Social Security: $39 Billion Deficit in 2014, Insolvent by 2035

Abstract

Social Security ran a $39 billion deficit in 2014, closing out five years of consecutive cash-flow deficits as the program’s revenues from the payroll tax and the taxation of benefits are falling short of benefit payments. Absent reform, Social Security benefits will be cut across the board by 23 percent in 2035. Action should be taken today to protect Social Security’s most vulnerable beneficiaries from such drastic cuts without burdening younger generations with massive tax increases or unsustainable debt. Lawmakers should immediately replace the current cost-of-living adjustment with the more accurate chained consumer price index; raise the early and full retirement ages gradually and predictably; phase in a universal, flat benefit; focus Social Security benefits on those who need them most; and enable more Americans to save their money in private retirement accounts.

Social Security’s main program, also known as Old-Age and Survivors Insurance (OASI), ran a $39 billion deficit in 2014, closing out five years of consecutive cash-flow deficits as the program’s unfunded obligations continue to grow.[1] According to the 2015 annual Trustees’ Report, the 75-year unfunded obligation of the Social Security OASI Trust Fund is $9.43 trillion, a $70 billion increase from last year’s unfunded obligation of $9.36 trillion.[2] After including federal debt obligations recorded as assets to the Social Security trust fund of $2.73 trillion, Social Security’s total 75-year unfunded obligation is nearly $12.2 trillion.

The Social Security OASI program is projected to reach insolvency in 2035. This means that the program is expected to have only enough revenue from payroll taxes, interest on the Trust Fund balance, and repayment of borrowed Trust Fund dollars to pay out scheduled benefits until 2035. This is one year later than projected in last year’s report.[3]

If no action is taken to improve Social Security’s solvency before its Trust Fund runs dry, benefits will either be delayed or reduced across the board by 23 percent. Congress should avoid indiscriminate benefit cuts which would harm the most vulnerable beneficiaries the most by adopting commonsense reforms that modernize the outdated Social Security program.

Social Security Is Already Adding to the Deficit

While Social Security’s OASI program is considered to be solvent on paper through 2035, Social Security’s cash-flow deficit is already adding to the federal budget deficit.

Since 2010, the OASI program has taken in less money from payroll tax revenues and the taxation of benefits than it pays out in benefits, generating cash-flow deficits. The 2014 cash-flow deficit was $39 billion. Over the next 10 years, the OASI program’s cumulative cash-flow deficit will amount to $840 billion, according to the trustees’ intermediate assumptions. For as long as the federal government is running deficits in excess of Social Security’s cash-flow deficits, we can assume that this $840 billion shortfall will be matched dollar for dollar by an increase in the public debt.

Social Security’s cash-flow deficits add to the public debt because, in order to pay full Social Security benefits, the Treasury Department has to raise cash in excess of what it receives from the payroll tax and the taxation of benefits. Cash-flow deficits mean that the Treasury can no longer pay all Social Security benefits from the program’s tax income alone. Instead, Treasury must produce additional cash from taxes or borrowing. With annual federal deficits in excess of Social Security’s cash-flow deficit, the OASI program is already adding to the deficit.

Since 2010, the OASI program has taken in less money from payroll tax revenues and the taxation of benefits than it pays out in benefits, generating cash-flow deficits. The 2014 cash-flow deficit was $39 billion. Over the next 10 years, the OASI program’s cumulative cash-flow deficit will amount to $840 billion, according to the trustees’ intermediate assumptions. For as long as the federal government is running deficits in excess of Social Security’s cash-flow deficits, we can assume that this $840 billion shortfall will be matched dollar for dollar by an increase in the public debt.

Social Security’s cash-flow deficits add to the public debt because, in order to pay full Social Security benefits, the Treasury Department has to raise cash in excess of what it receives from the payroll tax and the taxation of benefits. Cash-flow deficits mean that the Treasury can no longer pay all Social Security benefits from the program’s tax income alone. Instead, Treasury must produce additional cash from taxes or borrowing. With annual federal deficits in excess of Social Security’s cash-flow deficit, the OASI program is already adding to the deficit.

What About the Trust Fund?

In the past, when Social Security ran cash-flow surpluses, the federal government spent those surpluses on other federal spending, and in return, the Treasury credited Social Security’s Trust Fund with special-issue government securities. Although this $2.73 trillion in securities is not counted in the total amount of debt held by the public, it represents real debt that will have to be repaid over the coming decades, unless Congress changes current law.[4]

The Social Security Trust Fund represents legitimate repayments plus interest, but this distinction has no bearing on the federal budget’s bottom line. Congress spent all the excess revenues when Social Security was running surpluses, and now repaying those revenues is adding to deficits. As Chart 1 shows, shortfalls in Social Security’s programs represent a considerable portion of current and future deficits.

 

Nevertheless, Congress may change current law at any time, including by eliminating the Social Security Trust Fund. Funds earmarked for OASI through its Trust Fund do not represent accrued property rights, even though these funds come from taxing workers’ wages. Congress’s authority to modify the Social Security program was affirmed in the 1960 Supreme Court decision in Flemming v. Nestor, wherein the Court held that individuals do not have a “property right” to their Social Security benefits, regardless of how many years they paid payroll taxes.[5]

Via: Heritage Foundation

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FLORIDA REPUBLICANS RAISE BIG MONEY TO REPLACE DEMOCRAT CONGRESSMAN

The soon-to-be hotly-contested Republican primary race in Florida’s 18th congressional district will not mirror the God-awful and boring 2014 GOP primary race in this same district.

This will be a race to watch.

No one in the 2014 race was able to raise any money, except for former Rep. Carl Domino, who benefitted from the contributions he made to his campaign.

Domino went on to get clobbered by 

Rep. Patrick Murphy (D-FL)

10%

 (D) by 20 percentage points in a Republican swing year election.

The 2016 primary election cycle will be different, as Republicans have raised close to $1 million.

There are six announced Republican candidates in the race, including Domino, who are ready to make a strong push to replace the outgoing Murphy. Murphy is running for the U.S. Senate in 2016.

Democrats are already getting behind Palm Beach County Commissioner Melissa McKinlay, a mother of three and staunch liberal Democrat, who has raised $183,000, a lot of that money coming from the liberal ActBlue non-profit,

What about these Republicans? How much did they each raise?

Here is a breakdown and analysis of all the candidates:

Carl Domino—Career Politician and Candidate

$208,000 (Loaned himself this amount, no contributions)

Announced April 2014

Domino is coming off a big election night loss to Rep. Patrick Murhpy (D). He had to drop in a lot of his own money to be competitive and was only able to raise about $300k in the entire election cycle.

Domino ran in three straight election cycles and lost. Will the fourth time be the charm?

Paul Spain—Businessman

$635 (Loan)

Announced late June 2015

Spain ran in Florida’s 22th congressional district against 

Rep. Lois Frankel (D-FL)

22%

 (D) and lost big because he wasn’t able to raise more than $10 (he raised a little bit more than that) for his congressional campaign. Spain loaned his campaign $125,000 in his 2014 losing effort.

Tod Mowery—St. Lucie County Commissioner

$85,000

Announced May 2015

Mowery’s FEC report is not out yet. But according to his campaign, Mowery raised about $85k. Considering that he is a sitting county commissioner, we expect Mowery to have used his bully pulpit to raise campaign dollars from local and state special interests and small businesses with interests in St. Lucie County.

This is how politics work.

Brian Mast—Combat Wounded Vet and Fox News Favorite

$70,270

Announced June 9, 2015

Mast, the political newbie with no fundraising base and who lost both of his legs in an IED blast in Afghanistan, announced his congressional campaign with an inspiring video that landed him two Fox News TV hits. In addition to Fox, it seem as if Mast’s story is resonating around the country, as the overwhelming bulk of his donations have come from individuals outside of the district.

Mast could pose a real threat in this congressional district that is heavy with military veterans. Even Democrats are saying that Mast could be the one that will face McKinlay in the general election.

Mast loaned his campaign $9,499.

Can Mast keep this up?

Rick Kozell—Attorney and Establishment Republican

$100,000

Announced June 9, 2015

Kozell, one of those young Palm Beach Republicans, who was groomed in party ways, jumped in the race the same day Mast did. In the same amount of time, Kozell was able to tap into his donor base of establishment Republicans. Attorneys and lobbyists from South Florida and Washington, D.C., chipped in cash, as did his family.

Kozell was able to raise money from Gunster, Yoakley & Stewart (his former employer), the firm former U.S. Senator and then-Charlie Crist Republican George LeMieux currently runs.

According to the FEC, Kozell received $10,800 from his family. Kozell has only loaned his campaign $100.

Rebecca Negron—State Sen. Joe Negron’s Wife and Martin County School Board Member.

$175,282

Announced May 2015

As expected, Negron has been able to use her husband’s bully pulpit in Tallahassee to raise money from major lobbyists and special interests beholden to her husband Sen. Joe Negron.

Senator Negron could be the next Senate president in the GOP-led state legislature, leaving many attorneys and lobbyist feeling compelled to donate to his wife.

Negron himself considered running for the U.S. Congress a few years ago, leaving many in south Florida to question if Rebecca is running as a mere place-holder for her husband.

Negron has not loaned her congressional campaign any money.

Who is really running for Congress, Joe Negron or his wife Rebecca?

Via: Breitbart

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Al Sharpton: ‘Money Is Not Justice’

Rev. Al Sharpton Tuesday said that the $5.9 million settlement to the family of Eric Garner is not justice.

“Money is not justice,” Sharpton said at a rally according to the local affiliate of CBS. “Money is a recognition of the loss of the family. But it does not deal with the criminal and other wrongs done to this family and other families.”

Sharpton has been a vocal proponent for paying reparations for past slavery in America. And he has been criticized more recently by Garner’s family for caring too much about money, with Garner’s eldest daughter Erica Snipes caught on camera saying, “He [Sharpton] is about this,” while making a hand motion to signal money.

The record-high settlement was charged against Daniel Pantaleo, the police officer who put Garner, a black man, in a chokehold in 2014 that resulted in his death. Garner was heard shouting that he couldn’t breathe as he was wrestled to the ground. The incident made national headlines and sparked a debate on police using excessive force and institutional racism. Clarifying his earlier comment, Sharpton noted that it is up to the family to decide whether the settlement is enough.

“Settlements are based on what the parties think the loss is,” Sharpton told The Daily Caller News Foundation. “They said they want a federal investigation.”

Sharpton has built a career on advocating for civil rights and racial injustice. But while being secretly filmed by Project Veritas, Garner’s daughter seemed to accuse Sharpton of exploiting her father’s death. When the video was released, however, she denied accusing Sharpton of greed, according to the New York Post.

“Al Sharpton paid for the funeral. She’s trying to make me feel like I owe them,” she had said on camera.

“No, I didn’t say that I think Al Sharpton is all about the money,” she backtracked to the Post.

According to Mediaite, Sharpton and his organizations have been accused of accepting a significant payment to look the other way in a racial discrimination case involving companies including Comcast and Time Warner Cable. Sharpton called the accusation “ludicrous” and untruthful.

Via: Daily Caller

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NYT: Billionaire George Soros Financing Dems' Voter Rights Lawsuits

Billionaire philanthropist George Soros has agreed to spend as much as $5 million on Democrats' court battles against voting laws passed in recent years by Republican-controlled state governments such as in Ohio and Wisconsin.

"We hope to see these unfair laws, which often disproportionately affect the most vulnerable in our society, repealed," the Hungarian-born investor has said about the legal battles, describing himself as being "proud" of his involvement, reports The New York Times. 

Soros political adviser Michael Vachon said the billionaire has given $1 million so far this year to the liberal research super PAC American Bridge. 

Backers of Democrat presidential candidate Hillary Clinton, who has made the voting laws a cornerstone of her campaign, have been pushing Soros to commit millions of dollars to her super PAC.  Soros has not done that so far, the Times says.

The lawsuits against the states are being led by attorney Marc Elias, who is the Clinton campaign's general counsel, the newspaper reports. 

This is not Soros' first involvement in voting issues. His first major push in American politics included the America Coming Together voter-mobilization drive in 2004, in an effort to defeat President George W. Bush. 

The lawsuits include attacks on voter ID requirements, time restrictions on early voting that make it difficult to cast ballots on the weekend before Election Day, and rules nullifying ballots that are cast in wrong precincts. 

The Times reports that Soros was in contact with Elias in January 2014, while the attorney was exploring federal lawsuits before the midterms and before the 2016 cycle, said Vachon, Soros'  adviser, Michael Vachon. Elias himself refused comment Friday about the lawsuits' funding.

Soros is supporting lawsuits filed in Ohio and Wisconsin last month, and is helping finance a case Elias and other groups filed in North Carolina last year.

Clinton and Democrats argue that the states' voting laws affect poor, minority, and young voters, but Republicans say the new laws, enacted since 2010, serve as protection against election fraud. 

Via NewsMax

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The GOP Is the Strongest It's Been in Decades

Last fall, RCP Election Analyst David Byler and I put together an index of party strength.  While most journalists look at presidential performance as a measure of party strength (see the ubiquitous “Republicans have lost the popular vote in five of the last six elections”), we take a broader view of party strength.  Rather than look simply at presidential performance, we look at party dominance at the federal, congressional, and state levels.  One need only look at fights over voter identification laws, redistricting, food stamp benefits, Obamacare expansion, and a multitude of other battles from the last few years alone to understand the importance of non-federal elections. We therefore believe this approach gives a more complete measure of party strength.

In this article, we do three things.  First, we recap our methodology.  Second, we update the methodology for 2014, and we look forward to 2016.  Finally, we run some diagnostics on our index, answering various objections that have been raised.

Our index is the sum of five parts: presidential performance, House performance, Senate performance, gubernatorial performance and state legislative performance. The first is measured by the party’s performance in the previous presidential popular vote (NB: In this, and all other measurements, third parties are excluded). 

House performance is the average of the popular vote for the House and the average of the share of the House won by the party. This helps mitigate the effects of gerrymandering.  Senate performance is the share of the Senate held by the party.

Gubernatorial performance is the party’s share of governorships (again, with third party candidates excluded). We do not weight for population, for reasons explored further below.  For state legislatures, we average four numbers: the share of state Houses and state Senates held by each party along with the share of state House seats and state Senate seats held by each party.

This gives us five metrics, all of which run on a scale from 0 to 100.  Adding them together gives us a scale from 0 to 500.  We then subtract 250 from the total.  All this does is assign a score of zero to a situation where the parties are evenly matched, rather than 250. A positive score then means that the Republican Party is stronger while a negative score means the Democratic Party is stronger.

Via: RCP

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[CARTOON] America, meet Obamacare! You’ll love him!

Via: California Political Review

Coburn: Year could go down as one of America's 'worst'

Sen. Tom Coburn (R-Okla.) on Monday night argued this year could be remembered as one of the “worst for the republic," and he urged voters to clean house in the midterm elections.  

Coburn lamented the rollout of President Obama’s healthcare law, Senate Majority Leader Harry Reid’s (D-Nev.) decision to use the “nuclear option” to change Senate rules and the unwillingness of both parties to address the main drivers of the debt. 

“In 2014, here's a message worth considering: If you don't like the rulers you have, you don't have to keep them,” Coburn said in an op-ed in the Wall Street Journal, echoing President Obama's failed promise on health insurance.

The lawmaker also took the administration to task for delaying the mandate on large businesses to provide insurance to their workers while not offering individuals the same relief. 

“The president apologized in part for his statements, but his actions reveal the extent to which he has conformed to, rather than challenged, the political culture that as a presidential candidate he vowed to reform,” Coburn said. 

Coburn also blasted Reid for using “raw political power” to change Senate rules to allow most executive branch nominees to advance with a simple majority vote. He argued Reid was trampling minority rights. 

“In a republic, if majorities can change laws or rules however they please, you're on the road to life with no rules and no laws,” he said. 

Coburn said neither party should be celebrating the modest budget agreement reached earlier this month, which set spending levels for the next two years and avoided a government shutdown. 

Via: The Hill

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Democrats will pay political price for Obamacare in 2014

As Democrats survey a troubled 2014 political landscape, it's easy to forget how optimistic they seemed less than a year ago.

"I would expect that Nancy Pelosi is going to be speaker again pretty soon," President Obama told cheering House Democrats at a party retreat last February.

In the rosy scenario that took hold in some Democratic circles, the party was positioned to recapture the House in 2014 and maintain control of the Senate, allowing Obama to defy the history of second-term presidential decline. Great successes and good years lay ahead.

Had Democrats forgotten Obamacare, the law they passed in 2010 that was scheduled to take effect in 2014? It almost seemed as if they had.

Obama and his allies put off the arrival of Obamacare until after the president faced re-election in 2012. His administration also delayed releasing key rules regarding the law until after the election for fear of angering voters. But now they can't put it off any longer. 2014 will be the year Democrats pay for Obamacare.

When Obama spoke to the House retreat, polls consistently showed Democrats leading in the so-called "generic ballot" question, that is, whether voters will choose a Democratic or a Republican representative in the next election. Now, however, there's been a big swing away from Democrats and toward Republicans.

In addition, a new CNN poll found that 55 percent of voters surveyed said that when it comes to congressional races, they're more likely to vote for a candidate who opposes Obama than one who supports the president. "Those kind of numbers spelled early trouble for the Democrats before the 1994 and 2010 midterms, and for the GOP before the 2006 elections," CNN polling director Keating Holland reported on the network's website.

Meanwhile, support for Obamacare, already low, could fall further as more middle-income Americans — voters — figure out that they are the ones who will be paying for the Democrats' national health care scheme.

In 2009 and 2010, Obama, Pelosi and their fellow Democrats sold Obamacare as a kind of miracle. It would give health insurance to 30 million previously uncovered people and cut the federal deficit by more than a trillion dollars at the same time. And the only taxes needed to pay for it all would fall on the very wealthy. It seemed impossible, but that's what they claimed.

Via: Washington Examiner

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The doctor won’t see you? Analysts warn ObamaCare plans could resemble Medicaid

Those signing up for private health care coverage on the ObamaCare exchanges may be in for an unpleasant surprise -- they'll have insurance, but they might have trouble getting the doctor to see them. 

As hundreds of thousands enroll for coverage beginning Jan. 1, analysts are warning that the plans are likely to give them access to fewer doctors and hospitals. So much so, they warn, that the system could begin to resemble Medicaid, the health care program for low-income Americans. 

"Indeed, I think this will eventually be like Medicaid," said Merrill Matthews, director of the Council for Affordable Health Insurance. 

Matthews said the only way many insurers are going to be able to control costs is by "simply clamping down on the amount they are willing to pay." 

Just as with Medicaid, analysts warn that if payments get too low, many doctors might start refusing to see patients. That will leave more and more patients jockeying to see fewer and fewer doctors. 

They emphasize, then, that having health insurance won't necessarily translate into access to health care. 

"About half of the physicians in many communities refuse to take Medicaid patients because the payment system is just too low," said James Capretta, of the Ethics and Public Policy Center. 

Doug Holtz-Eakin, former director of the Congressional Budget Office, suggested some of the plans on the exchanges are going in the same direction. 

Via: Fox News Politics

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