Here It Comes (Social Security) in [Market-Ticker]

Posted 2011-01-26 19:28
by Karl Denninger
in Editorial

Here It Comes (Social Security)

The Congressional Budget Office said Wednesday that Social Security will pay out $45 billion more in benefits this year than it will collect in payroll taxes, further straining the nation's finances. The deficits will continue until the Social Security trust funds are eventually drained, in about 2037.

There are no Social Security Trust funds.

None. They do not exist.

And we're about to find out exactly how bad that subterfuge, entered into in the 1980s, is going to be for us and our children. The damage starts right now.

There is currently $4.652 trillion in so-called "trust funds" that are in fact IOUs in the Trustee's file cabinet. They are not legally debt. But in order to spend any of it, they will have to become legal debt. It is for this reason that when I run my deficit numbers, I count these alleged "Trust" funds - because in order to spend them, Treasury has to count them too.

So this year, $45 billion of that money, or about 1%, will have to be turned into actual marketable debt. And if the rate of depletion is linear (it's not; the worst of the additions from the boomers are from now until 2020) we're talking about roughly $180 billion a year each and every year that will have to be sold in additional Treasury Debt in order to meet these requirements.

Budget cuts? Where? Deficit reduction? How?

CBO thinks we're going to add fifty percent to tax revenues in the next couple of years. Oh really? Where's that going to come from? More than a trillion dollars a year in additional tax collections?

It won't happen folks. It never does. Avoidance activity goes up fast as taxes go up, as every State that has tried this discovers - people move or they cut back economic activity so as not to pay the tax.

I told everyone this was going to happen. That the so-called "surplus" in the alleged-but-not-present "trust" was never coming back.

Well, now once again, twice in one day in point of fact, I get to wave the

smiley

flag.

I'd rather be wrong about this instead of being right. But sadly, if we don't stop the idiocy, waving that flag will be about the only thing that I'm going to like in the weeks, months and years to come.

The "zero barrier" is approaching at a faster rate than I expected.

Discussion below (registration required to post)

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User Info	Here It Comes (Social Security) in forum [Market-Ticker]
Halfbrite Posts: 2459 Incept: 2008-10-13 Arizona via California	If they just cut .gov spending on everything (entitlements included) by 50% right now, I'll go back to work and start paying taxes again. No cuts, you get zippo from halfbrite. Your choice. (and Huffpost says Bachmanns & Rands budget proposals are "extreme" - how ya like mine?) ---------- "That which cannot continue, will not continue. Brace for impact!" Last modified: 2011-01-26 19:34:16 by halfbrite 2011-01-26 19:32:18 Permalink
Bhakta Posts: 71 Incept: 2009-12-03 Bangkok, Thailand	We are screwed blue and tattooed and are going to be barbecued. The people enjoyed their beer and hot dogs while the politicians did them in. 2011-01-26 19:33:32 Permalink
Frat Posts: 1935 Incept: 2009-07-15 NKY	Quote: The "zero barrier" is approaching at a faster rate than I expected Should I expect to not be able to post in the forums soon, then? **. ---------- We're *ed. Where's Henry Bowman when you need him? 2011-01-26 19:33:53 Permalink*
Bhakta Posts: 71 Incept: 2009-12-03 Bangkok, Thailand	Start with the 50% cut of politicians and bureaucrats salaries so they set the example for the rest of us. 2011-01-26 19:38:36 Permalink
Bertdilbert Posts: 2666 Incept: 2008-12-22 CA	Karl, the trust fund will end up on Bernanke's balance sheet at the Fed. Add another 2.5 trillion to the future fed balance sheet. They will not spend a single tax dollar to buy back those unmarketable bonds. They may buy them but the trust fund bond vanishes and a new bond will end up at the fed purchased on the "open market" lol... it is not monetizing, ask Bernanke. ---------- Dear Euroland: Relax, Germany has a plan for your money! Political Capital Defined: We are out of money but will tax our citizens for whatever it takes to "SAVE" the Euro. 2011-01-26 19:39:48 Permalink
Crzymorse Posts: 1195 Incept: 2010-06-25 Maryland	Twenty years of work by ass clowns and here's where we predictably wind up. Government Motors. Adult supervision is now mandatory. The Rainbow gold ***ting unicorn's colon is officially empty. The shining rainbow gold plated city on a dung pile, compliments of a perpetually dumbass legislature. So long and thanks for all the fish. 2011-01-26 20:03:21 Permalink*
Oldno7 Posts: 2141 Incept: 2008-11-14 RECALL STATE USA	To top it off our the government decided to take less out of paychecks in 2011 for SS. My wife will have $1021 less taken out of her check this year. I guess they are putting more money in our hands so we can buy stocks. I don't think so. ---------- IT'S THE SPENDING STUPID The US must become less a government of men, and more a government of LAW. When people lose everything and have nothing left to lose they lose it -Gerald Celente 2011-01-26 20:18:00 Permalink
Hamilchr Posts: 63 Incept: 2009-02-28 Portland, OR	Just got a better look at the CBO's #'s: they expect tax revenues to increase from $2,228B in '11 to $3,090B in '13. That is a 40% increase in tax revenue. After tax revenue stalled out from '01 to '10 at $2T (high of $2.6T and low of $1.78 during all of '00's)...now they expect tax revenue to go $500B beyond any previous and they expect this will have no impact on nominal GDP of 5.1%. **ingcredible. Who has the balls to put their name on this piece of trash? They also expect spending will only grow by 2% ($3708B to $3794B). So, a net $862B pulled out in taxes from '11 to '13 and we have nominal 5% GDP. Ohhh, and interest paid on the public debt (esp. short rates) will jump to over $450B (currently paying $200B)...so another $250B out of the economy from '11 to '13. Ohh...ohh, and States and Muni's will be cutting back by another $100B to $200B. So, net net, we'll remove $1.3T ('11 to '13) from the economy (just about 10% of the entire economy is pulled out of circulation) and we still grow by 5%!!!. How ing stupid are people to believe this !!! tacular!!! Whatever spook is reading this, give me my labotomy now...let's just get it done with so I can fit in with the rest of ing retarded america. Where is the ing backlash over something so incredibly stupid as this report!!! How can this be taken and reported as a "non-partisan" statement to guide our government??? Did anybody read the ing thing??? Have we gone over the edge where anything can be said by authorities is taken at face value??? Anybody that can add a couple numbers knows this thing isn't a little off but so far wide right it'd make FSU's kickers misses over the years look good. Folks - read the *ing report...we are crashing ---> I mean we are in free fall. Explain how it is otherwise... Cause I think we are crashing...like a controlled demolition...an inside job. Last modified: 2011-01-26 20:54:03 by hamilchr 2011-01-26 20:26:37 Permalink*
Mayorquimby Posts: 13909 Incept: 2008-09-18 The Archaic Past	They will be cutting payouts at some point and thats' all there is to it. Fortunately Ben is still printing madly and heating and food costs keep soaring at the same time. Good times... ---------- They who wish to hurt you, work within the law. - Morrissey Gold is theft. 2011-01-26 20:32:39 Permalink
Zappafan Posts: 1802 Incept: 2007-11-30 Atlanta	Karl everybody on this forum knew this would happen, my question is how the hell can we as Americans live with such an epic fail in DC? At some point it crosses the line from political pandering and short-termism into outright criminal neglect. As far I'm concerned the entire Congress should be removed from office ... there is nobody worth keeping in there, they are all either inept or criminals. ---------- The alternative to not borrowing from a counterfeiting cartel is to be priced out by those who do 2011-01-26 20:48:50 Permalink
Bhakta Posts: 71 Incept: 2009-12-03 Bangkok, Thailand	They cannot cut payouts, but they can definitely make those payouts next to worthless; they already have for retirees living overseas where the dollar has collapsed so badly in value already. 2011-01-26 20:50:22 Permalink
Mayorquimby Posts: 13909 Incept: 2008-09-18 The Archaic Past	Sure they can. And they will I suspect. ---------- They who wish to hurt you, work within the law. - Morrissey Gold is theft. 2011-01-26 21:01:28 Permalink
Mikek31 Posts: 4359 Incept: 2009-05-04 Chicago	Hamilchr wrote.. **tacular!!! Whatever spook is reading this, give me my labotomy now...let's just get it done with so I can fit in with the rest of *ing retarded america. Quote of the day! They won't necessarily cut payments. No, they'll just raise the retirement age to 101... ---------- Intentional manipulation of markets is usually thought of as a crime, not a benefit, and should lead to indictments, not praise.* -Karl Last modified: 2011-01-26 21:22:59 by mikek31 2011-01-26 21:20:31 Permalink
Lenguado Posts: 1272 Incept: 2010-01-12 Orlando, FL	Frat, Quote: Should I expect to not be able to post in the forums soon, then? **. Per Gen on previous thread: Admission: Tickerguy Was Right (Again); "Time before I say "** this" and shut this joint down? It's getting closer.." http://market-ticker.org/akcs-www?single.... Read it an weep.... ---------- I just realized... they aren't saying, "Keynesian Economics" they're saying "Kenyansian Economics". Grass Huts for everyone! Welcome to historys first Double Dip Depression Last modified: 2011-01-26 21:45:22 by lenguado 2011-01-26 21:35:13 Permalink
Etz Posts: 13891 Incept: 2007-06-26 LA	Boy am I glad Obozo has all these new ideas to get us out of the hole. Boomers are going to love their green meat; and green toilets; and... ---------- Legal chicanery and beneficent darkness are the banker's stoutest allies - F.Pecora. Last modified: 2011-01-27 00:03:40 by etz 2011-01-26 21:42:19 Permalink
Xorbe Posts: 161 Incept: 2009-06-23 Bay Area, CA	> I mean we are in free fall. Explain how it is otherwise... Not in free fall. The afterburners are on! 2011-01-26 21:47:21 Permalink
Frat Posts: 1935 Incept: 2009-07-15 NKY	** Leng, I appreciate you posting that and hate you for it as well - messenger rage, I suppose. KD, make it last until the wife makes me take the whole famn damily to Destin this June. Was hoping to catch a beer with ya. ---------- We're *ed. Where's Henry Bowman when you need him? Last modified: 2011-01-26 21:59:54 by frat 2011-01-26 21:59:06 From PDA* Permalink
Widgeon Posts: 13481 Incept: 2007-08-30 Region formerly known as the United States	Of Course We're Crashing ... the Fed is Monetizing Essentially 100% of the Debt and Adding More Daily. It's only those 6000 Nukes that have kept the rest of the world playing along. That day will pass. 2011-01-26 22:23:53 Permalink
Cprince Posts: 245 Incept: 2007-08-15	They spend all the Social Security revenue and put in a box an "IOU"...if they owe us then how will they pay us...by cutting benefits...that seems unfair...boy wait to the electorate gets a load of this...they will hit the roof.. ---------- IN 2011-01-26 22:24:18 Permalink
Mikpaq Posts: 420 Incept: 2009-02-26 Maine	Genesis wrote.. There are no Social Security Trust funds. There's your SPUTNIK moment! ---------- Remember, pillage first, then burn. 2011-01-26 22:25:53 Permalink
Tdray Posts: 249 Incept: 2008-12-11	http://www.youtube.com/watch?v=7GSXbgfKF.... 2011-01-26 22:26:08 Permalink
Tickergroupie Posts: 431 Incept: 2010-03-24	Quote: I guess they are putting more money in our hands so we can buy stocks. I don't think so. 2011-01-26 22:36:16 Permalink
Swrichmond Posts: 327 Incept: 2009-02-12	Quote: CBO thinks we're going to add fifty percent to tax revenues in the next couple of years. Oh really? Where's that going to come from? More than a trillion dollars a year in additional tax collections? I saw that too and puked on my computer. GDP going to $20 Trillion by 2014? Who the **** are they kidding? Or maybe they're counting on Ben's printing really devaluing the USD... 2011-01-26 22:39:25 Permalink
Bagbalm Posts: 4263 Incept: 2009-03-19 Just North of Detroit Online	I'd really love to see somebody smarter than me try to see what part of the system will freeze up first. Will fuel costs make it impossible to deliver goods? Will withdrawal of insurance cause operations to cease? Will a market crash lead to sudden retail failure? It's too damn complicated for me and my interests always tended to hard science not social things. I'm 99th percentile - I need somebody about 99.99 to do an analysis. Black Swan? I can't even separate the geese. 2011-01-26 23:03:29 Permalink

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