As of 9-30-2007 we owe the SSI trust fund 2.2 trillion

Hmm seems like it started out this way.

The Treasury Department "borrows" surpluses in the Social Security trust funds for use across the federal government. As a practical matter, the amount of money borrowed equals the balances in the trust funds after benefits are paid out.

There are two funds: one for disability benefits and a much larger one for retirement benefits. The surplus in those funds at the end of fiscal 2007 (Sept. 30, 2007) was about $2.2 trillion, all in non-marketable U.S. Treasury bonds.

The bonds now earn about 5 percent interest. Last year the government paid $110 billion in interest to the trust funds.

This practice began in 1937 with the creation of the Social Security system during Franklin D. Roosevelt's administration. That first year the government paid $2 million in interest on money it borrowed from the retirement trust fund.

http://hosted.ap.org/dynamic/stories/A/ASK_AP?SITE=FLTAM&SECTION=US
 
Both parties are ...Guilty-guilty-guilty!

cawacko said:
There's got to be a good Republican conspiracy behind this. How about you tell us how you think it got like Desh?
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The only answer is to put a lockbox on these funds...and stop raiding SS and medicare for 'Illegal Immigrants' and pork barrel projects!
 
Desh said:
So tell us guys how did this program get in trouble in the first place?
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From the very inception of Social Security (FICA) it was written into the law that any funds in excess of payments be "invested" in U.S. treasury bonds.

The problem with that is income from the sale of U.S. treasury bonds goes into the general fund of the federal government, which is then SPENT. So, even though on paper SS surplus is invested, in reality it is spent on the government, who then "owes" itself for the funds borrowed.

In fact, it was only due to the unusually large SS surpluses of the 90s, which was then used to buy treasury bonds and thus placed in the federal general fund, that allowed the Clinton administration to "balance the budget." (which is why many economic conservatives claim - correctly - that it was not a truly balanced budget.)

The manner SS surplus is invested is one of the larger exercises in idiocy our government engages in. If a major corporation were to do with their pension fund what our government does with SS, a lot of senior executives would be spending time in the pokey.
 
http://en.wikipedia.org/wiki/Us_social_security#Amendments_of_the_1980s


The 1983 Amendments and the Social Security Trust Fund
The 1983 Amendments also included a provision to exclude the Social Security Trust Fund from the unified budget (in political jargon, it was taken “off-budget”). This provision also provided for the exemption of Social Security and portions of the Medicare trust funds from any general budget cuts beginning in 1993.[58] This change was one way of trying to protect Social Security funds for the future.

As a result of these changes, particularly the tax increases, the Social Security system began to generate a large short-term surplus of funds, intended to cover the added retirement costs of the "baby boomers." Congress invested these surpluses into special series, non-marketable U.S. Treasury securities held by the Social Security Trust Fund. Under the law, the government bonds held by Social Security are backed by the full faith and credit of the U.S. government. Because the government had adopted the unified budget during the Johnson administration, this surplus offsets the total fiscal debt, making it look much smaller. There has been significant disagreement over whether the Social Security Trust Fund has been saved, or has been used to finance other government programs and other tax cuts.

So if the congress of this time had Put these surpluses in a say ..."lock Box" then we may have seen the Fix that was needed to SS?

Now the Clinton surpluses would have not exsisted and the Rs would not have been able to always claim they were really a result of their handling the budget?

Now I have seen both the OMB and the GAO claim that the majority of those surpluses were due to the 1993 budget reduction act. So why didnt the republican controlled congress do something to secure these surpluses. I recall hearing quotes of the time such as "wither on the vine" ,"shrink it to a size that we can drag it down the hall and drown it in the bathtub".

When the push came to shove the Republicans did not want to save it. They laughed at the Lock Box idea and made a joke of it.
 
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Desh said:
http://en.wikipedia.org/wiki/Us_social_security#Amendments_of_the_1980s


The 1983 Amendments and the Social Security Trust Fund
The 1983 Amendments also included a provision to exclude the Social Security Trust Fund from the unified budget (in political jargon, it was taken “off-budget”). This provision also provided for the exemption of Social Security and portions of the Medicare trust funds from any general budget cuts beginning in 1993.[58] This change was one way of trying to protect Social Security funds for the future.

As a result of these changes, particularly the tax increases, the Social Security system began to generate a large short-term surplus of funds, intended to cover the added retirement costs of the "baby boomers." Congress invested these surpluses into special series, non-marketable U.S. Treasury securities held by the Social Security Trust Fund. Under the law, the government bonds held by Social Security are backed by the full faith and credit of the U.S. government. Because the government had adopted the unified budget during the Johnson administration, this surplus offsets the total fiscal debt, making it look much smaller. There has been significant disagreement over whether the Social Security Trust Fund has been saved, or has been used to finance other government programs and other tax cuts.

So if the congress of this time had Put these surpluses in a say ..."lock Box" then we may have seen the Fix that was needed to SS?

Now the Clinton surpluses would have not exsisted and the Rs would not have been able to always claim they were really a result of their handling the budget?

Now I have seen both the OMB and the GAO claim that the majority of those surpluses were due to the 1993 budget reduction act. So why didnt the republican controlled congress do something to secure these surpluses. I recall hearing quotes of the time such as "wither on the vine" ,"shrink it to a size that we can drag it down the hall and drown it in the bathtub".

When the push came to shove the Republicans did not want to save it. They laughed at the Lock Box idea and made a joke of it.
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Yes, the republican congress failed to act to protect SS, and their ridicule of Gore's "lock box" idea was asinine. The focus at the time of both the republican-majority congress and the White house was to show a balanced budget. And there is no WAY they could have showed even a paper balanced budget if they had changed the law to reinvest SS funds away from government spending. The large surpluses which were generated due to the twin influences of 1983 budget act and the dot-com bubble of the 90s were the only item which allowed them to show a balanced budget on paper. That is why both democrats and republicans claim the credit for a balanced budget while pointing to the other for SS woes. In truth they are both culpable for the deceit involved in borrowing from one section of government, putting it in the general fund and calling it a balanced budget. And they are both culpable for the multi-trillion dollar hole in Social Security's future when those t-note come due and payable.

But the lock box idea, which I fully agree with, would not have, by itself, fixed the SS problem. The federal government already held huge amounts of treasury notes belonging to the SS fund even before the idea was brought out. Those funds need to be paid back and invested in a style similar to corporate pension funds.
 
That 1993 budget reduction act was passed without one single R vote. Gore had to come inot the senate and break the tie. The Gingrich revolution fought it tooth and nail. They told the American people it would ruin the country. They then won control of congress by harping in the media that it was a massive tax increase and they needed to take control and reverse it. It worked and they took control. That is when you heard the quotes I mentioned , they then set about to dismatle everything they could. Clinton was reviled because he fought back with vetos where he could. Im not saying Clinton was perfect but if he had not fought them it would have been very bad for this country. What we have now would have been compounded. The sub prime mess was unleashed by the Rs of the 90s in the form of the Grahm, Leach , Bliely act of 1999.

If the Dems had retained the majority this country would be looking very differnt now and for the better.
 
[ame]http://en.wikipedia.org/wiki/Federal_government_shutdown_of_1995[/ame]

They fought like cats and dogs. Clinton won some of the battles but had to compromise to get anything done.
 
Desh said:
That 1993 budget reduction act was passed without one single R vote. Gore had to come inot the senate and break the tie. The Gingrich revolution fought it tooth and nail. They told the American people it would ruin the country. They then won control of congress by harping in the media that it was a massive tax increase and they needed to take control and reverse it. It worked and they took control. That is when you heard the quotes I mentioned , they then set about to dismatle everything they could. Clinton was reviled because he fought back with vetos where he could. Im not saying Clinton was perfect but if he had not fought them it would have been very bad for this country. What we have now would have been compounded. The sub prime mess was unleashed by the Rs of the 90s in the form of the Grahm, Leach , Bliely act of 1999.

If the Dems had retained the majority this country would be looking very differnt now and for the better.
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The 1993 budget reduction act WAS a massive tax increase, and a lot of it hit the very people democrats promised to never raise taxes on. Between my 1992 tax return and my 1994 tax return my tax burden went up over 20% for an income increase of 4%. (The democratic congress wasn't very generous with pay increases for military those years either.)

There is a reason the democrats were put in the minority in congress in the 1994 elections. That reason was the democratic party broke damned near every promise they had made about revamping the tax codes so the middle class was not taking such a large hit relative to their income. The middle class was hit harder than the democratic party will ever admit by those tax increases at a time we were just barely starting to climb out of the economic stagnation that occurred when Bush Sr. raised taxes.

Democrats squeal like stuck pigs about the Bush tax cuts being aimed at the rich. (Why is it the average family of 4 with an income between 45 and 60 thousand ended up with a 73% reduction in tax burden under the Bush tax cuts?) But try taking a look at the exemption and tax shelters package the democrats put together under your precious 1993 bill. Talk about tax breaks aimed only at the wealthy.

And don't even start on the problems of buying things on credit be it sub-prime or otherwise. Credit purchases have been the artificial prop of our economy since the end of the Viet Nam war. There have been complaints about the way people get themselves in credit trouble every election cycle. They talk of predatory lending practices, bankruptcy rates, etc. etc. etc. The savings and loan crisis came and went, and congress didn't even try to do anything other than prop up the problem with another band-aid. It all makes pretty campaign talk when running for election. But nothing has been done about it because the politicians recognize what will happen when (not if) we are forced to return to a more pay-as-you-go style economy. Neither party, democrat nor republican, wants the whole thing tumbling down in their laps on their shift so they put on a variety of bandaids while the credit economy heads toward a death from a thousand cuts.

Something was bound to give eventually in our high-credit economy. Sub prime lending in the housing market just happened to be the trigger. If it hadn't been sub prime housing credit, it would have been something else - probably a lot worse - later on. For that matter, the current batch of politicos will undoubtedly put another patch on the deal, the sub-prime crisis will go the way of the savings and loan crisis, and we'll go on until something else busts, causing another crisis.

But one of these days, probably sooner than later, something will bust that can't be band-aided. Then there will be hell to pay going back to the 70s.
 
http://www.realestateagent.com/glos...mnibus-budget-reconciliation-act-of-1993.html


Establishment of a new two-tiered progressive Alternative Minimum Tax rate schedule for noncorporate taxpayers as follows: married individuals filing a joint return would pay a 26% rate on Alternative Minimum Taxable Income up to $175,000, and a 28% rate on Alternative Minimum Taxable Income in excess of $175,000; married individuals filing separate returns would pay a 28% rate on Alternative Minimum Taxable Income in excess of $87,500.
Exemptions under the Alternative Minimum Tax increased as follows: to $45,000 from $40,000 for married individuals filing jointreturns; to $22,500 from $20,000 for married individuals filing separate returns, as well as estates and trusts; to $33,750 from $30,000 for single individuals



I dont know how you ended up paying alot more but I didnt at that time. It was a great financial time for me and I managed to buy a new house without having to sell my first one. Everyone I knew did great in those years.
 
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http://epic.org/privacy/glba/


History of the GLBA

The history of the GLBA has its roots in the separation of banks, brokerage companies, and insurance companies. As a result of the financial failures of the Great Depression, Congress in 1933 passed the Glass-Steagall Act prohibiting national and state banks from affiliating with securities companies. In 1956, Congress passed the Bank Holding Company Act that prohibited a bank from controlling a non-bank company. In 1982 Congress amended the Bank Holding Act to further forbid banks from conducting general insurance underwriting or agency activities. This changed, however, in 1999, when the GLBA repealed sections of these acts and allowed banks to engage in a wide range of financial services.

The Glass -Steagal act was put in place as a result of these types of mergers helping to creat the great depression. It was repealed in 1999 with the GLBact and a couple of years later the Sub prime mess started. It allowed the lenders to turn the sub prime loans into a profit making instument.
 
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Desh said:
http://www.realestateagent.com/glos...mnibus-budget-reconciliation-act-of-1993.html


Establishment of a new two-tiered progressive Alternative Minimum Tax rate schedule for noncorporate taxpayers as follows: married individuals filing a joint return would pay a 26% rate on Alternative Minimum Taxable Income up to $175,000, and a 28% rate on Alternative Minimum Taxable Income in excess of $175,000; married individuals filing separate returns would pay a 28% rate on Alternative Minimum Taxable Income in excess of $87,500.
Exemptions under the Alternative Minimum Tax increased as follows: to $45,000 from $40,000 for married individuals filing jointreturns; to $22,500 from $20,000 for married individuals filing separate returns, as well as estates and trusts; to $33,750 from $30,000 for single individuals



I dont know how you ended up paying alot more but I didnt at that time. It was a great financial time for me and I managed to buy a new house without having to sell my first one. Everyone I knew did great in those years.
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People that did things like buy houses, etc. were able to itemize deductions, taking advantage of many of those exemptions and shelters I mentioned. Those of us in the lower strata and limited to standard deductions were screwed. Enlisted service men were (and are) not exactly over paid.

And don't EVEN get me started on what the alternative minimum tax can do to middle income people if they so much as blink wrong. I had abuddy get caught by it due to his wife's income. They had to refinance their house to pay their tax bill. (26% of $100,000 is $26,000.) It was supposed to be fixed according to democratic promises. Their "fix" was to increase the AMT rate then add to the exemption amount by less that the previous 10 years' inflation, which was the last time the exemption was adjusted.
 
If he was making 100,000 in 1993 he was not middle class.


The deductions for owning a home is what spurred alot of people to buy homes at the time. People like me who did are sitting pretty well even in the face of this mess we now have.
 
Desh said:
If he was making 100,000 in 1993 he was not middle class.


The deductions for owning a home is what spurred alot of people to buy homes at the time. People like me who did are sitting pretty well even in the face of this mess we now have.
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Yes, you hit it on the head, and what the government has been basically doing for over 50 years. Encouraging people to purchase on credit is what they use to prop up our unstable economy. Buy a house on credit and we'll let you deduct some of the credit expenses from your taxes. Buy, buy, buy because that stimulates economic growth.

You did well back then, as did a majority of people who acted as you did. (I already had my house paid for and did not desire to go in debt to buy another.)

Then there were the small minority who did NOT do well. But too bad for them, huh?

So we come to 1999, and the changes made to GLBA. Those changes were NOT made, as you seem to imply, to give the banking corporations license to
grab profits at the expense of the consumer. The economy was stagnating in the face of the dot-com crash. To stimulate the economy, credit purchasing needed to be opened up even farther than it already was. But what business is going to make sub-prime loans unless the laws are changed so they can profit from sub-prime loans. A business exists to make a profit. Those who don't make a profit do not last long. This is not evil or wrong in itself, though undoubtedly there are those who did abuse the situation for their gain.

So the law was changed, the lenders opened up sub-prime loans to a sector of the economy who could not otherwise qualify for home loans. The economy was again stimulated through encouragement of deficit spending. People bought houses. Contractors built more houses due to increased demand. Lumber companies and other manufacturing facilities sold the materials to build the houses. Furniture stores, bed and baths, etc. sold items to furnish, decorate and stock the houses. everyone was having a high time on deficit spending. And like 1993, the majority of people made good on the increased availability of housing credit.

But this time enough did NOT make it that the lenders themselves were left over extended, and we find ourselves in the sub-prime lending crisis.
 
We were running on defecit spending and not doing too well. So what did we do ? lower the bar to encourage more defecit spending. And started using the equity in our homes as credit cards as well.
No suprise it did not work out too well.
 
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