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Thursday, January 3, 2013

SS on NFP & More

 

Social Security (SS) is out with preliminary numbers for January’s payroll tax revenue:

 

Screen Shot 2013-01-03 at 12.41.12 PM copy

 

This is, of course, a preliminary number, and there will be revisions. The January data is based on a set of assumptions that SS uses to run its computers. Actual data will take at least three months.  I find it interesting that SS is assuming that the US economy starts off the year in low gear.

 

-The January 2013 YoY increase in payroll tax revenue is projected to be $1.1B (+2.2%).

 

-The January 2012 Yoy increase in payroll tax revenue was $3.2B  (+6.5%).

 

 

I looked at the YoY % changes in SS tax revenues. Its pretty clear that the big improvements in Q1 – 2012 will not be repeated in 2013:

 

ssjanuary

 

Possibly the computers at SS are taking into consideration a “post cliff” slowdown. The CBO has projected a decline in GDP in the early part of the year, so it is possible that SS is modeling based on that assumption. (The 2% increase in payroll taxes sucks out $10B a month in spending power.)

 

The payroll numbers for Q1 2012 were very solid: January + 275K, February 259K , March +143K,  Total = 677k. The early read from SS is that we will be lucky to see one-third of that in 2013.

 

I do look at the SS numbers in the context of the monthly Non-Farms data. This is a murky analysis as the BLS fudges its numbers with various adjustments. Looking backward over a longer period of time, there is a correlation between SS and NFP, but in any given month, it’s random.

 

To the extent that the SS numbers do tell a story, they are suggesting that the December NFP will be a tad on the soft side. Under 150k; my best guess is 125K. The wild card is Sandy. ADP thinks the storm added 40k construction jobs. (Zero Hedge discussion). That could bring the actual total for the month closer to 165k. We shall see.

 

The December NFP is looking like a non-event. The real question is what is going on in January. It’s freezing in “Sandy Land”; it will be for weeks. I doubt that much construction is getting done. Between the cold, and the cliff drag, it looks like a slow start to the year.

 

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SS has also come out with the January 2013 Benefits Paid number. A lumpy $66.666B went out the door.

 

tfbenefits

 

The benefit “nut” for January is $3.3B, (5.1%) higher than a year ago. The YoY payroll tax revenue was up only $1.1B (2.2%). Got that? Revenues up 2%, expenses up 5%. Boom!

 

The January numbers can be used by wonks like me to estimate annual results. The bottom line at SS in 2013 will be a cash deficit of $75B. The 2012 deficit was $52B.

 

Keep in mind that the deficits at SS must be funded by issuing more Debt to the Public. The debt needed for SS is ON TOP OF the debt needed to fund the government’s other operating deficits.

 

The USA now has two big drivers of debt. Most folks understand that the deficit adds to the debt. The country will soon learn that SS is becoming a very big driver of incremental debt. The upcoming debate on entitlement reform will force the issue of SS = Debt to come on the table.  I can hear the howling already….

 

Snarling-Grey-wolf

Comments

  1. It took me longer than it should have to figure out, but i think i’ve now got it.

    As long as the private sector is delev, or at least not inc borrowing, the fed gov can borrow all they want and they won’t even consider for one nanosecond doing anything but borrowing all they want.

    This situation even allowed the enablers in academia to formulate a new theory of money. The “modern monetary theory” which purports to show that gov’t can borrow all they want now that a democrat is in gov’t.

    All it really is, is a lack of competition from the private sector, not some new fancy dan theory, but they have the power, they have the theory, and they have the lack of competition from the private sector, and so they will not even think twice about borrowing all they need for ss or anything else they want.

    Fiscal cliff. new taxes and new spending to fix it. lol

    It will not change until the complete collapse of everything.

  2. Krasting, then Harris? Is there anything left worth saying? Buckle up!

  3. “The bottom line at SS in 2013 will be a cash deficit of $75B”

    easy fix, means test about 3 million people out of the program and save about $25,000 a year per person means tested out which is $75 billion. The only other way to get the money is to raise taxes on either the rich or everyone so the retired rich can keep getting other peoples money.

    Watching the financially illiterate go at it in this country is like being in some episode of The Twilight Zone.

  4. BK: “… based on a set of assumptions that SS uses to run its computers. Actual data will take at least three months.”

    I ended up re-reading this segment four times. No matter what the sentence actually reads or what my eyes were seeing — my brain kept reading it as: “It will take the vacuum tube computers at least three months to figure out the SSA has run out of cash”

    The US government is financially bankrupt, morally bankrupt, and it is out of credibility. Its getting a little boring reading magazine story after blog post after magazine story after blog post that Social Security is bankrupt — as if all the other programs are not also bankrupt.

    The US government is insolvent, a lot of US public school “graduates” are too mathematically challenged to see it — and many others don’t want to see it.

    After re-arranging the deck chairs on the Titanic, Captain Obama is now obsessed on making sure there will be enough butter knives on the dinner tables during next week’s voyage. The muck-rakers at the Washington Post and NY Times think he should check the temperature of the rice dishes in the 3rd class dining rooms. Don’t worry about the sea water sloshing around your knees, its just temporary.

  5. BK – Have you seen any work on the impact of the addition of all the illegal immigrants to SS? I am being told that changing their income from off the books to on the books income would remedy the SS problem. Thanks.

  6. Never mind means testing, that’s blatantly unfair; remove the income cap completely and drop the rate back to 4%.

    • Means testing or income cap … you are just rearranging deck chairs on the Titanic.

      You are delusional if you think the ponzi scheme can be fixed

    • unfair ?

      Is it fair younger people have to turn over part of what they earn to wealthy old people and pay the trillions of dollars of bills the old people made ?

      “remove the income cap completely and drop the rate back to 4%.”

      double talk for buy the votes of the masses by cutting their taxes a little and raising them on other working age people. The amount of earned income over the current cut off limit isn’t likely enough to be able to lower the rate across the board and keep sending out checks to rich old people.