OMB Director Says Social Security Will Be Fine

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Mr. Obama created the bi-partisan Debt Commission. He even named who was on it. Their conclusion... we need to cut $4 T of debt over the next decade, beginning with next year's budget. Most of that would be spending cuts. They say drastic action is needed. The GOP says drastic action is needed. The Tea Party says drastic action is needed. European countries realize they have to take drastic action cutting their own spending. But Michael Moore, the NYTimes, and Obama say, "Nope, everything's just fine." So who's lying? If $14 T is just like having a mortgage or a student loan, then it's $50,000 PER PERSON to every American plus interest, unless we can expect 300,000,000 checks in the mail tomorrow. Sorry, I can't pay my own bills. There are other ways out. We can grow our way out, partially. But that means pursuing a pro-growth policy. Obama's agenda is to strangle growth. Or aggressively pursue every source of fossil fuel off shore, on shore, in the arctic, in shale, everywhere. And become an oil/NG exporter. Don't think Barry's on board for that either. But with any scenario, we still have to cut spending at some point and reduce the size of government and what we expect from it. In the end, the road we're on leads to serfdom.

Michael Kohlman of OH 9:22PM March 04, 2011

Payroll taxes alone cannot keep it afloat. They may have to double or triple for two workers to support one retiree, as will be necessary. That is, as so many government programs are these days, UNSUSTAINABLE. That the OMB Director would tell such an incredible bald faced LIE is playing disgusting partisan politics. But then again, after two years, we should be used to that. He's been called out as disingenuous even by Left wing papers. And in fact exactly contradicted what he himself said two weeks ago how the SS Trust Fund could not be considered for providing any revenue for benefits. SS reform is not about cutting benefits. It's about making small changes now to ensure there are no future cuts to those already receiving/or about to receive benefits. The selling point is the absolute reality that it has to be reformed to have a future. Opponents can obfuscate and confuse the elderly all they want, but that does not change the facts. There is no trust fund. And benefits are already greater than revenue. BTW, SS has already been privatized. By government employees who have been allowed to opt out. Tell them they have to get on SS instead and see how horrible it is to have self directed retirement. SS is actually easy. It's Medicare that's unsustainable NOW. That solution isn't as simple. The whole framework has to change, leaving government out. Competition has to be introduced in health care by giving patients vouchers and letting them shop around for the most cost effective solution. That's the best method of controlling prices. Nothing government manages ever works very well, due to inefficiency, corruption, and politics.

Michael Kohlman of OH 8:29PM March 04, 2011

since mr. lew has made an extended study of the subject,and by any yard stick would be considered an expert on the matter one has to wonder why the republicans are going around yelling that the sky is falling.
the answer may lie within a segment of the republican party.people such as rep. paul ryan,and his ilk, are trying to fined any excuse to privatize the system which has served the american people well for over seventy years.
the republicans want to fix something thats not broken,and in doing so futher enrich the brokers on wall street.this is their real goal.

bruce b. of NV 12:55AM March 03, 2011

"Social Security is self-funded by the payroll tax, so as long as the payroll tax exists" I agree, but when the number of payees exceed the number of payers, as is about to happen when the baby boomers retire, the fund will quickly move into the negative, then what
I wonder how you voted last time, "used it to finance tax cuts, two wars, and other government programs" Way to slip that in there.

Larry of CA 5:47PM February 28, 2011

THE $2.6 TRILLION IN SURPLUS SOCIAL SECURITY REVENUE IS GONE!
So much misinformation is being spread about Social Security today that nobody knows what to believe. The enemies of Social Security say that Social Security is going broke and needs immediate reform. Extremists on the other side of the argument claim that Social Security is just fine. They say that Social Security has a $2.6 trillion surplus in the trust fund that can be used to pay full benefits until 2037. As a scholar, who has been researching and writing about Social Security for more than a decade, please allow me to say that neither of the above claims is even close to the truth.
Social Security is self-funded by the payroll tax, so as long as the payroll tax exists, Social Security cannot go broke. For nearly 30 years, payroll tax revenue exceeded the cost of benefits. That money was supposed to be saved and invested in real, marketable U.S. Treasury bonds to build up a large reserve in the trust fund. But none of it was saved or invested in anything. Since 1985, the government has siphoned every dollar of it into the general fund and used it to finance tax cuts, two wars, and other government programs, replacing the money with non-marketable IOUs. These IOUs are not real bonds. They are simply claims against future tax collections. The only way the government can redeem them is by 1) increasing taxes, 2) reducing other government expenditures or 3) borrowing from the public. On January 21, 2005, David Walker, Comptroller General of the GAO, tried to make it clear that the trust fund contained no real assets. He said,
“There are no stocks or bonds or real estate in the trust fund. It holds nothing of real value to draw down.”
In the Summary of the 2009 Social Security Trustees Report, a single sentence, buried deeply within the report, spills the truth about the so-called “trust fund bonds.” That sentence reads:
“Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.”
When the Comptroller General says the trust fund “holds nothing of real value to draw down” and the Social Security trustees say that the Treasury receives no new net income, from the interest allegedly paid on the IOUs, or when it redeems the IOUs, where do so many people get the idea that the trust fund holds $2.6 trillion in “bonds just like all other bonds?” They get that idea from the fact that they have been misled, by the government and organizations like AARP, for the past 25 years, to believe that. But it is not true. To borrow from the title of one of my books, it is all a “BIG LIE!”
Allen W. Smith, Ph.D.
Professor of Economics, Emeritus
Eastern Illinois University
Website: www.thebiglie.net

Allen W. Smith, Ph.D. of CA 3:10PM February 28, 2011

What kind of return are you getting on YOUR social security investment?
Can you leave YOUR earned money to your family when you die?
Social security should be turned into a self-directed account. You should have the option to move YOUR money to the investments that best fits your future or you be allowed to let it run under the current government control. Then to bottom-line would be YOUR money to what you wanted to once you pass away.
Better yet make the deposit mandatory, but into a self-directed IRA.
I know some will say that will only give the money to the crooks on Wall Street, but aren't you giving it to the crooks in DC now?
The money is YOUR earned property and we have given up control of it to the government.

Larry of CA 1:30PM February 28, 2011

Social Security and the parts of Medicare and Medicaid that are self-funding and are not an entitlement should come out of the budget and be paid the money owed them by the govenrment and put into their own budget! Now try balancing the budget!

Sandra of WY 12:43PM February 28, 2011