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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Soul Crusher on December 09, 2009, 10:03:25 AM
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SOCIAL SECURITY'S GRIM MILESTONE: HALF A YEAR IN THE RED
e21 ^ | 12/9/09 | Chuck Blahous
Posted on Wednesday, December 09, 2009 12:38:08 PM by FromLori
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Data recently made public by the Social Security Administration confirm that in October, 2009, the program reached a grim milestone: six consecutive months of operating cash deficits. This is the first time Social Security has faced this situation over the entire time period, dating back through 1987, for which SSA posts the monthly data online.
From May through October inclusive, Social Security’s outgoing payments have exceeded incoming program revenue, generated mostly by the payroll tax (with a smaller amount coming in via the taxation of benefits). When a cash-deficit situation develops during a period that the program is still technically solvent, full benefits continue to be paid. The operational deficit is effectively made up with general revenues, putting additional strain on a sagging federal budget.
The primary reason for the early arrival of Social Security’s deficits is the recession, which is depressing payroll tax revenue. The drop in employment, and its corollary effect on payroll taxes, is coinciding with a long-anticipated surge in benefit claims as the Baby Boomers begin to hit the retirement rolls. These factors have combined to accelerate Social Security’s financial difficulties relative to previous projections.
Social Security’s May, 2009, dip into the red can be seen on the following graph.
The January and April spikes in the program’s monthly balances seen above are typical seasonal fluctuations, arising from the periodic crediting of benefit tax revenues to Social Security. This can be readily seen by comparing Social Security’s 2009 cash flows with those of 2008, as on the graph below.
The graph above shows how the recession has caused Social Security’s 2009 finances to be persistently weaker than in 2008, with the gap generally growing worse in the latter part of the year as unemployment has risen. From May through October, Social Security’s incoming cash revenue has fallen short of payment obligations by a total of $17.7 billion.
In what might initially seem to be a paradox, the balance in the Social Security Trust Fund has nevertheless risen by nearly $42 billion over the same period, from $2.457 trillion to $2.499 trillion.
The significance of the Trust Fund’s continuing rise should not be misunderstood or overstated. The program’s ongoing monthly deficits are placing a strain on the federal budget at the present time, despite the increasing balance of the Trust Fund.
The rising debt that the Trust Fund holds can perhaps best be understood by conceptualizing it as being like a mortgage owed by the federal government, albeit an unusual kind of mortgage in which no cash payments are made by the borrower (the federal government) until the lender (Social Security) needs money. As long as Social Security’s own incoming tax revenue is sufficient to fund its benefit payments, the government is not required make any payments on the mortgage. When Social Security’s incoming tax revenue falls short, however, the government needs to produce extra cash and start paying that mortgage off. The mortgage debt will continue to grow, however, as long as the interest on the debt is greater than the monthly cash payments being made.
An individual analogy may help to make this clearer. If an individual homeowner took out a mortgage and then paid only $1770 on it over six months, when the mortgage’s interest costs alone over that period were $5930, then at the end of those six months that person would owe a further $4160 on the mortgage despite having made several payments. Paying down just a portion of the interest and none of the principal on a mortgage parallels what is happening here. The money obligated to the Social Security Trust Fund continues to rise as the fund accrues interest; but our cash-strapped government now has to deliver additional money to support benefit payments, and has had to do so for half a year.
History shows an extreme unlikelihood that the situation will have turned around when the November figures are available. November is historically a weak month for Social Security operations, posting negative flows in 11 of the past 22 years, despite the fact that the program has consistently run large annual surpluses during that time. Moreover, in the six instances since 1987 that October operations have been in the red, November has followed suit every time. And in none of those previous Octobers were the deficits as large as in October, 2009; nor was unemployment as high as it is today.
It is too soon to tell whether the half-year of persistent monthly deficits will soon translate into full calendar years of net deficits. If these annual deficits arrive by next year as predicted in the September baseline of the Congressional Budget Office (CBO), this will be significantly sooner than either they or the Social Security Trustees have previously projected. In 2008, CBO predicted that cash surpluses would persist through 2019. The Trustees’ projections for the onset of cash deficits have since 1983 ranged from 2012-2021. Like those of other government forecasters, these projections failed to predict the depth of the recent recession.
Contrary to one of the strangely persistent myths of American politics, the Trustees’ projections have never been unduly conservative. They have generally been consistent and qualitatively accurate in light of subsequent data, with errors tending to be on the side of being slightly aggressive (meaning optimistic from the perspective of system financing). That Social Security’s deficits may be arriving earlier than projected in any previous Trustees’ report should at long last put an end to the urban myth of overly-conservative projections.
Seniors will continue to receive their Social Security benefit checks despite Social Security’s grim half-year of operating in the red. The early arrival of a half-year of consistent monthly deficits, however, should serve as a wake-up call that like other forms of retirement income, Social Security finances are being hit hard by the recession. The necessity of repairs to the program’s financial outlook is growing more urgent than previously supposed.
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Lets focus on Palins' baby instead.
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'Lets focus on Palins' baby instead. "
statements like this turn the thread into a palin thread dude.
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'Lets focus on Palins' baby instead. "
statements like this turn the thread into a palin thread dude.
Ha ha. Its just amazing to me how so few people realize what a catastophe is approaching on so many fronts with entitlements, debt, etc, all while they focus on frivolous nonsense.
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I think most of us are aware of it.
Aside from voting in a competent and spending-cutting GOPer in 2012 and praying for the best, I'm not sure what else there is to do about it.
In 2008, mccain refused to detail where he would cut spending, for fear of pissing off companies or people whose jobs weren't necessary. I worry the 2012 repub will do the same.
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Ha ha. Its just amazing to me how so few people realize what a catastophe is approaching on so many fronts with entitlements, debt, etc, all while they focus on frivolous nonsense.
How do you want people to deal with this proposed catastrophe...You suggest stop paying into it, and investing the funds into the stock market as president bush wanted to do?
I'm not American. I do however live in Lyon France.I love it here in france, as we have the best healthcare in the world, and live very stress free lives.
You American's worry about things that you have zero control over.
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I think most of us are aware of it.
Aside from voting in a competent and spending-cutting GOPer in 2012 and praying for the best, I'm not sure what else there is to do about it.
In 2008, mccain refused to detail where he would cut spending, for fear of pissing off companies or people whose jobs weren't necessary. I worry the 2012 repub will do the same.
You probably are right 240.
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How do you want people to deal with this proposed catastrophe...You suggest stop paying into it, and investing the funds into the stock market as president bush wanted to do?
I'm not American. I do however live in Lyon France.I love it here in france, as we have the best healthcare in the world, and live very stress free lives.
You American's worry about things that you have zero control over.
We need to get active and tell these idiot politicians to focus on real issues, not frivolous crap like gay marriage and football playoffs.
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We need to get active and tell these idiot politicians to focus on real issues, not frivolous crap like gay marriage and football playoffs.
Gay rights is an important issue for some, it may not be an important issue for you..However, those gays should have rights as all humans do.
What do you mean that politician's are focusing on football there in America? Please cite some example?
here in Europe soccer is very important. In Spain the government lowered tax rates for multi-millionaire soccer players. Just so the country could have a leg up in attracting the worlds top talent. For example Christiano Ronaldo, the worlds best moved to Spain from the UK. Due to Spain's favorable 24% rax rate, as opposed to 50% in england.
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Gay rights is an important issue for some, it may not be an important issue for you..However, those gays should have rights as all humans do.
What do you mean that politician's are focusing on football there in America? Please cite some example?
here in Europe soccer is very important. In Spain the lowered taxes for multi-millionaire soccer players. Just so the country could have a leg up in attracting the worlds top talent. For example Christiano Ronaldo, the worlds best moved to Spain from the UK. Due to Spain's favorable 24% rax rate, as opposed to 50% in england.
The idiots in congress are worried that the college football system does not produce a champion based on a playoff system.
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The idiots in congress are worried that the college football system does not produce a champion based on a playoff system.
interesting, it's only a collage sport and not even important. 8)
Glad i moved to France, right after the 9/11 terrorists acts..Sounds like the country has gone downhill since Clinton was in office.
However, the consensus i see on the Lyon Daily new is that Obama is turning things around.
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interesting, it's only collage sport and not even important. 8)
Glad i moved to France, right after the 9/11 terrorists acts..Sounds like the country has gone downhill since Clinton was in office.
However, the consensus i see on the Lyon Daily new is that Obama is turning things around.
Ha ha. Yeah, we went from 6.2 % UE to 10.2 % UE and hovering around 17% real UE.
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Ha ha. Yeah, we went from 6.2 % UE to 10.2 % UE and hovering around 17% real UE.
Well take it from someone living in Lyon like me..Things have fallen off a cliff economically from a global perspective..However, Obama isn't at fault for all those jobs lost around the world.. In Spain the real unemployment rate is about 29.5%. I honestly don't like Obama.However, In my opinion he's doing a good job. When i left the states the unemployment rate was much lower than 6.2%.
You seem unhappy with the current state of the united states. i to was very unhappy and left the united states. It worked out the better for me. I was tired of the everyday grind in New York, and they fact i could have died in in the world trade center collapse. These things made it an easy choice for me.
i would suggest moving if you are unhappy. Please do not take offense to this
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30% unemployment in spain.. unreal... what do people do all day? post on getbig?
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30% unemployment in spain.. unreal... what do people do all day? post on getbig?
They probably scout for chics.
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30% unemployment in spain.. unreal... what do people do all day? post on getbig?
Well that's what i hear about the Spanish unemployment rate..
yet american's always complain when they have it better than anyone else.
the rate has increase in France as well..It was recorded at 9.6% 3 months ago..It will probably be as high as in the states when reported shortly..
however, i would like to point out that Obama isn't president here
the real unemployment rate here i would estimate to be at 35% here in France
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Well that's what i hear about the Spanish unemployment rate..
yet american's always complain when they have it better than anyone else.
the rate has increase in France as well..It was recorded at 9.6% 3 months ago..It will probably be as high as in the states when reported shortly..
however, i would like to point out that Obama isn't president here
I would swap Sarkozy for NoBama in a heartbeat. At least his wife is hot. ;D
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I would swap Sarkozy for NoBama in a heartbeat. At least his wife is hot. ;D
We'll take obama over here, that would be great
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We'll take obama over here, that would be great
Deal!
You will be begging for a refund within a month.
You get Michelle we get Carla.
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Deal!
You will be begging for a refund within a month.
You get Michelle we get Carla.
No deal on that. We have many fine french women here to keep Obama happy. We don;t want him to pull a tiger woods.
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No deal on that. We have many fine french women here to keep Obama happy. We don;t want him to pull a tiger woods.
HA HA!
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interesting, it's only a collage sport and not even important. 8)
Glad i moved to France, right after the 9/11 terrorists acts..Sounds like the country has gone downhill since Clinton was in office.
However, the consensus i see on the Lyon Daily new is that Obama is turning things around.
Nice Gimmick account... ;D
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I'm thinking of going on a vacation to New York, haven't been back since i left in late 2001, when the world towers went down..
i worked at Euro brokers on the 84th floor at tower 2. :'(
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I'm thinking of going on a vacation to New York, haven't been back since i left in late 2001, when the world towers went down..
i worked at Euro brokers on the 84th floor at tower 2. :'(
I was there this past weekend.
There is still a huge hole in the ground.
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I was there this past weekend.
There is still a huge hole in the ground.
i thought the was one building that was semi erected already? this is not true?
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i thought the was one building that was semi erected already? this is not true?
There is a small structure, but nothing to be proud of.
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don;t
hi nicky
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hi nicky
lol
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hi nicky
Hugov-vwho is that chic in your avatar?
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hi nicky
Whose nikey?
I'm Marcos Chamakh, it's my pleasure to meet you.
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Whose nikey?
I'm Marcos Chamakh, it's my pleasure to meet you.
lol
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lol
The soccer player gives it away.
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lol
I see you are a Moderator on this fine board. It;s my pleasure to meet you..
I live in Lyon, France, I and am a soccer fan, A fan Manchester united FC and Lyon.
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The soccer player gives it away.
Yeah.....lol
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The soccer player gives it away.
What are you trying to prove..I'm a fan of the biggest sports franchise in the world..The biggest athlete in the world. No shock.
Are you Ameican's suggesting that because i like soccer i am lesser of a man, or even possibly gay..
Well excuse me for not likely that sport you guys call football, with people just piling up on top of each other.
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Well if he goes apeshit and starts PM'ing your every 5 sec then we know for sure
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What are you trying to prove..I'm a fan of the biggest sports franchise in the world..The biggest athlete in the world. No shock.
And who would that be?
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lol
lolol ;D that was easy.
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And who would that be?
It's C Ronaldo..Best known athlete here in Europe in the last 20-30 years..looks like he'll be eclipsing tiger woods soon, in endorsements aggregate.
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Whose nikey?
I'm Marcos Chamakh, it's my pleasure to meet you.
play the same games and we'll just start the whole thing over again. No problem by me. If you want to follow the rules and listen to the mods, you can stay. That is if Ron doesn't time out you if you're using the same IP address.
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lolol ;D that was easy.
i'm sorry i do not follow.
i know i haven't been in America in a while. Have i done something stupid.
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Well if he goes apeshit and starts PM'ing your every 5 sec then we know for sure
oh I know for sure :)
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It's C Ronaldo..Best known athlete here in Europe in the last 20-30 years..looks like he'll be eclipsing tiger woods soon, in endorsements aggregate.
You said in the world.
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You said in the world.
I reckon he's not the most famous in the united states of America. However, he's very famous everywhere else in the world.
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You said in the world.
This is too easy. ;D
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This is too easy. ;D
I know, it's just funny.
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I reckon he's not the most famous in the united states of America. However, he's very famous everywhere else in the world.
You reckon huh? :)
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Guys i think i you have me confused with someone else. perhaps marouane chamakh..on the other hand im Marcose Chamakh
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Guys i think i you have me confused with someone else. perhaps marouane chamakh..on the other hand im Marcose Chamakh
no, it's no confussion. we'll see how you play here and that'll determine if you get a second chance, nicky.
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no, it's no confussion. we'll how how you play here and that'll determine if you get a second chance, nicky.
I live in france, so i still have AOL dial up, and they charge by the hour,,So got to run
Why do you say that i have the Same IP address? don't get it