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January 5th, 2017, 11:53 PM #1
The Grand Illusion: The 'Trust Fund' and Simpson-Bowles
that is only "Trust"...the Special Issue Securities. in lieu if Treasury Bills and Bonds, that can't be sold...
FDR created a Social Security Trust Fund wherein the payees would have a nominal if not actual account, so that a future Congress or President could not so easily raid it or abolish it.
Early in his first Administration, Pres. Obama created a Presidential Commission headed by two members hostile to Social Security.
Somewhere in my posts you'll read about how the Social Security Payroll Tax was increased so much that a surplus was created in the formerly pay-as-you-go system wherein the surplus monies were to be set aside so as to extend the solvency of the Social Security Administration (SSA) well into the future with these surplus monies that would be drawn upon when the SSA started to pay out more than in drew in with payroll taxes. This would have worked except for one thing: The monies were never set aside but were immediately spent. (See if you can figure out exactly when this three-card-monty scam was devised and who the major culprits were...)
Instead, scam Special Issue Securities were issued to replace the spent monies. These were not Treasury Bill or Bonds which are negotiable instrument and defaulting on them would all but bankrupt the government. These were , well Special Issue certificates which relied on a future Congress to vote the monies (by taxes or borrowing) and a President to spend them. Why didn't they buy Treasury Bills and Bonds with the surplus SSA monies as promised so in the future benefits could be paid by cashing them?
Because they wanted to spend them, silly! Actually setting aside the monies would defeat that purpose: This was a tax increase hidden as a benefit saving ! Now there is nothing but the unfunded and empty SIS's which is why Social Security is supposed to be in trouble.
Like many things that are "supposed to be", often they are not.
Here's some: Multinationals "lose money" in the USA where the Corporate income tax is (too) high at 35% so don't pay taxes here but "make money" in places where the tax is nominal or non-existent so they don't pay taxes there either. This is called "transfer pricing"--you transfer the profits and costs in ways that taxes come up zero. Don't you wish you could do that?
That' the SSA is hopelessly insolvent --they don't tell you about all the "money" that supposedly was "saved" in SIS's because you might want them to fund them, but then if the Congress did fund them having already spent your surplus or extra social security payments, you might get mad about having to pay the same tax all over a second time.
Alternatively, the Congress --and Simpson Bowles only touched on this--they could make up the deficit without making you pay the same tax twice. How? They could make people who never had to pay it pay it for the first time by lifting the cap on the payroll tax so everybody pays the same percentage. WoW! How come the smart folks who thought of pass the surplus SSA tax to "save future benefits" and spending () it now didn't think of that ?
They were paid not to think of that ? Ah! those Congressmen spending most of the day dialing for dollars !
The REAL Year Social Security "Goes broke".
On the Social Security Payroll Tax
The Making of PONZI America.
+++++++Note: Emphasis supplied++++++++
The government bonds themselves are considered to be U.S. Treasury debt securities and are interest-bearing, much like Treasury bills. Unlike other Treasury securities, however, these are not made available on the open market and have no market-based pricing tools. These securities are pegged to the interest rates earned by medium- and long-term Treasury bonds.
In the past, the Social Security trust fund actually held standard, public-issue Treasury securities in its accounts. Today, however, only special-issue Treasury securities are in the fund. Both types of funds have no real asset-based collateral, and are only borrowed against the full faith and credit of the U.S. government........
Read more: How is the Social Security trust fund invested? | Investopedia
How is the Social Security trust fund invested? | Investopedia
There is one obvious drawback with the way in which the trust funds are borrowed from and invested in: Future taxpayers are responsible for both their own future benefits as well as the interest-accumulating debt on past collections. The securities held in the Social Security trust fund have to be paid with other government receipts, which can only come in the form of taxes, money printing or borrowing -- all of which, directly or indirectly, reduce the income of taxpayers.
Read more: How is the Social Security trust fund invested? | Investopedia How is the Social Security trust fund invested? | Investopedia
PS. Back in 2005, when the SSA was operating at a "surplus" and supposedly putting aside the surplus money to "save Social Security" for future benefit payees, I had this conversation with a learned and distinguished member:
"You are missing the point, -L. 'n D. M. - - - - - -
There is no Trust Fund.
You, the Taxpayer and others to follow you are expected to make up the "shortfall".
Err..that is if you and they are ready, willing, and able.
Notice how sneaky the Gov't refers to this as "special issue securities" when it is OUR future tax rises it is talking about ?
WE have met the Special Issue Securities and it is US. "
The future is now, the SSA is no longer running a surplus but a deficit....
Last edited by MegalosSkylaki; January 6th, 2017 at 12:55 PM.
January 6th, 2017, 12:10 PM #2
Looking for Money in all the Wrong Places
Along came the Simpson-Bowles Presidential Commission...as if Social Security was not already a nice place for politicians to look for money
The National Commission on Fiscal Responsibility and Reform (often called Simpson-Bowles or Bowles-Simpson from the names of co-chairs Alan Simpson and Erskine Bowles; or NCFRR) is a Presidential Commission created in 2010 by President Barack Obama to identify "policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run".
The commission first met on April 27, 2010. A report was released on December 1, 2010, and although the Commission was supported by over 60% of the members (11 out of 18), and an equal number of Democrats and Republicans, the report did not reach the 14-vote threshold required to formally endorse the blueprint and have it sent to Congress for approval. Proponents of the plan praised it for hitting all parts of the federal budget and for putting the national debt on a stable and then downward path.
Prominent supporters include JPMorgan Chase CEO Jamie Dimon, Democratic Leader Nancy Pelosi (although at first she opposed the proposal), former Secretary of State Hillary Clinton, and Republican Senator Tom Coburn, Democratic Representative Chris Van Hollen has called for a deal based on the Simpson-Bowles framework. Critics say that it would cut entitlement and safety net programs, including Social Security and Medicare.
Prominent opponents include Paul Krugman, Speaker of the House Paul Ryan, President of the Americans for Tax Reform Grover Norquist and Democratic Representative Jan Schakowsky.
One can speculate as to why Pres. Obama --and so early in his Administration first term--put together such a commission and headed it with people known to be overtly hostile to Social Security.
Was this a way of funding "progressive" programs ? Was it a sop thrown to opponents of the ACA? Is he hostile to Social Security and wanted to hide behind a "blue ribbon" commission ? Was he plain foolish? Or, fox-like, was it a cynical means of choosing a commission whose recommendations would be so extreme as to be certainly rejected, thereby sparing Social Security?
The reality is that people paid taxes into the Social Security Trust "Fund" --and in at "overpaid" them so money would be available in the future to pay out their benefits. Now they find all manner of ways being debated as to how to welch out of that promise and he extra-money in the form of payroll taxes was spent on other stuff and nobody of either Party wants to talk about how to fund those spent monies because it would reveal a scam they themselves took part.
Now a new Administration wants to "save" Social Security. Look how at every time in the past this was done just how truthful the outcome was. As for people "living longer", they were living longer even in FDR's day. This should not be used as a pretext for welching on people's payroll tax money--directly and through their employer's contribution which was part of their earned pay.
The solution is for everybody to pay the same percentage of their income in payroll tax (FICA) rather than the inverted curve now where the less you earn, the higher percentage you pay and the more you earn, the smaller percentage you pay. This might even allow for that percentage to be reduced instead of repeatedly raised.
Instead of people who overpaid their Social Security tax having to pay it again twice to fund those bogus "Special Issue Securities"--which do not have one thin dime in them as it's been spent-- those people who escaped FICA on a large part (sometimes the majority) of their income--now get to pay it for the first time.
Who would have thought ?
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