Oooooh NOOOOO!!!! Saint Obama said he was going to increase taxes on the EVIL RICH – these fools did NOT think he meant THEM. Their world is falling down around them, even though they TRUSTED and voted for Saint Obama. Oh No!!!
Simple arithmetic. Why can’t the Republicans refute the claim, widely spread by the left and apparently widely believed, that “Social Security doesn’t add a penny to the deficit?”
If you go to the SS own website and look at the trustees’ report, it says plainly that
1. The SS system is pay as you go and outgo exceeds income and has for a couple of years
2. The trust fund is a fiction: for many years income exceeded outgo, but the excess was used to purchase government securities (bonds) and the money was used to pay OTHER government obligations.
3. The bonds held by the “trust fund” earn interest – but where does that interest come from? The General Fund composed of taxes paid by you and me.
4. The bonds held by the “trust fund” can be “redeemed” – but where does the redemption money come from? The General Fund composed of taxes paid by you and me.
5. The General Fund does not collect enough in taxes to pay all bills, including interest and redemption of bonds held by the “trust fund.” Money is borrowed each year to make up the difference. The money that must be borrowed makes up the deficit.
6. So if not enough money is coming in to pay all SS benefits, and bonds in the “trust fund” must be “redeemed” to make sure all benefits are paid, and the money to pay for the redemption comes from the General Fund, and the General Fund does not have enough money to pay all of its obligations and must borrow to meet them, the money to pay SS benefits not covered by income to the “fund” makes up part of the deficit.
7. The debt is accumulated annual deficits.
8. You could maintain the fiction that Social Security benefits are paid before all others and therefore doesn’t add to the deficit, other shortfalls do, but money is fungible.
Now who can’t do the math? Funding private pensions with a company’s own bonds is illegal – and for good reason. The situation is the same.