NW Plan for Social Security: Abridged Spreadsheet
First attempt at putting the NW Plan 2012 into viewable form. This graphic compresses the original spreadsheet in both axes. I will be putting links to the full spreadsheet in comments because I am not sure this one will share correctly (I am bouncing between Google Accts) link.
In any event the key columns are those marked NEW, especially the fourth column from the left ‘New Payroll Tax Rate’ and the last two ‘New Calculated Trust Fund’ and ‘New Trust Fund Ratio’.
This version of the spreadsheet terminates at 2045 simply because of graphic limitations, the original extends right through the 75 year window, but the key factor is that the Trust Fund Ratio stabilizes right at the 125 level right into the 2080s and still remains above 100 through the end of the range. In Social Security talk this means the NW Plan passes the Long Term Actuarial Balance test but just fails to meet the threshold for the stricter Sustainable Solvency measure which requires the TF Ratio to be trending at least slightly up.
On a final note. In the 2012 based NW Plan year end TF balances never drop in nominal terms meaning there is NEVER any net redemption of Trust Fund Principal. Which throws a whole new light on the asset/debt conundrum. But of that more in comments.
Dear Bruce
The trouble with “full disclosure” is that it just muddies the waters.
If the “NW” plan”fails to meet the threshhold for the stricter Sustainable Solvency measure”
it’s because it renders that measure irrelevant.
There is no need for “the TF Ratio to be trending at least slightly up” if you have in place a mechanism that bumps it up any time it threatens to fall below 100 in the next ten years.
I don’t remember the exact numbers, but it was something like the payroll tax might need to be increased about one tenth of one percent every ten years… or about eight cents per week per year (in today’s terms).. by the end of the actuarial window.
this is close enough to “slightly up” for practical purposes.
And, as everyone keeps reminding us, as I keep reminding them, ANY projections out seventy five years are nonsense. or as Dean Baker calls it “the science fiction future.”
so geeze, pleeze.
Actually, I think it was one Bruce Webb
who first pointed out that every time the Trustees Report wasn’t scary enough, they invented a new way to make it sound scarier.
The infinite horizon being the prime example.
Don’t follow their example.
Dale just trying to fend off the “yes but–“ers
Bruce
yes, oh god, don’t i know.
Bruce, coberly,
Send anyone who wants to talk infinite horizons to this link:
http://www.actuary.org/pdf/socialsecurity/tech_dec03.pdf
And if they still want an argument tell them to argue with the authors of this letter – the American Academy of Actuaries.
Anna
I’d love to send Larry Kotlikoff to talk to them. But I don’t think he would listen. And Andy Biggs already knows, but he isn’t saying.
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Not an easy spread sheet to read.
I see where you raise PR taxes. An increase of 1.2% over ten years.Hmmm.
You run these numbers like they do not have consequence. What you are proposing is a significant tax increase. Over time, you move it to 16%. I say this is a “No sale”, but I wish you well.
The problem with SS is the next 15 years. This plan has little consequence in this time frame.
A question, where do you come up with the new % at 5.44%?
SS is investing its money at 1.375%.
If you put that rate in, what happens?
Krasting you give no basis for your judgement about that 16%. Particularly when for workers it is 8%, doesn’t happen for 30 years and comes in small chunks. Nor do you consider that it is about 5% of the growth in Real Wage over that time and produces a benefit in real terms about 40% larger than today. In fact you don’t attempt to think at all beyond some vague feeling from the BK gut.
And exactly HOW does this plan “have no consequence” over the next 15 years when it produces solvency over that period, predictable solvency over the time to come (thus gratifying the Confidence Fairies) and by the way wipe $20 trillion in PV ‘unfunded liability’ off the books. At a minimum it guts all the fear tactics being used by the Peterson ‘Intergenerational warfare’ ‘bankrupt’ ‘won’t be there for me’ folk.
What is your measure? Ever mounting transfers from the GF? They aren’t there, particularly when inflation is considered. Or what?
As to interest rates. One exactly nobody expects interest rates to remain in effective negative territory forever. Two Dale is just working with a model supplied by the Trustees and showing the arithmetical consequences of a particular shift in FICA rates on that model, if you have a quarrel take it up with the OACT and the Blue Chip Consensus folk. And three for the umpteenth time interest rates don’t have that much impact on the totals as you fondly imagine. Why don’t YOU take these numbers and produce a spreadsheet with those alternative rates and show it to US.
Because of right now all I see is spluttering bluster and bullshit. You asked for numbers yesterday, I gave you numbers today.
You claim to see a huge crisis after 2016. What is it? Expressed in numbers please. And why wouldn’t the after numbers in this model not meet your (so far vaguely expressed) concerns?
Where’s the Beef? (as in ‘actual substance’ AND in ’cause for grievance’)
And yes the spreadsheet is hard to read. I am still working on the skills that would take Dales raw data and labels and actually putting them in user friendly form. Otherwise I would have had this up months and months ago. If anyone wants to volunteer their Mad Spreadsheet Presentation Skillz to help us out I will gladly supply the source file and as much name credit as I can hand out.
BTW the original is much worse-many more columns and even more cryptic labels. When I say ‘Abridged’ I mean it.
But the key columns are as in the main post: New Combined Payroll Tax Rate, New Trust Fund Balance, and New Trust Fund Ratio. The GDP, Income and Cost Dollars are just there to show due diligence and transparency. Also to give the context to show the continuing cash debt service in relation to the overall economy and the size of the program.
Bruce, The Trustees have said that a “fix” would be either a 20% benefit cut or a 2% tax increase – both immediate.
You have a phased in tax increase of 3.6%. I think what you have done is match the 2% upfront increase. (What is the NPV of the two alternatives?)
So, as a practical matter I say what you are doing is just matching what SSA has said, just packaging it up with bells and whistles.(A time honored Wall Street trick bye the way)
I don’t think a 2% increase is saleable today, I don’t think phased in increase that amounts to the same thing is going to be saleable either. (We have to come up with solutions that are not only viable, but politically feasible.)
In the 2013 – 23 period you have increased PR tax revenue by $381b (Yes??).
That’s a lot of money. And yes it would make a difference. On the other hand, OASI will spend $10T during the same period. The numbers are incredibly large.
You say % rates don’t matter. I disagree. Today SSA gets 1.375% (it will be less again in June). I think SS needs a minimum return of 4% for it to “work”.
So, as of today there is a 2.625% difference. Apply that on 2.7T and it comes to $70B a year, $800B over ten years. The interest issue is far greater than your tax increases over the first ten years. I can’t understand how you don’t think this is important.
% rates will remain historically low for at least another two years (Bernanke has promised that). Then you have the formula that looks back 3 years when setting rates. This takes us to at least 2018 when returns rise at SSA. (starting from a very low base)
I see very low % rates until 2015. After that, a slow normalization.
There is very little chance for SS to earn 4% over the next decade.
Bruce
ignore Krasting for the moment. he doesn’t know what he is talking about, but he throws words at it that sound good to him.
as for the “original spreadsheet is much worse.”
the fact is that “math is hard.” i don’t mean arithmetic. i mean thinking clearly. you can’t “abridge” the chain of reasoning and still come up with something that is understandable.
i taught math for years. the sad fact is that most people want you to give them a magic pill that will make them get the right answers on the test without ever thinking about the math in general or the particular problem in front of them.
if anyone has any specific questions, i will try to answer them. heck, when i get back from work, i will even try to reply to Krasting…
What Krasting can’t get in his mind
is that Social Security pays your basic living expenses for a predicted twenty years. He expects this to be cheap. And if it’s not cheap he throws himself on the floor and kicks his feet demanding a magical solution, or that we all just give up and plan to starve in the streets when we get old.
To be fair to him, there are people on the “left” who think we should just force “the rich” to pay for it.
Both of them drive themselves literally crazy with numbers they don’t understand. The insane rich go crazy with “8 Trillion Dollar Deficit” and when that stops giving them the hit they need, they find a 20 Trillion Dollar Deficit over The Infinite Horizon. And when that stops being scary enough they find a “44 Trillion Dollar Deficit” by including the cost of health care. And for the really insane there is always Lawrence Kotlikoff’s “222 Trillion Dollar Deficit”
All in “NPV” of course so they can tell themselves they are financial professionals. But they don’t know what NPV means (they think they do but they don’t.)
Now we have Krasting who has found out that a one tenth of one percent increase in the tax per year ultimately means a 16% “tax” after about fifty years. Oh God he screams… the end of the world.
But not a word about the fact that you are going to need to pay for your rent and groceries for twenty or more years when you are too old to work.
And the stock market hasn’t been all that reliable. And, no, even if you are going to live that long,you are not going to be able to work that long.
Of course this “16%” means that the average worker will see an extra 2% deducted from his paycheck.
And the good Krasting can’t keep in mind that that paycheck will be more than twice as big in real dollars as it is today. But no, no, we can’t use any of that money to pay for living longer, we have to spend it on fast cars and stocks and bonds.
Try this… it’s easier to understand if you are a grown up. You grandparents made something like 15 thousand a year in real dollars while working. Saved, if they could, about ten percent of that, enough to live on for the ten years, if they were lucky, that they expected to live after they could no longer work.
Now you dear reader are going to be making something like sixty thousand a year.. real dollars… and we are telling you you are going to have to save about 16% of that… ten thousand dollars… a year if you are going to live about twenty years in retirement.
Oh, no, oh, god, how can we do that? How can we live on only fifty thousand a year? How unfair that we should have to save money to live on. Shouldn’t the government pay for that? Shouldn’t the rich pay for that? Won’t the stock market pay for that?
There must be some way, there’s gotta be a way we don’t have to use our money to pay for living longer.
what complicates the picture is not only are you going to be living longer..
but the rate of growth of middle (and lower) class incomes has fallen. it is the growth of incomes that provides the effective “interest” in pay as you go financing. it is this interest that provides higher benefits for the amount of tax you pay.
the lower growth means that the present tax rate will not continue to support the current benefit rate.
you can either cut benefits… they are already set at “survival” level… by 25%. or you can raise your own tax by 2%.
this might be a hard choice if your income was also at “survival” level. but it’s not. you will never even notice that 2%
except that people like Krasting will keep pointing at the “sixteen percent” and try to make you feel like “it’s no fair.”
one thing for sure…it will have NO effect on “the economy.” the economy doesn’t care if you spend it all now, or if you spend it later… the reason is that what you don’t spend now, is spent immediately by someone else for whom your “tax” is their “benefit.”
a benefit they paid for by paying their tax when it was their turn.
but that appears to be another idea that is too subtle for a lot of people who don’t want to understand.
well, i said i’d reply to Krasting.
it’s like talking to an insane person. he throws out meaningless numbers that scare him and says, “what about that, hunh? what about that? hunh? hunh?
The Trustees 2% immediate fix would work fine. It would solve the 75 year actuarial deficit. and that might be enough, but then they intone ominously about the infinite future horizon. The northwest plan solves the infinite future horizon. And instead of a 2% immediate fix, offers a one tenth of one percent per year fix. This is easier to swallow, but because it lacks the (imaginary) interest of putting 8 Trillion dollars in the bank today (that’s 2% of the next 75 years worth of payroll) it will eventually require that the payroll pay about a 4% “tax.” This, by the way is all “net present value” though Krasting does not know it. That extra 2 percent is not an “extra cost.” It is just paying directly from payroll what the “immediate fix” would have paid in interest… if it could find a place to invest 8 Trillion dollars today and get a guaranteed 2% real return. which it can’t.
moreover that extra 2% “tax” is in place at the end of the 75 year actuarial window and pays for the rest of the “20 Trillion Dollar Infinite Horizon Deficit, Net Present Value”.
And it all cost you, the taxpayer, an extra one tenth of one percent per year, declining to about an extra one tenth of one percent every ten years by the end of the actuarial window. AND you get your money back with interest when you retire. And you don’t have to scrounge in garbage cans to find enough to eat, or live in doorways at night and on the sidewalk in the daytime.
But Krasting can’t see the economic benefit in this.
So it turns out the “bells and whistles” is “just” a way to actually pay for what we are going to need.
As for the 381 billion over 2013 to 2023… i’ll take Krastings word; this is not a number i thought was particularly important. let’s see… that’s about 4 billion a year. with 100 million taxpayers that works out to about forty dollars a year each, or, say eighty cents per week.
hmmm. but yes,the 381 billion sounds much more impressive.
now, lets see, “over the same period OASI will spend 10 Trillion. Or about one trillion a year. With 50 million retirees that’s about 20,000 a year in benefits. Just about the poverty level. And never mind that this is just about exactly what they paid for those benefits (in NPV of course).
But that 10 Trillion sounds like a lot if you were planning on buying a new car with it, instead of wasting on the old people who paid for it.
yes, the numbers are incredibly large.
100 million people making 50 thousand a year for ten years or seventy five years, or “the infinite horizon” gives you an “incredibly large” number.
number. take 6.03 times 10 to the 23rd power if you want an “incredibly large number.” It’s about the number of molecules in a basketball full of air.
but it’s still a basketball.
you can scare yourself stupid with “numbers” if you don’t know what they mean. or, like krasting, you can go “oooooooooh.” and build a stone idol called “big number” and fall down and worship.
or you can keep your eye on the ball.
now, krasting says “the interest rate matters.”
it does not.
Social Security gets its money from the payroll tax which goes up with inflation and the economy, without regard for the interest rate.
the interest rate on the Trust Fund is nice, but it doesn’t matter.
at some point the Trust Fund will be “100% of a year’s benefits.” A year’s benefits is 12% of a years payroll. So, say the interest on the Trust Fund is Krastings 4%. So the interest on the payroll provides 4% of 12% of payroll to SS. That’s about one half of one percent of payroll.
This could mean that it enables the payroll tax to be 12% instead of 12 and a half percent.
This is hardly a significant number to the average tax payer, though i will concede that to a bond trader who is thinking of the difference in return on a million dollar bond, it would buy a lot of cigars.
not being much of a mathematician, Krasting applies the difference in interest on some bonds for two years to the interest on all bonds for ten years and comes up with a meaningless 800 billion, which even if it was not meaningless in terms of any actual interest on actual money, is, again folks, all together now, 8 billion dollars a year, or 80 dollars per taxpayer, or about a dollar and a half per week.
which is in fact more than the 80 cents per week in the northwest plan. So we can conclude that the interest on the Trust Fund is paying part of the cost of Social Security over the next ten years.
But we already knew that. What the extra 80 cents per week, per year, that we provide does, is make up the difference between what current taxes, and the Trust Fund, pay, and what SS will need.
That is a very hard concept for Krasting to understand.
Krasting is the sort of person who reads a headline in the popular science tabloid press: The Sun is predicted to nova in ten billion years. He runs around screaming “we’re all going to die.” And he gets out his calculator and checks the NPV of his portfolio in ten billion years and gets really depressed when he sees that when the sun novas he is going to lose all that money.
(by the way, the NPV of his portfolio is “what is in it today.” that’s what present value means. and the eighty cents per week per year… well, that’s present value too. but don’t tell the “present value” jocks. they’ve been taught to say “NPV” when it times of trouble or in doubt.
it’s a little like “supercallifragilisticexpialodocious!”
Coberly, You accuse me of playing with numbers. I see it differently. Your words:
As for the 381 billion over 2013 to 2023… i’ll take Krastings word; this is not a number i thought was particularly important. let’s see… that’s about 4 billion a year.
Actually Coberly, it comes to $38B a year. A modest 10Xs more than you have said. So if $4b isn’t “particularly important”, is $38b also unimportant?
If you’re going to play with numbers. I’ll always catch it.
Coberly, I just read your following comment. Once again a goof on the math. You write:
Krasting applies the difference in interest on some bonds for two years to the interest on all bonds for ten years and comes up with a meaningless 800 billion, which even if it was not meaningless in terms of any actual interest on actual money, is, again folks, all together now, 8 billion dollars a year, or 80 dollars per taxpayer, or about a dollar and a half per week.
So you take 800B divide it by 10 years and come up with 8B. Sorry – bad math – it is 80B a year.
That comes to $500 per worker per year. A fair bit larger than your $80 number. About 6Xs larger.
Please…..
krasting
you appear to be right about the 40 billion. i’ll have to take another look at it.
also about the 80 billion. i’ll have to check into it.
The 381 billion over ten years is 38 billion per year. Divided by 100 million taxpayers, that is 380 dollars per year, or about 7 dollars per week.
what i should have said is that 80 cents per week the first year, and another 80 cents per week the second year, and another…. etc. gets you to 8 dollars per week the tenth year. i would guess this works out to about 4 dollars per week per year on average.
Add to that the boss’s matching share and you get to an everage of about 8 dollars per week. And that does reach the 381 billion that Krasting is worried about.
So if you can ignore my mental lapse for a moment, the question remains… is that a significant amount of money?
well, no.
it’s still you paying an extra eighty cents per week per year. THAT is what you would “feel.” Remember that over this time your income will go up about 8 dollars per week per year. That means that by the time you are paying that 8 dollars extra per week in tax, you will be getting an extra eighty (80) dollars per week in income.
Looks to me like you are 72 dollars per week ahead of where you are today.
the problem here, aside from my talking faster than i think, is that by looking at totals and “some” of the numbers, ten, fifty, 75 years down the road, we can scare ourselves into think we are looking at a “burden”.
A burden which turns out to be a way to pay for our basic retirement needs by raising our tax 80 cents per week while our income is going up 8 dollars per week.
So, point for Krasting on arithmetic. Point for coberly on significance?
As for the interest on the bonds. I have to concede that 800 billion over ten years comes to 80 billion a year, not 8 as i said, my “divide by ten” brain circuitry not working today.
But again, what does it mean?
Well, first, we still have Krasting applying a difference between two interest rates, one of which is imaginary, and the other of which is partial or temporary.
I do not know what the interest rate going ahead will be. I think the Trustees used 5% to calculate their 2012 projection of 8 Trillion dollar deficit.
I used whatever interest rate they used to see what the effect of an extra one tenth of one percent on the payroll tax, from time to time, would be. And I eliminated the 8 Trillion dollar deficit.
If you have my spreadsheet in front of you (it may not be on Bruce’s) you can see what the effect of interest on the Trust Fund is.
One thing to keep in mind is that for the Trustees, the Trust Fund runs out of money in 2030, and of course is running out over the time between now and 2030, so it is incorrect for krasting to apply his imaginary difference in interest rates to the full Trust Fund balance.
And here, dear reader, I must decline to make the same mistake I made in the comment Krasting finds fault with. NOt the divide by ten error… that was “trivial” and easily fixed.
No, the error of assuming someone else’s numbers mean anything. Krasting made up his numbers out of his head. I used the Trustees numbers and if my computer can still divide by ten… as opposed to my computer’s operator… my results are good.
So, please ignore what i said following my divide by ten error, and go back to what I said before that:
IF the interest on the Trust Fund was 5%, AND the Trust Fund held one full year’s benefits in reserve, THEN, because one full year’s benefits is (currently) about 12% of payroll, The interest on the Trust Fund would be 5% of 12% of payroll, or about 0.6%
of payroll.
IF this interest disappeared entirely, it would have to be replaced with a 0.6% increase in the tax.. in today’s terms that is about 5 dollars a week for you and 5 dollars a week for your boss.
Is this significant? Is it the end of the world? Is it a reason to “means test” the best way you have to prevent dire poverty in old age?
I don’t think so.
But again, points to Krasting for arithmetic. Points to coberly for significance?
I hope in making your decision you will take into consideration that Krasting begins with made up numbers that don’t seem to match in any way the actual financial situation of SS. The only number I made up here is the “5%”. You can use a lower number if you like, but that makes my argument stronger.
If you prefer a higher number, you need to remember that it is the general taxpayer who pays that interest… so maybe you don’t want to brag about the “need” for the Trust Fund to earn more interest.
in fairness (to Krasting? no, to me.)
does the fact that Krastings number for the effect of the interest rate turns out to be about twice my (corrected) number mean anything.
only that his is based on a Trust Fund ratio that is about twice (note the “about”) the one I based mine on. The current Trust Fund ratio is about twice that of a normal trust fund. It was made this way so the Boomers could help pay for their own retirement beyond the normal pay as you go financing.
This Trust fund is doing its job… providing that extra money that Krasting finds…. but it is running out of that money… as it is supposed to, by paying for what it was saved for… and the “high” trust fund that krasting assumes is not going to be there for very long. now, this might be what he is so concerned about. but it is what we have been saying not quite tirelessly, and with better arithmetic, for years and years… doesn’t matter.
as the “high” trust fund returns to normal, a tiny raise in the payroll tax will phase in to pay for the higher expected costs of the after-the-boomer generations. the tiny raise is eighty cents per week per year.
note “phased in”. at first it is not enough to replace the interest from the declining trust fund. but by the time the trust fund declines fully, the eighty cents per week per year will have become enough.
and remember while the tax is growing at the rate of eighty cents per week per year, incomes will be growing at the rate of eight dollars per week.
you are going to come out ahead in this game, if you can keep Krasting from scaring you into accepting benefit cuts.
which, if we go to means testing, as Krasting says he wants, while saying he does not want cuts.. the cuts will be 100% in most cases.
Yes Coberly, I think that for a portion of retirees, benefits should be cut to zero.
To me, that is the only way to get through the hump of the next 15 years. I don’t want to see a plan that cuts benefits across the board. (actually I would like to see some benefits go up)
A Means Test on Income is a partial answer. But my review says this would not generate enough savings unless the income cutoff was very low (50-75K in today’s dollars)
This a problem as those with modest investment income will still struggle. So a Means Test on income does not solve the problem.
I think the means test has to be on both income AND assets.
I think the means test on assets has to be anything over $3m. If you have that much in net worth, you don’t get benefits.
But I am not a total crook, I want to give each person a tax credit for the money they did not get from SS. This tax credit will be usable against an Federal Estate taxes due on death.
What this would do is give SS a free loan for about 15 years. It would defer the current cash loss. It would be a bridge through the boomer years.
This plan would be a reverse inter-generational tax. Wouldn’t that be a nice side benefit?
Krasting
having just demonstrated that my brain is getting old and unreliable it would not be prudent of me to be unkind to you.
nevertheless you are working too hard in a bad cause.
SS works fine, and will continue to work fine with or without the 80 cents per week per year increase that i advocate.
your “fix” (fixes?) would destroy the very nature of Social Security. I can almost guarantee that whatever advantage you see in them would be swamped by the disadvantages that you don’t see.
for now at least, I think the Pope has the right idea.
I need to retire.
Just to pick up on what Coberly has been saying in reply to Krasting’s continuously ignoring the rebuttals that Webb and Coberly have been taking the time to post here, It has become apparent that Bruce K. has no intention of giving any credence to any replies to his obfuscation of the facts of the Social Security financial balance and the actuarial nature of that balance. Especially egregious in this regard is his last suggestion that benefits be means tested with the result that some participants receive no benefits in spite of their having made contributions throughout their working lives. That completely ignores the earliest intentions as put forth by the New Deal which was that Social Security was a “safety net” paid for by those expected to require such assistance and those who would be fortunate enough not to have to depend on that net entirely. Social Security benefits are not, and were never intended to have even the flavor of, welfare. All who receive benefits have contributed to the system. Some at the lowest end of the income levels receive a slightly better return on their contributions, but only because they had to live their working lives at that lower end of the scale level. And they still will receive benefits that are smaller than those who enjoyed a more remunerative work life.
What effect Trust Fund Treasuries may or may not have on interest rates in general is not a concern of the Social Security system. If Krasting the Bond Trader is concerned about long term ibnterest rates he should find a more stable form of investment, less influenced by the turmoil of the market place. His insistence on manipulating a seperate system that effects nearly every worker in the country so that he may experience some gain or stability in his bond market activities is the hight of egocentricity and the antithesis of the intentions of the Federal Insurance Contributions Act. In short, he is selfish to an egregious extent and will find any way to twist facts regardless of how many times he is corrected regarding his erroneous assumptions.
Jack
just to prove i am really retired, or reformed, or something, let me put in a good word for Krasting, sort of.
I don’t think he is selfish in exactly the way you are thinking of. I do think that like most people he sees the world in terms of his own experience, as a bond trader, and is completely unable to even imagine what the experiences of others might be… and the experience of others, taken together, are what we call “reality.”
It does bother me that he has never shown any sign of understanding anything I have ever said to him… aside from my arithmetic mistakes… but even that is not so unusual. I could tell you about dozens of professional worriers about the poor poor, who, even though i agree with them about 98% of everything simply cannot tolerate the idea that i disagree with them about 2%. i don’t mean they continue to disagree with me. i mean they decide i am a non person and take care that their friends all shun me.
so while Krasting is a thorn in my side, he isn’t all that different from other thorns.
what Krating could do, what he has utterly failed to do is explain why the earlier than previously advertised paying down of the Trust Fund will affect the Bond Market, and why we should care.
I think this will be hard for him because he still has not showed that he has the least understanding of what Social Security is and how it works.
and, not to be mean here, but to be provocative, I am not sure that Krasting even understands the Bond Market.
i am guessing that someone who responds hysterically to tabloid headlines could probably do a good job of predicting how other people who respond hysterically to tabloid headlines will react.
this may be what it takes to be a bond trader.
but i should admit that i know nothing at all about trading bonds.
“I do think that like most people he sees the world in terms of his own experience, as a bond trader, and is completely unable to even imagine what the experiences of others might be… and the experience of others, taken together, are what we call “reality”
That is exactly why I use the termn egocentric, and it is that egocentricity that is the basis for selfish behavior. He rejects a priori any analysis of the issue that does not fit into his constrained view of the interacting variables,in this case, as related to Social Security. Granted that Krasting is not alone and may share the views of too many so-called serious thinkers on the subject of Social Security without recognizing or acknowledging that that system functions independently of the general budget other than as one of its many creditors.
And there’s the rub. It is dishonest to a fault to blame one’s indebtedness on the lender. And worse yet to only identify one out of all the many lenders as the means to that debts resolution. If it is unthinkable that the Treasury would ever not honor all claims by both private and sovereign holders of Treasury notes, why is intergovernmental debt not equally inviolable. The source of that intergovernmental debt was all the collective contributions from the payrolls of all working Americans. There is no basis for Krastiing’s ruminations, nor those of his cohorts on the subject of Social Security finances..
Jack
I agree with you entirely.
I have to say that I have known people who were pathologically dishonest, and yet they believed themselves.
And they believed you were somehow behaving badly if you did not believe them: “you don’t trust me because you are a suspicious, mean spirited, person…”
At least they said this with enough conviction to make me believe they believed it.