I really don’t want to eat cat food

There is a lot of misinformation about Social Security out there. I know this is true because at least half of what I read is inconsistent with the other half of what’s out there.

Here is a paragraph from Kim/Riverdaughter/Goldberry’s latest:

We know that Social Security does not add to the deficit. In fact, we have a trust fund worth almost $3 trillion dollars. Sure, that trust fund has taken a hit in the past four years because so many people are out of work and can’t pay their taxes but once people are working again, the kitty will start to grow again. And if all that is needed is a couple of tweaks to solve the minor shortfall, it’s really not as damaging to the economy or rich people’s ability to spend ungodly amounts of money on themselves as they pretend.

I don’t mean to pick on my former blog overlord, but that’s not true. There is no vault in the basement of the Social Security Administration offices with $3 trillion sitting in it. There might be a vault somewhere, but the only thing in it is a government I.O.U.


In the United States, the Social Security Trust Fund is a fund operated by the Social Security Administration into which are paid payroll tax contributions from workers and employers under the Social Security system and out of which benefit payments are made to retirees, survivors, and the disabled, and for general administrative expenses. The fund also earns interest. There technically are two component funds, the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds, referred to collectively as the OASDI funds.

When program revenues exceed payments (i.e., the program is in surplus) the extra funds are borrowed and used by the government for other purposes, but a legal obligation to program recipients is created to the extent this occurs. These surpluses add to the Trust Fund. At the end of 2011, the Trust Fund contained (or alternatively, was owed) $2.7 trillion, up $69 billion from 2010.[1] The fund is required by law to be invested in non-marketable securities issued and guaranteed by the “full faith and credit” of the federal government.

The trust fund represents a legal obligation to Social Security program recipients and is considered “intra-governmental” debt, a component of the “public” or “national” debt. As of April 2012, the intragovernmental debt was $4.8 trillion of the $15.7 trillion national debt.[2]

It’s just like your local bank. They may say they have a $100 million in assets but they probably only have $20-30 thousand in cash on hand. The rest of it is invested or loaned out.

What the government did is loan itself our retirement savings. (Not all of it – some of it goes to pay current retirees.) Then they spent it. It’s kinda like a guy who stole and spent all his grandmother’s money and now he’s waiting for her to die so he can inherit it. But the bookkeeping is way more complicated – I suspect they intentionally make it hard to figure out so they can hide how much they are stealing.

My grandpa said that the best way to lie is to tell the truth, but not all of it. There is a lot of that going on these days. That’s why you can read one article saying that Social Security is broke, and another saying everything is hunky-dory. They are both telling you some of the truth, but not all of it. So who do you trust?

In a perfect world there would be some independent, non-partisan authority out there that would sort through all the bullshit and provide us with neutral, objective facts. Unfortunately we have the mainstream media and the blogosphere. Most of them don’t know what they are talking about and the rest can’t be trusted to tell the truth.

We just came out of a two-year long election campaign where control of the country was up for grabs. During that time do you recall EVER seeing a detailed discussion (backed up by hard, verifiable data) by any of the major players as to what is wrong (if anything) with Social Security and what needs to be done to fix it? There was something called “Simpson-Bowles” (aka “The Catfood Commission”) but there wasn’t any consensus on their findings and recommendations.

It’s not just Social Security. The first half of Obama’s first term was taken up by health care reform but I don’t recall any hearings discussing the problems. That’s like a doctor prescribing treatment without first doing any diagnosis.

I really don’t want to eat cat food when I get old. If there is something wrong with Social Security we need to fix it. I mean really fix it, not just slap a band-aid on it and kick the can down the road a few years. But before we start fixing anything we need to reach some kind of consensus as to what the problem is.

That’s really hard to do when you can’t trust anybody. I’m no bean counter so I can’t do my own research. What we need is somebody (or several somebodies) to put together a “Social Security Reform For Dummies”. Then maybe we can get everybody on the same page.

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50 Responses to I really don’t want to eat cat food

  1. DM says:

    There might be a vault somewhere, but the only thing in it is a government I.O.U.

    Does that mean that all that money that Japan, China, and other U.S. Treasury holders have worthless I.O.U.s because the government is broke? The only difference, as far as I know, is that the U.S. Treasuries issued to the SS fund have certain limitations that other tradable Treasuries don’t have. The federal government has $16 trillion I.O.U.s The U.S. Treasuries that the SS fund holds are not subordinate to other U.S. Treasuries.

    • angienc says:

      Does that mean that all that money that Japan, China, and other U.S. Treasury holders have worthless I.O.U.s because the government is broke?

      No where in anything that myiq wrote was it implied much less stated that the IOUs were “worthless.” In fact, in the very next paragraph (after the Wiki quote) he goes on to draw an analogy to a bank lending out depositors’ money.

      Reading comprehension — how does that work?

    • wmcb says:

      Those “certain limitations” on SS treasuries of which you speak are very important. The foremost is that they can’t be sold on the open market: they are inter-governmental. The entity holding them is the same as the entity issuing them. What that means is an unaccountable free-for-all. There is no impetus to make them solvent, no penalty if they are not. No one is going to show up to cash them in and demand payment, as is the case with other treasury bond holders like China.

      We’ve already had a “crisis” re: SS treasuries, last year. Payments came due on the money we had “borrowed” from SS, and our govt simply ignored it. No payment was made. If you want the truth about SS bonds, look at what they DO, not what they say.. And what they DID was behave as if the “obligation” was meaningless. That CANNOT happen with normal treasury bonds held by people who actually expect repayment.

      Now, one could argue that the govt is not going to allow SS to go bankrupt unless the entire govt goes under. That they will continue to pay out SS checks regardless, even if they have to inflate and print money to do so. That’s a valid argument. But the idea that those special SS treasury bonds amount to “money in the bank” or some kind of “kitty” that is a positive asset on the national balance sheet is ludicrous. An IOU to yourself is not a net asset. If you hold an IOU from another entity, as is the case with anyone holding regular treasuries, that IS an asset.

      This is very basic accounting. If Joe has loaned me money, and holds a note saying what I owe him X amount on X date, then that is an asset for Joe, and a liability for me. Yes, that note has VALUE. For JOE. So long as he feels I can remain solvent and make the payments. That right there is normal US Treasuries in a nutshell, whether “Joe” is China or a retiree with treasuries in their portfolio.

      But SS treasuries are a case of me tapping my 401k to make a loan to myself. And what the govt bean counters and people like RD are trying to do is count BOTH the total amount in the 401k AND the loan amount as “assets” to me (the US govt). Bullshit. It has to be subtracted from the balance sheet somewhere- it CANNOT be an asset on BOTH sides of the transaction. They can wrap it in lots of obfuscating language, but that’s what they are doing. Some of the ins and outs and ways and means they do this are very complicated, but the concept is not complicated at all. It’s shady accounting, and a shell game.

      • DandyTiger says:

        The loan of your 401K is a great analogy.

        • jjmtacoma says:

          Except that if you borrow against your 401k there are huge penalties if you don’t pay it back.

          the SS fund for the government is probably more like us borrowing from our own vacation fund – where you really mean to pay it back but every other expense takes precedence. With vacation being a “nice to have” sort of thing.

      • Mary says:

        Honk! What the gov’t owes Social Security in treasuries will be the very LAST to be honored, if it comes to that.

        RD really doesn’t have a damm clue. But we knew that—economics was never her “thing.”

  2. DailyPUMA says:

    While we focus on Social Security, people who bought homes 30 or 40 years ago may not be able to tap the home equity in a fair and equitable way, just because.

    • DeniseVB says:

      I read that Obamacare is going to charge 3% on any equity profit you make after selling your home ? Those of us who bought years ago have already watched our little nest egg shrink, but we feel luckier than those who bought during the real estate bubble and are underwater now.

      • Mary says:

        3.8% True story—it’s in Obamacare.

        Some say it’s only for those above the “magic” $250,000 per year income level, but I haven’t seen anything in written form–except opinions—that verify same.

        • myiq2xu says:

          When California voters passed the seatbelt law the proposition specifically stated that the cops could not pull you over just because you weren’t wearing a seatbelt. Less than a year after the proposition passed the legislature changed the law to remove that part. Now cops can pull you over and ticket you if you aren’t wearing your seatbelt.

          Traffic tickets are big revenue for the government and unlike taxes it doesn’t take 2/3 voter approval to raise fines.

          My point is it doesn’t matter what the law says now. It can be changed later.

        • DeniseVB says:

          We’re well below the “magic” number, but it seems like punishing successful people is so unfair. If I were making 250k, I’d ask my boss to cut my salary to the new magic number of 249k 😀

        • Mary says:

          Well said, Myiq.
          I’m old enough to remember the Alternative Minimum Tax—it was supposedly only going to hit “the rich.” Slowly, but surely, it eased downward in the tax code, especially for small business owners, to hit the middle class.
          I don’t trust any of these new provisions that are advertised as “only for the rich” (ie, above $250,000 for a couple, $200,000 for single)—-they’ll ease downward, too.

          Case in point: these new taxes on the rich (raising rates) will only gain around $82 billion over 10 years—just a drop in the bucket, in terms of trillion dollar deficits annually. You KNOW more will come as soon as they get this “test case” passed. And THAT is what Americans are concerned about, justifiably.

        • catarina says:

          on the 3.8% “surcharge” here you go:


          I guess they need the extra dough for all those outlandish State dinners the Obamas like to throw for their celeb friends and big donors.

        • angienc says:

          I read that Obamacare tax is based on worth of the house itself being more than X amount (either $250k or $500k — I can’t remember which) not on the person’s income level. But again,haven’t seen anything but op-ed type writings on this.

        • angienc says:

          OK, I was wrong it is based on net income, not worth of house.

          Forbes has a story downplaying the entire thing because (1) it will not apply to most homes; and (2) the tax will not be much unless you’re the evil 1% (which makes it all OK — certainly will not stop really rich people from buying/building/selling homes or anything):

          Yes, the health law will impose a 3.8 percent tax on investment profits and other non-wage income starting in 2013. But that tax applies only to couples with adjusted gross income of $250,000 (or individuals with AGI of $200,000). About 95 percent of households make less than that, and will be exempt from the law no matter what.

          In addition, couples who sell a personal residence can exclude the first $500,000 in profit from tax ($250,000 for singles). That would be profit from a home sale, not proceeds. So a couple that bought a house for $100,000 and sold it for $599,000 would owe no tax, even under the health law.

          If that couple had AGI in excess of $250,000 and made a profit of $500,010, it would owe the new tax. On ten bucks. That would be an extra 38 cents.

          The Tax Policy Center figures that in 2013 about 0.2 percent of households with cash income of $100,000-$200,000 would pay any additional tax under this provision. And they’d pay, on average, an extra $235. Keep in mind that is added tax on all sources of non-wage income, not just home sales.


        • catarina says:

          It’s been so long since gain on sales of principal residences were taxed. TEFRA 1980-something, maybe?

          This opens the door to treat *all* home sales as realized cap gains.
          Wait for it, comrades.

  3. angienc says:

    Nobody’s telling the whole true — hell, nobody probably even knows the whole truth.

    But can we set as a given that anyone who describes social security contributions as going into a “kitty” really doesn’t know what the fuck they are talking about and should be *completely* disregarded?

  4. honoracarroll says:

    I wish the media hadn’t made Al Gore into a laughingstock, when he talked about putting Social Security into a ‘lockbox’. He may not have invented the internet, but he was 1000% correct about social security. If only he hadn’t lost the Supreme Court election.

    • swanspirit says:

      I am no bean counter either , although I wish I had a little more bean counter DNA in my system , it would make my own life easier. I did have an idea regarding SS and even Medicare , and when I heard Mitt Romney say the same thing , I thought , hey , maybe I am not as off the mark as I thought .
      Basically , the idea would be to decrease or eliminate SS and Medicare payments to people in high income brackets who really do not need it .
      I read somewhere that a very wealthy man was using his SS check to pay his golf club dues , so I think this approach might be one way of tackling this problem .
      RD should eat her own kitty food .

      • DeniseVB says:

        True story. We have friends using their combined SS payments for their beach house mortgage while living comfortably on their military retirement.

        Then again, we’re still punishing success, since they paid into SS since they started out on their careers. It is their money.

        • myiq2xu says:

          It is their money.

          That concept doesn’t get in the way of people advocating to tax the rich.

        • Mary says:

          It IS their money. SS is not welfare like food stamps or Section 8 or others—although, yes, it’s government run.

          They paid IN for 40 years.

        • elliesmom says:

          If people who pay into social security all of their working lives aren’t allowed to collect payments out when they retire because they’ve done too good a job preparing for their retirement themselves, then social security becomes a welfare payment for those who can collect it. I’m not sure most older folks who live on social security would be happy being welfare recipients. They believe the money they get every month belongs to them – not a redistribution of money from wealthier people.

          Those “wealthier people”, people paying in the maximum amount, would actually be better off financially if they were allowed to take the money they pay into social security, buy themselves a long term disability insurance policy, and invest the rest themselves. If Elliesdad and I live to be 90, we will not get our “investment” in social security back . We paid the maximum amount in for many of the years we worked, and the return on that “investment” is really quite poor. And if we die young, it’s a really crappy investment. When we die, our kids can have whatever is left in our personal retirement funds, but the government will only send them a check for a couple of hundred dollars from social security. If my kids had the choice of “opting out” of social security while they’re still young, I’d tell them to do it in a heartbeat. The one selling point of social security used to be the money was guaranteed, but that’s hardly the case anymore.

        • swanspirit says:

          Yes everyone pays in , but the original purpose of SS was to be used as a safety net for the elderly who needed it .

  5. Sad isn’t it- that nobody really does know the whole truth. About so many things. Social Security, Obamacare, Ben-Ghazi and the list goes on and on and on.
    I wish there was a law requiring Congress to use plain English when writing bills and passing laws. IMO, they purposely use lots of gobbledegook in their bills in order to induce comas in any citizen actually trying to navigate our way through the damn things.

  6. myiq2xu says:


    I am opposed to any “privatization” schemes. If you allow people to choose their own investments some people will come out ahead but others will lose their asses and we will end up bailing them out. That’s subsiding risk (aka “moral hazard”)

  7. simofish says:

    What I find mind boggling – the lifetime drug addicts / alcoholics who get social security because they “can’t function” any longer. They never paid in or very little. Fucking freeloaders. Now I get to pay for their continued drug habit.

    • Somebody says:

      Amen to that simofish, people don’t realize that SS has become the new welfare, nor do they realize that what those recipients get monthly is typically much higher than what the average senior gets. I know someone getting $2,800 a month, she lives rent free in her own home bought and paid for by family, family maintains the taxes and insurance. Yet she can’t make ends meet; I assume there has been a lot of inflation in the illegal drug market.

      I’d like to add that SS was the new welfare before Obama. Although under Obama it has skyrocketed even more.

      The question is though, as a society how do we deal with such deadbeats? Leave it to families? Churches? What’s the answer?

    • yttik says:

      I know! I have a problem with people who are “disabled” because of drugs/alcoholism. Then they go on to spend their money on more drugs and alcohol.

  8. Somebody says:

    The government is fraught with various “trust funds”, of course SS is the behemoth of the “trust funds”.

    Years ago during the Clinton administration there were hearings about how to handle the surplus with Greenspan and others. The hearings were aired on C-Span and for some reason I watched most of them. During those hearings they talked about some of these trust funds as well as our foreign debt. It obviously wasn’t that comprehensive, but perhaps a good tutorial to start with.

    Honoracarroll, touche with the Al Gore “lockbox”. Although had he won that election could you imagine how much we’d all be paying in carbon taxes? Only the wealthy could afford cat food!! Speaking of Gore, much of his reinventing government was spot on, but very little was ever implemented.

  9. driguana says:

    If it’s difficult for those of us that pay attention to understand what is going on in the fiscal realm, imagine what little the rest of the country actually knows and understands! And the politicians on all sides step in and spew their particular point of view, further obscuring any attempt at real debate as you suggest.
    Received this from Bernie Sanders this morning:
    “President Obama and the Democrats won a decisive victory on Election Day. The people have spoken and the Democratic Leadership must make it very clear that they intend to stand with the middle class and working families of our country, and not the Big Money interests. This means that in the coming weeks and months the Democrats must hold the line in demanding that deficit reduction is done in a way that is fair — and not on the backs of the elderly, the sick, children and the poor.

    As Congress reconvenes and addresses the so-called “fiscal cliff,” I have outlined several ways that we can do deficit reduction without cutting the programs that working families rely on most:

    * At a time when the wealthiest people in our country are doing phenomenally well, we must eliminate the Bush tax cuts favoring the top 2 percent.
    * At a time when corporate profits are soaring, we must end the absurd tax policy that allows about one-quarter of large, profitable corporations to pay nothing in federal income taxes.
    * At a time when the federal treasury is losing over $100 billion annually because the wealthy and large corporations are stashing their money in tax havens in the Cayman Islands and elsewhere, we must pass real tax reform that ends this outrage.
    * At a time when we spend almost as much as the rest of the world combined on defense, we must cut defense spending. There is also waste in other governmental agencies which must be eliminated.

    Now, is the time to hold Democrats accountable and ensure that we do deficit reduction in a way that is fair, while also protecting Social Security, Medicare and Medicaid.”

    • myiq2xu says:

      Now, is the time to hold Democrats accountable


      • DandyTiger says:

        Now that’s downright sad. Once they’re elected, you can’t hold them accountable. Your leverage is your vote. How is it that people don’t get that fundamental formula.

        • Somebody says:

          Most people are disengaged and they’re also easy prey to the propaganda we call news, as well as slick marketing. With the right campaign manager and media coverage Charles Manson could win a landslide election.

    • swanspirit says:

      What are you talking about? You cannot even get Obama off the campaign trail after he wins! He is in , arrogant , “I won and I will do whatever I want “mode now !

  10. myiq2xu says:


    A teenage girl was beheaded by a relative in northern Afghanistan after she turned down his marriage proposals, according to reports.

    The victim, named as Gisa, was decapitated with a knife in the Imam Sahib district of Kunduz province on Tuesday, local police said. She is believed to be around 15-years-old.

  11. myiq2xu says:

    riverdaughter, on November 28, 2012 at 7:16 pm said:

    This is not true. Social security has its own funding mechanism. All that needs to be done is raise the cap on the payroll tax. AND the government has to make good on the loans it borrowed from the trust fund.
    Otherwise, it’s fraud and theft of my generation’s retirement wealth.
    Don’t test us. We are not amused.

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