This year things have changed. To a large degree, they have changed for all Americans, from the very young (and even unborn) to the very old. What am I talking about? The ponzi scheme know as Social Security is starting to crack. In fact:
This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.
So, how bad is that? Doesn’t Social Security have a massive trust fund that it can tap? Money built up over generations of overpaid payroll taxes? Well, yes, I guess. It depends on what you mean by “trustfund”. What the Social Security Trust Fund has is a collection of IOUs from the Federal Government. It has no surplus funds whatsoever. All the money is dumped into the general fund and spent. What Social Security has is:
But to illustrate the government’s commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bonds exist only in electronic form.
They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War.
One bond is worth a little more than $15.1 billion and another is valued at just under $10.7 billion. In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government. But don’t bother trying to steal them; they’re nonnegotiable, which means they are worthless on the open market.
Did you follow that? The bonds are special. So special that they are worthless on the open market. So where will the money come from if (when) Social Security needs it? Nobody knows, and that is a real problem. There is nothing real behind the Social Security bonds. They are the promises of a spendthrift Congress to repay them out of income that it doesn’t have. We can’t even sell these bonds to China, at least not if the Chinese are paying attention to what they are buying.
About $2.5 trillion is owed to Social Security.
Good luck to the politician who reneges on that debt, said Barbara Kennelly, a former Democratic congresswoman from Connecticut who is now president of the National Committee to Preserve Social Security and Medicare.
“Those bonds are protected by the full faith and credit of the United States of America,” Kennelly said. “They’re as solid as what we owe China and Japan.”
What does this mean? Our debt cannot continue to grow the way it is. Sooner or later it is just going to be unstustainable. No matter what we do, we probably can’t pay it back in real money. What that probably means is inflation on a grand scale, to the point that the debt is managable. China and Japan take a big hit, but thanks to the feckless behavior of the Federal Government (Democrats and Republicans) it also means that Social Security shares in that hit. You may still get your monthly check from SSI, but it will be worth pennies on the dollar to what you paid in. If you are lucky.
Like I said, this year things have changed.
Tags: Social Security
