# "actuarially bankrupt" what does that mean exactly? **URL:** \ **Category:** Factual Questions\ **Created:** [August 5, 2015, 9:45pm UTC](https://boards.straightdope.com/t/actuarially-bankrupt-what-does-that-mean-exactly/727100 "2015-08-05T21:45:45Z")\ **Posts on this page:** 4\ **Page:** 3
**Author:** ![Habeed](https://avatars.discourse-cdn.com/v4/letter/h/a587f6/32.png) [@Habeed](https://boards.straightdope.com/u/Habeed)\ **Post date:** [August 6, 2015, 7:04pm UTC](https://boards.straightdope.com/t/actuarially-bankrupt-what-does-that-mean-exactly/727100/41 "2015-08-06T19:04:45Z")
> [@Lemur866](#): > > If we want to fund retirees, why not just tax the fatcat bankers and use the taxes to pay for current retirees? The national government has a few tricks up its sleeve that an individual retiree with a pension fund doesn’t have, such as the power to tax, the power to print money, the power to pass laws, and so on. Ultimately that’s what’s going to happen under the current system. The money is there. Right now, social security/medicare taxes, which are 15% of the gross, stop at 106k or so annual income. This makes them a regressive tax - they only tax the poor and middle class a significant amount. A proposal has been made to just remove that limit, so it’s 15% of income all the way up. This, apparently, is all it would take to make social security “actuarially solvent”. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [August 6, 2015, 8:15pm UTC](https://boards.straightdope.com/t/actuarially-bankrupt-what-does-that-mean-exactly/727100/42 "2015-08-06T20:15:58Z")
> [@md2000](#): > > So what happens when the government no longer runs deficits and does not have to borrow? (I say this while trying to keep a straight face) > > Essentially using the idea that the whole of the SS fund other than payouts is invested in government loans, means that the government will have to always make enough from taxes (give or take a small carry-over) to pay off the year’s social security obligations - either as that year’s contributions to the fund or as repayment of outstanding obligations coming due. > > So in this case, the “actuarial bankrupt” claim means that at some point, those two sources will not be enough and the government will have to kick in even more, from general tax revenue or borrowed from non-SS sources. All I was getting at is that in general, the non-marketable government securities are things rather similar to savings bonds, which effectively have no risk, but have little in the way of interest either. If they were to invest in say… the wider stock market, they’d be exposed to a bit more volatility, depending on how they invest, and they’d get a higher rate of return- probably drastically so. Plus, a side advantage might be that the government might get even more serious about accounting and financial shenanigans, if the bulk of the people’s SS funds were invested in the open market, and potentially exposed to crap like that. ---
**Author:** ![rbroome](https://avatars.discourse-cdn.com/v4/letter/r/838e76/32.png) [@rbroome](https://boards.straightdope.com/u/rbroome)\ **Post date:** [August 8, 2015, 3:15am UTC](https://boards.straightdope.com/t/actuarially-bankrupt-what-does-that-mean-exactly/727100/43 "2015-08-08T03:15:48Z")
I never did understand why the Federal government couldn’t have invested the money in actual, real investments. Why doesn’t it own a piece of a wide spread of successful companies and businesses, worldwide? 2.8 trillion would buy a lot of stock… Can you imagine the political firestorm that would have occurred in 2009 if this had been in place? The stock market briefly dropped 40% and investors panicked. If the US Government had announced that the SS trust fund had just dropped by 40%, there would have been a special election to unelect everyone in Washington. Which may not have been a bad idea, but try to imagine congress voting to create such a liability. People know that stocks fluctuate, but when they go down everyone feels bad. Politicians don’t like it when voters feel bad… Besides, the current system certainly makes it easier to sell all these Gov’t debt instruments we are creating. Why would the Government want to reduce the number of entities wanting (by law) to buy Government securities? As for the future, as other posters have pointed out, one way or the other (higher taxes or inflation) the Government will print the checks. Hopefully, there will be enough goods and services to absorb all those $. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [August 8, 2015, 4:51pm UTC](https://boards.straightdope.com/t/actuarially-bankrupt-what-does-that-mean-exactly/727100/44 "2015-08-08T16:51:33Z")
> [@rbroome](#): > > I never did understand why the Federal government couldn’t have invested the money in actual, real investments. Why doesn’t it own a piece of a wide spread of successful companies and businesses, worldwide? 2.8 trillion would buy a lot of stock… The goal wasn’t to invest the money. The goal was to spend the money. Here was this growing pile of money just sitting there. And Reagan was spending dough like there was no tomorrow. SDI, expanding the Navy, two new bomber systems, etc. It was a trick used to prevent the deficit from blowing up even further. (And it’s amazing how many fell for this trick.) Now we have to start using tax dollars to fund the losses. [Previous page](https://boards.straightdope.com/t/actuarially-bankrupt-what-does-that-mean-exactly/727100.md?page=2)