# 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:** 10\ **Page:** 2
**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, 5:11pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/21 "2014-07-29T17:11:23Z")
> [@DingoelGringo](#): > > **“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. One of the reasons digressions like this bug me so much is that we should be discussing the changes that will need to be made to keep it paying out past that “2030s” date. I’d love to be able to make this post in 40 years! Just seems silly to plan for it when we have so much trouble having the right discussion. ---
**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, 5:58pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/22 "2014-07-29T17:58:10Z")
> [@Kiros](#): > > 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. In this thread it isn’t the ones who are “overly critical” of Social Security who are suggesting that there is some “resource” that can be drawn on other than the taxpayer’s wallet, or that major tax increases and/or spending cuts represent no more than an “accounting fix”. > [@](#): > > One of the reasons digressions like this bug me so much is that we should be discussing the changes that will need to be made to keep it paying out past that “2030s” date. We already know what those changes are. We need to raise taxes and/or cut benefits. The trouble is that people keep trying to pretend it is something else. 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, 6:39pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/23 "2014-07-29T18:39:38Z")
> [@Shodan](#): > > In this thread it isn’t the ones who are “overly critical” of Social Security who are suggesting that there is some “resource” that can be drawn on other than the taxpayer’s wallet, or that major tax increases and/or spending cuts represent no more than an “accounting fix”. You’re still doing it, though. The major tax increases and/or spending cuts are going to be necessary to fix the general operating budget, including the payment of national debt already incurred. The structural issues that we need to make those major changes for are the tax/debt policy of the past 15 years, military spending over that time period and going forward, and expected healthcare cost growth. The general budget situation is really important and it’s got a lot of major issues. Dragging it into “what’s wrong with Social Security” obfuscates what is actually going on with the SS program. Social Security: $2.6t assets, focus of fix should be on future projected cash flows, which are somewhat negative. Fixes will require small to moderate changes to tax and benefit structure (see below). Federal Budget: $2.6t liability to SS Trust Fund, as part of some $17t and growing total liability and continued negative cash flows. Fixes will require major tax increases and/or spending cuts. > [@Shodan](#): > > We already know what those changes are. We need to raise taxes and/or cut benefits. The trouble is that people keep trying to pretend it is something else. Likely yes to both of these to some degree. Long-term, we need the equivalent of a 2-3% increase in the payroll tax to bring the Social Security “budget” into balance. There’s flexibility on how to do this on both the tax (across the board or progressive, raise or remove caps, etc) and benefit (raising retirement age, adjusting incentives to encourage people to take it even later, phasing out benefits over certain asset/income levels) sides. That’s the discussion that our politicians should be having, because if they get that worked out now, they have a lot more options than if they’re trying to do it in 2033 when the Trust Fund has 0 assets and they have to make up the entire chunk immediately with no cushion. ---
**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, 7:29pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/24 "2014-07-29T19:29:30Z")
> [@Kiros](#): > > You’re still doing it, though. No, I’m not. > [@](#): > > The major tax increases and/or spending cuts are going to be necessary to fix the general operating budget, including the payment of national debt already incurred. Get back to me when I suggest that the tax increases and/or spending cuts are just an “accounting fix”. > [@](#): > > Dragging it into “what’s wrong with Social Security” obfuscates what is actually going on with the SS program. I didn’t drag it in. You did. 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, 8:14pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/25 "2014-07-29T20:14:26Z")
> [@Shodan](#): > > No, I’m not. > Get back to me when I suggest that the tax increases and/or spending cuts are just an “accounting fix”. > I didn’t drag it in. You did. > > Regards, > Shodan You… completely ignored the content of that post and took a couple of quotes out of context to pivot back to some one liners. I’m happy to add information about finance and accounting, and even to debate the merits, but there’s a reason I don’t really do GD on a regular basis. Have a great evening! ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [July 29, 2014, 9:59pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/26 "2014-07-29T21:59:23Z")
It is not possible for the American taxpayers, considered as a whole, to save money today that can be paid out to future American citizens. Retiree benefits have to be paid out in the year they are actually paid out. In other words, when a retired person gets paid a dollar today, and they go out and spend it on a widget, that widget has to be produced by a worker working today. That money has to be provided by taxpayers today. The fiction that social security funds are in a trust is simply nonsense. The reality is that taxes that are earmarked for social security are actually used for general revenue, because today we take in a lot more social security taxes than we pay out in social security payments. Yeah, the general fund gives the social security fund t-bills. So it’s safe, right? Sure, except future general taxes are going to have to redeem those bills. So today SS taxes pay for general expenditures, in the future general taxes are going to have to pay for SS payments. It’s very likely that no promised social security payments will actually be cut. Instead the value of the dollar will fall to a level that the nominal dollar amount will be much easier to pay. The problem is that current social security payments have to be made by current taxpayers paying into the system, and this will always be true. We can call the taxes needed to support social security “social security taxes” or “income taxes”, it doesn’t matter what we call it, we still have to either pay for it via taxes or borrowing. Right now it’s cheap to borrow, but that won’t last forever, so we’ll have to increase revenue instead. If our economy grows we can increase revenue without increasing taxes, 10% of $100 is $10, but 10% of $110 is $11. ---
**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 30, 2014, 6:16am UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/27 "2014-07-30T06:16:50Z")
> [@Lemur866](#): > > Retiree benefits have to be paid out in the year they are actually paid out. In other words, when a retired person gets paid a dollar today, and they go out and spend it on a widget, that widget has to be produced by a worker working today. That money has to be provided by taxpayers today. If you have whole life, the benefit your heirs get when you die doesn’t come from the money you put in either. It comes from premium payments from current customers and investments - exactly like Social Security. > [@](#): > > The fiction that social security funds are in a trust is simply nonsense. The reality is that taxes that are earmarked for social security are actually used for general revenue, because today we take in a lot more social security taxes than we pay out in social security payments. Cite? General revenue does not imply that the excess buys government securities, which is what really happens. > [@](#): > > Yeah, the general fund gives the social security fund t-bills. So it’s safe, right? Sure, except future general taxes are going to have to redeem those bills. So today SS taxes pay for general expenditures, in the future general taxes are going to have to pay for SS payments. You appear not to have read the thread. If the bills were not sold to Social Security, they would be sold to someone else. Do you have a safer alternative investment, perhaps? > [@](#): > > It’s very likely that no promised social security payments will actually be cut. Instead the value of the dollar will fall to a level that the nominal dollar amount will be much easier to pay. I don’t even know what this means. Do you mean inflation not compensated by cost of living adjustments? Considering how many of us there are going to be in 20 years, not likely. > [@](#): > > The problem is that current social security payments have to be made by current taxpayers paying into the system, and this will always be true. We can call the taxes needed to support social security “social security taxes” or “income taxes”, it doesn’t matter what we call it, we still have to either pay for it via taxes or borrowing. Right now it’s cheap to borrow, but that won’t last forever, so we’ll have to increase revenue instead. Until recently the income from social security more than paid for benefits. Is that your definition of borrowing? Sure it is a tax since it is mandatory, but it is an odd tax since money you get in the future is related to how much you pay in. ---
**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 30, 2014, 6:21am UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/28 "2014-07-30T06:21:01Z")
> [@Kiros](#): > > You… completely ignored the content of that post and took a couple of quotes out of context to pivot back to some one liners. I’m happy to add information about finance and accounting, and even to debate the merits, but there’s a reason I don’t really do GD on a regular basis. Have a great evening! BTW, the Times today carried an article on the trustees report. SS is solvent until 2033, same as last year, but Medicare is okay until 2030, 4 years better than last year, thanks to ACA. I figure that the reason we aren’t doing the fairly obvious things to ensure longer solvency is that the right keeps on ranting about it being broke and it being a Ponzi scheme and other such crap. If only we had Republicans like Ronald Reagan today. ---
**Author:** ![Marley23](https://avatars.discourse-cdn.com/v4/letter/m/45deac/32.png) [@Marley23](https://boards.straightdope.com/u/Marley23)\ **Post date:** [July 30, 2014, 2:41pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/29 "2014-07-30T14:41:58Z")
> [@Voyager](#): > > I figure that the reason we aren’t doing the fairly obvious things to ensure longer solvency is that the right keeps on ranting about it being broke and it being a Ponzi scheme and other such crap. If only we had Republicans like Ronald Reagan today. To that end I suppose we should hedge our bets: it’s always possible someone will gin up a phony crisis for political reasons and create a more immediate threat to the program. ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [July 30, 2014, 3:32pm UTC](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260/30 "2014-07-30T15:32:45Z")
At some point SS will begin straining the federal budget enough that heretofore other untouchables like defense will be pressured to reduce their expenditures. Then we’ll have sort of a “starve the beast” syndrome writ very large. I’m for this happening, BTW. [Previous page](https://boards.straightdope.com/t/social-security-to-be-in-the-red-by-the-end-of-2016/694260.md?page=1)