Tag Archives: Social Security

Feds: Social Security Disability Fund Goes Broke Next Year

We warned you. (December 18, 2013.)

July 13, 2015: Obama says Medicare and Social Security “are not in crisis”.


Free Beacon (July 22, 2015): Social Security’s disability trust fund will run out of money next year, administrators said on Wednesday, forcing steep benefit cuts for the entitlement’s beneficiaries unless Congress acts to shore up the program.

The program’s trustees said in a report on the fund’s financial state that its fiscal reckoning, which is expected to come in late 2016, will automatically slash benefits by nearly a fifth, the Associated Press reported.

The report said the fund faces “an urgent threat” that requires prompt action by Congress.

There is an easy fix available: Congress could shift tax revenue from Social Security’s much larger retirement fund, as it has done in the past.

President Barack Obama supports the move. But Republicans say they want changes in the program to reduce fraud and to encourage disabled workers to re-enter the work force.

The date that the fund will be exhausted is unchanged from last year’s report. But as the deadline gets closer, advocates say the need to act becomes more urgent.


I’d say it needs to become urgent NOW.

See also:


CBO: Debt Headed to 103% of GDP; ‘No Way to Predict Whether or When’ Fiscal Crisis Might Occur Here

CBO Director Keith Hall has a dire warning...

CBO Director Keith Hall has a dire warning…

CNSNews: Testifying in the U.S Senate on Thursday, Congressional Budget Office Director Keith Hall warned that the publicly held debt of the U.S. government, when measured as a percentage of Gross Domestic Product, is headed toward a level the United States has seen only once in its history—at the end of World War II.

To simply contain the debt at the high historical level where it currently sits—74 percent of GDP–would require either significant increases in federal tax revenue or decreases in non-interest federal spending (or a combination of the two).

Historically, U.S. government debt held by the public, measured as a percentage of GDP, hit its peak in 1945 and 1946, when it was 104 percent and 106 percent of GDP respectively.

In 2015, the CBO estimates that the U.S. government debt held by the public will be 74 percent of GDP. That is higher than the 69-percent-of-GDP debt the U.S. government had in 1943—the second year after Pearl Harbor.

By 2039, CBO projects, the debt held by the public will increase to 101 percent of GDP and by 2040 to 103 percent GDP. At that point, Hall told the Senate Homeland Security and Governmental Affairs Committee, the “debt would still be on an upward path relative to the size of the economy.”

The U.S. Treasury divides the federal debt into two main parts: debt held by the public and intragovernmental debt. The debt held by the public includes Treasury securities such as Treasury bills, notes and bonds that are owned by individuals, domestic and foreign corporations, private banks, the Federal Reserve Bank, and foreign governments. The Treasury pays interest on this debt to those who own it. The intragovernmental debt is money the Treasury owes to government trust funds–such as the Social Security trust funds–because the government has spent money belonging to those trust funds (i.e. Social Security payroll taxes) on things other than what the trust fund was created to fund (i.e. Social Security).

As of July 9, according to the Treasury, the debt held by the public was $13,102,609,587,775 and the intragovernmental debt was $5,049,321,696,720. That equaled a total debt of $18,151,931,284,495 (and counting).

While the run up in debt held by the public as a percentage of GDP in the 1940s financed a global war against Nazi Germany and Japan that ended with an allied victory, the current run toward unprecedented debt is based on projected increases in mandatory federal spending for entitlement programs. These include Social Security, Medicare, Medicaid and Obamacare subsidies.

“Mainly because of the aging of the population and rising health care costs, the extended baseline projections show revenues that fall well short of spending over the long term, producing a substantial imbalance in the federal budget,” Hall said in his written testimony.

“As a result, budget deficits are projected to rise steadily and, by 2040, to raise federal debt held by the public to a percentage of GDP seen at only one previous time in U.S. history—the final year of World War II and the following year,” he said.

“Moreover,” he said, “debt would still be on an upward path relative to the size of the economy. Consequently, the policy changes needed to reduce debt to any given amount would become larger and larger over time. The rising debt could not be sustained indefinitely; the government’s creditors would eventually begin to doubt its ability to cut spending or raise revenues by enough to pay its debt obligations, forcing the government to pay much higher interest rates to borrow money.”

Eventually, the nation would face a crisis—with wary investors demanding “much higher interest” rates to buy U.S. government debt.

“How long the nation could sustain such growth in federal debt is impossible to predict with any confidence,’ testified Hall. “At some point, investors would begin to doubt the government’s willingness or ability to meet its debt obligations, requiring it to pay much higher interest costs in order to continue borrowing money. “Such a fiscal crisis would present policymakers with extremely difficult choices and would probably have a substantial negative impact on the country,” he said.

federal debt

“Unfortunately, there is no way to predict confidently whether or when such a fiscal crisis might occur in the United States,” he said. “In particular, as the debt-to-GDP ratio rises, there is no identifiable point indicating that a crisis is likely or imminent. But all else being equal, the larger a government’s debt, the greater the risk of a fiscal crisis.”

Simply keeping the debt in check would require significant changes in federal policy that would hit Americans in the pocketbook. “Just holding federal debt at its current high level of 74 percent of GDP in 2040 would require significant changes in tax and spending policies,” Hall testified. “The combinations of increases in federal tax revenues and cuts in non-interest federal spending relative to current law of about 1.1% of GDP in each year for 25 years would be needed.

“In 2016, this would be a spending and/or a tax revenue increase totaling about $210 billion dollars–and then more than that in each year after that,” said Hall. “If those changes came from increases of equal percentage in all types of revenues they would represent an increase of 6 percent relative to current law for each year between 2016 and 2040,” Hall testified.

“In 2016, for example, an average middle-income household would have to pay $750 more in taxes and more than that in each year afterwards,” he said. “Or if the changes came from cuts of equal percentage in all types of non-interest spending, that spending each year would have to be 5.5 percent less than projected,” he said. “If the reduction was applied across the board to all types of non-interest spending, an average 65 years old in the middle of the earnings income who retires in 2016 would see a reduction of about $1,050 in his or her initial annual Social Security benefits—more than that in each year afterwards.”

“The more ambitious goal of returning public debt by 2040 to its average level over the past half century, which is 38 percent of GDP, would require more than that,” Hall said. “This would require a revenue increase and/or non-interest spending decrease totaling 2.6 percent of GDP every years.

“This means an average middle income household would have to pay $1,700 more in federal taxes in 2016 and larger amounts in subsequent years,” he said. “Or by cutting non-interest spending across the board, average Social Security benefits for a 65-year-old in the middle of the earnings distribution would have to drop by $2,400 in 2016 and by larger amounts in later years.”

my work here is done


Great news! It’s Reported That Social Security Overpaid Nearly Half on Disability

Tax dollars at work...

Tax dollars at work…

ABC News: Social Security overpaid nearly half the people receiving disability benefits over the past decade, according to a government watchdog, raising questions about the management of the cash-strapped program.

In all, Social Security overpaid beneficiaries by nearly $17 billion, according to a 10-year study by the agency’s inspector general.

Many payments went to people who earned too much money to qualify for benefits, or to those no longer disabled. Payments also went to people who had died or were in prison.

Social Security was able to recoup about $8.1 billion, but it often took years to get the money back, the study said.

“Every dollar that goes to overpayments doesn’t help someone in need,” said Sen. Chuck Grassley, R-Iowa. “Given the present financial situation of the Social Security Disability Insurance trust fund, the program cannot sustain billions of dollars lost to waste.”

The trust fund that supports Social Security’s disability program is projected to run out of money late next year, triggering automatic benefit cuts, unless Congress acts. The looming deadline has lawmakers feuding over a solution that may have to come in the heat of a presidential election.

The program’s financial problems go beyond the issue of overpayments — Social Security disability has paid out more in benefits than it has collected in payroll taxes every year for the past decade. But concerns about waste, fraud and abuse are complicating the debate in Congress over how to address the program’s larger financial problems.

“Overpayments are bad for everyone — they are bad for the beneficiary and they are bad for the taxpayer,” said Rep. Sam Johnson, R-Texas, chairman of the House Ways and Means subcommittee on Social Security. “With the disability program going broke next year, it is especially troubling that Social Security is failing to protect precious taxpayer dollars.”

A spokesman for the Social Security Administration said the agency has a high accuracy rate for its payments and a comprehensive debt collection program for overpayments.


“Social Security provides services to over 48 million retirement and survivors beneficiaries and about 15 million disability beneficiaries,” Social Security spokesman Mark Hinkle said in an email. “The agency will issue nearly $1 trillion in payments this year. For fiscal year 2013 — the last year for which we have complete data — approximately 99.8 percent of all Social Security payments were free of overpayment, and nearly 99.9 percent were free of underpayment*.”

“That same year, we also achieved high levels of payment accuracy in the (Supplemental Security Income) program despite the inherent complexities in calculating monthly payments due to beneficiaries’ income and resource fluctuations and changes in living arrangements,” he said.

The inspector general’s office examined a randomly selected sample of 1,532 people who were receiving either Social Security disability or Supplemental Security Income in October 2003. SSI is a separately funded disability program for the poor.

Auditors followed the group for 10 years, until February 2014. *They determined that 45 percent of the beneficiaries were overpaid at some point during that period. The overpayments totaled $2.9 million, the study said. They used the results to estimate that Social Security made a total of $16.8 billion in overpayments during the 10-year period.

The study concluded that “the agency could do more to prevent the most common overpayments.”

Social Security paid out $142 billion in disability benefits last year. Unless Congress acts, the trust fund that supports the disability program will run dry sometime during the final three months of 2016, according to projections by the trustees who oversee Social Security. At that point, the program will collect only enough payroll taxes to pay 81 percent of benefits. That would trigger an automatic 19 percent cut in benefit payments. The average monthly payment for a disabled worker is $1,165, or about $14,000 a year.

An easy fix is available. Congress could redirect payroll tax revenue from Social Security’s much larger retirement program, as lawmakers have done before. But Republicans in Congress are balking, saying they want to address the program’s long-term finances.

About 11 million disabled workers, children and spouses currently receive Social Security disability benefits. About 8.3 million people receive Supplemental Security Income, which is funded separately, through the government’s general revenues.

SSI paid out about $54 billion in benefits last year.

See also:


Social Security’s $300M IT project doesn’t work

We've already flushed enough...

Your tax dollars at work…

ABC News: After spending nearly $300 million on a new computer system to handle disability claims, the Social Security Administration still can’t get it to work. And officials can’t say when it will.

Six years ago, Social Security embarked on an aggressive plan to replace outdated computer systems overwhelmed by a growing flood of disability claims. But the project has been racked by delays and mismanagement, according to an internal report commissioned by the agency.

Today, the project is still in the testing phase, and the agency can’t say when it will be operational or how much it will cost.

In the meantime, people filing for disability claims face long delays at nearly every step of the process — delays that were supposed to be reduced by the new processing system.

“The program has invested $288 million over six years, delivered limited functionality and faced schedule delays as well as increasing stakeholder concerns,” said a report by McKinsey & Co., a management consulting firm.

As a result, agency leaders have decided to “reset” the program in an effort to save it, the report said. As part of that effort, Social Security brought in the outside consultants from McKinsey to figure out what went wrong.

They found a massive technology initiative with no one in charge — no single person responsible for completing the project. They issued their report in June, though it was not publicly released.

transparency is a lie

As part of McKinsey’s recommendations, acting Social Security Commissioner Carolyn Colvin appointed Terrie Gruber to oversee the project last month. Gruber had been an assistant deputy commissioner.

“We asked for this, this independent look, and we weren’t afraid to hear what the results are,” Gruber said in an interview Wednesday. “We are absolutely committed to deliver this initiative and by implementing the recommendations we obtained independently, we think we have a very good prospect on doing just that.”

The revelations come at an awkward time for Colvin. President Barack Obama nominated Colvin to a full six-year term in June, and she now faces confirmation by the Senate. Colvin was deputy commissioner for 3½ years before becoming acting commissioner in February 2013.

The Senate Finance Committee has scheduled a confirmation hearing for Colvin for July 31.

The House Oversight Committee is also looking into the computer program, and whether Social Security officials tried to bury the McKinsey report. In a letter to Colvin on Wednesday, committee leaders requested all documents and communications about the computer project since March 1.

The letter was signed by Rep. Darrell Issa, R-Calif., chairman of the Oversight Committee, and Reps. Jim Jordan, R-Ohio, and James Lankford, R-Okla. They called the project “an IT boondoggle.”

The troubled computer project is known as the Disability Case Processing System, or DCPS. It was supposed to replace 54 separate, antiquated computer systems used by state Social Security offices to process disability claims. As envisioned, workers across the country would be able to use the system to process claims and track them as benefits are awarded or denied and claims are appealed.

But as of April, the system couldn’t even process all new claims, let alone accurately track them as they wound their way through the system, the report said. In all, more than 380 problems were still outstanding, and users hadn’t even started testing the ability of the system to handle applications from children.

“The DCPS project is adrift, the scope of the project is ambiguous, the project has been poorly executed, and the project’s development lacks leadership,” the three lawmakers said in their letter to Colvin.

Maryland-based Lockheed Martin was selected in 2011 as the prime contractor on the project. At the time, the company valued the contract at up to $200 million, according to a press release.

McKinsey’s report does not specifically fault Lockheed but raises the possibility of changing vendors and says Social Security officials need to better manage the project.

Gruber said Social Security will continue to work with Lockheed “to make sure that we are successful in the delivery of this program.” Steve Field, a spokesman for Lockheed Martin, would only say that the company is committed to delivering the program.

Nearly 11 million disabled workers, spouses and children get Social Security disability benefits. That’s a 45 percent increase from a decade ago. The average monthly benefit for a disabled worker is $1,146.

The report comes as the disability program edges toward the brink of insolvency. The trust fund that supports Social Security’s disability program is projected to run out of money in 2016. At that point, the system will collect only enough money in payroll taxes to pay 80 percent of benefits, triggering an automatic 20 percent cut in benefits.

Congress could redirect money from Social Security’s much bigger retirement program to shore up the disability program, as it did in 1994. But that would worsen the finances of the retirement program, which is facing its own long-term financial problems.

Social Security disability claims are first processed through a network of field offices and state agencies called Disability Determination Services. There are 54 of these offices, and they all use different computer systems, Gruber said.

If your claim is rejected, you can ask the state agency to reconsider. If your claim is rejected again, you can appeal to an administrative law judge, who is employed by the Social Security Administration.

It takes more than 100 days, on average, to processing initial applications, according to agency data. The average processing time for a hearing before an administrative law judge is more than 400 days.

The new processing system is supposed to help alleviate some of these delays.

See also:


Is Social Security a Massive Ponzi Scheme?

I received an interesting email. Here it is:



Remember, not only did you and I contribute to Social Security but your employer did, too.

It totaled 15% of your income before taxes.

If you averaged only $30K over your working life, that’s close to $220,500.

Read that again.

Did you see where the Government paid in one single penny?

We are talking about the money you and your employer put in a Government bank to ensure you and me that we would have a retirement check from the money we put in, not the Government.

Now they are calling the money we put in an entitlement when we reach the age to take it back.

If you calculate the future invested value of $4,500 per year (yours & your employer’s contribution) at a simple 5% interest (less than what the Government pays on the money that it borrows) —

After 49 years of working you’d have $892,919.98 . If you took out only 3% per year, you’d receive $26,787.60 per year and it would last better than 30 years (until you’re 95 if you retire at age 65) and that’s with no interest paid on that final amount on deposit!

If you bought an annuity and it paid 4% per year, you’d have a lifetime income of $2,976.40 per month.


Entitlement my foot; I paid cash for my social security insurance!

Just because they borrowed the money for other government spending, doesn’t make my benefits some kind of charity or handout!!

Remember Congressional benefits? — free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days.

Now that’s welfare, and they have the nerve to call my social security retirement payments entitlements?

They call Social Security and Medicare an entitlement even though most of us have been paying for it all our working lives, and now,when it’s time for us to collect, the government is running out of money.

America’s Retirement Disaster: 50% of Boomers have less than $12k in retirement savings

A disaster is in wait for Americans in their retirement years.

Put simply:

Too many Americans are dependent on the government (Social Security and public pensions – more on that below), instead of putting aside savings to ensure our financial security in our “golden” years.

Jim Quinn of The Burning Platform blog, has put together a bar graph that shows how perilously little Americans have in retirement savings:

After a lifetime (presumably) of working, the median Boomer household (age 55 to 64), has managed to accumulate only $12,000 in retirement savings. $12,000 isn’t even enough to support one person, much less a household, for a year. Since “median” is that figure that divides a population into two halves, this means that 50% of Americans age 55 to 64 have less than $12,000 saved for their retirement.

As Quinn colorfully puts it: “These 55 to 64 year olds are up shits creek without a paddle. No wonder the percentage of over 55 people working is at an all-time high.”

But it’s not just the Boomers: Every age bracket has been living in a land of delusion. The median retirement savings of all non-retirement age Americans, 25 to 64 years old, is only $3,000. The entire country has bought into the ”live for today” mantra.

And if you think you can rely on government in your “golden” years, think again.

To begin, Social Security is broke. There is no “trust fund” because for years, the federal government has been dipping into that “trust fund” to make up for its budget deficits. The “trust fund” is an accounting fiction that exists only on paper.

To make matters worse, even if we go by the mythical “trust fund,” Social Security will go broke in 4 years, by 2017, when it will pay out more in benefits than it takes in. In the 1950s, there were roughly 5 workers for every retiree; today, it is roughly half of that. With 78 million Baby Boomers moving into retirement, the demands on Social Security will be even greater in the coming years ahead. With demographics heading in the wrong direction and a much slower-growth economy, the Social Security Administration has moved up its estimate that the Social Security Fund will be exhausted entirely by 2033.

The first Social Security program to go broke will  be Social Security Disability (SSD), which has seen the biggest number of recipients dependents in the 4 years 8 months of the Obama presidency. Today, more than 28 million Americans who are of working age claim to have a disability – a level higher than at any other time in recorded history. But there are good reasons for us to question how many of the 28 million SSD recipients are actually disabled. (See Many on Social Security Disability can but don’t want to work,” Aug. 3, 2013.)

According to a Social Security trustees report released in April 2012, SSD will run out of cash in three years, by 2016, when incoming payroll-tax revenue will cover only 79% of SSD benefits. Because the plan is barred from running a deficit, disability aid would have to be cut, which means SSD recipients will get only about 80% of the monthly payments they used to get.

Then there’s public or government pension, whether federal, state, or local.

As I explained in my post of August 18, 2013 (“Why there will be many more Detroits – in one chart”) and as the graph below shows, public employees pensions are, without exception, severely underfunded because they are based on the expectation that whatever money that’s paid into those funds gets 7% to 8% interest. The only problem is the Federal Reserve is and has been suppressing interest rates to an anemic 1-2% because if the Federal Reserve lets interest rates go up, our already gargantuan national debt of nearly $17 trillion (some say it’s actually $70 trillion) will balloon even quicker.

underfunded pensionsJim Quinn grimly concludes:

“We have trillions in unfunded Social Security obligations that won’t be paid. Cities and States have trillions in unfunded pension and health benefits that won’t be paid. The government and its citizens have lived above their means for decades and haven’t saved for a rainy day or their futures. […] There is no possible scenario where this ends well or can be solved by another government solution. It’s too late.”

Is it too late?

The one chance we have is if we get a pro-growth leader in the White House and a pro-growth party in both houses of  Congress.

America is rich in energy resources. We can be independent in energy if we want to, instead of being reliant on oil imports from the troublesome Middle East.

If we give free rein to oil exploration and development — instead of the Obama regime’s obstruction and hampering, in pursuit of the chimera of “green” energy by wasting millions of taxpayer dollars on unprofitable, corrupt, and ultimately bankrupt solar energy ventures like Solyndra (which alone received $535 million in never-repaid “loans” from the POS) — we can not only become energy independent but also create millions of jobs. The economy will grow and with that, we can grow ourselves out of our unfunded liabilities and our national debt.

We had that chance in 2012 with Mitt Romney. :(

See also:


Wednesday Morning Quickie.

This Just In!!!   Check Your Mail..

Just wanted to let you know – today I received my 2013 Social Security
Stimulus Package. It contained two tomato seeds, cornbread mix, two
discount coupons to KFC, an ‘Obama Hope & Change’ bumper sticker, a prayer rug, a machine to blow smoke up my arse and a ‘Blame it on Bush’
poster for the front yard. The directions were in Spanish.
Yours should arrive soon.


H/T   Jean