The NY Times reports:
andThe bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security.
This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.
The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.It is important to note that there is still an overall surplus due to the interest received on the fund, thus the overall balance continues to grow, but we are getting closer and closer to the tipping point unless growth surprises to the upside or changes are made to the current structure.
Source: CBO
Jake,
ReplyDeleteyou might want to update the Bespoke link on the right side of the blog.
They have a new address.
Thanks
K
Jake,
ReplyDeletewould love to see a bar chart of consumer spending for the past 5-8 years. I have a feeling people never really stopped spending but now with the home ATM gone I do wonder where the coin is coming from. It is not from wages.
Re social security: This transition is important even now because it means Treasury has to borrow more. That is, whereas SS used to puts its surplus into the SS trust fund (which was then spent on general obligations), now the best it can do is not require immediate payment of all the interest owed.
ReplyDeleteTo getyourselfconnected: Part of the answer on "where the coin is coming from" (not all of it) is what Calculated Risk calls the "Squatter stimulus" -- people not paying their mortgage and so having more to spend on other things. It turns out this distorts personal consumption expenditures by about $40 billion/year.
Jim Fickett
ClearOnMoney.com
Jim,
ReplyDeleteThanks, that is a good piece of the puzzle.
Still,
I think the spending comes from other stuff; how many mortgage/rent free people are there?
On the other hand, holding the shoe on the other foot, I am getting a bit fed up with paying all my stuff when I could get a free ride. USA = Greece? Keep this crap up and it may well be. I'd rather be fishing.
Using data from Lender Processing Services and the Mortgage Metrics report, I estimate 3.7 million missed payments per month right now. Some of these are just one-offs, and some are people who have completely stopped paying. But all contribute to extra money in hand.
ReplyDeleteI agree, if we are going to live under a failed government, we should at least be fishing in the Aegean!
Jim Fickett
ClearOnMoney.com
Jake,
ReplyDeleteYou do your readers a MASSIVE disservice when you say, "It is important to note that there is still an overall surplus due to the interest received on the fund, thus the overall balance continues to grow, but we are getting closer and closer to the tipping point unless growth surprises to the upside or changes are made to the current structure."
Let's get real. There is no "surplus" or "balance". Every SS dollar that comes in was already spent long ago on misc. big-gov nonsense. We're in a world of hurt when even objective analysts like yourself fall for these Orwellian schemes.
Fair enough criticism... What I am trying to say is the budget is still positive (as reported) and cash flow positive (so the balance is still growing).
ReplyDeleteI am in agreement with you about the broader issue. As a 30 something year old, I have zero expectation of receiving a dime in social security...
Jim- good stuff. Thanks for sharing.
ReplyDelete