# Social Security to be in the red by the end of 2016. **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [July 28, 2014, 5:49pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260 "2014-07-28T17:49:50Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [July 28, 2014, 5:49pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/1 "2014-07-28T17:49:50Z")
Ran across this story about the [Treasury’s report on funding for Medicare and Social Security.](http://www.foxbusiness.com/personal-finance/2014/07/28/social-security-retirement-disability-trusts-broadly-funded-until-2033) Something about this report strikes me as odd. They start out by reporting that Medicare is fully funded for about the next 20 years. OK, fine. Then they report that Social Security is fully funded only until late 2016. Excuse me? That’s only 2 years from now! By the time we elect our next president, Social Security will no longer be able to pay 100% of its obligations. Why the heck isn’t that the headline item, and Medicare bit the afterthought? Is this some kind of half-assed attempt to bury a disturbing new item beneath a (somewhat) positive one? :dubious: ---
**Author:** ![running\_coach](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/running_coach/32/15836_2.png) [@running\_coach](https://boards.straightdope.com/u/running_coach)\ **Post date:** [July 28, 2014, 6:00pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/2 "2014-07-28T18:00:39Z")
Sure would be nice if the article actually identified or linked to the report it’s quoting. ---
**Author:** ![running\_coach](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/running_coach/32/15836_2.png) [@running\_coach](https://boards.straightdope.com/u/running_coach)\ **Post date:** [July 28, 2014, 6:03pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/3 "2014-07-28T18:03:46Z")
[Found it.](http://www.ssa.gov/oact/trsum/) ---
**Author:** ![Marley23](https://avatars.discourse-cdn.com/v4/letter/m/45deac/32.png) [@Marley23](https://boards.straightdope.com/u/Marley23)\ **Post date:** [July 28, 2014, 6:11pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/4 "2014-07-28T18:11:07Z")
[This applies to the disability fund, not Social Security as a whole.](http://www.ssa.gov/oact/TRSUM/index.html) The disability fund is far smaller than the old age and survivors insurance fund. [According to the Wall Street Journal, there’s a fairly easy fix for this and it’s been used in the past](http://online.wsj.com/articles/medicare-social-security-headed-in-different-directions-1406564712): Congress can just move some money from the retiree fund into the disability fund. That would leave both funds with enough money to operate into the 2030s. ---
**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:** [July 28, 2014, 9:07pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/5 "2014-07-28T21:07:47Z")
> [@Marley23](#): > > Congress can just move some money from the retiree fund into the disability fund. That would leave both funds with enough money to operate into the 2030s. There is no retiree fund any more. It’s all been spent. To make up the funds that were taken out, Congress will have to raise taxes or cut benefits. We got a little breathing room thanks to older folk retiring later due to the Great Recession. But that’s basically over now. The 2030s date is all the work of a simple accounting con. (I’m surprised such a low year was cited, most people invent years like 2040 or 2050.) ---
**Author:** ![Marley23](https://avatars.discourse-cdn.com/v4/letter/m/45deac/32.png) [@Marley23](https://boards.straightdope.com/u/Marley23)\ **Post date:** [July 28, 2014, 9:15pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/6 "2014-07-28T21:15:40Z")
> [@ftg](#): > > There is no retiree fund any more. It’s all been spent. To make up the funds that were taken out, Congress will have to raise taxes or cut benefits. We got a little breathing room thanks to older folk retiring later due to the Great Recession. But that’s basically over now. If you follow that link, you’ll see the report says the OASI had $2.6 trillion in reserves at the end of 2012. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [July 29, 2014, 1:01pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/7 "2014-07-29T13:01:36Z")
> [@Marley23](#): > > [This applies to the disability fund, not Social Security as a whole.](http://www.ssa.gov/oact/TRSUM/index.html) The disability fund is far smaller than the old age and survivors insurance fund. [According to the Wall Street Journal, there’s a fairly easy fix for this and it’s been used in the past](http://online.wsj.com/articles/medicare-social-security-headed-in-different-directions-1406564712): Congress can just move some money from the retiree fund into the disability fund. That would leave both funds with enough money to operate into the 2030s. Ah, I didn’t realize that it was the Social Security _Disability_ fund, and not Social Security in general. I couldn’t figure out why Social Security running out of money in the next 2 years wasn’t a huge headlining news story. Then again, I know people who are on disability. This is probably a huge headlining news story to them. > [@ftg](#): > > There is no retiree fund any more. It’s all been spent. To make up the funds that were taken out, Congress will have to raise taxes or cut benefits. We got a little breathing room thanks to older folk retiring later due to the Great Recession. But that’s basically over now. > > The 2030s date is all the work of a simple accounting con. (I’m surprised such a low year was cited, most people invent years like 2040 or 2050.) I’m aware of this. I’ve long suspected that by time I reach retirement age, “retirement” will be something only the wealthy can afford to do. > [@Marley23](#): > > If you follow that link, you’ll see the report says the OASI had $2.6 trillion in reserves at the end of 2012. I believe that figure counts the government IOU’s as if they were real money. No way in Hell does the Social Security Administration have $2.6 trillion sitting in a bank account somewhere. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 29, 2014, 2:52pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/8 "2014-07-29T14:52:07Z")
> [@Marley23](#): > > If you follow that link, you’ll see the report says the OASI had $2.6 trillion in reserves at the end of 2012. OASI is a debt, not a reserve. Regards, Shodan ---
**Author:** ![Kiros](https://avatars.discourse-cdn.com/v4/letter/k/439d5e/32.png) [@Kiros](https://boards.straightdope.com/u/Kiros)\ **Post date:** [July 29, 2014, 3:33pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/9 "2014-07-29T15:33:04Z")
> [@Shodan](#): > > OASI is a debt, not a reserve. > > Regards, > Shodan I’m probably asking for pain by replying, but it’s a debt to the government budget; it’s a reserve to the Social Security program. There’s more than enough _actually_ wrong with Social Security that we don’t have to be disingenuous about the accounting. I mean, I’m certainly not counting on it in any meaningful way for my retirement in 30+ years. But if I want to get mad that Social Security is effectively buying government bonds, the anger would be more appropriately directed towards the federal budget doing all that borrowing. We don’t need to treat Social Security different than we would anyone else holding $2.6 trillion in treasuries just because we hates it. If BoA or Warren Buffet or China had that amount of U.S. govt debt, we’d pretty much say that they had $2.6 trillion in a bank account somewhere. (I also feel like we’re floating away from MPSIMS here…) ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [July 29, 2014, 3:38pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/10 "2014-07-29T15:38:03Z")
> [@Diceman](#): > > I believe that figure counts the government IOU’s as if they were real money. Or as other people call them, “United States Treasury Bonds”. Known in the financial world as the zero on the scale of investment riskiness. [QUOTE=Diceman] No way in Hell does the Social Security Administration have $2.6 trillion sitting in a bank account somewhere. [/QUOTE] Which would only be as secure as the bank that account was in. After all, having $2.6 trillion in a bank account doesn’t mean that the bank has $2.6 trillion in cash sitting in its vault waiting for you – the bank has “spent” the money as well, and probably on riskier investments than US treasuries. ---
**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:** [July 29, 2014, 4:16pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/11 "2014-07-29T16:16:58Z")
> [@leahcim](#): > > Or as other people call them, “United States Treasury Bonds”. Known in the financial world as the zero on the scale of investment riskiness. Please, please note: These are IOUs from an entity to the _same_ entity. These are _always_ worthless. Always. No one, not you, me, a company or a government can make an IOU to itself have any value. Note: It cannot just be an asset! It is _both_ and asset and a debt. Ergo, it cancels itself out. That makes it an accounting con and nothing more. You cannot consider just one side of the equation. You have to consider both. The second you do that you will realize the scam that’s been pulled. ---
**Author:** ![Marley23](https://avatars.discourse-cdn.com/v4/letter/m/45deac/32.png) [@Marley23](https://boards.straightdope.com/u/Marley23)\ **Post date:** [July 29, 2014, 4:32pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/12 "2014-07-29T16:32:53Z")
So that didn’t pan out at all. As long as there’s an accounting fix the fund should be fine into the next decade. That doesn’t mean nothing needs to be done over the long term, but still. ---
**Author:** ![buddy431](https://avatars.discourse-cdn.com/v4/letter/b/6a8cbe/32.png) [@buddy431](https://boards.straightdope.com/u/buddy431)\ **Post date:** [July 29, 2014, 4:33pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/13 "2014-07-29T16:33:32Z")
> [@ftg](#): > > Please, please note: These are IOUs from an entity to the _same_ entity. These are _always_ worthless. Always. > > No one, not you, me, a company or a government can make an IOU to itself have any value. > > Note: It cannot just be an asset! It is _both_ and asset and a debt. Ergo, it cancels itself out. That makes it an accounting con and nothing more. > > You cannot consider just one side of the equation. You have to consider both. The second you do that you will realize the scam that’s been pulled. So what, do you think that the government is going to continue to pay all of its treasury bonds except the ones held by the social security administration? Or, more likely, they’ll do what they always have: issue more new bonds to cover their existing obligations? Where would you rather they put the money? The stock market? A bank (insured up to $250,000 by the federal government!)? Some other country’s bonds? I agree that social security is going to have problems in the medium to long term, and that the deficit is an issue that needs to be dealt with, but this is just a disingenuous argument. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [July 29, 2014, 4:33pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/14 "2014-07-29T16:33:53Z")
> [@ftg](#): > > Please, please note: These are IOUs from an entity to the _same_ entity. These are _always_ worthless. Always. > > No one, not you, me, a company or a government can make an IOU to itself have any value. > > Note: It cannot just be an asset! It is _both_ and asset and a debt. Ergo, it cancels itself out. That makes it an accounting con and nothing more. > > You cannot consider just one side of the equation. You have to consider both. The second you do that you will realize the scam that’s been pulled. To put it another way, the fact that the accounting con was pulled off by the US Treasury doesn’t mean it wasn’t a con. In the end, the government is going to have to come up with an almost-unimaginably huge pile of money if Social Security is actually going to meet its obligations. More likely (far, far more likely) is that Social Security recipients will only receive a fraction of what they were promised. ---
**Author:** ![DingoelGringo](https://avatars.discourse-cdn.com/v4/letter/d/9d8465/32.png) [@DingoelGringo](https://boards.straightdope.com/u/DingoelGringo)\ **Post date:** [July 29, 2014, 4:39pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/15 "2014-07-29T16:39:43Z")
> [@Kiros](#): > > I’m probably asking for pain by replying, but it’s a debt to the government budget; it’s a reserve to the Social Security program. There’s more than enough _actually_ wrong with Social Security that we don’t have to be disingenuous about the accounting. I mean, I’m certainly not counting on it in any meaningful way for my retirement in 30+ years. But if I want to get mad that Social Security is effectively buying government bonds, the anger would be more appropriately directed towards the federal budget doing all that borrowing. We don’t need to treat Social Security different than we would anyone else holding $2.6 trillion in treasuries just because we hates it. If BoA or Warren Buffet or China had that amount of U.S. govt debt, we’d pretty much say that they had $2.6 trillion in a bank account somewhere. > > (I also feel like we’re floating away from MPSIMS here…) **“Not counting on it when I retire”** is what my daddy said when I was young, and he died at the age of 82 8 years ago. It is supporting me, from the contributions I mad e for 44 years. ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [July 29, 2014, 4:41pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/16 "2014-07-29T16:41:06Z")
No, the government is not ever going to have to come up with a huge pile of money. It’s going to have to come up with a whole bunch of very small piles of money, month after month and year after year. Which is something that it’s quite capable of doing, and in fact has been doing throughout history. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 29, 2014, 4:45pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/17 "2014-07-29T16:45:39Z")
> [@Kiros](#): > > I’m probably asking for pain by replying, but it’s a debt to the government budget; it’s a reserve to the Social Security program. There’s more than enough _actually_ wrong with Social Security that we don’t have to be disingenuous about the accounting. There’s nothing disingenuous about the accounting - it is carried as a debt on the government books. This is by law, and entirely proper. What’s disingenuous is to pretend that Social Security requires just “an accounting fix” to be solvent, or that the $2.6T represents a resource to be drawn on instead of a huge debt that must be paid. !00% - every single penny - is going to come out of the pockets of the taxpayer. To state or imply that any of it is going to come from any other source is a lie. Regards, Shodan ---
**Author:** ![Sicks\_Ate](https://avatars.discourse-cdn.com/v4/letter/s/258eb7/32.png) [@Sicks\_Ate](https://boards.straightdope.com/u/Sicks_Ate)\ **Post date:** [July 29, 2014, 4:47pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/18 "2014-07-29T16:47:49Z")
> [@Diceman](#): > > I’m aware of this. I’ve long suspected that by time I reach retirement age, “retirement” will be something only the wealthy can afford to do. There’s no reason that only the wealthy should be able to retire absent social security. SS doesn’t pay out that much in the first place. I would imagine that anyone with a reasonable paycheck and the motivation and discipline to do so could save or invest enough to retire. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 29, 2014, 4:47pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/19 "2014-07-29T16:47:57Z")
> [@Diceman](#): > > To put it another way, the fact that the accounting con was pulled off by the US Treasury doesn’t mean it wasn’t a con. In the end, the government is going to have to come up with an almost-unimaginably huge pile of money if Social Security is actually going to meet its obligations. More likely (far, far more likely) is that Social Security recipients will only receive a fraction of what they were promised. The government would have to come up with a huge pile of money even if Social Security did not exist. We would have just gotten it from the Chinese instead of ourselves - would that have made you happy? The pile isn’t that huge when compared to GDP. BTW, if you had the ability to tax and an over 200 year record of paying your bills, IOUs from you would be worth a lot. How odd that the market, which is perfect in all other respects - says that T Bills are about the safest investment there is. ---
**Author:** ![Kiros](https://avatars.discourse-cdn.com/v4/letter/k/439d5e/32.png) [@Kiros](https://boards.straightdope.com/u/Kiros)\ **Post date:** [July 29, 2014, 5:02pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/20 "2014-07-29T17:02:32Z")
> [@Shodan](#): > > There’s nothing disingenuous about the accounting - it is carried as a debt on the government books. This is by law, and entirely proper. > > What’s disingenuous is to pretend that Social Security requires just “an accounting fix” to be solvent, or that the $2.6T represents a resource to be drawn on instead of a huge debt that must be paid. > > !00% - every single penny - is going to come out of the pockets of the taxpayer. To state or imply that any of it is going to come from any other source is a lie. > > Regards, > Shodan You’ve misinterpreted me here; I wasn’t implying that the accounting itself was disingenuous, but that the way that people who are overly critical of Social Security interpret the accounting is disingenuous. When finance/accounting evaluates a program within an organization - a benefit program, a department within a business, a capital expenditure project, whatever - we evaluate it on its own merits. Social Security doesn’t require an accounting fix to be solvent. It currently _is_ solvent, through (apparently, I am taking the cites at their word) the 2030s with the assets and liabilities that the **program** currently has. The general government operating budget, on the other hand, owes Social Security a lot of money (you can call it a “shit-ton” or a “fuckton” if you want to be dramatic). This is not a problem with the financial performance of Social Security. If the government budget wasn’t financed through the sale of bonds to Social Security, it would have been financed by the sale of bonds to someone else with a lot of cash that wanted the risk-free yield. If you want to have a discussion about how the government borrows too much cash and how the U.S. taxpayer will have to meet the obligation of this borrowing, have at it. If you want to argue that the ease of “selling” those bonds to the Social Security program made politicians much more willing to spend than they might have been otherwise, that could be a good discussion. But neither is really relevant to an analysis of performance of the Social Security program. [Next page](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260.md?page=2)