiling?
For the past two years, SS has not taken in enough revenue through payroll taxes to cover benefit payouts. Please pause here for a second. For 73 years, SS ran a surplus. It took in more money than it paid out. Think about that. 73 years is a long time. For the past 2 years, it has run a deficeit (due to the recession, temporary demographic shift and Obama's misguided payroll tax cut.)
Anyhow, at the moment, and for awhile, SS is going to need to redeem some of the $2.5 trillion in US treasury bonds it holds to cover benefit payouts.
As quick has correctly pointed out, the US government needs to borrow when these bonds are redeemed. The US government is on the hook for $2.5 trillion worth spread over the course of 26 years. The Bush tax cuts take about $1 trillion a decade out of our revenue intake, to give you some idea to compare. (Please realize I'm not making a partisan statement here .. I'm just pointing out how the US budget works.)
Basically, what's going on here is that some politicians are trying to convince you to forfeit your money to pay for the debt. Are you willing to do that? When words like "ponzi scheme", "slush fund" "IOU" and "raid" are being used they are not accurate and the people using them know that.
They are simply trying to balance the budget by stealing whatever payroll contributions you've made to SS. Are you willing to let them do that? I'm not.
it is a trust fund as written i the law that createdit. certainly it is a specail one in that it cre4ats trustee;that is the only one who it can be invested in;a trusteee who detewrmines the interest rate often below noraml interest rates. But like nayhting their is still moeny invested its a fund. But its becomeing more a ponzi skeem as one is paid put of thecontributions of another as the fund does not meet ralirty of investing. if that were true then i the 90s; the fund would have grown quickly on increased interest while less so since.it appears more and more that it was created as a can lose skeem for more mney for government to borrow and spend.But this is the new trust fund called SS that voters bought and their representative put into law and we have to live with what the trustees reproted i that a set return is not gaurnateed at all. I wander if people see governamnt i thsi insatnce as the same as tose who promoted bad mortage loans?Its really the same except it more accdepted in politcians it seems.If this were wall street or private compoan y the madden crowd would be ready to ahng them.
it is a trust fund as written i the law that createdit. certainly it is a specail one in that it cre4ats trustee;that is the only one who it can be invested in;a trusteee who detewrmines the interest rate often below noraml interest rates. But like nayhting their is still moeny invested its a fund. But its becomeing more a ponzi skeem as one is paid put of thecontributions of another as the fund does not meet ralirty of investing. if that were true then i the 90s; the fund would have grown quickly on increased interest while less so since.it appears more and more that it was created as a can lose skeem for more mney for governamnt to borrow and spend.
Thank you for taking the time to comment, dave. I can see from your reply that you're another one who understands what's going on here. Even though you and I probably disagree on solutions, we both at least know the score.
You're right, and Bush was right, if the money in the SS trust fund was invested in the market it would have had a great return in the 90s -- much better than its low (but again, very, very safe) current return.
If politicians were arguing that the SS trust fund should be invested in the market or something, I wouldn't be as worried as I am now. Right now, some of them are trying to convince Americans that it doesn't exist. Judging by the results of this poll, I can see it's working on some. It saddens me to see so many of my fellow Americans being suckers.
I feel like we're being softened up for the kill. Don't treat me like a fool and tell me that a $2.5 trillion dollar trust fund that I have a stake in is not there or was stolen years ago. Not true. Peddle that s*** to someone else. I'm not a sucker.
Tell me that the fund can be managed better? Pitch some sort of investment scheme that will get a better rate of return? I might be interested. I think the US government is no shape to borrown $2.5 trillion from foreign investors right now though -- which is what it would have to do if we wanted to invest the trust fund in the stock market.
Do you believe the over $2.5 trillion dollars in US treasury bonds held in the Social Security trust fund are worthless? If so, do you believe that all US treasury bonds are worthless?
(If that's the case, please send any and every US treasury bond you have to me. I will even give you some money for these worthless "IOUs." How does half of the face value sound to you? Pretty fair, right? After all, an asset that is only backed by the full faith of the US government, which is generally recognized as the safest investment in the world, is just trash, right?)
I think it is fairly common knowledge Social Security is bankrupt. There is no "trust fund" in the true sense of the word. Congress began allocating Social Security funds to other programs over 50 years ago. By 30 years ago the fund was bankrupt and Congress "funds" Social Security yearly with current revenues. As we are in debt and expenses (spending) excede revenues with the difference made up by borrowing which is passed on to the taxpayer to repay with interest, Social Security is still effectively bankrupt.
US Bonds are still backed by confidence in our government but this is also at risk as illustrated by the recent reduction in the US Credit Rating. I'm not an economist but I have watched (as a lurker) on this forum and others as posters who claim to be economists explain why our debt doesn't matter and how we are not at financial risk. I admit I haven't been able to follow their arguments to the point of easing my concerns.
A common thread I have noted in their discussions is the idea that our abundant wealth in natural resources guarantee's our solvency. This argument reminds me of someone who has borrowed against their home and begins defaulting on the mortgage saying it doesn't matter because we still have property in the house to sell. Yes, we may have resources or property within our national house to sell, but to be in the position of auctioning our resources to offset debt is a sign of extreme financial distress, not financial stability.
It also concerns me that there appears to be a complaceny concerning the idea that the wealth of this nation belongs to the government to use as it will. My understanding was the wealth of this nation belongs to the people and the governments' role is that of a fund manager who works at our request, not a lein holder who tells us our options after selling our debt. The government has failed in it's responsibility as a fund manager and is dodging responsibility for their failure by selling our debt to another lein holder. We need to fire them and hire another more competent manager.
As for our natural resources, great tracts of our land have been set aside as U.N. resources under terms like Biosphere Reserve and World Heritage Site. This was done under direction of the Executive Branch of our government with little or no supervision by Congress - who is supposed to represent our interests. Five of the top seven gold producing mines in the United States are owned by foreign interests. It occurs to me these gold reserves should be declared a national resource belonging to the people of the United States, not a federal asset to be "sold" to foreign interests.
The powers of the executive branch have steadily expanded for the past 100 years accelerating dramatically in the 1960's, again in the 1980's and once again after 9/11. Other than a brief period of time between President Ford and President Reagan our country has been in a perpetual state of emergency which allows some of the extended powers the Executive Branch of government exercises often I believe to our detriment.
We need to return our government and specifically the executive branch to the rule of law. This may be done by acknowledging the legal validity of the Constitution and requiring the president to honor the oath of office legally required for acceptance of this office. Of course to make this happen we need an advocate in the executive office who respects the limitations of the office and the rights of the American people.
For the past two years, SS has not taken in enough revenue through payroll taxes to cover benefit payouts. Please pause here for a second. For 73 years, SS ran a surplus. It took in more money than it paid out. Think about that. 73 years is a long time. For the past 2 years, it has run a deficeit (due to the recession, temporary demographic shift and Obama's misguided payroll tax cut.)
Anyhow, at the moment, and for awhile, SS is going to need to redeem some of the $2.5 trillion in US treasury bonds it holds to cover benefit payouts.
As quick has correctly pointed out, the US government needs to borrow when these bonds are redeemed. The US government is on the hook for $2.5 trillion worth spread over the course of 26 years. The Bush tax cuts take about $1 trillion a decade out of our revenue intake, to give you some idea to compare. (Please realize I'm not making a partisan statement here .. I'm just pointing out how the US budget works.)
Basically, what's going on here is that some politicians are trying to convince you to forfeit your money to pay for the debt. Are you willing to do that? When words like "ponzi scheme", "slush fund" "IOU" and "raid" are being used they are not accurate and the people using them know that.
They are simply trying to balance the budget by stealing whatever payroll contributions you've made to SS. Are you willing to let them do that? I'm not.
so what you are saying then is the Dem's lied to us about old people not getting their check during the fight over the debt ceiling. For if there was a fund why was anyone worried about the elderly getting their SS checks?
This is a good post, ksh, and it shows that you're trying to honestly understand the issues the best you can. Like you, I'm not a economist, and I'm not a politician.
I too shared in the "common knowledge" that Social Security is bankrupt. Then I researched it. That's not true at all. You can't have $2.5 trillion dollars in assets, be able to pay your debts in full until 2037 and then at a 77 percent rate thereafter and be bankrupt.
The real problem critics of Social Security have is that after 73 years of running a surplus, all of which has been invested in US treasury bonds since 1983, SS now has to redeem some of its bonds to make good on its obligations. It's not a bank buster by any means. It needs to redeem 2.5 trillion over the course of 2.5 decades. That is extremely manageable.
However, some would like to reduce the debt by convincing Americans that the $2.5 trillion dollar asset they hold is worthless. LOL. Peddle that s*** somewhere else. Try to convince China that the $2 trillion in US bonds they hold are worthless. You might have better luck. I'm not stupid enough to fall for that.
Quote:
Originally Posted by kshRox01
I think it is fairly common knowledge Social Security is bankrupt. There is no "trust fund" in the true sense of the word. Congress began allocating Social Security funds to other programs over 50 years ago. By 30 years ago the fund was bankrupt and Congress "funds" Social Security yearly with current revenues. As we are in debt and expenses (spending) excede revenues with the difference made up by borrowing which is passed on to the taxpayer to repay with interest, Social Security is still effectively bankrupt.
US Bonds are still backed by confidence in our government but this is also at risk as illustrated by the recent reduction in the US Credit Rating. I'm not an economist but I have watched (as a lurker) on this forum and others as posters who claim to be economists explain why our debt doesn't matter and how we are not at financial risk. I admit I haven't been able to follow their arguments to the point of easing my concerns.
A common thread I have noted in their discussions is the idea that our abundant wealth in natural resources guarantee's our solvency. This argument reminds me of someone who has borrowed against their home and begins defaulting on the mortgage saying it doesn't matter because we still have property in the house to sell. Yes, we may have resources or property within our national house to sell, but to be in the position of auctioning our resources to offset debt is a sign of extreme financial distress, not financial stability.
It also concerns me that there appears to be a complaceny concerning the idea that the wealth of this nation belongs to the government to use as it will. My understanding was the wealth of this nation belongs to the people and the governments' role is that of a fund manager who works at our request, not a lein holder who tells us our options after selling our debt. The government has failed in it's responsibility as a fund manager and is dodging responsibility for their failure by selling our debt to another lein holder. We need to fire them and hire another more competent manager.
As for our natural resources, great tracts of our land have been set aside as U.N. resources under terms like Biosphere Reserve and World Heritage Site. This was done under direction of the Executive Branch of our government with little or no supervision by Congress - who is supposed to represent our interests. Five of the top seven gold producing mines in the United States are owned by foreign interests. It occurs to me these gold reserves should be declared a national resource belonging to the people of the United States, not a federal asset to be "sold" to foreign interests.
The powers of the executive branch have steadily expanded for the past 100 years accelerating dramatically in the 1960's, again in the 1980's and once again after 9/11. Other than a brief period of time between President Ford and President Reagan our country has been in a perpetual state of emergency which allows some of the extended powers the Executive Branch of government exercises often I believe to our detriment.
We need to return our government and specifically the executive branch to the rule of law. This may be done by acknowledging the legal validity of the Constitution and requiring the president to honor the oath of office legally required for acceptance of this office. Of course to make this happen we need an advocate in the executive office who respects the limitations of the office and the rights of the American people.
I'm not a sucker either. The fed better tread lightly otherwise the masses will have had enough of being used for ventures that benefit the few. That nonsense is about to end and it's not going to be pretty.
so what you are saying then is the Dem's lied to us about old people not getting their check during the fight over the debt ceiling. For if there was a fund why was anyone worried about the elderly getting their SS checks?
I can see you're more interested in playing political football that understanding how to protect what is probably the most important financial asset in your portfolio.
Have you paid payroll taxes? If so, for how many years?
Please read what I'm writing carefully, wjwet. This has a direct bearing on your pocket book. You need to understand what politicians are trying to do here if you want to be able to protect your money.
The "Dems" said that the elderly might not get their SS checks because in order to meet its obligations, SS had to cash in a portion of the $2.5 trillion in bonds it holds. The US government has to meet this obligation. The only way it can at the moment is to borrow.
Are you willing to forfiet your portion of a $2.5 trillion dollar asset to take a bite out of the $14 trillion dollar debt? That's the real question here. If you are, you're more altruistic than I am.
Personally, l plan on forcing the US government to pay up on the treasury bonds my payroll taxes purchased over the past 30 years. To balance its books, the US government is going to have to look elsewhere. I suggest trying to convince China its bonds are a "ponzi scheme."
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