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Monday, December 14, 2009

Social Security Solvency

Social security is projected to remain solvent through 2034 before a solvency crisis strikes. That is nearly forever in political terms. But the truth may be much uglier. Due to the government's current spending habits, Social Security could become unusable as early as Autumn of 2010.

The current administration and Congress are borrowing to spend. The government deficit is projected to expand another 3 trillion dollars. There are three sources for federal solvency: Private purchases of treasury notes; Sales of t-notes to the Federal Reserve, creating "new money" and inflationary pressure; Sales of t-notes to Social Security Administration.

The Federal Reserve purchases have exceeded 55% of total t-notes sold in recent auctions. This suggests we up for inflation, which is a massive pain. This nasty fact helps explain why foreign governments are losing interest in US Treasuries. But it also means the t-notes assets purchased by Social Security won't go as far when they are paid off. The future pay back of the t-note will have less purchasing power than the money used to buy the t-note in the first place.

You should note these t-notes are used to supply cash to the Democreeps' apesnot spending, featherbedding their buddies. There is not much, if any, truly productive federal spending going on.

Solvency for required federal spending, like the military and postal service, both constitutionally mandated, will drain future tax collection. Social programs must be reduced. It is reasonable to speculate some bills may not get repaid, like Social Security owned t-notes.

Social Security's apparent solvency may be an illusion. The Democreeps have spent like such a cloud of drunken fools, we may have a giant credit card bill years in the re-paying.

If the disaster strikes as early as Autumn of 2010, seniors will be screaming in genuine pain. Will they blame the elected people who actually caused their hurt? Or will they demand soft words?

Repelicans have always been artless when it comes to soft words. There is no easy way to tell someone they can't be helped. Democreeps will lie, then not help, then insist someone else caused the problem. It helps that the Democratic Party owns most of the popular press in the US.

The Hard Road
But the Republican Party must take the hard road for all of us. The coming party platform must include elements like, 1. All contracts not already let under Obamunism are canceled; and 2. all contracts let but no started are canceled with only a 10% cancellation allowance; 3. All other unexpended funds are impounded. Imagine the screeching from the Left.

But we will need this sort of discipline to recover from the Democreep orgy of stupidity. Someone has to pay the bills.

In future let's not be stupid in who we vote for.

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More about Social Security status posted as Trustees Report

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