Don’t Depend on Social Security Paying Your Mortgage
zFacts published an article about the US National Debt vs GDP
In 1981 the gross national debt, compared to the nation’s annual income, reached its lowest point since 1931, 32.5%. It could have been paid off then more easily than at any time in the previous 50 years. Despite his claim to hate the debt, Reagan instituted unprecedented peacetime deficit spending. This is not partisan politics, this is straight off the White House web site.
Currently about half of the US government’s deficit comes in the form of borrowing from social security:
The gross (total) deficit is bigger because it takes into account that when the fed’s general fund (mostly military spending) borrows money from the Social Security Trust Fund, it will have to pay it back. Borrowing from Social Security is still borrowing. Deficit lite, which Bush is talking about, assumes there is no such obligation — that Social Security will not have to be paid back. So the more they borrow from Social Security the smaller is deficit lite.
President Bush has been lobbying to strengthen social security by privatizing it. Currently the social security system has a surpluss large enough that it helps the government cook the books by over $100 billion a year, but in about 15 years it will start costing the government more than it takes in. When it does that you can guarantee at least one of the following will happen
- sharply higher taxes
- sharply lower social security payouts
- inflation (and rising interest rates) due to greater borrowing and an increasing currency supply
If you are counting on social security paying part of your mortgage you might be taking a big risk. Due to accouning fraud, the government is hiding nearly a half million dollars of debt owed by each US houshold. A recent USA Today article pegged the number at $516,348 per household. What happens to home mortgage interest rates the day we default on that debt?
Homeowners May Want to Refinance While Rates Are Low
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