Debt-limit delay would jeopardize Social Security payments - USATODAY.com

Economy • 6/29/11 11:23:52 am • Views: 951

WASHINGTON — Social Security payments to millions of retirees and people with disabilities could be threatened if President Obama and Congress can’t agree to increase the government’s debt limit by Aug. 2, a new analysis shows.Although the Treasury Department likely could avoid delaying Social Security checks, the analysis by the Bipartisan Policy Center points up the depth of the cuts that would be needed if the $14.3 trillion debt ceiling isn’t raised.

Debt Limit

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10 comments

Bulworth Wed, Jun 29, 2011 1:51:05pm

The weird thing about this is, conservatives have been shrieking for years about Social Security's supposed "bankruptcy" which, even if an accurate description, which it isn't, wouldn't arise until the 2030's.

But now they're treating the prospect of next month's debt default rather leisurely. I realize part of this is political posturing intended to get Democrats to fully capitulate to whatever ransom demand teabag nation is making at the midnight hour, but the contradiction with the party's previous whining about the nation's fiscal situation, it's pretty mind bending.

Daniel Ballard Wed, Jun 29, 2011 2:32:20pm

I just made a call to Mikiesmoky2, who disagrees utterly with USA today, I encouraged him to chime in. He has spent quite some time looking into this.

Artist Wed, Jun 29, 2011 3:35:51pm

re: #1 Bulworth

It's pretty simple, really. They're trying to do as much damage as possible so they can blame it on Obama. It's all about making him a one term president.

mikiesmoky2 Wed, Jun 29, 2011 7:56:40pm

The People are being "tenderized".

Once again...., Social Security funding is from employees and employers and goes into the SS trust fund and payments are made from the fund to recipients (redundant? lol).

There are funds that come from the federal budget, about 12 billion dollars a year to administer the fund.

Again..., the People are being set up..., by both sides of the aisle, since both have the "0.1%" (the top 0.1% earners) clients.

I admonish all to wake up, throw open those windows, and start yelling.......................

Daniel Ballard Wed, Jun 29, 2011 8:18:13pm

re: #4 mikiesmoky2

Would you please address the case made by the USA Today writer and perhaps the panels report specifically?

mikiesmoky2 Thu, Jun 30, 2011 7:30:22am

re: #5 Rightwingconspirator

YOU ASKED FOR IT......................................

[Link: www.usatoday.com...]

This article (complete article @ the above hyperlink) was written by Matt Krantz, who writes a colum for USA Today – my RESPONSES follow his comments:

REGARDING: Before we can decide if Social Security's structure qualifies it as a Ponzi scheme, a quick definition is in order. A Ponzi scheme "is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors," according to the Securities and Exchange Commission. RESPONSE: Stipulated.

REGARDING: Some investors think that the fact that Social Security pays existing investors with cash collected by new investors makes it a Ponzi scheme. RESPONSE: According to the definition, presented above, it appears to fit quite snugly.

REGARDING: But that's not true, says Jack Coffee, professor of law and securities law expert at Columbia Law School. "This is less a question and more an aggressive assertion," he says.
RESPONSE: Duh?

REGARDING: Social Security is not a Ponzi scheme because it wasn't an intentional fraud, he says. RESPONSE: I see. “It wasn’t an ‘intentional’ fraud”. How does Professor Coffee know that the original Social Security plan was set up to be less than a fraud? We must examine the evidence. Was SS set up to be actuarially sound? No, it was not. The lucky first recipient of SS had paid in about $24 of SS taxes and collected in excess of $20,000 during her lifetime. The question really is as to whether this is more of a Ponzi scheme or a pyrimid scheme!
I am confident that FDR had good intentions. He believed that workers who participate for 40-45 years deserve, at least, a modicum retirement. He must have concluded that if the program were set up to be actuarially sound, it would have never been legislated. He may have been hoping that, over time, adjustments would be made to allow the program to morph into an actuarially sound program. Rather than Congressional adjustments to accomplish that goal, Congress only made adjustments, which “kicked the can down the road”. Due to Congress’s abrogation of its responsibilities, under the Constitution (see The Preamble), we are where we are. This malady can be corrected, but that would antipathetical to Congress’s clients, i.e., the top 0.1% of earners.

REGARDING: In fact, the system has worked as expected since its creation in the 1930s. RESPONSE: Yes, I agree, i.e., as a quasi-Ponzi scheme.
REGARDING: What's happening now is that, like many corporate pension plans, Social Security is running the risk of being underfunded as obligations grow faster than contributions. RESPONSE: Oh, my golly! This guy is a professor?? Am I being punked?? Congress has never made any attempt to provide the appropriate actuarial parameters to Social Security, whereas a defined benefit pension plan, by law, must be structured with appropriate assumptions, which should achieve the retirement goals for each individual. If the assumptions turn out to be inadequate, e.g., planning on achieving annual earnings of 7.5%, but falling short, more funds must be contributed to the plan.

REGARDING: But again, Social Security wasn't created with this aim, he says. "It was a system that was quite adequate for a long time," he says. RESPONSE: Hmmmm. It appears that this nutty professor is, finally, admitting SS is a Ponzi scheme.

(CONTINUED.....................)

mikiesmoky2 Thu, Jun 30, 2011 7:37:17am

CONTINUATION......................................

REGARDING: Changes are certainly needed to keep Social Security working to reach the goals it was established to meet, he says. Either benefits will need to be curtailed or the government will need to kick in funding, he says.
RESPONSE: Ah, ha!! He is correct. This is the crux of the matter. Congress’s clients would prefer to not pay for the workers who have allowed them (the top 0.1%) to accummulate their wealth, i.e., without the workers, the clients would not have been able to accummulate that wealth.

REGARDING: But again, it's not a Ponzi scheme, but a retirement system where the demographics have changed, he says.
RESPONSE: Genre: If one repeats something enough times, one may tend to believe it.

INTERESTING QUESTION: Who should be more embarrassed, the professor or Columbia Law School?

REGARDING: "It's a system where almost everyone agrees needs reform."
RESPONSE: This professor deserves the Noble prize for Economics. NOT!!!!

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz

I hope this does it for you..................... lol

Daniel Ballard Thu, Jun 30, 2011 10:42:45am

re: #7 mikiesmoky2

I see where you try to support the ponzi scheme thing, which, to me reads as an emotional complaint. After all true ponzi schemes are criminal enterprises. By your definition taxes might be called grand theft! While some may want to look at it this way it's just not at all helpful in the discussion at hand. and does not address whether a default jeopardizes the payments this summer of fall.

Daniel Ballard Thu, Jun 30, 2011 10:43:06am

Whhopps PIMF-
Summer OR Fall

mikiesmoky2 Thu, Jun 30, 2011 2:58:07pm

re: #8 Rightwingconspirator

REGARDING: I see where you try to support the ponzi scheme thing, which, to me reads as an emotional complaint.
RESPONSE: Emotional?? How can a rational mind perceive my comments to be "emotional"?
lol
Please show your logic, which enabled your "conclusion".

REGARDING: After all true ponzi schemes are criminal enterprises.
REGARDING: What does that even mean or imply regarding this conversation????? BTW, what is the difference between a Ponzi scheme and a "true" Ponzi scheme?
The definition within the original article does not involves the term "criminal". It does use "fraud".
There is intentional fraud and there can be "unintentional" fraud, due to the ignorance of the perpetrator.
If an innocent person were talked into starting a Ponzi plan without knowing he or she was doing anything wrong, would that alter the characterization of the "plan"?

REGARDING: By your definition taxes might be called grand theft!
RESPONSE: I find it extremely challenging to respond to such an "interesting" effort. Yes..., I am just shaking my head in disbelief. lol

REGARDING: While some may want to look at it this way it's just not at all helpful in the discussion at hand. and does not address whether a default jeopardizes the payments this summer of fall.
RESPONSE: Very good. Cut to the chase!
A federal default would have no effect upon SS disbursements. The worst case scenario is that the fund would play for the administration (about 1 billion dollars per month), which is the obligation of the general fund aka federal budget.

I hope these responses work for you.

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