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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (84970)	11/8/2000 8:42:37 AM
From: gnuman	Read Replies (1) \| Respond to of 132070

Skeeter Bug. Is SS a Ponzi scheme? Since 1970 the maximum income subject to FICA tax has risen from $8K to$80K. The combined tax rate, (employee and employer), has risen from 9.6% to 15.3%. What's interesting is part of the surplus generated by these increasing tax revenues is included in the General Budget. The collections not required for current SS and Health Insurance disbursements are transferred to the General Budget through "Special Issue" securities purchased by the SS fund. (BTW, the Government does not include the "Special Issue" paper held in SS as part of the National Debt. Currently ~$1 Trillion). Part of the surplus in the General Fund is then used to retire maturing securities held in the SS fund, and to pay interest on the existing paper. So we have increasing FICA taxes, increasing Special Issue securities, increasing debt service on those securities; while at the same time increasing the "surpluses" in the General Fund to be used for non entitlement purposes. What kind of scheme is that? How long can it go on? JMHO's

To: Skeeter Bug who wrote (84970)	11/8/2000 7:58:10 PM
From: gnuman	Read Replies (5) \| Respond to of 132070

Skeeter Bug. Some interesting SS Statistics. During the next ten years the Trustee's forecast the assets of the Entitlement funds will increase ~$2.4 Trillion to a total of ~$3.4 Trillion. (The cumulative total of Income less Expenditures). These assets consist almost entirely in "Special Issue" Government securities. (I believe it will actually be much higher since interest on the "Special Issue" securities is re-invested in those same securities. Not only are the securities not included in the National Debt, but the Interest payment on them is not an expenditure). I imagine this $2.4 trillion projected "surplus" is a large part of what the politicians are talking about. (Note that during the Clinton term the "assets" increased ~$720 Billion). So if nothing changes, 10 years from now the public will be indebted to the Entitlement Funds for something in excess of $4 Trillion. However, the trustees believe that Income will exceed Expenditures until 2015. Before a trust fund is exhausted, the cash flow of the fund changes in stages. When combined OASDI expenditures exceed current tax income beginning in 2015, a portion of annual interest income will be needed to meet expenditures in 2015 through 2024. Beginning in 2025 and continuing through exhaustion of the combined OASDI Trust Funds in 2037, a portion of the principal balance in the trust funds will also be needed to pay benefits. The comparable dates for HI for beginning use of interest income and of the fund's principal balance are 2010 and 2017. Based on this, I assume that the OASDI Assets consisting of "Special Issue" securities will continue to grow until 2015. So why worry about the system? Income will exceed expenditures for the next 15 years, right? And if nothing changes, for those 15 years the annual "surplus", (which will exceed $200B/yr next year), will be invested in the General Fund to be used for other things. In case you're interested, here are some interesting documents from the SSA. Old-Age and Survivors Insurance Trust Fund, 1937-99 (A table of Income/Expenditures/Assets) ssa.gov Status of the Social Security and Medicare Programs (A report from the Board of Trustees. Lot's of interesting charts, tables and commentary). ssa.gov JMHO's