-Social Security bankrupt? Impossible.

Rodger Malcolm Mitchell FICA, Social Security, Uncategorized September 12, 2009August 25, 2014 1 Minute

An alternative to popular faith

Which of the following federal agencies might go bankrupt, without a change in the law?

1. Bureau of Prisons
2. Centers for Disease Control and Prevention
3. Coast Guard
4. Central Intelligence Agency
5. Department of Justice
6. Department of State
7. Department of Labor
8. Department of Transportation
9. Department of the Air Force
10. Department of the Army
11. Department of the Navy
12. Department of the Treasury
13. Social Security Administration
14. Centers for Medicare & Medicaid Services
15. Department of Health and Human Services

       Answer: It is impossible for any federal agency to go bankrupt. None ever has; none ever will. Not even during the Great Depression did any federal agency go bankrupt nor did any federal check bounce.
      Then, in 1971, the federal government went off the gold standard specifically to give itself the power to create enough money to pay its bills, no matter how high.
      Think about this: “‘I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.’—Paul O’Neill, Secretary of the Treasury, June 19, 2001″

He said there is no money in the trust fund, yet it has been paying benefits. How is that possible? Because, benefits are paid by our Monetarily Sovereign, U.S. government, not from a mythical trust fund.

Now tell me again why Social Security and Medicare might go bankrupt.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

Published by Rodger Malcolm Mitchell

MBA Northwestern, business turnaround expert, economist View all posts by Rodger Malcolm Mitchell

Published September 12, 2009August 25, 2014

3 thoughts on “-Social Security bankrupt? Impossible.”

kbar325 says:

August 25, 2014 at 7:07 am

@RMM: These documentary filmmakers didn’t read your blog apparently:

http://brokeneggsfilm.com

http://brokeneggsfilm.com/about/

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1. Rodger Malcolm Mitchell says:
  
  August 25, 2014 at 8:56 am
  
  Yes, she is mouthing the public’s belief that federal finances are just like personal finances and that somehow, in some unknown way, the federal government could run out of dollars.
  
  I wonder who funded it. A rich person, with an axe to grind?
  
  Rodger Malcolm Mitchell
  
  P.S. I wrote the following Email to Professor Teresa Ghilarducci, who is quoted in the film’s advertising;
  
  The movie, “Broken Eggs,” cites your research when it declares, “Social Security is on the brink of bankruptcy.”
  
  As an economist, you know that the U.S. government is Monetarily Sovereign, so never can run short of its own sovereign currency. You also know that FICA does not pay for Social Security, but rather, as Paul O’Neill, Secretary of the Treasury, said on June 19, 2001, “I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.”
  
  The entire premise of “Broken Eggs” is false, and you know it. You should reveal this fact and demand that your name be removed from their advertising.
  
  She wrote back:
  
  I absolutely never never said that!! Outrageous if it implies I do!!
  
  Professor Teresa Ghilarducci
  Bernard L. and Irene Schwartz Professor of Economic Policy Analysis
  New School for Social Research
  6 E. 16th St. #1128
  New York, New York 10003
  Phone: 212-229-5901 # 2
  
  So not only is the movie a fraud, but they use fraudulent cites.
  
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Rodger Malcolm Mitchell says:

August 25, 2014 at 11:03 am

Just heard from the producers of “Broken Eggs”

Hey Rodger! The movie is made up of experts and real people who are discussing retirement as a whole and does not singularly focus on social security. Also, social security will be insolvent by 2033 unless some very simple and necessary changes are made. This movie is about solutions and awareness on all fronts and is not, we assure you, a fraud.

I responded:

”

” . . . social security will be insolvent by 2033 unless some very simple and necessary changes are made.”

Yes, unless the federal government simply adds money, which it can do at any time. Is that what you mean by “simple and necessary changes”? It’s like saying my checking account will be insolvent unless I transfer money from my savings account.

Social Security is a federal agency that can be insolvent only if the federal government wants it to be insolvent.

Your movie spreads the false belief that FICA pays for social security, and because there may be fewer people paying FICA, Social Security will go bankrupt.

Completely, 100% false. FICA does not pay for Social Security any more than FICA pays for the White House, the Congress or the Supreme Court, all of which also are federal agencies.

Why don’t you talk about the White House becoming “insolvent”? Are you worried that the Senate will run short of dollars? Is the Supreme Court teetering on the edge of bankruptcy?

The lie that Social Security can become insolvent is promulgated to make people accept increases in FICA (the most regressive tax in U.S. history) or reductions in benefits. Why? To widen the gap between the rich and the rest. It’s a lie that the rich want the rest of us to believe. It’s the rich who want that gap widened.

That is what you really should be talking about: The ever growing gap between the rich and the not-rich. That is the real disgrace in America. Not the phony Social Security insolvency.

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