borrowing from Social Security

if the fed govt wasn't borrowing from Social Security, would they need to be talking about raising the retirement age for the post-baby-boomers?

(maybe "they" means "pundits", not necessarily "the fed govt".)

this article has a bunch of details on it but not the interest rate the govt is paying to borrow $2.5T of SS funds.

http://www.gazette.com/articles/security-95673-borrow-social.html

Deficit = money in - money out

Accounting tricks are not some kind of dark sinister conspiracy. They are accounting tricks. Account for the accounting tricks.

Originally posted by zeeblebot
if the fed govt wasn't borrowing from Social Security, would they need to be talking about raising the retirement age for the post-baby-boomers?

(maybe "they" means "pundits", not necessarily "the fed govt".)

this article has a bunch of details on it but not the interest rate the govt is paying to borrow $2.5T of SS funds.

http://www.gazette.com/articles/security-95673-borrow-social.html

They would still need to do something regarding the long term deficit in the trust fund which is presently expected to be depleted somewhere around 2039.

The interest rate on the "special issues" is hardly a big secret. From the SSA website:

The rate of interest on special issues is determined by a formula enacted in 1960. The rate is determined at the end of each month and applies to new investments in the following month.
The numeric average of the 12 monthly interest rates for 2009 was 2.917 percent. The annual effective interest rate (the average rate of return on all investments over a one-year period) for the OASI and DI Trust Funds, combined, was 4.860 percent in 2009. This higher effective rate resulted because the funds hold special-issue bonds acquired in past years when interest rates were higher.

http://www.ssa.gov/oact/progdata/fundFAQ.html


The formula is:

The formula sets the rate applicable in a given month to the average market yield on marketable interest-bearing securities of the Federal government which are not due or callable until after 4 years from the last business day of the prior month (the day when the rate is determined). The average yield must then be rounded to the nearest eighth of 1 percent. This formula became effective with the October 1960 rate.

http://www.ssa.gov/oact/progdata/intrateformula.html

Originally posted by zeeblebot
if the fed govt wasn't borrowing from Social Security, would they need to be talking about raising the retirement age for the post-baby-boomers?

(maybe "they" means "pundits", not necessarily "the fed govt".)

this article has a bunch of details on it but not the interest rate the govt is paying to borrow $2.5T of SS funds.

http://www.gazette.com/articles/security-95673-borrow-social.html

And is there any provision at all which requires this borrowed money to be paid back ?? Of course not !
Even when the gov had a huge surplus in 2001 not a penny was applied to this debt.

Originally posted by zeeblebot
if the fed govt wasn't borrowing from Social Security, would they need to be talking about raising the retirement age for the post-baby-boomers?

(maybe "they" means "pundits", not necessarily "the fed govt".)

this article has a bunch of details on it but not the interest rate the govt is paying to borrow $2.5T of SS funds.

http://www.gazette.com/articles/security-95673-borrow-social.html

You are correct indeed! This practice must stop.

Originally posted by bill718
You are correct indeed! This practice must stop.

But this was the intent all along. The age for which people could collect social security when it was inacted under FDR was the median age of when people died. In short, most people were not suppose to ever see it, rather, it was simply another ploy to create a big pot of money.

Originally posted by whodey
But this was the intent all along. The age for which people could collect social security when it was inacted under FDR was the median age of when people died. In short, most people were not suppose to ever see it, rather, it was simply another ploy to create a big pot of money.

LMAO!!!

Originally posted by caissad4
And is there any provision at all which requires this borrowed money to be paid back ?? Of course not !
Even when the gov had a huge surplus in 2001 not a penny was applied to this debt.

Actually:

Money to cover expenditures (mainly benefit payments) from the trust funds comes from the redemption or sale of securities held by the trust funds. When "special-issue" securities are redeemed, interest is paid. In fact, the principal amount of special issues redeemed, plus the corresponding interest, is just enough to cover an expenditure.....................................

The government has always repaid Social Security, with interest.

http://www.ssa.gov/oact/progdata/fundFAQ.html

Originally posted by whodey
But this was the intent all along. The age for which people could collect social security when it was inacted under FDR was the median age of when people died. In short, most people were not suppose to ever see it, rather, it was simply another ploy to create a big pot of money.

I see Whodey has been smoking unnatural substances again. Social Security was voted into law under F D R with the intention of giving citizens a means to retire when they reached old age. This was NOT designed to simply accumulate "a big pot of money". Most people WERE supposed to see it, because they had paid into it for many years.

It seems the fellow who started the programme wanted it ultimately to morph into private accounts. In his own words:

From FDR Message to Congress on Social Security (1-17-1935)

"In the important field of security for our old people, it seems necessary to adopt three principles:

First, noncontributory old-age pensions for those who are now too old to build up their own insurance. It is, of course, clear that for perhaps 30 years to come funds will have to be provided by the States and the Federal Government to meet these pensions.

Second, compulsory contributory annuities, which in time will establish a self-supporting system for those now young and for future generations.

Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by SELF-SUPPORTING ANNUITY PLANS."

*Caps & bold for emphasis are mine.

Originally posted by MacSwain
It seems the fellow who started the programme wanted it ultimately to morph into private accounts. In his own words:

[b]From FDR Message to Congress on Social Security (1-17-1935)

"In the important field of security for our old people, it seems necessary to adopt three principles:

First, noncontributory old-age pensions for those who are now t ...[text shortened]... to be supplanted by SELF-SUPPORTING ANNUITY PLANS.[/b]"

*Caps & bold for emphasis are mine.[/b]

It seems to me that FDR is simply saying there should be a government fund for retirement pensions and that additionally the US should subsidize additional private pension plans.

Originally posted by bill718
I see Whodey has been smoking unnatural substances again. Social Security was voted into law under F D R with the intention of giving citizens a means to retire when they reached old age. This was NOT designed to simply accumulate "a big pot of money". Most people WERE supposed to see it, because they had paid into it for many years.

When the legislation was passed, what was the median age when people died? Now compare that to the age that people could collect.

Originally posted by whodey
When the legislation was passed, what was the median age when people died? Now compare that to the age that people could collect.

And consequently the premiums have gone up.

Originally posted by whodey
When the legislation was passed, what was the median age when people died? Now compare that to the age that people could collect.

http://www.ssa.gov/history/lifeexpect.html


It should also be noted that life expectancy had been steadily rising in the early decades of the 30's, a trend which had every likelihood of continuing (as it did). I wish right wingers would make up their mind about their reasons to vilify Social Security; it can't both be a "Ponzi scheme" meant to bankrupt us AND a scheme to defraud most contributors so that Big Government could build up a huge mound of cash.

Originally posted by KazetNagorra
It seems to me that FDR is simply saying there should be a government fund for retirement pensions and that additionally the US should subsidize additional private pension plans.

Exactly. MacSwain is repeating an old right wing lie tossed around when GW proposed to privatize Social Security during his 1st term. It's debunked here http://mediamatters.org/research/200502040010:

During 1935 congressional hearings on Roosevelt's Social Security bill, Edwin Witte, executive director of the Committee on Economic Security (CES), clearly stated that the voluntary accounts were intended as a "separate undertaking" meant to "supplement" the compulsory system, not replace it: "The voluntary system of old-age annuities we suggest as a supplement to the compulsory plan." Further, voluntary annuities would be "similar to those issued by commercial insurance companies" -- as Witte explained -- but they would differ from private accounts in that their funds would be deposited into and paid out of the Social Security trust fund, and they would provide a government-guaranteed benefit like mandatory contributions.