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December 31, 2013

"The Social Security Cliff"

Under current law, it's coming. No doubt about it. And when it arrives, please don't ask why nobody warned you, O.K.? 


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John Henry

I remember that in 1967, in about week 2 of Navy basic training, we had a lecture on pay and benefits. As it was explained to us, by 1990 or so Social Security would be bankrupt. We would pay in but would never get anything back. This seems like more of the same, just pushed further into the future.

The truth is that SS can't go bankrupt as it is paid out of general tax revenues. Just like any other welfare program such as Food Stamps, Section 8 housing, WIC and all the others. It can't go bankrupt any more than the Army can go bankrupt.

SS payments out only have a distant nodding relationship to payments in and no legal relationship at all. Congress can raise of lower benefits, impose means tests, refuse to pay benefits to people living in certain places or whatever they choose.

What can happen is that Congress decides not to fund it any more. Just as they might choose to defund any other program.

But it is never going to "run out of money".

Unless the entire US govt goes bankrupt which could possibly happen. Not likely, but theoretically possible.

John Henry

Les Cargill

Looks to me like a projection that GDP growth will remain about 1.0%-2.0% short of what should be our target for 20 years.

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