Social Security Needs Money And May Need To Cash In IOU's

www.news.yahoo.com/s/ap/20100314/ap_on_bi_ge/us_social_security_ious

Well, there are a lot of babyboomers that are relying on or soon will need to rely on their money. The SSA is broke but has some IOU's that it will need to cash in to stay afloat.

"This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more".

Uh oh! This doesn't sound good to me.  Oh but wait, the SSA has $2.5 Trillion in IOU's from the federal government. Whew, that makes me feel better....NOT! Don't forget that the federal government is still running a deficit every month. So where is the government going to get the money when the SSA wants to cash in some of these IOU's?

From the article; "Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come".

"Social Security is financed by payroll taxes — employers and employees must each pay a 6.2 percent tax on workers' earnings up to $106,800. Retirees can start getting early, reduced benefits at age 62. They get full benefits if they wait until they turn 66. Those born after 1960 will have to wait until they turn 67".

Now wait, 6.2%?  I don't think so.  Remember that businesses don't pay taxes.  If there is a cost increase to the business they raise prices or...they give you less of a pay raise. Unless you work for a large corporation or a government agancy that gets across the board pay raises, you are called into your supervisor's office and he shows you your whole compensation package to show you how much the company "pays" you. Part of what they show you is the taxes "they pay".  Now all of your package comes into play when they figure up your raise. So, maybe you would have received a larger raise than you really did if they, i mean you, didn't have to pay the 12.4% tax for your social security. Do you get it, you are actually paying the whole 12.4%, it just looks like they are matching the 6.2% you pay.

"Social Security will also collect about $120 billion in interest on the trust funds, according to the CBO projections, meaning its overall balance sheet will continue to grow. The interest, however, is paid by the government, adding even more to the budget deficit".

Whoa, that's gotta make you feel good. The SSA will get $120 billion from the federal government, but that will add to the deficit, which means debt, which means each and everyone of us taxpayers will owe more.

"The national debt — the amount of money the government owes its creditors — is about $12.5 trillion, or nearly $42,000 for every man, woman and child in the country. About $8 trillion has been borrowed in public debt markets, much of it from foreign creditors. The rest came from various government trust funds, including retirement funds for civil servants and the military. About $2.5 trillion is owed to Social Security.

Good luck to the politician who reneges on that debt, said Barbara Kennelly, a former Democratic congresswoman from Connecticut who is now president of the National Committee to Preserve Social Security and Medicare".

Look at that part in yellow. Read it again and do the math. Debt is $12.5 TRILLION...we have sold treasury bonds to raise money of about $8 TRILLION....and borrowed the rest from where? Look again at the yellow text. Yep, I would say if any politician tries to renege on that there may be some old-fashioned justice being done. There are a lot of people that are going to want tha 12.4% they have been paying in for the last 40+ years.

"Those bonds are protected by the full faith and credit of the United States of America," Kennelly said. "They're as solid as what we owe China and Japan."

Gosh, I'll sleep better tonite after reading that last line...