U.S. Congress Writes Own Accounting Rules

[Mephisto]

What's the real federal deficit?

Updated 8/4/2006 9:55 AM ET

By Dennis Cauchon, USA TODAY
The federal government keeps two sets of books.
The set the government promotes to the public has a healthier bottom line: a $318 billion deficit in 2005.

The set the government doesn't talk about is the audited financial statement produced by the government's accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included — as the board that sets accounting rules is considering — the federal deficit would have been $3.5 trillion.

Congress has written its own accounting rules — which would be illegal for a corporation to use because they ignore important costs such as the growing expense of retirement benefits for civil servants and military personnel.

http://www.usatoday.com/news/washington/2006-08-02-deficit-usat_x.htm?csp=15
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The Bush administration opposes including Social Security and Medicare in the audited deficit. Its reason: Congress can cancel or cut the retirement programs at any time, so they should not be considered a government liability for accounting purposes.

 

[HeavyAaron]

The Bush administration opposes including Social Security and Medicare in the audited deficit. Its reason: Congress can cancel or cut the retirement programs at any time, so they should not be considered a government liability for accounting purposes.

This much, at least, is totally correct. Social Security has no binding obligations, unlike most pension plans. Recipients are at the discretion of the Federal Government. Had Bush managed to get his private accounts set up that people would actually own, this wouldn't be so. But as it stands, there are no real obligations. Congress could (and arguably should) stop the SSI program at any moment.

Aaron

 

[BPSCG]

Congress could (and arguably should) stop the SSI program at any moment.

SSI is not Social Security.

SSI stands for Supplemental Security Income. It is a federal welfare program for people who are over age 65, blind, or disabled.

The only thing SSI has in common with Social Security is (are):

• It's administered by the Social Security Administration;
• It's a federal income tranfer program;
• Its name sounds like Social Security;
• It often gets confused or conflated with Social Security (my first clue that Dan Rather didn't always know what the hell he was talking about was over 20 years ago when he referred, on one of his nightly news broadcasts, to "Supplemental Social Security...").

 

[BPSCG]

Social Security has no binding obligations, unlike most pension plans. Recipients are at the discretion of the Federal Government.

Remember that next time you hear your congressman talk about Social Security's "guaranteed" benefits. Ain't no such thing. If you hear him say it at a town meeting, ask him what's guaranteed about it.

Is it the rate of return on your "investment"? No - that rate has fallen through the years.

Is it the type of benefit that you can receive? No. Benefits used to be paid to college students, but were eliminated in the 1980's. The $255.00 lump-sum death benefit at one time was paid to the surviving spouse, or if there was none, whoever was responsible for the funeral expenses; that was also changed in the 1980's, to be paid only to the surviving spouse.

Is it the way the benefit amount is calculated? No; the benefit formula has changed many times over the years; the "1978 New Start" calculation significantly reduced the payout.

Is the FICA tax rate guaranteed? No - it started at one percent in the 1930's. Look at your pay stub today and do the math.

Is it that if two people born on the same day who pay the pay the exact same amount into the system and who start collecting Social Security on the same day will collect the same amount? No - ask a federal employee who worked under the old Civil Service Retirement System (not covered under SSA) who moonlighted in covered work for years; he gets less just because he also gets the federal pension.

The only thing "guaranteed" about Social Security is that congress will play politics with it until the system collapses like a house of cards.

 

[HeavyAaron]

SSI is not Social Security.

SSI stands for Supplemental Security Income. It is a federal welfare program for people who are over age 65, blind, or disabled.

The only thing SSI has in common with Social Security is (are):

• It's administered by the Social Security Administration;
• It's a federal income tranfer program;
• Its name sounds like Social Security;
• It often gets confused or conflated with Social Security (my first clue that Dan Rather didn't always know what the hell he was talking about was over 20 years ago when he referred, on one of his nightly news broadcasts, to "Supplemental Social Security...").

Thanks, but it does also stand for "Social Security Insurance", which I admit still isn't what I meant. SSI is technically only the portion of SS which is survivorship and disability, not retirement. I guess I shouldn't have been so sloppy.

Thanks,
Aaron

 

[BPSCG]

SSI is technically only the portion of SS which is survivorship and disability, not retirement. I guess I shouldn't have been so sloppy.

SSI is not Social Security at all.

"Social Security Insurance" is not a term that is used anywhere in the Social Security Administration - at least it wasn't in the 13 years I worked as a claims rep for the agency (1975-88).

Social Security is funded by the OASDI portion of your FICA tax - OASDI = "Old Age, Survivor, and Disability Insurance" and the amount of the Social Security benefit you (or your dependents) get is (greatly oversimplified) tied to what you've paid in OASDI taxes over the years.

Supplemental Security Income is funded by general federal tax revenues, i.e., income taxes. The amount you get is a base amount reduced by other income you might have (again, greatly oversimplified).

They have as much in common as a horse chestnut has with a chestnut horse.

 

[HeavyAaron]

SSI is not Social Security at all.

"Social Security Insurance" is not a term that is used anywhere in the Social Security Administration - at least it wasn't in the 13 years I worked as a claims rep for the agency (1975-88).

Be that as it may, it is common usage:

http://www.acronymfinder.com/af-query.asp?Acronym=SSI&p=dict

Aaron