That social security is "going broke ....is, to put it as generously as possible, a claim that is dubious in the extreme. "Factually false" is more apt.Greenwald really has no clue. While he is very suspicious of many reports coming out of NYT, he is buying the CJ nonsense about SS as if Sheldon Adleson, after examining the numbers, would want in. The fact of the matter is that the Social Security trustees themselves report a more honest picture of the SS situation than CJ.
As the Pulitzer Prize-winning former New York Times economics reporter David Cay Johnston has repeatedly explained, this is the primary demonstrable myth being used by the DC class – which largely does not need entitlements – to deceive ordinary Americans into believing that they must "sacrifice" the pittances on which they are now living:
"Which federal program took in more than it spent last year, added $95 billion to its surplus and lifted 20 million Americans of all ages out of poverty?
"Why, social security, of course, which ended 2011 with a $2.7 trillion surplus.
"That surplus is almost twice the $1.4 trillion collected in personal and corporate income taxes last year. And it is projected to go on growing until 2021, the year the youngest Baby Boomers turn 67 and qualify for full old-age benefits.
"So why all the talk about social security 'going broke?' … The reason is that the people who want to kill social security have for years worked hard to persuade the young that the social security taxes they pay to support today's gray hairs will do nothing for them when their own hair turns gray.
"That narrative has become the conventional wisdom because it is easily reduced to a headline or sound bite. The facts, which require more nuance and detail, show that, with a few fixes, Social Security can be safe for as long as we want."
This is from the Social Security Board of Trustees summary of the 2012 annual report:
Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period.What this means is that Social Security incoming tax cash flow is less than outflow to SS recipients. The difference that makes SS cash flow still positive (on the books) is interest earned from the Treasury. This is a problem, since not only does the Treasury not have on hand the money to pay the interest earned but it does not have on hand the $2.7 trillion surplus that CJ touts. Got that?
The entire surplus is a multi-trillion IOU from the Treasury. The Treasury does not have the money and will have to go into the markets to raise it, in addition to the money it needs to cover the on the books budget deficit.
Thus, the minute SS had to start redeeming some of its IOUs from the Treasury, and that started when SS tax income came in at less than outflow to recipients in 2010, SS was forced to turn to the Treasury for money.
The problem becomes even greater when the amount of IOUs the SS has to redeem from Treasury grows to a significant size. When might that happen? SS tells us (my bold):
The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply... and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.Thus the real problem, as admitted by SS, starts in roughly 6 years. At that point, the payouts will, as SS puts it, "rise steeply," which means SS will have to cash in even more IOUs from the Treasury. And I repeat, this is money which the Treasury does not have and which the Treasury will have to raise in the markets. In other words, the entire surplus is a myth. There is no pile of cash that SS has sitting around. The Treasury has already started borrowing money to make up SS's non-interest short-fall and the short-fall just gets worse as time goes on.
Bottom line, understanding the SS problem is simple math and balance sheet accounting. Lefties, I have noticed, have problems with math and balance sheets. Throw in a few equations and a couple of balance sheets and they will have no understanding of what is going on. Greenwald's quoting of CJ's claim of an SS surplus of $2.7 trillion proves my point. Greenwald doesn't have a clue. It makes me want to contact him and sell him one of my fog making machines that I keep in San Francisco. He should see the balance sheet and profit projections I have that go along with the machines.
(ht Stephen Davis)