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80-526: After enactment, these Acts were often referred to as "Gramm-Rudman-Hollings I" and Gramm-Rudman-Hollings II) after U.S. Senators Phil Gramm ( R - Texas ), Warren Rudman ( R - New Hampshire ), and Fritz Hollings ( D - South Carolina ), who were credited as their chief authors. The term " budget sequestration " was first used to describe a section of the Gramm–Rudman–Hollings Deficit Reduction Act of 1985. The Acts aimed to cut

160-516: A 3.6% rate in 2014) the program will run an overall surplus that adds to the fund through the end of 2019. Under current law, the securities in the Trust Fund represent a legal obligation the government must honor when program revenues are no longer sufficient to fully fund benefit payments. However, when the Trust Fund is used to cover program deficits in a given year, the Trust Fund balance is reduced. One projection scenario estimates that, by 2035,

240-569: A Democrat for Representative from Texas's 6th congressional district , which stretched from the Fort Worth suburbs to College Station . He was reelected to his House seat as a Democrat in 1980. Gramm's voting record was very conservative, even by Texas Democratic standards of the time. During his first four terms, he tallied an average rating of 89 from the American Conservative Union , and from 1980 to 1982 he garnered

320-452: A Republican for his own vacancy in a February 12, 1983 special election , and won easily. One of his many special election opponents was the second-place finisher by only 115 votes in his 1978 Democratic Party primary, the then newly elected State Senator Chet Edwards of Waco , and later U.S. Representative for the 11th and the 17th congressional districts of Texas (January 3, 1991 – January 3, 2011). Another special election opponent

400-684: A U.S. senator to be given instead to the Texas A&;M community. The offer was accepted and a memorial flyover for the 12 killed was flown at a Texas A&M football game on November 26, 1999. Social Security Trust Fund The Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund (collectively, the Social Security Trust Fund or Trust Funds ) are trust funds that provide for payment of Social Security (Old-Age, Survivors, and Disability Insurance; OASDI) benefits administered by

480-482: A budget deficits ceiling that would decline to zero by 1991 that was attached to a bill raising the debt limit of the federal government by more than $ 250 billion. The amendment was approved by a vote of 75 to 24 and was stated as a possible prelude to a balanced budget in five years without a tax increase by United States Secretary of the Treasury James Baker : "I think it's important that we recognize

560-463: A career Army sergeant, suffered a stroke and was partially paralyzed . He died when Gramm was 14. Gramm's mother, Florence (née Scroggins), worked double shifts as a nurse to supplement the veterans disability pension. Gramm attended public schools , graduated in 1961 from Georgia Military Academy (now Woodward Academy ), and graduated in 1964 from the University of Georgia . He received

640-689: A combination of social security payroll taxes paid by current workers and interest income earned by the Social Security Trust Fund. According to the projections of the Social Security Administration, the Trust Fund will continue to show net growth until 2022 because the interest generated by its bonds and the revenue from payroll taxes exceeds the amount needed to pay benefits. After 2022, without increases in Social Security taxes or cuts in benefits,

720-434: A doctorate in economics from the University of Georgia 's Terry College of Business in 1967. Gramm taught economics at Texas A&M University from 1967 to 1978. In addition to teaching, Gramm founded the economic consulting firm Gramm and Associates (1971–1978). In 1976 , Gramm unsuccessfully challenged Texas Democratic Senator Lloyd Bentsen , in the party's senatorial primary. Then in 1978 Gramm successfully ran as

800-419: A legal obligation of the federal government to program beneficiaries. Under current law, when the program goes into an annual cash deficit, the government has to seek alternate funding beyond the payroll taxes dedicated to the program to cover the shortfall. This reduces the trust fund balance to the extent this occurs. The program deficits are expected to exhaust the fund by 2034. Thereafter, since Social Security

880-401: A loss of competitiveness, America in decline." Gramm's comments immediately became a campaign issue. McCain's opponent, Senator Barack Obama , stated, "America already has one Dr. Phil . We don't need another one when it comes to the economy. ... This economic downturn is not in your head." McCain strongly denounced Gramm's comments. On July 18, 2008, Gramm stepped down from his position with

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960-518: A means of cutting the budget through across-the-board spending cuts if deficit -reduction targets were not met. They were successful in making the Gramm–Rudman–Hollings Act law, although portions were ruled unconstitutional . In the years following the passage of the Act, other sections were largely superseded by other budget-controlling mechanisms. In 1990, Gramm failed in an effort to amend

1040-606: A native of Hawaii, who is associated with George Mason University 's Mercatus Center in Virginia. They have two sons: Marshall Gramm, a professor of economics at Rhodes College in Memphis, Tennessee , and Jeff Gramm, a money manager, author, and previously a musician in the indie pop band Aden . Gramm is an Episcopalian . After the 1999 Aggie Bonfire collapse , Gramm offered the F-16 flyover reserved for his future funeral as

1120-487: A prominent theme of his State of the Union Address . One consequence was increased public attention to the nature of the Social Security Trust Fund. Unlike a typical private pension plan, the Social Security Trust Fund does not hold any marketable assets to secure workers' paid-in contributions. Instead, it holds non-negotiable United States Treasury bonds and U.S. securities backed "by the full faith and credit of

1200-614: A proponent of free trade , also lashed out at Buchanan, arguing that Buchanan was a " protectionist ". After abandoning his presidential bid, Gramm refocused on his bid for a third Senate term. He defeated Victor Morales of Dallas in November 1996 to win what would be his final term in the Senate. Gramm was one of five co-sponsors of the Commodity Futures Modernization Act of 2000 . One provision of

1280-529: A supporter of Barack Obama and former President Bill Clinton , described Gramm during the 2008 presidential race as "the high priest of deregulation," and has listed him as the number two person responsible for the economic crisis of 2008 behind only Alan Greenspan . On October 14, 2008, CNN ranked Gramm number seven in its list of the 10 individuals most responsible for the current economic crisis. In January 2009 Guardian City editor Julia Finch identified Gramm as one of twenty-five people who were at

1360-419: A victory over Democratic State Senator and former Fort Worth Mayor Hugh Parmer . Gramm polled 3,027,680 votes (60.2 percent) to Parmer's 1,429,986 (37.4 percent), again receiving more than three million votes. Between 1999 and 2001, Gramm was the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs . During that time he spearheaded efforts to pass banking deregulation laws, including

1440-595: Is a longtime Gramm supporter". In Gramm's eyes, Flatt embodied the burdens that a typical Texas independent small businessman faced in the realm of taxation and government spending. In spite of his self-proclaimed opposition to Federal spending, Gramm voted to have the Federal Government build the Superconducting Super Collider in his state, which would have cost billions of dollars of taxpayer money. Gramm ran unsuccessfully for

1520-610: Is an American economist and politician who represented Texas in both chambers of Congress . Though he began his political career as a Democrat , Gramm switched to the Republican Party in 1983. Gramm was an unsuccessful candidate in the 1996 Republican Party presidential primaries against eventual nominee Bob Dole . Gramm was born on July 8, 1942, in Fort Benning, Georgia , and grew up in nearby Columbus . Soon after his birth, Gramm's father, Kenneth Marsh Gramm,

1600-537: Is expected to peak in 2021 at approximately $ 3.0 trillion. If the parts of the budget outside of Social Security are in deficit, which the Congressional Budget Office and multiple budget expert panels assume for the foreseeable future, there are several implications: On the other hand, if other parts of the budget are in surplus and program recipients can be paid from the general fund, then no additional debt need be issued. However, this scenario

1680-413: Is highly unlikely. Some commentators believe that whether the trust fund is a fact or fiction comes down to whether the trust fund contributes to national savings or not. If $ 1 added to the fund increases national savings, or replaces borrowing from other lenders, by $ 1, the trust fund is real. If $ 1 added to the fund does not replace other borrowing or otherwise increase national savings, the trust fund

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1760-522: Is nominated by the President from a list of three people recommended by the presiding officers of the House and Senate. He is removable only by impeachment or a joint resolution of Congress, which requires majority votes in both houses and is subject to a Presidential veto. Congress can give a number of reasons for this removal, including "inefficiency," "neglect of duty," or "malfeasance". The House passed

1840-444: Is only authorized to pay beneficiaries what it collects in payroll taxes dedicated to the program, program payouts will fall by an estimated 21%. Gross federal debt consists of debt held by the public and debt issued to government accounts (for example, the Social Security trust funds). The latter type of debt does not directly affect the economy and has no net effect on the budget. — Congressional Budget Office The trust fund

1920-420: Is required by law to be invested in non-marketable securities issued and guaranteed by the "full faith and credit" of the federal government. These securities earn a market rate of interest. Excess funds are used by the government for non-Social Security purposes, creating the obligations to the Social Security Administration and thus program recipients. However, Congress could cut these obligations by altering

2000-642: Is the Old-Age and Survivors Insurance (OASI) Trust Fund, which holds in trust special interest-bearing federal government securities bought with surplus OASI payroll tax revenues. The second, smaller fund is the Disability Insurance (DI) Trust Fund, which holds in trust more of the special interest-bearing federal government securities, bought with surplus DI payroll tax revenues. The trust funds are "off-budget" and treated separately in certain ways from other federal spending, and other trust funds of

2080-480: The Federal Reserve ), to investigate what additional changes to federal law were necessary to shore up the fiscal health of the Social Security program. The Greenspan Commission projected that the system would be solvent for the entirety of its 75-year forecast period with certain recommendations. The changes to federal law enacted in 1983 and signed by President Reagan and pursuant to the recommendations of

2160-663: The Iraq International Law Compliance Act of 1990. An earlier amendment to the act, the D'Amato Amendment, prohibited the US from selling arms or extending any sort of financial assistance to Iraq unless the President could prove Iraq was in "substantial compliance" with the provisions of a number of human rights conventions, including the Genocide Convention . After reading the D'Amato Amendment, Gramm introduced his own amendment to counter

2240-607: The U.S. Treasury Department announced that the Old-Age and Survivors Trust Fund was projected to be able to pay scheduled benefits until 2033 while the Disability Insurance Trust Fund was projected to be able to pay its benefits through 2057 (and through 2034 when the funds were hypothetically combined), 1 year and 8 years earlier respectively than the previous report found. In June 2022, the Treasury Department issued an updated report for

2320-469: The United States federal budget deficit. This deficit is the amount by which expenditures by the federal government exceed its revenues each year and was at the time the largest in history in dollar terms. The Acts provided for automatic spending cuts ("cancellation of budgetary resources", called "sequestration") if the total discretionary appropriations in various categories exceed in a fiscal year

2400-541: The primary . He then faced the Democratic nominee, State Senator Lloyd Doggett of Austin in the general election for the right to succeed retiring Republican Senator John G. Tower . Gramm polled 3,116,348 votes (58.5 percent) to Doggett's 2,207,557 (41.5 percent). Gramm was the first U.S. Senate candidate in the history of Texas to receive more than three million votes. In October 1985, Gramm, Fritz Hollings , and Warren Rudman sponsored an amendment to establish

2480-456: The "full faith and credit" of the U.S. government. To escape paying either principal or interest on the "special" bonds held by the trust funds, the government would have to default on these obligations. This cannot be done by executive order or by the Social Security Administration. Congress would have to pass legislation to repudiate these particular government bonds. This action by Congress could involve some political risk and, because it involves

Gramm–Rudman–Hollings Balanced Budget Act - Misplaced Pages Continue

2560-474: The 1985 bill by a vote of 271–154 and the Senate by 61–31, and President Ronald Reagan signed the bill on December 12, 1985. On August 12, 1986, Representative Dan Rostenkowski introduced the Balanced Budget and Emergency Deficit Control Reaffirmation Act. The Senate passed the bill with two amendments by a vote of 36–35, and the House approved the Senate's first amendment by voice vote but rejected

2640-513: The 2007 subprime mortgage crisis and 2008 global economic crisis. The Act is most widely known for repealing portions of the Glass–Steagall Act , which had regulated the financial services industry. The Act passed the House and Senate by an overwhelming majority on November 4, 1999. Gramm responded in March 2008 to criticism of the act by stating that he saw "no evidence whatsoever" that

2720-609: The 95th Congress increased the FICA tax to fund Social Security, phased in gradually into the 1980s. In the early 1980s, financial projections of the Social Security Administration indicated near-term revenue from payroll taxes would not be sufficient to fully fund near-term benefits (thus raising the possibility of benefit cuts). The federal government appointed the National Commission on Social Security Reform , headed by Alan Greenspan (who had not yet been named Chairman of

2800-414: The Act is the "very essence" of execution of the laws, which is beyond the power of a legislative body. It was noted: "Once Congress passes legislation, it can influence only its execution by passing new laws or through impeachment." Congress enacted a reworked version of the law in the 1987 Act. Gramm–Rudman failed, however, to prevent large budget deficits. The Budget Enforcement Act of 1990 supplanted

2880-484: The Comptroller General regarding their recommendations for how much must be cut. The Comptroller General then evaluated these reports, made his own conclusion, and gave a recommendation to the President, who was then required to issue an order effecting the reductions recommended by the Comptroller General unless Congress made the cuts in other ways within a specified amount of time. The Comptroller General

2960-555: The Fund is projected to decrease each year until being fully exhausted in 2034. At this point, if legislative action is not taken, the benefits would be reduced. The 2015 Trustees Report Press Release (which covered 2014 statistics) stated: Some basic equations for understanding the fund balance include: "Program revenues" has several components, including payroll tax contributions, taxation of benefits, and an accounting entry to reflect recent payroll tax cuts during 2011 and 2012, to make

3040-575: The Government's ability to pay benefits. Other public officials have argued that the trust funds do have financial or moral value, similar to the value of any other Treasury bill, note or bond. This confidence stems largely from the "full faith and credit" guarantee. "If one believes that the trust fund assets are worthless," argued former Representative Bill Archer, then similar reasoning implies that "Americans who have bought EE savings bonds should go home and burn them because they're worthless because

3120-610: The Gramm-Rudman amendment is basically a process designed to give the legislative branch and in some degree the executive branch, the political will to deal with the deficit. It means it's going to force some action. Given the political will to make the hard choices you can reach balance without having to raise taxes." Gramm served on the Senate Budget Committee from 1989 until leaving office in 2002. Gramm and Senators Fritz Hollings and Warren Rudman devised

3200-535: The Greenspan Commission advanced the time frame for previously scheduled payroll tax increases (though it raised slightly the payroll tax for the self-employed to equal the employer-employee rate), changed certain benefit calculations, and raised the retirement age to 67 by the year 2027. As of the end of calendar year 2010, the accumulated surplus in the Social Security Trust Fund stood at just over $ 2.6 trillion. Social Security benefits are paid from

3280-537: The Louisiana Caucus on February 7, 1996, to Pat Buchanan (the final delegate count was 13–8). New Orleans Times Picayune political columnist Otis Pike noted the loss could be traced to the passion of the supporters for Buchanan compared to those for Gramm. "Gramm should have won the Louisiana caucuses – but didn't, because the religious right turned out to vote in larger numbers." At least part of this

Gramm–Rudman–Hollings Balanced Budget Act - Misplaced Pages Continue

3360-699: The McCain campaign. Explaining his remarks, Gramm stated that he had used the word "whiners" to describe the nation's politicians rather than the public, stating "the whiners are the leaders." In the same interview, Gramm said, "I'm not going to retract any of it. Every word I said was true." After the Iowa Caucus , Gramm referred to the 2016 presidential election cycle as "scary". He said of Donald Trump , "I'll have to admit I don't find Trump much more reassuring" than Hillary Clinton or Bernie Sanders "in terms of economic policy", but did not believe Trump would be

3440-514: The Old-Age and Survivors Insurance and Disability Insurance Trust Funds with revised projections for their ability to pay scheduled benefits to 2034 and 2057 respectively and by 2035 when hypothetically combined due to accelerated recovery from the COVID-19 recession . In March 2023, the Treasury Department issued the annual trustees report for the Old-Age and Survivors Insurance and Disability Insurance Trust Funds with depletion date projections for

3520-586: The Republican Party nomination in the 1996 presidential election , for which he had raised $ 8 million as early as July 1994. Although he began the race with a full war-chest and tied for first place with Dole in the 1995 Iowa Straw Poll , his campaign was fatally wounded In 1995 when the scandal broke out that he had previously invested in the porn movies industry, which led the New York Post to nickname him "Porno-Gramm". Consequently, he lost

3600-456: The Senate. Gramm was co-chair of John McCain 's presidential campaign and his most senior economic adviser from the summer of 2007 until July 18, 2008. In a July 9, 2008 interview on McCain's economic plans, Gramm explained the nation was not in a recession , stating, "You've heard of mental depression ; this is a mental recession." He added, "We have sort of become a nation of whiners, you just hear this constant whining, complaining about

3680-549: The Trust Fund could be exhausted. Thereafter, payroll taxes are projected to only cover approximately 83% of program obligations. There have been various proposals to address this shortfall, including: reducing government expenditures, such as by raising the retirement age; tax increases; investment diversification and, borrowing. The "Social Security Trust Fund" comprises two separate funds that hold federal government debt obligations related to what are traditionally thought of as Social Security benefits. The larger of these funds

3760-601: The Trust Fund: Some in our country think that Social Security is a trust fund – in other words, there's a pile of money being accumulated. That's just simply not true. The money – payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. These comments were criticized as "lay[ing] the groundwork for defaulting on almost two trillion dollars' worth of US Treasury bonds". However, even right-leaning politicians have been inconsistent with

3840-663: The U.S. government". The trust funds have been invested primarily in non-marketable Treasury debt, first, because the Social Security Act prohibits "prefunding" by investment in equities or corporate bonds and, second, because of a general desire to avoid large swings in the Treasuries market that would otherwise result if Social Security invested large sums of payroll tax receipts in marketable government bonds or redeemed these marketable government bonds to pay benefits. The Office of Management and Budget has described

3920-519: The United States Social Security Administration . The Social Security Administration collects payroll taxes and uses the money collected to pay Old-Age, Survivors, and Disability Insurance benefits by way of trust funds. When the program runs a surplus, the excess funds increase the value of the Trust Fund. As of 2021, the Trust Fund contained (or alternatively, was owed) $ 2.908 trillion. The Trust Fund

4000-551: The bill is often referred to as the " Enron loophole " because some critics blame the provision for permitting the Enron scandal to occur. Wendy Gramm was an Enron Board member and her husband was the second-largest recipient of campaign contributions from Enron, succeeded in legislating California's energy commodity trading deregulation. Despite warnings from prominent consumer groups which stated that this law would give energy traders too much influence over energy commodity prices,

4080-482: The budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985. The trust funds run surpluses in that the amount paid in by current workers is more than the amount paid out to current beneficiaries. These surpluses are invested in special U.S. government securities, which are deposited into

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4160-443: The budget spending thresholds. That is, if Congress enacts appropriation bills providing for discretionary outlays in each fiscal year that exceed the budget totals, unless Congress passes another budget resolution increasing the budget amount, an across-the-board spending cut in discretionary expenditure is automatically triggered in these categories, affecting all departments and programs by an equal percentage. The amount exceeding

4240-603: The depletion date of the combined funds would be in 2037, and the 2020 annual report estimated the depletion date of the combined funds would be in 2035. In a survey of 210 members of the American Economics Association published in November 2006, 85 percent agreed with the statement: "The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged." On February 2, 2005, President George W. Bush made Social Security

4320-605: The distinction as follows: These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on

4400-665: The federal government. From the U.S. Code: EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L.   101–508 , title XIII, Sec. 13301(a), Nov. 5, 1990, 104  Stat.   1388-623 , provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of - (1)

4480-590: The financial crisis, The Washington Post named Gramm one of seven "Key Players In the Battle Over Regulating Derivatives", for having "pushed through several major bills to deregulate the banking and investment industries, including the 1999 Gramm–Leach–Bliley act that brought down the walls separating the commercial banking, investment and insurance industries". 2008 Nobel Laureate in Economics Paul Krugman ,

4560-464: The financial security of older Americans, seems unlikely. An alternative to repudiating these bonds would be for Congress to simply cap Social Security spending at a level below that which would require the bonds to be redeemed. Again, this would be politically risky, but would not require a "default" on the bonds. From the point of view of the Social Security trust funds, the holdings of "special" government bonds are an investment that returned 5.5% to

4640-452: The fixed deficit targets, which replaced sequestration with a PAYGO system, which was in effect until 2002. Balanced budgets did not actually emerge until the late 1990s when budget surpluses (not accounting for liabilities to the Social Security Trust Fund ) emerged. The budgets quickly fell out of balance after 2000 and have run consistent and substantial deficits since then. Phil Gramm William Philip Gramm (born July 8, 1942)

4720-531: The following to fill seats on the board. They await Senate confirmation. The Board of Trustees holds the trust funds. The Managing Trustee is responsible for investing the funds, which has been delegated to the Bureau of the Fiscal Service . The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. The program

4800-538: The fund "whole" as if these tax cuts had not occurred. These all add to the program revenues. During 2016, the initial balance as of January 1 was $ 2,780 billion. An additional $ 710 billion in payroll tax revenue and $ 87 billion in interest added to the Fund during 2016, while expenses of $ 776 billion were removed from the Fund, for a December 31, 2016 balance of $ 2,801 billion (i.e., $ 2,780 + $ 710 + $ 87 - $ 776 = $ 2,801). In an annually issued report released in August 2021,

4880-406: The funds estimated at 2033 and 2097 respectively and by 2034 when combined. In May 2024, the annual trustees report was released with depletion date projections for the funds estimated at 2033 and 2098 respectively and by 2035 when combined. The 1990 board of trustees annual report estimated the depletion date of the combined funds would be in 2043, the 2000 and 2010 annual reports estimated

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4960-483: The heart of the financial meltdown. Time included Gramm in its list of the top 25 people to blame for the economic crisis. As of 2009, Gramm is employed by UBS AG as a vice chairman of the Investment Bank division. UBS.com states that a vice chairman of a UBS division is "...appointed to support the business in their relationships with key clients." He joined UBS in 2002 immediately after retiring from

5040-835: The highest rating from that body of any Democrat in the Texas delegation. In 1981, he co-sponsored the Gramm-Latta Budget which implemented President Ronald Reagan 's economic program, increased military spending , cut other spending, and mandated the Economic Recovery Tax Act of 1981 (the Kemp-Roth Tax Cut). Just days after being reelected in 1982, Gramm was thrown off the House Budget Committee . In response, Gramm resigned his House seat on January 5, 1983. He then ran as

5120-490: The human rights sanctions in the D'Amato Amendment. Gramm's amendment would have allowed the George Bush administration to waive the terms of the D'Amato Amendment if it found that sanctions against Iraq hurt US businesses and farms more than they hurt Iraq. In the end, the bill passed the Senate without Gramm's amendment only a week before Saddam Hussein invaded Kuwait . Gramm won his second Senate term in 1990 with

5200-532: The landmark Gramm–Leach–Bliley Act in 1999, which removed Depression-era laws separating banking, insurance, and brokerage activities. As a senator, Gramm often called for reductions in taxes and fraud in government spending. He employed his "Dickey Flatt Test" ("Is it worth taking it out of Dickey's pocket?") to determine if federal programs were worthwhile. Richard "Dickey" Flatt owns a family-run printing business started by his father and mother in Mexia , Texas, and

5280-443: The language they use when referencing Social Security. For example, Bush has referred to the system going "broke" in 2042. That date arises from the anticipated depletion of the Trust Fund, so Bush's language "seem[s] to suggest that there's something there that goes away in 2042." Specifically, in 2042 and for many decades thereafter, the Social Security system can continue to pay benefits, but benefit payments will be constrained by

5360-628: The law. Trust Fund obligations are considered "intra-governmental" debt, a component of the "public" or "national" debt. As of December 2022 (estimated), the intragovernmental debt was $ 6.18 trillion of the $ 31.4 trillion national debt. Of this $ 6.18 trillion, $ 2.7 trillion is an obligation to the Social Security Administration. According to the Social Security Trustees, who oversee the program and report on its financial condition, program costs are expected to exceed non-interest income from 2010 onward. However, due to interest (earned at

5440-653: The legislation was passed in December 2000. In 2002, Gramm left his Senate seat (effective November 30) a few weeks before the expiration of his term in hopes that his successor, fellow Republican John Cornyn , could gain seniority over other newly elected senators. However, Cornyn did not gain additional seniority due to a 1980 Rules Committee policy. Some economists state that the 1999 legislation spearheaded by Gramm and signed into law by President Clinton—the Gramm–Leach–Bliley Act —was significantly to blame for

5520-585: The limit is held back by the Treasury and not transferred to the agencies specified in the appropriation bills. Under the 1985 Act, allowable deficit levels were calculated in consideration of the eventual elimination of the federal deficit. If the budget exceeded the allowable deficit, across-the-board cuts were required. Directors of the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) were required to report to

5600-467: The money has already been spent." At a Senate hearing in July 2001, Federal Reserve Chairman Alan Greenspan was asked whether the trust fund investments are "real" or merely an accounting device. He responded, "The crucial question: Are they ultimate claims on real resources? And the answer is yes." Like other U.S. government debt obligations, the government bonds held by the trust funds are guaranteed by

5680-480: The nominee. Gramm endorsed U.S. Senator Marco Rubio in the 2016 Republican presidential primary stating: "He's the best prepared on national security. He can win the general election." Upon Rubio's withdrawal from the race, Gramm endorsed fellow Texan Ted Cruz , calling him "a fearless leader and fighter for conservatives all over the country". Gramm lives in Helotes, Texas . He is married to Wendy Lee Gramm ,

5760-467: The reduction in the employees' share of payroll taxes from 6.2% to 4.2% of compensation. The resulting shortfall was appropriated from the general Government funds. This increased public debt, but did not advance the year of depletion of the Trust Fund. Joe Biden's campaign platform proposed new payroll taxes for those making $ 400,000 or more per year (but after taking office, his tax proposal included only Medicare tax changes). The Trust Fund represents

5840-401: The revenue base from the 12.4% FICA (Social Security payroll) tax on wages. According to the Social Security trustees, continuing payroll tax revenues at the rate of 12.4% will enable Social Security to pay about 74% of promised benefits during the 2040s, with this ratio falling to about 70% by the end of the forecast period in 2080. In 2011 and 2012, the federal government temporarily extended

5920-399: The second amendment. The Senate rescinded that amendment by voice vote and President Reagan signed the bill on August 21. The process for determining the amount of the automatic cuts was found unconstitutional in the case of Bowsher v. Synar , ( 478 U.S. 714 (1986)) as an unconstitutional usurpation of executive power by Congress because the Comptroller General's function under

6000-403: The sub-prime mortgage crisis was caused in any way "by allowing banks and securities companies and insurance companies to compete against each other". Gramm's support was later critical in the passage of the Commodity Futures Modernization Act of 2000 , which kept derivatives transactions, including those involving credit default swaps , free of government regulation. In its 2008 coverage of

6080-453: The trust funds in 2005. The trust funds cannot resell these "special" government bonds on the secondary bond market, although the interest rate is determined based on market interest rates. Instead, the "specials" can be sold back to the government at face value, which is an advantage when interest rates are rising. The week after his State of the Union speech, Bush downplayed the importance of

6160-463: The trust funds. If the trust funds begin running deficits, meaning more in benefits are paid out than contributions paid in, the Social Security Administration is empowered to redeem the securities and use those funds to cover the deficit. The Board of Trustees of the Trust Funds is composed of six members: The current board members as of September 24, 2024: President Biden has nominated

6240-487: Was Texas State Representative Dan Kubiak of Rockdale, Texas . Gramm became the first Republican to represent the district since its creation in 1846. After he left the House, the seat was retained for the Republican Party by Joe Barton . In 1984, Gramm was elected as a Republican to represent Texas in the U.S. Senate . He defeated Congressman Ron Paul , former gubernatorial nominee Henry Grover , Robert Mosbacher, Jr. , of Houston , and several of other contenders in

6320-674: Was because James Dobson infamously said, "I walked into that meeting fully expecting to support Phil Gramm for President. Now I don't think I'd vote for him if he was the last man standing." This poor showing in a state adjacent to Texas plus placing 5th in Iowa's caucuses resulted in Gramm's withdrawal from the contest on the Sunday before the New Hampshire primary . He threw his support to a senatorial colleague Robert J. Dole of Kansas. Gramm,

6400-496: Was initially established in 1935 in response to the Great Depression. The first to file for Social Security was Ida Mae Fuller in 1940. Fuller paid $ 24.75 in taxes during her three years working under the social security program, and drew an aggregate of $ 22,889 in benefits before passing at age 100. This represents a ratio of $ 925 in benefits for every dollar she paid into the program. In 1977, President Jimmy Carter and

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