Anyone care to explain this?

[Bob Hubbard]

For a few years now, I have always heard the politicians saying that social security is solvent until 2020 or 2030, not sure of the correct decade.
That being the case, and I still think being solvent means one has the ability to pay one's bills, being that more money is coming in than going out.
Now, this present debacle about the "deadline" to do something about the debt ceiling, has me a bit confused because the politicians are saying the possibility exist that if the debt ceiling is not raised before august second, social security checks may no be sent out.
So my question is, which way is it?
Is social security solvent, or is someone lying?
Bob.

 

[shagdrum]

The social security thing is a lie. The ONLY reason social security would stop is if Obama specifically decides to stop payments. Even if the debt limit is not raised, the government takes in more then enough tax revenue to pay social security, Medicare and all the other things they are threatening to not pay.

When you have budget battles in local and state governments, politicians scare the voting populace by saying that certain vital services (police, schools, jails, etc) will have to be shut down (sometimes even making good on these threats until they get their way). This is because, due to the incentive structure involved, the political class hates to cut spending so they scare the voting populace into submission.

The social security thing is simply the same manipulative scare tactics on a grander scale. If they were to stop paying these things, it is only because they chose to do so, not because they were "forced" to do so.

As to the solvency thing, those are estimate and estimates are not reality. In fact, when it comes to something like this government "estimates" are almost always absurdly optimistic to the point of being laughably unrealistic.

Also, it is worth noting that there is a difference between debt and deficit.

 

[cammerfe]

Now there you go shedding light on a murky subject!

KS

 

[Marcus]

The real explanation is that, while the SS trust fund itself is solvent, the actual administration of benefits (the people who "write the checks") is still covered under the federal budget. It's like having money in your bank account but the bank told all the tellers to go home, so you can't get to it.

 

[shagdrum]

It should be remembered that the process of getting the mondy out is automated. In fact, IIRC last week (if not earlier) it was reported that it was too late to change the computer code to stop that process.

It would take more effort to stop the checks then not.

“We send that information actually over to the Department of the Treasury. They are the ones who actually send out the payments, whether it’s electronic funds, transfers, or check.”
-Stephen Goss, chief actuary of the Social Security Administration

“I guess we’ll have to ask the Department of the Treasury and we’re having difficulty getting answers from them, but I see under no circumstances unless it was a political decision that the administration would refuse or withhold Social Security checks because there are sufficient receipts,”
-Rep. Tim Huelskamp​

‪Social Security Actuary Confirms: Withholding Checks Would be a Political Decision - July 13, 2011‬‏ - YouTube