A desperate solution is needed with SS and borrowing, not sure how much longer we can kick the can down the road.

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PristineSound

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Summary: The article warns that approaching Social Security insolvency could lead to more federal borrowing, which they argue might unsettle debt markets and spur inflation, triggering a difficult economic and policy situation well before the fund actually runs out.

fortune.com

Social Security's trust fund is nearing insolvency, and the borrowing binge that may follow will rip through debt markets, economist warns | Fortune

“Inflation may not wait for debt to pile up. It can arrive the moment Congress commits to that debt-ridden path.”
fortune.com fortune.com
 
The problem is real. The real problem is Congress. It was never ment to be a long term career. Although, that could be argued in the Senate with six year terms.
The real answer is a balanced budget amendment to the constitution and term limits for all…including the the judiciary.
 
Gallaher said:
The problem is real. The real problem is Congress. It was never ment to be a long term career. Although, that could be argued in the Senate with six year terms.
The real answer is a balanced budget amendment to the constitution and term limits for all…including the the judiciary.
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Couldn't agree more.
 
PristineSound said:
Summary: The article warns that approaching Social Security insolvency could lead to more federal borrowing, which they argue might unsettle debt markets and spur inflation, triggering a difficult economic and policy situation well before the fund actually runs out.

fortune.com

Social Security's trust fund is nearing insolvency, and the borrowing binge that may follow will rip through debt markets, economist warns | Fortune

“Inflation may not wait for debt to pile up. It can arrive the moment Congress commits to that debt-ridden path.”
fortune.com fortune.com
Click to expand...
Just to clarify , IF nothing is done ( a low probability) SS doesn't "run out of money" it would just mean that payouts would be cut 20-30% after 2034. Also, economists predictions are often wrong. My sense is the SS situation will be okay, but wouldn't be the end of the world if cuts actually happen.
 
Gallaher said:
The problem is real. The real problem is Congress. It was never ment to be a long term career. Although, that could be argued in the Senate with six year terms.
The real answer is a balanced budget amendment to the constitution and term limits for all…including the the judiciary.
Click to expand...
Congress responds to incentives like anyone else. Given the ample evidence on this board alone, almost no one will vote to either raise their own taxes or cut their own government benefits, or both. And that's what it will take. If you are in Congress, the safest thing for you personally is to do almost nothing, because you are bound to annoy at least some of your constituents if you vote one way or the other and you may not be reelected. So you let the president rule by executive order and take all the heat. Sadly, that means the rules change whenever the administration changes.

To get the changes you suggest, you would need to amend the Constitution. That requires a 2/3 vote in both the Senate and the House and ratification by 38 states. It would be unreasonable to expect people in Congress to vote themselves out of a job that can be very lucrative for them, so I think it will never happen.
 
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I suspect this will be fixed but only at the last minute. Congress will vote to raise the cap where SS taxes no longer come out, while also changing the algorithm to bend the curve down for those higher earners (going forward not those already getting SS). That "fix" will allow for SS to see increases immediately so that payouts will not decrease.
 
Gallaher said:
The problem is real. The real problem is Congress. It was never ment to be a long term career. Although, that could be argued in the Senate with six year terms.
The real answer is a balanced budget amendment to the constitution and term limits for all…including the the judiciary.
Click to expand...
Exactly!
 
Can will be kicked until you don't even recognize it was a can anymore. I'll bet you on this one.
 
Not to be a jerk, but, the problem will not be “fixed” it might get “patched”. Until 2010 SS ran a surplus then Congress found a way to borrow and spend the funds. Not the intended purpose for SS funds.

Now add the burgeoning National debt to the equation….!?!
Someone smarter than me needs to weight in on financial management in the face if theses obstacles.
 
Aerides said:
Haven't we all read some version of this story, every week, since the 80's?
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No, not since the 80s... just more recently.

The problem was "fixed" in 1983, but at the time it was enacted was expected to keep the system solvent for 75 years, until 2058. They missed the mark by 24 years assuming benefits are reduced in 2034.
 
Congress should have addressed this issue at least 10 years ago. They longer they wait, the "worse" the "fix". Agree, it won't get fixed until the last possible minute. If I was over 50 now and hoping to partly rely on SS in my retirement, I would want to *know* what I could l count on so I could at least plan accordingly.
 
Gallaher said:
Not to be a jerk, but, the problem will not be “fixed” it might get “patched”. Until 2010 SS ran a surplus then Congress found a way to borrow and spend the funds. Not the intended purpose for SS funds.

Now add the burgeoning National debt to the equation….!?!
Someone smarter than me needs to weight in on financial management in the face if theses obstacles.
Click to expand...
Your post shows a total misunderstanding of how social security operates within the federal budget that unfortunately is not uncommon.

From the 1983 fixes until 2010, SS taxes exceeded benefits each year so the surplus built up. It continued to build, but slower because of interest on the surplus, until it peaked at $2.9 trillion in 2021. Since then benefits paid exceeded taxes collected and interest so the surplus began to decline and is expected to run out about 2034 or so.

Social Security is ring fenced as a separate trust fund within the federal budget, so ONLY social security taxes can be used to pay for social security and social seecurity taxes cannot be used for anything other than social security benefits. What Congress does in terms of spending and borrowing has NOTHING to do with Social Security's solvency. So Congress HAS NOT spent the funds as you state since the surplus is totally unaffected by general fund spending.

SS surplus is invested in a special issue of US government bonds and the amount of those speical issue bonds are not affected by Congressional spending in the general fund... they would have been the same amount even if Congress had a balanced budget for the general fund. There is a second order effect that to the extent that the general fund has deficits that debt issued to the general public is lower because of purchases of bonds by the SS Trust Fund.

SS can be saved relatively easily. There are a small number of things that could be done to make it viable. However, as Gumby explained, any of these fixes will inevitably have winners and losers so Congress is paralized to inaction like a deer in the headlights and is unlikely to do anythng until the last possible moment. That is what happened in 1983... the fund was months from having to reduce benefits before Congress acted.
 
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pb4uski said:
Your post shows a total misunderstanding of how social security operates within the federal budget that unfortunately is not uncommon.

SS surplus is invested in a special issue of US government bonds and the amount of those speical issue bonds are not affected by Congressional spending in the general fund... they would have been the same amount even if Congress had a balanced budget for the general fund.
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Hang on a sec. Those government bonds that are purchased using money from the Social Security trust fund means the revenue gained from the sale of the bonds can be spent on anything.

The Social Security tax revenues that are exchanged for the U.S. government obligations go into the general fund of the U.S. Treasury, and they are indistinguishable from all other revenues in the general fund.
 
The sale of the special issue bonds isn't revenue! Also, since general fund spending isn't a factor in calculating the surplus that is inveted in those special issue bonds the amount that would be invested in thoe special issue bonds is totally unaffected by what general account spending is!

Now the purchase of those special issue bonds provides the general fund with cash that is does use in lieu of issuing bonds to the public but the amount of special issue bonds would be the same if the general fund ran a surplus or a deficit... so there is no valid point to be made as you are suggesting.

ETA: I'll concede that the wording in the document is poor, but the issuance of bonds to the SS Trust Fund or the general public are not revenue to the general fund. Revenues are taxes and fees collected.
 
pb4uski said:
The sale of the special issue bonds isn't revenue! Also, since general fund spending isn't a factor in calculating the surplus that is inveted in those special issue bonds the amount that would be invested in thoe special issue bonds is totally unaffected by what general account spending is!

Now the purchase of those special issue bonds provides the general fund with cash that is does use in lieu of issuing bonds to the public but the amount of special issue bonds would be the same if the general fund ran a surplus or a deficit... so there is no valid point to be made as you are suggesting.

ETA: I'll concede that the wording in the document is poor, but the issuance of bonds to the SS Trust Fund or the general public are not revenue to the general fund. Revenues are taxes and fees collected.
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OK, my bad in calling the money from the sale of the bonds as being revenue. It doesn't change the fact that the funds from these bonds go into the general fund and can be spent on anything.
 
Qs Laptop said:
OK, my bad in calling the money from the sale of the bonds as being revenue. It doesn't change the fact that the funds from these bonds go into the general fund and can be spent on anything.
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True, but do you understand that the "funds from those bonds that go into the general fund" are a function of SS taxes collected, interest received and benefits paid so the amount would be the same whetner the general fund ran a surplus or a deficit, right?

IOW, Congressional decisions on spending don't impact the SS Trust Fund surplus one iota.
 
Dad had dementia.
Dad watched a lot of TV programs (and received box load of junk mail) that would get him really riled up about congress stealing/spending SS funds.

It was always a challenge to walk him back from the ledge by trying to explain that the SS trust fund surplus needed to be invested in "something" to earn a return and the (allegedly) safest retirement trust fund investment is US gov bonds. (safest investment in this case being the "cleanest dirty shirt in the hamper").
 
Your post shows a total misunderstanding of how social security operates within the federal budget that unfortunately is not uncommon.

Oh! So there is no issue with SS! Congress doesn’t touch it. Thanks for correction.
 
I
Gallaher said:
Your post shows a total misunderstanding of how social security operates within the federal budget that unfortunately is not uncommon.

Oh! So there is no issue with SS! Congress doesn’t touch it. Thanks for correction.
Click to expand...
The Social Security trustees can't just keep the surplus as stacks of dollar bills in a warehouse until needed to pay benefits. They have to invest to get interest so that the surplus will last as long as possible. The best safe investments are the special issue U.S Treasury bonds, which are backed by the full faith and credit of the United States government, the same as every other US Treasury bill or bond.
 
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