Monday, February 6, 2012

Social Security and Negative Cash Flow

The liberals that believe there are no issues with Social Security need to show the rest of us the money. The fact of the matter is Social Security has been running negative cash flow since 2009, a full 8 years earlier than projected. The interest on the treasury bonds has been used to make up for the shortfalls. The treasury bonds are not cash. Interest on the treasury bonds adds to the deficit because we do not have the cash flow in the treasury to pay all of our bills. The fact of the matter is that the treasury bonds are nothing more than interest bearing IOUs. The government didn’t borrow the money from Social Security; the government spent the money and replaced cash with IOUs. The liberals would like to have us believe Social Security is solvent and that all that is needed is for the cap on taxable Social Security earned income to be lifted. Taxing more is not the answer.

Here is the problem in a nutshell. Social Security was supposed to be running a surplus until 2017. That didn’t happen. In fact, we have been running negative since 2009. Obama’s payroll tax decrease is compounding the problem. Instead of the tax being withheld at a 6.1% rate for employers and employees, that tax is now standing at 4.1 %. Social Security does not have a cash flow. We have to borrow money to pay interest, in 2012 interest is estimated to be $114 billion. Instead of the $114 billion be added in treasury, $46 billion will have to be sent out in the form of cash to recipients. Rather than compound and add to the so called lock box, we are dipping in and taking the interest out. Every year we do this prior to 2017, we reduce the number of years the IOU’s last before we have to redeem them and pay for them out of the general fund. The left is dishonest in their attempts to persuade the people Social Security is solvent.

One solution the left always loves is to lift the cap we have on the earned income subject to Social Security taxes. This presents to problems: first, Social Security is supposed to be self sustaining, and second, there are other proposals on the table taxing the rich at even higher rates on the capital gains and income taxes. Yes Social Security is supposed to be self sustaining. The benefits of Social Security max out where the cap is currently set. Making all income subject to this tax without increasing the benefit for that that pay more in simply means the rich are paying more than their fair share of taxes to sustain a program that the liberals spent in other grandiose social engineering programs, like Cowboy Poets society in Nevada. Additionally, the liberals want to tax even further the rich to pay for everything from 46 million people on food stamps, to education, to roads, to bridges to nowhere. Adding even more taxes on the so called rich takes even more money out of the capital investment world. Instead of growing the economy, confiscating money from the rich will shrink the wealth of the country as a whole. I know trickle-down economics is ridiculed by the left, but Obama trickle up economics is a dismal failure.

So liberals, where is the money? Where is the positive cash flow the liberals believe is in the fund? The Social Security lock box is filled with promises. The left continuously clings to the idea that the Treasury bonds make the Social Security trust fund solvent. The left clings to the idea that Social Security is separate from the general fund. The left clings to the idea that the rich have an infinite amount of wealth. However, when we have a budget deficit, a portion of that deficit goes to pay interest on the Social Security promises. When the Treasury bonds begin being redeemed, the general fund will be tapped, not only to pay interest on the remaining Treasury bonds but also the bonds being redeemed. Confiscating 100% of the $1 trillion in estimated wealth of the rich will not even pay for the current estimated deficit of the year. There is no liberal Utopia; the left only wants everyone to be poor. The left doesn’t want a level playing field, their envy of the rich wants to make them poorer. The left wants “equality” rather than competition. Rather than incentivize the productive the left wants to punish.

No comments: