Old Man Harry, Uncle Sam’s great nephew is 75 years old this year and he is broke. People (retirees) thought old Harry was loaded? After all, hundreds of millions of people have been paying into Harry’s Trust Fund since 1935, expecting a little retirement check when they hang up the old work boots.
The zeros on the card represent how much money is in the fund
Is Harry really broke? Depends on who you ask.
Come to find out, Uncle Sam has been investing Harry’s trust fund in himself. He has been paying Harry interest on his fund (writing IOU’s for the interest he owes to the fund.)
In other words, Sam never pays down the principle he owes Harry. He borrows to pay the interest to Harry, and winds up keeping the money he borrowed to pay the interest and keeps doing this every time the rent comes due.
I wish I could do this…but I would be sharing a cell with Bernie Madoff for 387 years !
Here is what we were told…from so called experts Congress who work with these numbers massaging them every day…..
The literal bottom line is that Social Security is financially more sound than the federal government as a whole.
Thanks to hikes in the Social Security payroll tax in the 1980s designed to create a surplus to handle the crunch of baby-boomer retirements, the program’s trust fund is projected to grow steadily for nearly 20 more years — until 2027.
After that, officials estimate there will be sufficient money to pay 100 percent of benefits until 2041, when the surplus is expected to be exhausted. From that year on, payroll tax revenue alone should be able to meet 78 percent of the program’s obligations — even if no changes are made.
A year and a half later this is what is said about Harry trust fund..
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
What is going on here? This tidbit of information was from the 2008 budget.
The FY 2008 Presidential Budget projects $2.662 trillion in revenue for FY 2008. One-fourth of this revenue is from payroll taxes that are supposed to go towards future Social Security benefits. Since these benefits aren’t needed today, the government “borrows” from the Social Security Trust Fund to pay for other costs.
This practice of borrowing from a retirement fund is very familiar to many workers who have borrowed from their 401(k). The difference is that (hopefully) the worker has a plan to pay back the loan, and continue to fund the retirement account. The government, on the other hand, has no plan to pay back the loan from Social Security. Instead, its plan for at least the next five years is to continue to borrow from this retirement fund. In fact, by using Social Security payroll taxes, the government can even “balance” the budget by 2012.
The other difference, of course, is that the worker the government is borrowing from…is you.
As taxpayers, we are ultimately responsible for everything our crazy uncle does. If he breaks a window, we apologize and pay for it. If he embezzles borrows money from Harry’s Ponzi sche Trust Fund, and doesn’t pay it back, then we have to make it good.
Here is another fact of life…
We are screwed!
….but we already knew that.
Related posts:
- If You Think Health Care is Broken Now- Just Wait till Uncle Sam gets a hold of it!
- When the Government goes out of business, what happens to those who depend on Uncle Sam?
- Dr. Seuss: “I do not like this Uncle Sam”
- Neil Cavuto: “Millionaires, If you feel guilty, write Uncle Sam a check”
- Social Security in the Red 15 Out of the past 25 Months