Comments on: 4 Dividend Stocks For The Social Security Blues *

By: Allan

Allan — Sat, 28 Aug 2010 19:20:50 +0000

Social Security Trust Fund accounting is fairly complex (as it is for all federal government trust funds).

(lots of historical US government numbers at: http://www.gpoaccess.gov/usbudget/fy11/hist.html)

Bullet point #3 is not quite the whole truth; the trust fund has income from taxes (about $560 billion in 2009) and interest ($107 billion in 2009); using this to pay benefits (about $540 benefits in 2009).

The SS trust fund invests all the excess of income vs. outgo in United States Treasury bonds and a net surplus of about $2.3 trillion as of 2009. These are paper IOUs; just like the bonds held by the US Military Retirement fund, the Chinese government and all US Treasury bond holders.

Focusing on the state of SS Trust Fund avoids focusing on the real problem (not to say the SS trust fund is not a problem). The real, genuine, immediate and enormous problem is the General Fund (all spending other than the trust funds, primarily Social Security and Medicare).

The General Fund, primarily defense spending, Medicaid, interest payments and Veteran affairs spending. We ran a deficit of $1,549 billion in 2009, a deficit of $641 in 2008 and have not had a surplus since since 2000; in fact in the last 50 years the General Fund has only had a surplus in 3 years. The SS trust fund has run a surplus in 41 years of of the last 50 years.

Discussing the problems of SS is missing the elephant in the room. While interesting, Social Security is not our most pressing problem. What ever “fix” someone might suggest would be rather pointless with the General Fund hemorrhaging red ink. We allegedly fixed the SS problem in 1982 with a very large increase in Social Security taxes (while at the same time cutting individual and corporate income taxes).

Fixating on Social Security while turning a blind eye to the General Fund is like worrying about your athlete’s food when you have just had your arm cut off.

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By: The retired One

The retired One — Sun, 30 Aug 2009 10:31:58 +0000

I feel we will all have our s/s checks reduced by effects of inflation and our COLA’s jerked out from under us by a Govt that will develop a needs based system.
Where-in the base will be fudged to pay little compaired to actual inflation.
I can’t help but see the people in needed services like school teachers will keep making it and survive as both parents in most homes have to work.
They can’t send their kids to private school they are just about making it as it is.
Savings at 7 % for how long? This will soon be diverted by people that will pay less and less on their c/c’s until they give up hope. So they will divest themselves of assets that are trackable assets to file bankrupsy.
They will be living and giving up hope of true home ownership. Just going day to day without looking to the future and plans for advancement.
Most all future jobs will be outsourced right off the drawing board. They won’t even be offered in this country.Let’s see you have to pay income taxes as a citizen of the U.S.A.
no matter where you live. But do you have to pay into S/S if you work out of the country?
I wouldn’t count on Dividends from a american based company, even P&G and J&J and pepsi & coke will suffer. Just Look at how the revered disney is doing. Walmart may be one of the few to overcome the path we are on.

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[...] Dividend Stocks For The Social Security [...]

By: Dividends4Life

Dividends4Life — Fri, 28 Aug 2009 23:58:45 +0000

C.A.: I think the context of the $680 billion comment was an ongoing social program, vs a “one time project”.

Yes, bullet 4 is referring to the Treasury Securities in bullet 6.

The history of Wal-Mart can be traced back to the 1940s when Sam Walton began his career in retailing.

Best Wishes,
D4L

By: C.A.

C.A. — Fri, 28 Aug 2009 22:05:47 +0000

“At $680 billion Social Security is the nation’s biggest social program.”

What about TARP?

Are the IOUs in bullet item 4 the Treasury securities referred to in bullet item 6?

Good article. Thnx. Didn’t know Wal-Mart has been around for 35 years.

By: Daniel M. Ryan

Daniel M. Ryan — Wed, 26 Aug 2009 04:16:11 +0000

Here’s another kicker: the only reason why the 2000 budget showed a surplus was because the feds tapped into a then-extant surplus in the Social Security books. It ain’t going to be there anymore.

By: dizzy7

dizzy7 — Tue, 25 Aug 2009 15:09:51 +0000

Excellent post and unfortunately likely to be only too accurate. I’ve been collecting social security for a couple of years now, but I very much doubt the program will offer nearly as generous benefits (if any) to my daughters when they retire.

BTW, I think you made a slight typo with the ABT dividend rate. I’ts currently closer to 3.5% than 2.11%.