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Archive for February 25th, 2013

Did Walt Whitman Say It Best?

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The Social Security Trust Fund has grown every year since 1983, thanks to President Ronald Reagan and the adjustments to funding that he initiated. It even grew last year and the year before despite the cut in payroll taxes from 6 to 4 percent.

However, the corporate press will only let you know about about the Social Security Trust Fund deficit between the taxes it takes in and the money it pays out even though the system is sitting on a $2.7 trillion surplus that collects about $120 billion in interest per year. When you count the interest, there has always been a surplus, at least since 1983.

Take a look at part of the report from the trustees of the Social Security Trust Fund from 2012. Italics and bold are mine.

“Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemption’s will be less than interest earnings through 2020, nominal trust fund balances will continue to grow. The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.

A temporary reduction in the Social Security payroll tax rate reduced payroll tax revenues by $103 billion in 2011 and by a projected $112 billion in 2012. The legislation establishing the payroll tax reduction also provided for transfers of revenues from the general fund to the trust funds in order to “replicate to the extent possible” payments that would have occurred if the payroll tax reduction had not been enacted. Those general fund reimbursements comprise about 15 percent of the program’s non-interest income in 2011 and 2012.”

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