There is a problem with Medicare, we need some wise men to come up with good ideas, women, too.
I think the Social Security problem can be handled with a simple, but lasting change. See Below. JEO


"The Social Security trust fund … is already facing imminent bankruptcy."
John Boehner on Thursday, December 1st, 2011 in a news conference
The problem with Social Security can be handled (kick the can down the road) by a change in the formula that determines the amount of interest that the Treasury pays on bonds that are added to the SS Trust fund periodically. The actual number changes from time to time and there is plenty of logical reasoning for increasing it. It was well said, but false, when W stated that we were only getting 2% interest, when private equity funds could generate 5 to 7% annually. The current figure is about 3.5%, well above loan rates at the Federal Reserve.
In fact, when Bush 41 was in charge, the Treasury had to pay 13.75% for one of the 1990 issues, that is still paying to the SS Trust Fund to this day and will continue until its 30 year life is exhausted. Read Politifact Ohio’s recent study, and see if you can agree with Boehner or with me. JEOpfell
John Boehner says the Social Security trust fund faces imminent bankruptcy

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As 2011 wound down and Congress dickered over extension of a temporary payroll tax cut for 160 million Americans, concerns about the extension cross party lines.

A significant number of Democrats and Republicans argued that cutting that tax, which finances Social Security, will undermine the program.

During the negotiations, House Speaker John Boehner told reporters that the payroll tax cut was an issue on which House Republicans were ready to work with President Obama to find common ground.

"The key question is, how do we pay for it?" the Ohio Republican said. "It's important that the payroll tax cut be paid for because that money is used to fund the Social Security trust fund, which is already facing imminent bankruptcy."

That drew the notice of PolitiFact Ohio. "Imminent bankruptcy" describes a dire situation requiring immediate attention.

We asked Boehner's office for evidence. They referred us to the summary of the annual reports of the Social Security and Medicare trust funds that was issued last spring, and one passage in particular:

"Social Security expenditures exceeded the program's non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years."

The status report goes on, however: "Through 2022," it says, "the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085."

PolitiFact has been over this ground before.

In recent history, the revenue raised in payroll taxes was more than enough to cover the benefits that Social Security needed to pay out. The excess went into a trust fund, which has now accumulated roughly $2.5 trillion.

That money is not cash sitting in a vault somewhere. The federal government has loaned the money to itself, using the cash to pay for other expenses. The loan is in the form of special-issue Treasury bonds that earned $117.5 billion in interest in 2010, according to the latest trust fund report.

Largely because of the recession, Social Security paid out more in benefits in the last two years than it raised from the payroll tax. To pay benefits in 2010 and 2011, Social Security supplemented money from the payroll tax with interest from the bonds, according to the Social Security Administration.

According to the Social Security and Medicare Trust Fund Reports, interest from the Treasury bonds -- plus revenue from the payroll tax -- will be insufficient to cover the cost of retiree checks in 2022.

Fourteen years later, in 2036, the trust fund itself will be depleted, according to the report. If nothing is done, the only money flowing into Social Security will be the amount raised year-to-year in taxes. That will only cover about 75 percent of benefits through 2085.

How does that add up for Boehner's statement about "imminent bankruptcy"?

"Imminent" is defined by the dictionary as "about to happen."

"Bankrupt" is a distinct legal term that means a person, company or government is unable to pay its debts.

There is an element of truth here. Social Security is facing long-term fiscal challenges. But the claim ignores critical facts that would give a different impression.

The program is not out of money or unable to pay benefits. At the current pace, according to federal projections, scheduled benefits should continue to be paid in full for about 25 years.

The sky may be darkening, but it is not falling.

On the Truth-O-Meter, Boehner's statement is Mostly False.

Social Security Facts™

House Speaker John Boehner told reporters: "The Social Security trust fund ... is already facing imminent bankruptcy." PolitiFact Ohio (Tuesday) finds his statement to be "Mostly False." Some young people have been misled by such statements and have falsely concluded that Social Security will not be there for them. Conservatives are purposely undermining Social Security to reduce public support for it.
The facts are that in recent history, the revenue raised in payroll-taxes is more than enough to cover the benefits needed to pay out. The excess is in a trust fund composed of Treasury bonds. This $2.5 trillion excess (plus Interest) is sufficient to pay full benefits until 2036; after that time, Social Security will be able to pay 75 percent through the year 2085. That is as far as projections have been made. »
AUSTIN KUDER Seven Hills Letters to the Editor Plain Dealer 5 Jan 2012

Social Security is shaky indeed

It is troubling to read the recent misinformation about Social Security in PolitiFact Ohio (Tuesday) and a letter to the editor (Thursday), both claiming to present facts.
Social Security really is just another government expense item for the U.S. Treasury. The trust fund is a liability and has no real meaning as an asset for Social Security. Since President Lyndon Johnson unified the budget, the trust fund has been nothing more than a bookkeeping entry.
The only purpose the fund provides is that it allows Social Security to pay benefits at their present level when there is a shortfall in Social Security revenue, as was the case in 2011 and is expected in 2012.
However, the idea that because the trust fund has all these bonds, Social Security will be able to pay benefits until 2036 is pure fantasy. The Treasury must generate money to redeem the bonds and is now borrowing or using freshly printed Fed notes for nearly half of all the money, it spends. It is essentially bankrupt and, thus, so is Social Security. Those are the real facts.
I've been fortunate and have benefited for 18 years from Social Security. But I have told my kids, ages 45 to 50, not to expect much, if anything, from it.
JOHN M. SANDERS Painesville Letters to the Editor Plain Dealer 8 Jan 2012