Tuesday, April 24, 2012

How 'bout another Payroll Tax holiday? Idiots.

Yesterday, the Social Security Administration released it's annual report. Some highlights, from the SSA's press release:
  • The projected point at which the combined Trust Funds will be exhausted comes in 2033 – three years sooner than projected last year. At that time, there will be sufficient non-interest income coming in to pay about 75 percent of scheduled benefits. 
  • Income including interest to the combined OASDI Trust Funds amounted to $805 billion in 2011. ($564 billion in net contributions, $24 billion from taxation of benefits, $114 billion in interest, and $103 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2011 payroll tax legislation.) 
  • The assets of the combined OASDI Trust Funds increased by $69 billion in 2011 to a total of $2.7 trillion.
Let's take these one at a time. The first indicates what we've known for a while now: Social Security--as currently structured, and allowing that assumptions made are legitimate--is not sustainable in the long run. Yet, that reality doesn't stop the congenitally clueless from saying things like this:
Despite the repeated efforts of Republicans to privatize Social Security and end the Medicare guarantee, these vital initiatives remain strong. Today’s Trustees’ report affirms that Social Security and Medicare will continue to provide critical benefits to seniors and other Americans. Democrats will always ensure they are strengthened, never weakened, as we work to create jobs and grow our economy.
Those are the words of former speaker Nancy Pelosi, who actually thinks the report is a feather in the cap of the Administration and Congressional Democrats. She continues:
The report demonstrates that health care reform has strengthened Medicare by extending its solvency; a report today from the Department of Health and Human Services confirms that the Affordable Care Act has also increased benefits and reduced costs for seniors under Medicare, just as Democrats intended it to.
Right. Sure. A report from the Administration-controlled DHHS confirms this. That's like citing a company legal department's analysis as proof-positive that some company action was entirely legal, or like citing the mother of someone charged with murder as proof of innocence because she said "I know my son is not a murderer." But regardless, notice how Pelosi focuses on Medicare and avoids Social Security, proper. Why is that? Maybe because she and her cohorts had a huge hand in making the end come three years sooner.

And that brings us to the second point. Look at the last bit: $103 billion in reimbursements from the Treasury's General Fund. Because of the 2011 payroll tax legislation. And I noted that this would be the case in a piece last year. So, the fabled Payroll Tax holiday directly upped the debt by $103 billion. But more than that, it also deprived the SSA Trust Fund of actual, real monies. Because the "reimbursements" from Treasury come in the form of non-marketable Treasury bonds, which are nothing more than IOUs. Thus, the SSA had $103 billion less to use for actual investing, paying out proceeds, or earning interest.

Which brings us to the final bullet point, the Fund's overall increase in assets. According to the SSA Board, the total want up by $69 billion, yet we know that $103 billion of its yearly income came in the form of IOUs, thus the most actual assets could have increased is...well, I guess they couldn't have increased at all. The best case scenario for the Fund is that fungible assets (meaning assets that can easily be converted to cash) decreased by $34 billion. The SSA Board claims $2.7 trillion in total assets, but what percentage of those do you suppose are fungible? Well, if the United States Treasury issued most of those assets in the form of non-marketable securities--which they did--it would mean a very small percentage was fungible.

And Pelosi thinks the report is good news. Hilarious.

Cheers, all.

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