Social Security Stunner; Bankruptcy of Nation Moved Up Several Years
Wednesday, April 1, 2009, 1:35 pm, by cmartenson
Well, Obama is talking tough with the Big Three, even letting on that the bankruptcy of GM and Chrysler is a very real possibility and may happen soon.
Since these are bankrupt companies, I suppose this makes a certain amount of sense, leaving aside the perplexing silence on why a similar approach is not being taken with insolvent banks. I guess it's possible that manufacturing paper profits is now “more American” than fashioning real goods out of hard materials.
But it goes further than this. The current administration might as well be worrying about the fact that the US government itself is hurtling towards bankruptcy.
Not only are debts exploding - moving smartly past “unsustainable” and into “ruinous” - but revenues (tax receipts) are falling like a rock.
Yesterday it was reported that the difference between Social Security income (taxes) and outlays (benefits payments), which is known in Washington-speak as “the SS surplus”, would shrink to zero next year.
The U.S. recession is wreaking havoc on yet another front: the Social Security trust fund.
With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund's annual surplus is forecast to all but vanish next year -- nearly a decade ahead of schedule -- and deprive the government of billions of dollars it had been counting on to help balance the nation's books.
First of all, let’s clear something up. As we’ve covered here repeatedly, there is no such thing as the Social Security “Trust Fund”. A “trust fund” implies that there are funds held in trust somewhere. Instead the Social Security account consists of several 3-ring binders filled with government IOUs which will have to be repaid by taxpayers (surprise!).
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The government will not default on it's debt to foreign nation states that buy U.S. debt obligations to support the government expenditures. To default would insure foreign governments would never again purchase government debt. The U.S. government will simply print more currency.
ReplyDeleteHowever, the U.S. government will absolutely default on it's financial obligations and promises to it's own people. The citizens are of little concern to the needs and welfare of the greater government.
I know this from personal experience.
I know this from personal experience.
ReplyDeleteWhat experience would that be? Since everyone is anonymous here