Reply to Krasting’s reply to Coberly’s reply to Krasting
by Dale Coberly
Bruce Krasting has replied to my post “The sky is falling…again.” Basically he holds up his paw and complains how nasty I and Bruce Webb have been to him. He repeats his hysterical nonsense with no evidence he read all of the words in each sentence he responds to, let alone understand that numbers add up to something. I respond to his response to me, both of us interlinear. It’s long and clumsy, but it’s all I’m up for today.
Bruce Krasting writes
I’m No Chicken Little
I wrote a piece on the 2009 results that were published by the SSTF. Some of my assumption and many of my conclusions have come under criticism. Mr. Bruce Webb, a well-respected fellow, suggested that I was “peddling crap”. He went on to suggest that I was in collusion with two leading economists, Mr. Briggs and Mr. Hassett of the American Enterprise Institute (AEI). There is no truth to that. Right or wrong I have come to my observations on the Fund on my own. I have written a total of 11 pieces (out of 180) on the SSTF in the past year. They have all been published outside of my blog. I am not that new to this debate.
Dale Coberly (another well respected guy) at Angry Bear did a piece that discussed all of this. Mr. Coberly took me to task on my views. Argued with my analysis. Disagreed with all of my conclusions. Fair enough. I think that is what blogs are for.
I have never met Coberly or Webb. I am not sure why they took the approach they did. The Angry Bear site has a link to Webb’s blog on the banner. So they speak as one voice. One says that I am colluding with people from AEI (in my view he lost any respect he might deserve with that silly assertion) the other approaches this with a tone and style that makes me think of a sandbox.Their piece and my thoughts:
DC: sorry about the sandbox, i learned my style and tone in graduate school.
The Sky Is Falling Before Schedule. Again.
by Dale Coberly
“Bruce Krasting tells us The sky is falling the sky is falling Social Security has run out of money 30 years before it was supposed to happen. The words here are mine, the tone is his:”
BK-I never said anything of the sort. As you say, you make up words. Why do you feel it is necessary to do that? I did say the following and I stand by it:
DC: no, silly, you never said it in words. it was your tone. as i said. i used my words to reproduce your tone in a few words, a rather well understood device, used by literate people everywhere.
“I think that the recession of 08 and 09 and the anticipated high unemployment (low employment) in 2010 has crippled the Fund. Nothing short of a major overhaul can turn it around at this point. The damage has been too great.” (quote from BK’s original post)
BK-Yes, a major overhaul is necessary in my opinion. From the SS Trustee’s 2009 report to Congress,
“Under current law, the cost of Social Security will soon begin to increase faster than the program’s income….. . Based on the Trustees’ best estimate, program cost will exceed tax revenues starting in 2016.”
DC: yes, but your opinion is what is at issue. i thought i made a clear enough case that the cost increasing faster than the income was well understood and predicted a long time ago. that is what the trust fund was designed to take care of. it was always intended to “run out of money” to be replaced either by increasing the tax or cutting benefits. which we will get to below.
BK-FICA and SECA taxes were less than benefits paid for the first time in history in 2009. That is a significant milestone. Mr. Webb points to adjustments to this basic ratio including tax on benefits and RR expenses and overhead. His calculation was for this to result in a surplus of $8b. Fair enough. By that calculation the Fund covered expenses 1.012X. The ratio I point to is .9924X. These are rounding errors. The break even point has been functionally achieved. It will be exceeded in 2010. The Trustees predicted that this would happen in 2016. In will come six years earlier. You see no sense of urgency in that?
DC: NO! Absolutely not. read what i said just above. read it carefully. try to understand it before you disagree with it. if you still disagree with it, try to understand your basis for disagreeing with it. someone else’s unanchored opinion?
He tells us the Trust Fund has a surplus of 2 and a half trillion dollars. That’s 2,500 billion. Yet he is convinced that a 5 billion cash shortfall this year “has crippled the Fund.” Other things being equal (they are not), that 5 billion shortfall would take 500 years to deplete the Fund. The Fund will run out of money long before that for other reasons… but those other reasons were understood and planned for a long time ago.
BK: Yes, if you divide 2.5 trillion by 5 billion you get 500. But we both know that is an irrelevant calculation. You think that math adds to this debate?
DC: yes. it puts some perspective on your claim the Fund is “crippled.” and will require a major overhaul to fix.
Krasting may be alluding to those other reasons when he argues with Bruce Webb that the small cash deficit this year will keep on growing, but he doesn’t really say so. The deficit might keep growing or it might not. The recession could end, and then cash flow would go positive again, at least for a while.
BK: Yes the recession will end. It already has. But we have 10% unemployment and few prospects for job creation. If we started getting increases in NFP of 700k per month, I might back off. But we are still losing jobs. I think that net of census hiring we will lose jobs for the full year. I am not alone in that view of employment. What is your outlook for jobs creation? Are you looking for 10mm net new hires this year? If not, you might want to consider the implications to the Fund.
DC: for my purposes the recession is not over until the unemployment rate falls below 5%. if that takes 10 years the Trust Fund can handle it. Again, try to follow my logic. Your logic tends to skip over the hard parts. The fund has enough money in it to handle 10% unemployment for ten years or more. I don’t make predictions. I just do arithmetic.
The other reasons the Trust Fund will eventually “run out of money” (almost) will still be with us. Fortunately, they don’t matter either. Social Security will not be “broke.” The Trust Fund was designed to “run out of money” (almost). When it does, Social Security will return to pay as you go (almost) at perhaps a slightly higher tax rate to pay for the longer life span of the generation paying the tax.
He claims that there was a negative COLA. There wasn’t. He seems to think the difference between the December and January total outlays represents a “decline in monthly checks.” It doesn’t.
BK: This is a valid criticism. It would have been more correct if I had said:
“The December to January benefits number fell by $475mm ($6b annualized). The first time ever absence of a COLA adjust may have contributed to this unusual phenomenon. In the past decade there has not been any years where this has occurred. The percentage change in the past few years were 06/07 = + 2%, 07/08 = + 1%, 08/09 = + 5% and 09/10 = -1%. A big swing in direction for 2010.”
BK: I look for numbers that change from a ‘predictable’ direction. When that happens there is often consequences. Sometimes those consequences create opportunities to make and lose money. That is why I watch for them. Coberly and Webb have unique knowledge of the workings/numbers of the Fund. They could turn that into an opportunity to make a buck. They should try it. It is rewarding in many ways. But I doubt that they see the forest for the trees.
DC: no doubt looking for trends can make you money on Wall Street. doesn’t have a damn thing to do with the financial condition of the Trust Fund. I do not have the gift for predicting mob behavior, so i will never make money on the market. I can tell you however with great precision that the Trust Fund is not going to run out of money soon, and that when it does it won’t make a material difference to anybody. Except the people who hope to stampede the Congress into crippling Social Security so they can make money out of people who don’t have much to start with.
He seems to think that a 100 billion dollar surplus is a deficit because it’s not a 190 billion surplus. Time to run in circles, scream and shout, because we only came out a 100 billion ahead this year instead of the 190 billion we predicted before the recession. The whole point of the Trust Fund is to bridge cash shortfalls due to things like recessions. What Krasting is screaming about is the Trust Fund doing what it was designed to do. See, you build up surpluses when times are good, and you spend them down when times are bad.
BK: That was not a little rain shower we just went through. That was the storm of the century. Yes we have eaten into the surplus. In 2010 we may start to ‘live off the interest’. And this ship is far from being turned around.
Yes, I do think a miss of 45% on a basic measure of the Fund’s performance is material. If a public company missed by 45% on the bottom line we would take the stock out back and shoot it.
DC: yes, a storm of the century. makes a big hit on the Trust Fund, but hardly a fatal hit. not even a damaging one. I think you need to look at the “base” of your 45%. When you deal with percents it is critical to keep track of what it is a percent of. Sure as hell the Trust Fund did not suffer a 45% loss. What “performance” are you thinking of? You are confused because you think the Trust Fund is supposed to be like the trust fund your grandfather left you to live on all your life. It’s not. It’s more like a “christmas fund” or even an “education fund” designed to hold money for a short time and then be used up.
He seems alarmed that Social Security is not able to lend money to the Treasury. This is like your forty year old son getting mad at you because you can’t afford to “lend” him a hundred bucks this week like he expected because he has gotten so used to getting it. The purpose of Social Security is to provide benefit checks to the people who pay the payroll taxes. The purpose of Social Security is NOT to support Congress’ deficit spending.
BK: You have me right on this point. I am alarmed. While I agree that this is not an issue for the SSTF, it most certainly is an issue for the entire fixed income market. In prior years the SSTF acquired Treasury IOU’s for as much as 50% of the total deficit. In a few years the Fund will be a seller versus a buyer. Do you really think that is not a significant development?
DC: the problems of the fixed income market are it’s own problems. the purpose of the Social Security Trust Fund is NOT to underwrite the fixed income market. if you have been counting on it to do so, you have been making a mistake. bond buyers often do.
So because Social Security has reached the long planned for point where the surpluses have to be called upon to do the job they were designed to do, Krasting wants to call a “deficit commission” and steal the benefits from the people who have paid for them. And subject them to “means testing,” i.e. “welfare,” which Social Security was specifically designed not to be.
BK: The fund has proposed either a 2% increase in payroll taxes or a 13% cut in benefits (or some combination). The 2% solution proposed by the Fund would increase payroll taxes by $115 billion annually. That number would rise each year thereafter. Please point me to the economist, Senator or Congressperson who would sign up for that. I think the voters in the States that they are from would be anxious to hear about that. You have my email. Send me the list and I will publish it.
DC: the 2% increase would increase the amount of deduction from the average workers check about 14 dollars per week at a time when his income will be about 500 dollars per week higher than it is today, both figures in real dollars. The senators and congressmen so far appear to be too damn dumb to understand that the average worker would see that not as a burden, but as money well spent: that fourteen bucks per week extra, out of a pay that is 500 dollars per week extra, guarantees his ability to retire before his knees give out, with a little time to enjoy life before they hook him up to a tube in a nursing home. it’s what our grandparents tried to do for themselves, but without social security, they often got wiped out by inflation, stock losses, or job losses.
BK: The Trustees said that ‘creative thinking’ would be required. I don’t see you two putting anything new on this table. There are 160mm people paying into the system, there are 55 million getting benefits. That is two thirds of the population and most of the adults. Not one of them would support an increase in their taxes and/or a decrease in benefits. What I offer is politically doable. The alternatives will create a debate that will make health care and tea parties look like small beer.
DC: we have put something new on the table. look up “northwest plan” on Bruce Webb’s website. or read my pdf… i’ll send it to anyone. write coberly@peak.org.
what you are offering is an increase in the retirement age… a death sentence to maybe 20% of the people who will not live that long, whatever the “average life expectancy” is. And you offer “means testing” which simply destroys social security. the whole point of social security is that it is not means tested. the workers pay for it themselves.
BK:A question. You have two choices, which do you choose?
1) You reduce the check to Bill Gates’s and a widow from Alabama’s by 20%.
2) You eliminate Bill’s check entirely and keep the widow with her old benefits.
DC: there are more than two choices. the one i suggest is raise the payroll tax by one tenth of one percent whenever the Trustees Project “short term actuarial insolvency.” That will keep the Trust Fund solvent forever, and continue to pay benefits at the present levels, and let people retire at the the present age. Bill Gates paid for his retirement check, just like the widow. Only she gets a better deal, because Social Security is insurance. Just like fire insurance. Bill Gates will get a lower rate of return than the widow. But, oddly enough, he will make about 2% real rate of return anyway. The widow will make about 10%. Or even more if she is the beneficiary of someone who died young.
BK: Would your really go for #1? If so, I suggest you ask Bill (or me). We would disagree with you. #1 is not the ‘right thing to do’.
DC: you would disagree with me. no telling what Bill Gates thinks. You would be wrong, for the reasons I gave above.
BK: Mr. Coberly has already answered this question. He stated yesterday, “Bill Gates will get his check” He is correct, under the current law Mr. Gates will get money he does not need or want. But if it becomes necessary to cut benefits, Mr. Gates will have his benefits reduced by the same percent as the widow. In 2010 the mindset of the people is not in agreement with this thinking.
DC: see my reply above. what you are saying here is nonsense once you understand the real choices. The “mindset of the people” has been misinformed by the Big Liars who have shaped your opinion. Basically people who can’t do arithmetic don’t understand what is at stake here.
It also needs to be pointed out that Social Security has nothing to do with the deficit. Not the current debt nor any future deficit. Social Security was carefully designed to be paid for by the people expecting the benefits. It is not paid for by general revenues, taxes on the rich, or government borrowing.
BK: I want to focus on the statement that, ‘SS has nothing to do with current debt.’ This is correct. But things are happening now that affect who owns the debt. On a month to month basis a small portion of the debt has been shifting back and forth between that held by the public and that which is intergovernment. I want to demonstrate a troubling trend that I see. Some data.
DC: sorry. you are wrong. Social Security owns the debt. Call it intergovernment if you want. The bonds say payable to Social Security. That means the debt is owed to the people who put up the money: the workers of america.
DC: please note that Krasting has agreed that SS has nothing to do with the current debt.
BK:The monthly shortfalls are reversed at the end of the quarter (except Q 3) and we see the annual surplus number. There is no YoY negative shift in the Public vs. Government holdings. (It continues to be positive)
However, for the months of Feb., May, July, August, Sept., Oct., and Nov. the SSTF did reverse repo transactions with Treasury to provide the liquidity to cover the monthly shortfall. The offset is that for that month the Treasury has to increase it’s sales of Treasury bills to the public to generate the cash to cover the deficit. In 2009 those shortfalls had three affects.
1) It reduced the amount of investable funds and therefore the ability of the Fund to earn income and,
2) It cost the Fund +/-$125mm in interest to fund the monthly shortfalls.
3) It caused the Treasury to issue additional short term debt in the public market. Some of that additional debt extended beyond one quarter.
DC: what you are saying here is that the government has to pay back the money it borrowed from Social Security. what is there about paying back money that you borrowed that you don’t understand?
DC:by the way, the fund continues to earn interest on the 2.5 Trillion Dollars still in it. You are still claiming that a reduced profit is really a loss. Really bad accounting, especially when the fund which has “lost profit” was designed to be used in just such an eventuality. Which eventuality was long expected.
BK: I acknowledge that these monthly amounts are negligible in the scheme of things. But now you have to acknowledge something. In 2008 there were 3 deficit months. In 2009 there were 7 deficit months and the sum of those was $24.2b. As historians of the Fund’s performance you will confirm that these negative cash flow months have not been seen in the Fund’s numbers over the past twenty years. A troubling development if it were to sustain itself. I believe that it will.
DC: eventually it will. that’s the way it was designed. it doesn’t mean anything except that the trust fund will be paid down to do what it was designed to do: help fund the Boomer retirement. It was not designed to be a slush fund for the government and a prop to the bond market. get your hand out of my pocket.
BK: Now consider the 4th Q 2009 surplus of only $13.6 b. Compare that with the surplus in 2008 of $52.3 b. A YoY decline of 75%. I believe there is a very real possibility that the 4th Q 2010 number will be a full quarter deficit number based on the trend from 08 to 09 and the assumption that there will no meaningful additions to the number of contributors. I expect the 3rd Q to repeat the 09 performance.
DC: could be. doesn’t mean a thing as far as Social Security is concerned. might affect your Bond prices. might affect the governments ability to borrow. but that’s what happens when you overborrow. it is not the fault of Social Security. And crippling social security in order to cover your other debts is theft.
DC: Note that Krasting keeps making the same argument. He hasn’t even noticed the argument against him. He keeps arguing that the Trust Fund has gone cash flow negative, and may do so even more in the future. He keeps ignoring that it was designed to do that. It was created as a “rainy day fund.” He is complaining because his bond traders have been counting on it never being used. Because he forgot that’s what it was created for.
BK: You would say of this development, should it happen, that it is no big deal and of no lasting significance. From the perspective of the Fund you might be right. But you have to look ‘outside the box’. There will be a market consequence to this. And that is what my readers and I care about. Should the 4th Q 2010 prove to be a net negative you will get this headline in the Wall Street Journal:
Treasury Forced to Sell More Debt to Public as SSTF Turns Negative for Second Half 0f ’10
Bond market spooked, yields rise. Gold rallies, stocks and the dollar down.
You may be experts on the Fund. But I know a thing or two about markets. A six month deficit for the Fund is not “priced in”. Unless something is done (or we get extraordinarily lucky and create 8mm new jobs) this development will take place in the next two years. When it does it is not going to go over well at all.
DC: you may be right. the Bond market may have put itself into a stupid position. This does not give you the right to cripple Social Security. What you are proposing is theft.
Finally, let us suppose that Krasting were right (he is not) and that we have depleted the Trust Fund. Would this be a catastrophe? Would Social Security be “broke.” Would we see a crippling burden on the young?No. Social Security would return to pay as you go… as it was always intended to be.
BK: I never said the Trust Fund was depleted. I said that it needs a fix ASAP. You say I am wrong about something I never said. Do you think making these false claims supports your position? There are a lot of smart folks who read this stuff, they will see through this fog you are trying to create.
DC: hopefully they will see that you don’t know what you are talking about. You “never said the fund was depleted” you just said it was “crippled”, it “needs a fix ASAP.” And your fix is to destroy Social Security to save the Bond Market from itself.
It would continue to pay benefits out of current payroll taxes.Because of the size of the baby boom, the missing Trust Fund income would have to be replaced by a small tax raise. That raise would be on the order of one percent of payroll for each the employee and the employer, probably phased in over ten years. This was going to happen anyway… starting in about 2026…because the next generation is going to be living longer than the last. All an immediate collapse of the trust fund (not going to happen unless Congress steals it) would do would be to advance the date of the first one tenth of one percent tax increase.
Krasting does not understand what he is talking about, but he is getting encouragement from people who do. They know he is wrong, but they are happy to let him do the “sky is falling” screaming for them. It accomplishes their purposes, which is to panic the people into letting them cripple Social Security.
BK: Okay. I don’t know what I am talking about and Mr. Webb and Mr. Coberly, are the experts. Mr. Webb has stated his views, “nothing needs to be done, maybe a tweak in twenty years”. I think he is way off on that call.
DC: but what you think doesn’t matter. Webb has the numbers. So do I. all you have is hot air and hand waving.
BK: We shall see who is right or wrong. I say that SS is at a nexus. I say we should address the issue before it gets to a point where the fix is more than we can bear. They suggest that we should just sit back and assume that this is all going to work out fine. Sorry to disappoint you. You can’t put your head in the sand and hope this goes away. It will not.
DC: but what you say is wrong. deeply wrong. you don’t know what you are talking about. by yelling crisis you are going to “fix” it by killing it. There is no crisis. The Trust Fund is simply doing what it was designed to do. That may be inconvenient for the bond market. The bond market should have seen it coming.
BK:In their posts yesterday Mr. Webb/Coberly went out of their way to establish that they were in fact the experts on this. The word Hubris came to mind when I read:
“I am an expert on this part of Social Security. Bruce is an expert on a part of it that is larger than but not entirely overlapping my part. There are a few other experts around. But in general you cannot trust people who bill themselves as “non partisan experts.”
Dale Coberly
(Rdan here…I believe this is in comments reacting to a reader comment. Why is it part of a post?)
DC: exactly. dont’ trust anyone who calls themselves an expert. least of all me. but you can check my work. you see, Krasting calls “hubris” when anyone else claims to know something he doesn’t agree with. His own intuitions are something else. You should trust Krastings intuitions if you can’t do arithmetic.
Note from BK:
On November 20, 2007 I was on the FOX “Scoreboard” show with David Asman. On that show I said, “Fannie and Freddie will go bankrupt. The stockholders will be wiped out, the bondholders will all be spared”. I took a lot of criticism for saying that. All the ‘experts’ were saying it could not happen and guys like me were lunatics. Less than a year later I was proven correct. I did well with that call.
SS is no Fannie or Freddie. There will be no explosion. But the ins and outs of SS are equivalent to 13% of GDP. Anything that affects SS will have an impact on the real economy one-way or the other. When that happens there will be both risk and reward. My guess is that this is about nine months off from become an issue that starts to move markets. If anything, it will be less.
DC: Social Security is 4% of GDP and may go up to 6%. this is to pay the basic living expenses of 25% of the population. AND THEY PAID FOR IT THEMSELVES.
I’m glad Krasting was able to predict Fanny. I don’t know anything about Fannie and Freddie. I do know about Social Security. Krasting does not. Note how pathetic this is: Krasting “goes out of his way” to criticise me for calling myself an expert; then he calls himself an expert. Maybe he is, but he’s an expert bond trader. I just know something about the Social Security Trust Fund. And you, dear reader, need to be an expert in who do you trust. Me, I wouldn’t trust anybody. I’d do my own arithmetic. It has often saved me from being made a fool of by self described “non partisan experts.”
DC: exactly. dont’ trust anyone who calls themselves an expert. least of all me. but you can check my work.
Shouldn’t you now provide a bibliography of your writing that have appeared in reputable refereed journals.
DC: Social Security is 4% of GDP and may go up to 6%. this is to pay the basic living expenses of 25% of the population. AND THEY PAID FOR IT THEMSELVES.
In going from 4% to 6% you say the additional cost on average will increase only 20 cents a week, or 10 dollars a year. And over a working career if you wanted to cut benefits you would only have to cut them by extending the average retirement age by about a week. You and Bruce represent Angry Bear and you’ve made the call – Social security only needs about 20 cents more a week to solve its fiscal tiny problems.
DC: exactly. dont’ trust anyone who calls themselves an expert. least of all me. but you can check my work.
Shouldn’t you now provide a bibliography of your writing that have appeared in reputable refereed journals? Or like in the movie my cousing Vinny provide a reasonable basis on how you’re an expert.
DC: Social Security is 4% of GDP and may go up to 6%. this is to pay the basic living expenses of 25% of the population. AND THEY PAID FOR IT THEMSELVES.
In going from 4% to 6% you say the additional cost on average will increase only 20 cents a week, or 10 dollars a year. And over a working career if you wanted to cut benefits you would only have to cut them by extending the average retirement age by about a week. You and Bruce represent Angry Bear and you’ve made the call – Social security only needs about 20 cents more a week to solve its fiscal tiny problems.
Would someone A) Define “surely” and B) remind us all who said this….
“But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed.”
Unless your English language is different than the one I grew up with someone was as terribly wrong as Ben Stein was wrong on the housing market.
Cantab
you are the source of my “expert” troubles. I was trying to explain to you that what you see is what you get. All of my expertise is right here in front of you. It would help if you could read. I said twenty cents per wee per year. It adds up. I didn’t say a damn thing about extending the retirement age except that its a bad idea. a cruel and stupid idea. the rest about extending it a week came out of your own head.
Jay
i guess i am not enough of an expert to understand what you are saying here.
the enemies of social security say something much like what you quoted. doesn’t make them right. Social Security is not a “narrow interest”. It is the savings of millions of workers. Their own money.
Jay
I guess I am not enough of an expert to understand what you are getting at here.
The enemies of social security say something like what you are quoting. doesn’t make them right. social security is not a “narrow interest” it is the savings of millions of workers. their own hard earned money. the “unpleasant decision” they want you to make is to steal the workers money to make life nicer for bond traders.
but they pretend it has something to do with the deficit. it doesn’t.
Well I guess I owe an apology to Cantab who unlike me and Coberly posts under his own name and has fully disclosed his own CV.
In Alice in Wonderland. Your peer reviewed journal articles are where? Are you the same AM who earned an MA in Econ at BC in 1991? For a guy that has eight layers of sockpuppets in the form of screen names and IP addresses shoved up your shall we say “credibility” you have a lot of gall asking me and Dale to provide bona fides. I have posted under my own name and given plenty of pointers as to who I am, where I live, what my academic and work history has been and yet all we think we know about you is that you drink in pubs in Cambridge Mass. 😛
Cantab
you are the source of my “expert” troubles. I was trying to explain to you something about the nature of “expert”-ise, All of my expertise is right here in front of you. what you see is what you get. It would help if you could read. I said twenty cents per week per year. It adds up, while wages are increaseing ten dollars per week per year. those add up too. I didn’t say a damn thing about extending the retirement age except that it’s a bad idea. a cruel and stupid idea. the part about extending it a week came out of your own head.
Boys, boys boys, play nice! ( I think I left out one boys!) Cantab, for heaven’s sake do the math. Dale is correct!
Bruce K, I don’t know what your are selling, but it isn’t going over here. There is a lot more in depth knowledge about the workings of the SSTF than you are used to dealing. Even this old fart came to the conclusion that Buce W and Dale C knew what they were talking about. You have not shown me much to date, sorry!
BK, for what purpose did you think the SSTF was supposed to be used. Hold down file cabinets in some musty Fed office? If we use the totality of the SSTF to pay benefits for the baby boomers, then that’s what it was intended to do.
Next you’ll be talking about “lock boxes” or stealing the excess for use in the general fund. Sheesh!!!
Bruce and Dale,
I personally have no quarrel with your analyses re. SS, but you are both more sanguine about SS than many more credentialled people. So it is understandable that Cantab seek some 3rd party testimony. Do I correctly recall that you have both been involved in some higher level study groups, or policy discussions, in which your work has been at least somewhat peer reviewed?
http://angrybear.blogspot.com/2009/11/bruce-webb-dale-coberly-arne-larson-and.html
I believe the issue is not relevent with Cantab, who has no credentials or listening skills that he deomonstrates on this issue. Bruce K., who has written on the issue a bit, makes no special claims to credentials, yet our Cambridge resident does not inquire? How unfair! Hence it is a asked only as a distraction instead of a constructive comment.
I find the statement made by BK about making a profit off of SS troubles much more troubling than anything else in the entire conversation. Profits in the bond market made off of grandma and grandpa drive the notion of crisis?…ouch! And then he scoffs at non-profit motives!
CoRev
thanks.
for anyone who does not know, CoRev and I have not exactly been nice to each other, and disagree about a lot of stuff.
though i admit he is a better person than i am.
CoRev,
If I’ve ever said anything even remotely uncomplimentary in regards to your opinion about anything I take it back and compliment you here and now for being square on this issue.
CoRev,
If I’ve ever said anything even remotely uncomplimentary in regards to your opinion about anything I take it back and compliment you here and now for being four square on this issue.
sammy
i don’t like to mention it, but my work has been scored by the chief actuary of the social security administration. doesn’t mean he likes it. just means the numbers are correct.
the reason i don’t like to mention it is because i am not an “expert” in the Cantab sense, and I don’t want to impose on the people who submitted the work, who are experts.
you can check this out by reading NASI report october 2009 “Fixing Social Security” Reno and Lavery. http://www.nasi.org
see page 14 and the inside cover paragraph four. it’s as famous as i’ll ever get.
sammy, here is what i think about “experts.” i hope you have heard the Sammy Davis Jr or Cab Calloway versions. they do it better than me:
“Little David was small, but oh, my!
Little David was small, but oh, my!
He slew big Goliath
Who laid down and dieth.
Little David was small, but oh, my!
Oh the things that you’re liable
To read in the Bible
They ain’t necessarily so!
They ain’t necessarily so!
Bruce,
It is you that is professing to be an expert, not Cantab, so it is your credentials, not his, that are the issue. Your position is a little out of the mainstream, so you should understand and anticipate this objection and be able to counter it.
One great thing we have learned about the internet is that it puts individuals on a much more level playing field with “experts” and “the credentialled” Bloggers called the Housing Bubble earlier than the rocket scientists on Wall Street; bloggers unmasked the Global Warming hoax; bloggers have covered many scandals better than the mainstream media. You and Cobs could be doing the same thing for Social Security, so you should “put your sales hat on.”
An opportunity missed…well, blown out of the water. Poof.
I am disappointed in some of the remarks posted by Dale Coberly and Bruce Webb at Bruce Krasting’s blog. Similarly, I have been unimpressed with the two main posts on Social Security at Angry Bear since the exchanges at Krasting’s blog. The Angry Bear arrogance is not only absurd, but self-defeating. This is not how you educate individuals. It’s not how you bring people to your side of an argument or presentation on an important subject. Simply, it’s not how you achieve success. The putdowns and supposed linkage to guys like Andrew Biggs blows the whole effort out of the water as do some of Dale’s remarks in this main post. It’s a pathetic approach, but it is typical of what has been observed at Angry Bear. This should stop if the blog is to ever achieve any further growth and success.
Ted K, a comment reader at Bruce Krasting’s blog summed it up: Ted K said… “I don’t know why Angry Bear had to make it so incredibly personal. When we disagree with someone does it ALWAYS have to mean the other person has evil motives or evil intentions?? I think Krasting made some small mistakes, but Krasting’s main message is dead on correct.”
I happen to like Dale Coberly and Bruce Webb, but they screwed up if the goal was educate Bruce Krasting and, hopefully, help him provide better information on the status of the Social Security Trust Fund. Kicking sand in his face accomplished nothing other than making another potential enemy.
Bruce Krasting…a relatively new voice
Bruce Krasting may be new to the Social Security analysis scene, but his initial blogging efforts were pretty good. He has raised some points that haven’t been raised by main posters at Angry Bear. I realize that he overlooked the taxation on benefits summary outlined in Table IV.A3. — Operations of the Combined OASI and DI Trust Funds,
Calendar Years 2004-18. Bruce Webb did a good job of pointing that out in comments at Krasting’s blog.
Now, if one takes the time to review Bruce Krasting’s blog posts on the Social Security Trust Fund, some of reasons that Krasting got off track are understandable. It is my opinion that it wouldn’t take much effort to get Krasting up to speed, but it will take a different attitude than that being demonstrated here at Angry Bear, both in main posts and comments. The Angry Bear attitude sucks.
For starters, some might try reading his collection of posts instead of shooting their mouths off any further.
Why would this be important? Bruce Krasting is dual posting some of his Social Security series at Zero Hedge. His last main post, the one that Dale is responding to, is posted at Zero Hedge. That’s two audience groups that Angry Bear could impact. If one succeeded in bringing the Zero Hedge readership up to speed, the word will spread across the news media. Note, by the way, that Angry Bear is the first listing in the blogroll at Zero Hedge. No Angry Bear main posters have made any comment posts under that thread at Zero Hedge. Not a word. Maybe that’s a good thing at this point.
Social Security Trust Fund posts by Bruce Krasting
Bruce Krasting’s blog,
Bruce Krasting My Take on Financial Events
http://brucekrasting.blogspot.com/search/label/Social%20Security%20Trust%20Fund
Sunday, March 29, 2009
Social Security Trust Fund – The Mother of all Bond Portfolios
http://brucekrasting.blogspot.com/2009/03/g20-will-certainly-discuss-matter-of.html
Thursday, April 30, 2009
Social Security – Trouble at Hand?
http://brucekrasting.blogspot.com/2009/04/mr.html
Tuesday, May 12, 2009
2009 Social Security Trustees Report – Trouble
http://brucekrasting.blogspot.com/2009/05/2009-social-security-trustees-report.html
Sunday, May 17, 2009
Social Security – At the Crossroad?
http://brucekrasting.blogspot.com/2009/05/social-security-at-cross-road.html
Tuesday, August 18, 2009
Social Security – Some Fun Facts
http://brucekrasting.blogspot.com/2009/08/social-security-some-fun-facts.html
Sunday, September 13, 2009
SSTF – Their Proposals
http://brucekrasting.blogspot.com/2009/09/sstf-their-proposals.html
Individual Changes Modifying Social Security
http://www.ssa.gov/OACT/solvency/provisions/index.html
Summary of Provisions That Would Change the Social Security Program
http://www.ssa.gov/OACT/solvency/provisions/summary.html
Tuesday, November 17, 2009
Oct. SSTF Report – We Are Now Living Off Of The Interest
http://brucekrasting.blogspot.com/2009/11/oct-sstf-report.html
Wednesday, December 2, 2009
Jobs – A Solution at Hand?
http://brucekrasting.blogspot.com/2009/12/jobs-solution-at-hand.html
Monday, January 4, 2010
SS Trust Fund – 2009 Full Year Results – Ugh!
http://brucekrasting.blogspot.com/2010/01/social-security-trust-fund-issued-their.html
I’m No Chicken Little
01/13/2010
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
—–
Bruce Krasting, contributor, Zero Hedge
http://www.zerohedge.com/search/node/%22Social%20Security%22
Bruce Krasting ZH Social Security Trust Fund posts:
Zero Hedge Search
http://www.zerohedge.com/search/node/Bruce%20Krasting?page=1
SSTF Shocker – $6B August Deficit
09/08/2009
http://www.zerohedge.com/article/sstf-shocker-6b-august-deficit
Oct. SSTF Report – We Are Now Living Off Of The Interest
11/18/2009
Social Security Trust Fund posts by Bruce Krasting
Bruce Krasting’s blog – Bruce Krasting My Take on Financial Events
http://brucekrasting.blogspot.com/search/label/Social%20Security%20Trust%20Fund
Sunday, March 29, 2009
Social Security Trust Fund – The Mother of all Bond Portfolios
http://brucekrasting.blogspot.com/2009/03/g20-will-certainly-discuss-matter-of.html
Thursday, April 30, 2009
Social Security – Trouble at Hand?
http://brucekrasting.blogspot.com/2009/04/mr.html
Tuesday, May 12, 2009
2009 Social Security Trustees Report – Trouble
http://brucekrasting.blogspot.com/2009/05/2009-social-security-trustees-report.html
Sunday, May 17, 2009
Social Security – At the Crossroad?
http://brucekrasting.blogspot.com/2009/05/social-security-at-cross-road.html
Tuesday, August 18, 2009
Social Security – Some Fun Facts
http://brucekrasting.blogspot.com/2009/08/social-security-some-fun-facts.html
Sunday, September 13, 2009
SSTF – Their Proposals
http://brucekrasting.blogspot.com/2009/09/sstf-their-proposals.html
Individual Changes Modifying Social Security
http://www.ssa.gov/OACT/solvency/provisions/index.html
Summary of Provisions That Would Change the Social Security Program
http://www.ssa.gov/OACT/solvency/provisions/summary.html
Tuesday, November 17, 2009
Oct. SSTF Report – We Are Now Living Off Of The Interest
http://brucekrasting.blogspot.com/2009/11/oct-sstf-report.html
Wednesday, December 2, 2009
Jobs – A Solution at Hand?
http://brucekrasting.blogspot.com/2009/12/jobs-solution-at-hand.html
Monday, January 4, 2010
SS Trust Fund – 2009 Full Year Results – Ugh!
http://brucekrasting.blogspot.com/2010/01/social-security-trust-fund-issued-their.html
I’m No Chicken Little
01/13/2010
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
—–
Bruce Krasting, contributor, Zero Hedge
http://www.zerohedge.com/search/node/%22Social%20Security%22
Bruce Krasting ZH Social Security Trust Fund posts:
Zero Hedge Search
http://www.zerohedge.com/search/node/Bruce%20Krasting?page=1
SSTF Shocker – $6B August Deficit
09/08/2009
http://www.zerohedge.com/article/sstf-shocker-6b-august-deficit
Oct. SSTF Report – We Are Now Living Off Of The Interest
11/18/2009
Social Security Trust Fund posts by Bruce Krasting
Bruce Krasting’s blog,
Bruce Krasting My Take on Financial Events
http://brucekrasting.blogspot.com/search/label/Social%20Security%20Trust%20Fund
Sunday, March 29, 2009
Social Security Trust Fund – The Mother of all Bond Portfolios
http://brucekrasting.blogspot.com/2009/03/g20-will-certainly-discuss-matter-of.html
Thursday, April 30, 2009
Social Security – Trouble at Hand?
http://brucekrasting.blogspot.com/2009/04/mr.html
Tuesday, May 12, 2009
2009 Social Security Trustees Report – Trouble
http://brucekrasting.blogspot.com/2009/05/2009-social-security-trustees-report.html
Sunday, May 17, 2009
Social Security – At the Crossroad?
http://brucekrasting.blogspot.com/2009/05/social-security-at-cross-road.html
Tuesday, August 18, 2009
Social Security – Some Fun Facts
http://brucekrasting.blogspot.com/2009/08/social-security-some-fun-facts.html
Sunday, September 13, 2009
SSTF – Their Proposals
http://brucekrasting.blogspot.com/2009/09/sstf-their-proposals.html
Individual Changes Modifying Social Security
http://www.ssa.gov/OACT/solvency/provisions/index.html
Summary of Provisions That Would Change the Social Security Program
http://www.ssa.gov/OACT/solvency/provisions/summary.html
Tuesday, November 17, 2009
Oct. SSTF Report – We Are Now Living Off Of The Interest
http://brucekrasting.blogspot.com/2009/11/oct-sstf-report.html
Wednesday, December 2, 2009
Jobs – A Solution at Hand?
http://brucekrasting.blogspot.com/2009/12/jobs-solution-at-hand.html
Monday, January 4, 2010
SS Trust Fund – 2009 Full Year Results – Ugh!
http://brucekrasting.blogspot.com/2010/01/social-security-trust-fund-issued-their.html
Wednesday, January 13, 2010
I’m No Chicken Little
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
—–
Bruce Krasting, contributor, Zero Hedge
http://www.zerohedge.com/search/node/%22Social%20Security%22
Bruce Krasting ZH Social Security Trust Fund posts:
Zero Hedge Search
http://www.zerohedge.com/search/node/Bruce%20Krasting?page=1
SSTF Shocker – $6B August Deficit
09/08/2009
http://www.zerohedge.com/article/sstf-shocker-6b-august-deficit
Oct. SSTF Report – We Are Now Living Off Of The Interest
11/18/2009
Social Security Trust Fund posts by Bruce Krasting
Bruce Krasting’s blog,
Bruce Krasting My Take on Financial Events
http://brucekrasting.blogspot.com/search/label/Social%20Security%20Trust%20Fund
Sunday, March 29, 2009
Social Security Trust Fund – The Mother of all Bond Portfolios
http://brucekrasting.blogspot.com/2009/03/g20-will-certainly-discuss-matter-of.html
Thursday, April 30, 2009
Social Security – Trouble at Hand?
http://brucekrasting.blogspot.com/2009/04/mr.html
Tuesday, May 12, 2009
2009 Social Security Trustees Report – Trouble
http://brucekrasting.blogspot.com/2009/05/2009-social-security-trustees-report.html
Sunday, May 17, 2009
Social Security – At the Crossroad?
http://brucekrasting.blogspot.com/2009/05/social-security-at-cross-road.html
Tuesday, August 18, 2009
Social Security – Some Fun Facts
http://brucekrasting.blogspot.com/2009/08/social-security-some-fun-facts.html
Sunday, September 13, 2009
SSTF – Their Proposals
http://brucekrasting.blogspot.com/2009/09/sstf-their-proposals.html
– Individual Changes Modifying Social Security
http://www.ssa.gov/OACT/solvency/provisions/index.html
– Summary of Provisions That Would Change the Social Security Program
http://www.ssa.gov/OACT/solvency/provisions/summary.html
Tuesday, November 17, 2009
Oct. SSTF Report – We Are Now Living Off Of The Interest
http://brucekrasting.blogspot.com/2009/11/oct-sstf-report.html
Wednesday, December 2, 2009
Jobs – A Solution at Hand?
http://brucekrasting.blogspot.com/2009/12/jobs-solution-at-hand.html
Monday, January 4, 2010
SS Trust Fund – 2009 Full Year Results – Ugh!
http://brucekrasting.blogspot.com/2010/01/social-security-trust-fund-issued-their.html
Wednesday, January 13, 2010
I’m No Chicken Little
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
—–
Zero Hedge
Bruce Krasting, Contributor, Zero Hedge
http://www.zerohedge.com/search/node/%22Social%20Security%22
Bruce Krasting ZH Social Security Trust Fund posts:
Zero Hedge Search
http://www.zerohedge.com/search/node/Bruce%20Krasting?page=1
SSTF Shocker – $6B August Deficit
09/08/2009
http://www.zerohedge.com/article/sstf-shocker-6b-august-deficit
Oct. SSTF Report – We Are Now Living Off Of The Interest
11/18/2009
Social Security Trust Fund posts by Bruce Krasting
Bruce Krasting’s blog – Bruce Krasting My Take on Financial Events
http://brucekrasting.blogspot.com/search/label/Social%20Security%20Trust%20Fund
Sunday, March 29, 2009
Social Security Trust Fund – The Mother of all Bond Portfolios
http://brucekrasting.blogspot.com/2009/03/g20-will-certainly-discuss-matter-of.html
Thursday, April 30, 2009
Social Security – Trouble at Hand?
http://brucekrasting.blogspot.com/2009/04/mr.html
Tuesday, May 12, 2009
2009 Social Security Trustees Report – Trouble
http://brucekrasting.blogspot.com/2009/05/2009-social-security-trustees-report.html
Sunday, May 17, 2009
Social Security – At the Crossroad?
http://brucekrasting.blogspot.com/2009/05/social-security-at-cross-road.html
Tuesday, August 18, 2009
Social Security – Some Fun Facts
http://brucekrasting.blogspot.com/2009/08/social-security-some-fun-facts.html
Sunday, September 13, 2009
SSTF – Their Proposals
http://brucekrasting.blogspot.com/2009/09/sstf-their-proposals.html
– Individual Changes Modifying Social Security
http://www.ssa.gov/OACT/solvency/provisions/index.html
– Summary of Provisions That Would Change the Social Security Program
http://www.ssa.gov/OACT/solvency/provisions/summary.html
Tuesday, November 17, 2009
Oct. SSTF Report – We Are Now Living Off Of The Interest
http://brucekrasting.blogspot.com/2009/11/oct-sstf-report.html
Wednesday, December 2, 2009
Jobs – A Solution at Hand?
http://brucekrasting.blogspot.com/2009/12/jobs-solution-at-hand.html
Monday, January 4, 2010
SS Trust Fund – 2009 Full Year Results – Ugh!
http://brucekrasting.blogspot.com/2010/01/social-security-trust-fund-issued-their.html
Wednesday, January 13, 2010
I’m No Chicken Little
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
—–
Zero Hedge
Bruce Krasting, contributor, Zero Hedge
http://www.zerohedge.com/search/node/%22Social%20Security%22
Bruce Krasting ZH Social Security Trust Fund posts:
Zero Hedge Search
http://www.zerohedge.com/search/node/Bruce%20Krasting?page=1
SSTF Shocker – $6B August Deficit
09/08/2009
http://www.zerohedge.com/article/sstf-shocker-6b-august-deficit
Oct. SSTF Report – We Are Now Living Off Of The Interest
11/18/2009
Social Security Trust Fund posts by Bruce Krasting
Bruce Krasting’s blog – Bruce Krasting My Take on Financial Events
http://brucekrasting.blogspot.com/search/label/Social%20Security%20Trust%20Fund
Sunday, March 29, 2009
Social Security Trust Fund – The Mother of all Bond Portfolios
http://brucekrasting.blogspot.com/2009/03/g20-will-certainly-discuss-matter-of.html
Thursday, April 30, 2009
Social Security – Trouble at Hand?
http://brucekrasting.blogspot.com/2009/04/mr.html
Tuesday, May 12, 2009
2009 Social Security Trustees Report – Trouble
http://brucekrasting.blogspot.com/2009/05/2009-social-security-trustees-report.html
Sunday, May 17, 2009
Social Security – At the Crossroad?
http://brucekrasting.blogspot.com/2009/05/social-security-at-cross-road.html
Tuesday, August 18, 2009
Social Security – Some Fun Facts
http://brucekrasting.blogspot.com/2009/08/social-security-some-fun-facts.html
Sunday, September 13, 2009
SSTF – Their Proposals
http://brucekrasting.blogspot.com/2009/09/sstf-their-proposals.html
– Individual Changes Modifying Social Security
http://www.ssa.gov/OACT/solvency/provisions/index.html
– Summary of Provisions That Would Change the Social Security Program
http://www.ssa.gov/OACT/solvency/provisions/summary.html
Tuesday, November 17, 2009
Oct. SSTF Report – We Are Now Living Off Of The Interest
http://brucekrasting.blogspot.com/2009/11/oct-sstf-report.html
Wednesday, December 2, 2009
Jobs – A Solution at Hand?
http://brucekrasting.blogspot.com/2009/12/jobs-solution-at-hand.html
Monday, January 4, 2010
SS Trust Fund – 2009 Full Year Results – Ugh!
http://brucekrasting.blogspot.com/2010/01/social-security-trust-fund-issued-their.html
Wednesday, January 13, 2010
I’m No Chicken Little
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
—–
Bruce Krasting, Contributor, Zero Hedge
Bruce Krasting – ZH Social Security Trust Fund posts:
Zero Hedge Search
http://www.zerohedge.com/search/node/Bruce%20Krasting?page=1
SSTF Shocker – $6B August Deficit
09/08/2009
http://www.zerohedge.com/article/sstf-shocker-6b-august-deficit
Oct. SSTF Report – We Are Now Living Off Of The Interest
11/18/2009
http://www.zerohedge.com/article/oct-sstf-report-we-are-now-living-interest
SS Trust Fund – 2009 Full Year Results – Ugh!
01/04/2010
Social Security Trust Fund posts by Bruce Krasting
Bruce Krasting’s blog – Bruce Krasting My Take on Financial Events
http://brucekrasting.blogspot.com/search/label/Social%20Security%20Trust%20Fund
Sunday, March 29, 2009
Social Security Trust Fund – The Mother of all Bond Portfolios
http://brucekrasting.blogspot.com/2009/03/g20-will-certainly-discuss-matter-of.html
Thursday, April 30, 2009
Social Security – Trouble at Hand?
http://brucekrasting.blogspot.com/2009/04/mr.html
Tuesday, May 12, 2009
2009 Social Security Trustees Report – Trouble
http://brucekrasting.blogspot.com/2009/05/2009-social-security-trustees-report.html
Sunday, May 17, 2009
Social Security – At the Crossroad?
http://brucekrasting.blogspot.com/2009/05/social-security-at-cross-road.html
Tuesday, August 18, 2009
Social Security – Some Fun Facts
http://brucekrasting.blogspot.com/2009/08/social-security-some-fun-facts.html
Sunday, September 13, 2009
SSTF – Their Proposals
http://brucekrasting.blogspot.com/2009/09/sstf-their-proposals.html
– Individual Changes Modifying Social Security
http://www.ssa.gov/OACT/solvency/provisions/index.html
– Summary of Provisions That Would Change the Social Security Program
http://www.ssa.gov/OACT/solvency/provisions/summary.html
Tuesday, November 17, 2009
Oct. SSTF Report – We Are Now Living Off Of The Interest
http://brucekrasting.blogspot.com/2009/11/oct-sstf-report.html
Wednesday, December 2, 2009
Jobs – A Solution at Hand?
http://brucekrasting.blogspot.com/2009/12/jobs-solution-at-hand.html
Monday, January 4, 2010
SS Trust Fund – 2009 Full Year Results – Ugh!
http://brucekrasting.blogspot.com/2010/01/social-security-trust-fund-issued-their.html
Wednesday, January 13, 2010
I’m No Chicken Little
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
—–
Bruce Krasting, Contributor, Zero Hedge
Bruce Krasting – ZH Social Security Trust Fund posts:
Zero Hedge Search
http://www.zerohedge.com/search/node/Bruce%20Krasting?page=1
SSTF Shocker – $6B August Deficit
09/08/2009
http://www.zerohedge.com/article/sstf-shocker-6b-august-deficit
Oct. SSTF Report – We Are Now Living Off Of The Interest
11/18/2009
http://www.zerohedge.com/article/oct-sstf-report-we-are-now-living-interest
SS Trust Fund – 2009 Full Year Results – Ugh! […]
Uh, talking about class, you obviously have none of it Movie Guy. So they don’t like Krastigs mumbling, maybe it is for a good reason. You can’t debate unfacts. Which Krastigs tries to mumble.
Go somewhere else and do the chicken.
Angry Bear has explained everything very clearly and it is remarkable, that the angry bear people have been so nice to him.
The point is not, that Krasting’s numbers are incorrect or that he isn’t right, when saying that selling the social security owned billd will have consequences. (It will have consequences, which are positive for social security. The interest on bills will increase and thereby increase the revenue of the remaining SS fund.)
The point is, that this all is not relevant for social security, and that the general budget is oblieged to pay its bill. Period. The fix has to come from the general budget.
What Krasting suggests is indeed theft, and any congressman who would vote for something like that should go immediately to prison.
Social security is at its heard an independent organisation, like the supreme court or congress, not part of the US administration. Think of it as a completely separated institution, then you will get the point.
My apologies. I thought this was an open thread, because when I posted there was nothing on the main page, everything was below the fold.
The narrow interest I was alluding to was unions. Checkj the news wire.
Bruce,
By attacking me again like with the others on the left you are letting your anger get the better of you.
Let me give you an example based on what I did with Cactus’s analysis which I thought was wrong. First, I looked at the policies of all the administration’s and found what general policies were being followed. It turned out that the sea change was in 1981 after Reagan was elected and not everytime the party in power flipped from democrat to republican. Next I showed that the percent of revenue as a percent of GDP had remained pretty constant from the 1960s to the present day. I aslo uncovered specific events such as the Kennedy/Johnson administration not raising taxes until their last year and then passing high tax burden on to there predicessor. Then I argued that under Kennedy/ Johnson oil prices were falling, they spiked under Nixon and Carter, and fell under Clinton and the increased again under Bush. I aslo made several point about the slow response to policy under FDR. Cactus got it wrong when he implied that each republican before reagan enacted more away from Keynesian economics and enacted that a Fresh Water policy (ref. Linda). Nixon said we’re all Keynesians now so I don’t see how you put him in the free market fresh water school.
These were all good arguments but I did not stop here. I found a paper by Christina Romer that really laid the blame for macro economic policy and inflation taking a wrong term under the Kennedy/Johnson and being set right again under Reagan. So I did find expert opinion to back up my position. All I’m doing is to act you and Coberly to do the same thing.
CoRev,
Its not too much to ask Bruce & Coberly if they want to be considered experts to provide a list of refereed journal articles on social security. If they have not writtien anything then they should quote expert opinion from specialists on social security that tell the same story that they’re telling.
By the way, are you staking your intelectual reputation on Coberly’s 20 cents a week can fix social securities long term problems. I don’t know that Coberly is wrong but I would like to see some work by other analysts before I accept this number as an approximation to the truth. If he’s right that’s great since we have one less major economic problem that we’ll have to deal with.
Rdan,
Look in the back of a scientific paper. There are plenty examples of quoting other people’s work.
Cantie, NO! NO! NO! Stop the genuflecting over the “peer reviewed” alter. If the climate gate issue hasn’t shown us the weakness of that approach when compared to the open internet, then you missed a vital message.
Do the math! You’ll be surprised at how little it will take to make SS fully “pay go.” The SSTF will handle the bulk of the boomers’ needs. We will be mostly over that demand bubble as the SSTF is depleted.
Cashing those SSTF bonds will do only one thing, move them from publicly held to privately held status. They are already booked as part of the Nat debt. Oh, if they use the high interest bonds first it may reduce the rate of increase of the debt/deficit, as the interest rates are reduced on the same value borrowed.
Thanks for the list MG.
Read again Sammy. I am not professing to be an expert, those are Coberly’s words. I back up all of my assertions with tables and figures from either SSA or CBO while Cantab mostly pulls them out of his ass. And it is Cantab that is demanding bona fides while offering none.
And your second paragraph contradicts the first. I have put my sales hat on and actually have been making a lot of sales. What is your point? That I haven’t shut up the huckster outside my store peddling shop worn goods?
(As to Global Warming hoax. In your dreams. The word ‘trick’ in one e-mail is not quite as determinative as global warming denialists would have it be. Deniers are delusional and it is no wonder that serious scientists privately mock them and calculate ways of pushing back against their ridiculous talking points. Kind of like G.H.W. Bush mocked Reaganomics by accurately calling it “Voodoo”)
Krasting explicitly claims that he is NOT new and brags about his posting record on SS:
“I have written a total of 11 pieces (out of 180) on the SSTF in the past year. They have all been published outside of my blog. I am not that new to this debate.”
And the person who originally pointed us to this piece implicitly held him up as an authority. Krasting argues (after the fact) that he independently came to the same conclusion as Hassett and Biggs did last March and purports to be able to calculate Social Security surpluses over the next couple of years when he clearly doesn’t understand the implications of an existing Social Security portfolio of $2.5 trillion. Surpluses simply cannot vanish in the way he suggests. And nobody has to take my word for it. I ran this by Paul Van de Water whose credentials I think are kind of good on this http://www.cbpp.org/experts/index.cfm?fa=view&id=26
“From 2001 to 2005 Van de Water served as Assistant Deputy Commissioner for Policy at the Social Security Administration, where he managed the agency’s policy analysis, research, and statistical activities. From 1999 to 2001, he was Associate Commissioner for Research, Evaluation, and Statistics at Social Security.
Van de Water worked for over 18 years at the Congressional Budget Office. From 1994 to 1999 he was Assistant Director for Budget Analysis. In that capacity he supervised the agency’s budget projections, analyses of the President’s budget, cost estimates of legislative proposals, and estimates of the cost of federal mandates on state and local governments”
Meaning Paul was basically the guy producing all of the numbers MG likes to cite. And the first line of his e-mail last night? “Bruce W. is right on this”
And Paul pointed to this refuation of Biggs/Krasting argument from last spring from him and Kathy Ruffing “Social Security Does Not Face a Near-Term “Reckoning” Alarmists’ Claims Are Unjustified, But Action Is Needed to Restore Long-Term Solvency.” Available athttp://www.cbpp.org/files/4-21-09socsec.pdf.
As to the charge that no ABs posted at Zero Hedge well I started to and my initial post ultimately showed up as the reply to the first comment but they moderate all comments so that it is not easy to establish a dialogue, instead I am working up a series of responses at my blog this morning and will e-mail Krasting for a reply.
Plus our original reply was not to Zero Hedge. Frankly your faint accusations of bad faith are ridiculous. Krastings original post was fatally defective, when challenged he decided to elevate it and take it personal by citing Dale and my names in the main post on a new venue. He apparently wants a fight and I’ll deliver. I was perfectly prepared to let this all go as a warning that maybe he should do some due diligence and arithmetic check PRIOR to posting drivel.
Martin Heck–Thank you for pointing out that the Social Security Administration is an independent executive branch agency, not specifically tied to any other federal department. It is particularly significant in this context that the Chief Actuary of SSA has scored Dale Coberly’s figures and found them accurate. The Chief Actuary is the authority on the solvency of the Trust Fund, but has no management function in SSA. Therefore, even if the NW Plan would work better than other options to address long-term TF shortfalls, neither SSA or the Chief Actuary has any part in determining the policies put in place by Congress.
As between Bruce Webb and Dale Coberly’s proposed plan, and any immediate “fix” in response to a non-existent crisis, it is clear that a small tax increase phased on over a long period of time is all that is required to meet any actual or projected funding shortfalls. SSA puts out monthly statistics showing benefits paid, number of beneficiaries and so on.
According to its latest summary available on its website (socialsecurity.gov), it puts $51 billion dollars into the domestic economy every month. When U3 unemployment is 10%, this money amounting to $612 billion dollars a year is a big part of what is keeping this country going. This is the function for which SS was designed and which it has performed since it’s inception.
Programs of this significance and real economic utility do not benefit from quick fixes or unfounded assertions that the sky is falling. I have read Mr. Krastig’s the recent blog entry. Compared to Mr. Webb’s and Mr. Coberly’s work in this area, it is inconsequential but for its possible contribution to the already alarming amount of misinformatlion being published on this subject. Mr. Krastig gets an F.
BFD. I have around 100 posts here http://bruceweb.blogspot.com/2008/08/angry-bear-social-security-series.html and about the same dating back to Nov 2004.
The issue is not volume of posting but numeracy. Krasting biffed.
$2.5 trillion throws off a certain amount of interest every year. Unless every dollar of that interest is used for benefits in a given year that $2.5 trillion will throw off that same amount of interest the next year. That interest is scored as surplus for Unified Budget calculations, Krasting claims that over the next five years that surplus will not exceed $200 billion even though interest is coming in around $125 billion a year. In order for his numbers to come in right the cash deficit for Social Security in 2010 and 2011 has to come in at at least $125 billion up from what has been either a wash or up to $5 billion deficit in 2009. If someone wants to explain how a full 20% of Social Security revenue is just going to vanish this year then great, but from a top of my head calculation Krasting is off by a minimum of half a trillion dollars over the next five years. A number I submitted to a group of 125 policy experts. If I am wrong then I expect to get spanked but until then I really don’t care that this guy fooled Zero Hedge into publishing his SS posts.
Punctuation correction– See ‘it’s in last line of third paragraph, my comment. It should be “its”. Sorry. 🙂
Let me slow it down. $2.5 trillion at a nominal 5% interest = $125 billion. If Social Security receipts from payroll tax and tax on benefits trail total cost then a portion of that interest has to be paid in cash. Meaning that the TF balance does not increase by as much as projected. But if it stays the same or increases even nominally then interest will remain roughly the same. Only if the shortfall is enough to eat up all the interest and then start tapping into principal can that interest be adjusted down and only to the percentage that the principal drawdown is to the total balance.
If Social Security is cash flow neutral over the next five years the surplus due to interest on the existing TF will be somewhere around $600 to $750 billion. In order to get that down to ‘if we are lucky’ $200 billion we would need SS to run cash flow negative about $75-120 billion a year. Given that there was no COLA this year benefits paid will only go up by the demographic effect of new retirements minus mortality when revenues can only drop by the percentage of newly unemployed to overall revenue. Tax on payroll was $672 billion in 2008 and projected at $679 billion for 2009. It looks like the latter was around $5 billion too high. Okay but how do you blow another $95 billion or so out of that number? Are we really looking at 25% unemployment? Or will professionals earning near the payroll cap really going to be reduced to minimum wage and so cut receipts per capita?
Or is MY arithmetic screwy. Show me.
MG there is such a thing as temporal sequence.
Krasting posts on his own blog.
Prominent blogger links to Krasting
AB siteowner Dan notices link and alerts Coberly and Webb
Coberly and Webb post hostile comments on Krastings blog (not knowing who he is, if he is actually anybody at all)
Krasting complains to outside expert
Krasting elevates his complaints to Zero Hedge
MG chastises Coberly and Webb for blowing opportunity to get message to Zero Hedge audience.
Uh how were we to know this WATB would cite us by name at Zero Hedge? A web site that I don’t follow to begin with?
My goal was not to ‘educate’ Bruce Krasting, more like ‘edicate’ in the old fashioned way, by smacking his hand with a ruler. Krasting may be an innocent fool or a willing tool of the crap being promulgated by the enemies of Social Security. From my perspective he is kind of like the guy standing next to the guy planting that IED, my Hellfire missile might cause some collateral damage when launched from that stand-off drone. Too bad, you need to watch who you associate with.
CoRev,
Cantie, NO! NO! NO! Stop the genuflecting over the “peer reviewed” alter. If the climate gate issue hasn’t shown us the weakness of that approach when compared to the open internet, then you missed a vital message.
What do you think the vital message was? Do you think the scientific method with scientists doing research and then having the research peer reviewed is not the true way scienced is advanced in the world. If you think this you’re wrong. The blogs on the internet provide mostly commentary and at best they raise question on research. But blogs don’t contribute significant original research. So I think you need to modify your position on this issue. Global warming research in not the end of science but rather for a small group of global warming scientist is their fraudulent application of the scientific method that have gotten some of them in trouble.
Do the math! You’ll be surprised at how little it will take to make SS fully “pay go.”
I did the math based on Coberly’s 20 cents a week. I just want some second sources to see get more confidence that this number is reasonable.
Cashing those SSTF bonds will do only one thing, move them from publicly held to privately held status.
Does the 20 cents include the hike in taxes to pay off the bonds while keeping all other spending constant?
I am sorry that the comments here have gotten off track. There was a substantive issue, which I think was settled: Social Security is not going broke.
But the comments have degenerated (for the most part) into “so’s your mother” and “you started it.”
Krasting has written me a “clarification” of his position. He goes from being demonstrably wrong on the facts, to be being arguably and horribly wrong on the morality. He seems to admit that Social Security is not in trouble, but that the Treasury having to pay back the money it borrowed from Social Security is going to cause such chaos in the bond markets that… well, that the sky will fall. He does not contemplate that the Treasury could avoid borrowing on the bond markets to repay what it has borrowed from Social Security simply by raising taxes … about one tenth of one percent per year up to about 1 percent for a few years, on the people who benefited from the borrowing in the first place.
Bruce
sorry I got you into this. i was trying to teach Cantab something about the concept of “expert.” Foolish me. There was never any hope that he would understand. And not much that some other readers will understand. Let me say again “expert in THIS PART of Social Security.” I did not claim to be a nationaly recognized expert in the whole field of Social Security. Some place I hope you have a mechanic who is “expert” in repairing your model of car.
Which leaves me saying something I didn’t think I would ever say: Cantab reliably brings the tone of this blog down to grade shcool level and seriously muddies the waters for anyone intersted in trying to understand the substantive issues. I would vote to ban him if I had a vote.
Cantab
you are as hard to ignore as a snake in the children’s bed. you are simply trying to change the subject from the mistakes Krasting made to some phony issue about my credentials. or your inability to understand the math. i used to think you were just terribly stupid. i am beginning to wonder if you don’t know exactly what you are doing.
you say you “just want some second soures…to get more confidence that this number is reasonable.” you have been given second sources. see the NASI report. read the goddam Trustees Report and do the arithmetic yourself. It’s not hard.
but you know that, you just want to see how long you can throw dust in our face and turn away any other readers who don’t have time for such idiocy.
coberly:
No mention by Mr. Krasting of how we got to today and what has caused much of the short fall to occur? Hmmm . . . just that we need to cut benefits or raise taxes tremendously on 90% of the payroll wage earning taxpayers which supplied the Funds necessary to salvage Wall Street, the banks, the bond market, etc. in order to avoid having to payback some of the TF. Never a correlation? I don’t get it coberly. The justification that is . . .
Bruce and yourself did well.
I did do a response to this. I am not going to post it on my blog. I don’t think my other readers care much about this at this point.
It was on the long side (sorry) but you may be happy to know that I call it “Krasting and Colbey Agree”.
I put it on scrib. the link is here: http://www.scribd.com/doc/25269181/coberlyii
I will make a few direct comments above. Let’s give this a rest for 6 months. Then we wil be able to more clearly see where we are on this story.
Bruce Krasting
Let your readers review it and make their own conclusions. Please.
Bruce,
Maybe you should make an excel with all your analysis and calculations to analyze social security. The user could start with a base case and then do sensitivity analysis and see what surplus or shortage would accrue given different assumptions.
We could have a permanet link from this site to the model so anyone wanting to jump into the issue with all the prerequisite information.
Run is a reader
well, krasting
stopped posting my comments, summarizing this post, and replying to the “devastating” questions of some of his fans.
i can imagine that his readers are not interested in hearing about his mistakes.
krastings response which he is not going to post seems to agree with me that the Trust Fund is not in trouble. But he says the Bond Market will be in trouble if the governmetn has to start paying back the money it owes to the Trust Fund. His solution to that problem is just to kill Social Security by means testing it and raising the retirement age. It never occurs to him that the governmetn could just raise the taxes… a tiny amount… of the people who benefited from borrowing the Trust Fund.
I am glad Krasting thinks the Bond Market sky will not fall in the next six months. Perhaps he is counting on the “bi partisan commission” to fix the deficit on the backs of the people who paid for their own Social Security benefits, but can now be expected to give them up to bail out the bond traders.
repeat Mr. Kasting:
“No mention by Mr. Krasting of how we got to today and what has caused much of the short fall to occur? Hmmm . . . just that we need to cut benefits or raise taxes tremendously on 90% of the payroll wage earning taxpayers which supplied the Funds necessary to salvage Wall Street, the banks, the bond market, etc. in order to avoid having to payback some of the TF. Never a correlation?”
How did we arrive at today???
Bruce,
Maybe you should make an excel with all your analysis and calculations to analyze social security. The user could start with a base case and then do sensitivity analysis and see what surplus or shortage would accrue given different assumptions.
We could have a permanet link from this site to the model so anyone wanting to jump into the issue would start with all the prerequisite information.
Bruce,
Maybe you should make an excel model with all your analysis and calculations to analyze social security. The user could start with a base case and then do sensitivity analysis and see what surplus or shortage would accrue given different assumptions.
We could have a permanet link from this site to the model so anyone wanting to jump into the issue would start with all the prerequisite information.
See my post to Bruce. Why don’t you do the calculation in an excel spreadsheet with links to this website.
Cantie, I am not going to debate my views re: the peer review process with you. That’s a no win argument for both of us.
When you say: “I just want some second sources to see get more confidence that this number is reasonable. ” If you have actually done the math re: SS revenue/benefit shortfall, then you are the second “expert” source. It is after all simple arithmetic. Making it more than that is posturing.
Bruce there is going to be a vote within a week or so on whether to raise the debt limit. 35 Senators have signed onto Conrad-Gregg and at least some of them have argued for attaching that to the debt limit vote. The Conrad-Gregg Commission is rigged in a way that practically guarantees an assault on Social Security benefits based largely on alarmist reporting by organs such as the Peter G Peterson founded and financed Fiscal Times which formed a co-publishing arrangement with the Washington Post where their preferred position on entitlements and entitlement reform is being published as pure fact.
Wittingly or not your post served to sell a message being pushed by AEI, Concord, the PGPF, and Heritage RIGHT NOW. Six months from now may well be too late, the camel’s nose might be under the tent.
If you are innocent in all this I am a little sorry. On the other hand if you are blogging on this topic you should be following Biggs’ blog and if you find yourself echoing his position making sure you check out the opinions of the people pushing back on him. Which would have led you to me.
http://andrewgbiggs.blogspot.com/ Notes on Social Security Reform
But now you decided to take it personal which led to my response here:
http://bruceweb.blogspot.com/2010/01/krasting-at-zero-hedge-taking-it.html
Coberly and I gave you a shot in comments on your blog. You could have countered that there or ignored it. Or maybe figured out who we were and engaged us on our own ground. Instead you picked a fight on what should have been neutral ground and in the process besmirching my reputation. And NOW you want a six month truce?
I can’t make you respond but this is not a trivial issue. Not on a policy base and not personally.
For the record I have been communicating off the grid with Coberly about this posting issue. he understasnds, (I hope) that i did nothing to limit anything. I would really apreciate if Coberly would confirn this to the audience. I never limit anything. Ever.
bk
Coberly, Id watch my back if I were you! CoRev is settin’ you up. Getting you to drop your guard with all the sweet talk 😉
I really do wish we could get past the point as a country of discussing whether we can afford it or how we are gonna pay for it and simply make the ECONOMIC decision of how much we will allot to each working individual at retirement. We do not HAVE to remove anything from anyones paycheck to pay for it all we have to do (if we wish to, still not necessary from a funding perspective) is keep up with the amount everyone made during their working life and allot a percentage of that to them annually.
This whole program was created when we were on a commodity based, fixed exchange rate currency regime that we no longer adhere to (thankfully) so the rules we devised are no longer necessary from a funding perspective. We can choose to for political reasons but lets not get economics and politics confused (I know I know now I’m REALLY being naive)
I justed posted this on my site. Had no trouble doing so. Anyone else I want to know.
I have been advised that some comments to this discussion were somehow blocked. Can anyone confirm that? Please me know as a comment here or directly to me.
Thanks,
Bruce Krasting
bkrasting@gmail.com
“Does the 20 cents include the hike in taxes to pay off the bonds while keeping all other spending constant?”
Actually it does serve to drastically lower the General Fund transfer needed to finance the redemption of the Trust Fund. Under current law the entirety of the Trust Fund has to be paid off in the next thirty years, under the Northwest Plan that payout is stretched out and never includes the 125 TF ratio of funds left in Trust. Rather than a big shock after 2035 or so everything is smoothed out. You have a choice, actually engage us on the numbers or continue to show that your name really should be Cantabrigium Biggus Dickus.
http://spreadsheets.google.com/pub?key=r49_nOHQG4QdHuwcbMGmP0Q
Got a problem with the numbers? Then bring it.
2009 OASDI Trustees Report
http://www.socialsecurity.gov/OACT/TR/2009/II_highlights.html#76460
Conclusion
Under the long-range intermediate assumptions, annual cost will begin to exceed tax income in 2016 for the combined OASDI Trust Funds. The com¬bined funds are then projected to become exhausted and thus unable to pay scheduled benefits in full on a timely basis in 2037. The separate DI Trust Fund, however, is projected to become exhausted in 2020.
For the combined OASDI Trust Funds to remain solvent throughout the 75-year projection period, the combined payroll tax rate could be increased dur¬ing the period in a manner equivalent to an immediate and permanent increase of 2.01 percentage points, benefits could be reduced during the period in a manner equivalent to an immediate and permanent reduction of 13.3 percent, general revenue transfers equivalent to $5.3 trillion in present value could be made during the period, or some combination of approaches could be adopted. Significantly larger changes would be required to maintain solvency beyond 75 years.
For this year’s intermediate projections, real GDP starts at a lower level than was assumed last year for 2008, declines through the second quarter of 2009, levels off in the third quarter, and then begins to grow, reaching the projected stable, sustainable path by the end of 2015. These revised economic assump¬tions account for about half of the estimated reduction in the program’s actu¬arial balance relative to last year’s report. The effect of the recession on the actuarial balance would be smaller than projected in this report if the recov¬ery were such that economic output substantially overshoots the projected sustainable path, a phenomenon observed in some past business cycles.
The projected trust fund deficits should be addressed in a timely way so that necessary changes can be phased in gradually and workers can be given time to plan for them. Implementing changes sooner will allow their effects to be spread over more generations. Social Security plays a critical role in the lives of 52 million beneficiaries and 160 million covered workers and their fami¬lies in 2009. With informed discussion, creative thinking, and timely legisla¬tive action, present and future Congresses and Presidents can ensure that Social Security continues to protect future generations.
I read this and I don’t get Bruce & Coberly’s don’t worry about social security and be happy message. Raising the payroll tax by 2.01 percentage points sound like more than 20 cents a week; and cutting benefits by 13.3 percent sounds like its a bit more than raising the retirement age by 1 week.
2009 OASDI Trustees Report
http://www.socialsecurity.gov/OACT/TR/2009/II_highlights.html#76460
Conclusion
Under the long-range intermediate assumptions, annual cost will begin to exceed tax income in 2016 for the combined OASDI Trust Funds. The com¬bined funds are then projected to become exhausted and thus unable to pay scheduled benefits in full on a timely basis in 2037. The separate DI Trust Fund, however, is projected to become exhausted in 2020.
For the combined OASDI Trust Funds to remain solvent throughout the 75-year projection period, the combined payroll tax rate could be increased dur¬ing the period in a manner equivalent to an immediate and permanent increase of 2.01 percentage points, benefits could be reduced during the period in a manner equivalent to an immediate and permanent reduction of 13.3 percent, general revenue transfers equivalent to $5.3 trillion in present value could be made during the period, or some combination of approaches could be adopted. Significantly larger changes would be required to maintain solvency beyond 75 years.
For this year’s intermediate projections, real GDP starts at a lower level than was assumed last year for 2008, declines through the second quarter of 2009, levels off in the third quarter, and then begins to grow, reaching the projected stable, sustainable path by the end of 2015. These revised economic assump¬tions account for about half of the estimated reduction in the program’s actu¬arial balance relative to last year’s report. The effect of the recession on the actuarial balance would be smaller than projected in this report if the recov¬ery were such that economic output substantially overshoots the projected sustainable path, a phenomenon observed in some past business cycles.
The projected trust fund deficits should be addressed in a timely way so that necessary changes can be phased in gradually and workers can be given time to plan for them. Implementing changes sooner will allow their effects to be spread over more generations. Social Security plays a critical role in the lives of 52 million beneficiaries and 160 million covered workers and their fami¬lies in 2009. With informed discussion, creative thinking, and timely legisla¬tive action, present and future Congresses and Presidents can ensure that Social Security continues to protect future generations.
Raising the payroll tax by 2.01 percent or cutting benefit by 13.3 percent sound like more to me than 20 cents a week or raising the retirement by 1 week to make the system balance out.
BK,
Do you not think it is misleading to say that SS must be fixed (regardless of the method) without revealing that your motivation has nothing to do with the solvency or ability of it to function per its actual mandate, but instead because your investment portfolio has a flaw in its assumptions?
Not to mention that you admit as much, but then proclaim that while SS may not have originally been designed to prop up the bond market, because of your flawed investment, it now should be redesigned under this assumption to correct your error! Amazing!
Given your inability to see this as a flaw, I’m not then surprised you conclude that the only way to pay for your mistake is to have the folks who rely on the SS fund to, gasp, further pay for your mistake through reduced benefits!
Did I get the big picture you think BW and Coberly missed?
Disclosure: I’m not an SS expert, but I did stay at a holiday inn last year (c).
Bruce,
What cell in the spreadsheet has the 20 cent a week number already calculated. Help me out here.
And where are the life tables with the demographic assumptions?
Cantab I have never claimed to be an economist. I don’t make models, I don’t even make simple spreadsheets. Instead I use standard numbers from CBO and SSA and point them out.
We have a model. It is called Intermediate Cost and it is published by the Trustees of Social Security. Actually we have more models than that, the Trustees also publish a Low Cost and High Cost version and the CBO has their own model that comes with a probability distribution. We have also examined those models going back in time, in my case to 1997 with some sampling before that. My personal long-standing belief is that Intermediate Cost is too pessimistic and that the bias is to the upside but instead of arguing that I have accepted the wisdom of just taking the standard model and running with it. Which led to Coberly using those numbers and those assumptions to prepare a set of spreadsheets including the following one: http://spreadsheets.google.com/pub?key=r49_nOHQG4QdHuwcbMGmP0Q You are free to run whatever sensitivity analysis you like or you can just use the ones supplied by the Office of the Chief Actuary.
http://www.ssa.gov/OACT/TR/2009/trLOT.html they start with Table VI.D.1.
I don’t need an excel model, I have two hundred pages of the Report of the Trustees of Social Security and CBO’s Long Term Outlook for Social Security and have pointed to them many, many times. You on the other hand seem to have nothing to contribute at all.
Bruce, that is why you are on our masthead. BK posts on ZH regularly.
They are in the Social Security Report.
http://www.ssa.gov/OACT/TR/2009/trLOT.html
Try tables V.A.1 to V.A.4 and then tables Vi.D.1 to3 plus Vi.D.7 & 8
I have no knowledge of any blocked comments by me. I have been advised by jskit that long comments get jammed and a fix is in the works shortly.
What cell? Try column 4 which has the new rate. You will see that in contrast to column 3 that the year 2011 shows an increase from 12.4% to 12.7%. Take the increase of 0.3% split it in half to reflect the employee/employer split and then take 0.15% x a median household income of $50,000 and you get a total of $75/year which works out to $1.44 a week or 20 cents a day.
If Dale actually said 20 cents a week it was just a slip he had the math for a 2% total increase right here: “DC: the 2% increase would increase the amount of deduction from the average workers check about 14 dollars per week at a time when his income will be about 500 dollars per week higher than it is today, both figures in real dollars. “
Indy, My investment portfolio may have some flaws. But I don’t own and US government bonds. I think they are more risk than you think. They could go down in value quite a bit.
Do reallyy think that I take the time to write this stuff in order to to confuse the masses and the policy makers into a strategy that enriches me? That is just silly. The world does not work like that.
Raising FICA by 2% assuming an employer/employee split works out to under $10 a week. But there is no need to do it all at once, a 0.3% increase right away fixes DI for the long term while a series of 0.2% increases from 2026 to 2036 does much the same for OAS with smaller fixes in 2038 and 2039 and a final one in 2041.
I don’t see where Coberly said 20 cents per week, but the initial cost of the NW Plan in terms of take home does work out to 20 cents per day.
Zero Hedge moderates comments. And puts you through a goofy arithmetic exercise besides. I had noproblem posting comments on your personal blog.
See above. I think this is a reference to Zero Hedge. If you are a contributer it is quite possible that you are presented neither the Capcha or the moderation requirement.
Since some here seem to think that pedigree has some importance to the understanding of an argument, I think it appropriate to look closely at Mr. Krasting’s own autobiographical description.
“About Me
I worked on Wall Street for twenty five years. This blog is my take on the financial issues of the day. I was an FX trader during the early days of the ‘snake’ and the EMS. Derivatives on currencies were new then. I was part of that. That was with Citi. Later I worked for Drexel and got to understand a bit about balance sheet structure and corporate bonds from Mike Milken. I was involved with a Macro hedge fund later. That worked out all right, but it is not an easy road. There was one tough week and I thought, “Maybe I should do something else for a year or two.” That was fifteen years ago. I love the markets. How they weave together. For twenty five years I woke up thinking, “What am I going to do today to make some money in the market”. I don’t do that any longer. But I miss it.”
I had previously focused on his tutelage under Michael Milken. Krasting seems to think that there was much good to have been learned from Milken. I won’t deny that, but I would only point out that Milken used his “expertise” to enrich himself dramatically at the expense of others. He was tried and convicted for that. I think that Krasting holding that relationship out to the world as a valued experience says much about how we shoud evaluate his contributions to our understanding of the complexities of the SS TF issue.
Derivatives trading to Citibank to Drexel and Michael Milken. That’s an interesting professional progression to now bring to the SS discussion.
So much heat; so little light. I think most sensible, informed people know that SS is in better shape than Medicare. Both will probably need more funding at some point in the future. This will come from taxes that will be raised, a lot I suspect, including a VAT. Other things that will happen are most likely a cut in benefits, and a lot of inflation. Those are the only three things that will work. So why get so angry about it all? These things will happen because they have to happen. Fate.
I find wrangling over all this not only distasteful, but supremely silly. Just face the Music or the facts.
Bruce,
Despite Jack-ass trying to kick me off the site for saying I do what I do I actually do a lot of data analysis and model building. I find when you lay out the model in the spreadsheet and you take time to organize if and pretty up the inputs and presentation of the output it actually goes a long way to make an analysis transparent and its key results clear and understandable. My intention was not like in the Monty Python movie to ask you to chop t down the tallest tree with a herring but rather to make a model with all your assumptions in it.
Krasting
how could i confirm it? how could i possibly know? last time i looked my replies to you had disappeared from you site.
CoRev,
Cantie, I am not going to debate my views re: the peer review process with you. That’s a no win argument for both of us.
This is not my opinion versus your opinion on the way science works. You’re just wrong on this one point.
If you have actually done the math re: SS revenue/benefit shortfall, then you are the second “expert” source.
Ok, you do the math and post it showing that you know how to get to Coberly’s 20 cents a week. I still like the idea of having some spreadsheets done with the computations and having permanet link from this site to them. Right now if they existed you could just say look at coberly’s spreadsheet under the model tab and then get back to me.
Cantab
all you are doing here is skipping over the answers you and others have already been given. i doubt you are fooling anyone. either you have serious brain damage or you are just pulling your standard four year old at the grownups party trick.
Bruce,
i am getting a little buzzed. but one tenth of one percent whenever the trustees report short term fiscal insolvency is 80 cents per week on an average pay of 800 dollars per week. The current prediction is that the trustees will report short term fiscal insolvency 17 times over the next 75 years… that is one year in four. one fourth of 80 cents per week is 20 cents per week. that is the average increase in the payroll tax for each the employee and the employer to make Social Security fully solvent for the next 75 years. a smaller rate of increase ought to make it fully solvent forever.
after this has been going on for a few years… say to 2036, when the worst of it will be over, the payroll tax will have been increased 8 dollars per week, on an income that will have increased 460 dollars per week by then.
i hesitate to refer to this because most people don’t have the mathematical ability to compare their future taxes to their future wages and their future needs. they invariably compare their future taxes to their present wages, and they discount their retirement needs to something less than their chances of seeing a flying saucer.
on the other hand, after they have been taught to recite Trillions and Trillions (last i saw it was 130 Trillion) they can’t believe 20 cents per week per year, because per week per year doesnt’ mean a damn thing to their brains. so i may be actually hurting my case by pointing out how cheap the fix is. they just can’t believe it.
but in fact in no year will the taxpayer ever “feel” a tax raise more than 80 cents per week. most years there won’t be any tax raise at all. hence the “averge” twenty cents pre week per year.
the initial cost that Bruce refers to is the cost of restoring the DI fund to “actuarial solvency” over the next two years: one tenth percent this year and half a tenth next year, for a total of $1.20 per week. Only that fixes it for fifty years, and fixes the combined OASDI until 2026… when the first 80 cents per week installment for OASI will come due.
I hope I haven’t confused anybody. except cantab.
Margery
if you could read you’d have seen the light. benefit cuts are not necessary. a twenty cents per week per year tax raise might be.
you may need to wrangle with the facts.
Bruce,
I see your calculation and if that’s all there is I would agree that we don’t have a large problem with social security.
Why is it wrong when I read what they say and assume the two percent means 12.4 + 2 = 14.4 percent rather than 12.4 x 1.021 = approximatly 12.7 percent? The first way of doing it seems more consistent with matching up with an alternative 13.3 percent benefit cut.
For me the higher rates means something like $2,000 (me + employer) a year in higher taxes.
There have been times when I thought my comments were blocked and latter I came to the conclusion that I did something wrong in posting — like not hit the post button.
As in my response to you’re other post is the 2.01 percent an add on to the tax rate or an multiplicative increase (ie the difference between 14.4 and 12.7 percent).
Guest,
That’s it einstein.
As in my response to your other post is the 2.01 percent an add on to the tax rate or an multiplicative increase (ie the difference between 14.4 and 12.7 percent).
I hope I haven’t confused anybody. except cantab.
I need to nail down the 2.01 increase in the tax rate. I’m pretty sure it 2.01 + 12.4 percent = 14.41 percent and not 12.4 x 1.0201 = 12.65 percent.
I hope I haven’t confused anybody. except cantab.
I need to nail down the 2.01 increase in the tax rate. I’m pretty sure it 2.01 + 12.4 percent = 14.41 percent and not 12.4 x 1.0201 = 12.65 percent.
http://ssaonline.us/finance/2009/RSI%20Social%20Insurance.pdf
“The hike in taxes to pay off the bonds”. What are you talking about. The bonds have been paid for – by payroll tax deductions.
Now, if Congress is going to have a bigger deficit because there is less/no SS surplus to offset spending, that is Congress’ problem for their fiscal budget. They may decide to raise taxes or run a deficit to fund their budget. Doesn’t affect SS. If SS can’t meet benefits based on projections, they can raise taxes or cut benefits. But there is no hike in taxes to “pay off bonds”.
It is confusing when terms are used without thinking it through – it also affects one’s credibility.
The Treasury does NOT have to repay Social Security for anything. The debt ceiling was raised and debt was issued. That debt will be reduced when SS Treasuries are redeemed. This will be directly converted into spending – no bonds issuance will be required.
The problem will be Congress’ fiscal budget that no longer has the surplus from the SS trust fund. That is CONGRESS’ problem for their annual budget – they can raise taxes for federal spending, cut programs or deficit spend (or some combination).
They may very well decide to tax retiree’s income at a higher rate than billionaire banker capital gains – who knows – but it’s Congress’ problem and we need to keep it there.
Bruce
not a slip. the 20 cents per week per year is the average increase over 75 years. the 20 cents per day that you are looking at is the cost of fixing DI this year … fixing it for the next 50 years.
you have to realize that people like Cantab cannot understand how there could be two different answers to the same question. an increase of xx per week per year probably requires a brain that can understand at least the first few weeks of calculus.
And your crystal ball is better because? If you could predict the future that well, you wouldn’t be sitting at home posting blog comments.
I think this whole bond market being upset and the Treasury having to repay SS crap is basically based on the money supply being increased by the government instead of private interests. Which means that private interests will have to restrain themselves or generate inflation – they do NOT like being constrained.
I’m sorry that a few trillion is going to hit the boomers directly after they already paid for it. The numbers are in balance more or less – OK, I may have to extend my retirement a year or two – but I am probably (knock on wood) live a couple of years longer (at least until ObamaCare kicks in). Maybe my benefits are cut a bit – directly or via taxation. I can live with that – if the numbers add up.
Bankers want to be in control of the money supply – and the trust fund depletion throws a monkey wrench into how they want to run things. So lets make up financial crap like costs over an infinite horizon (notice how no one calculates the GDP over the same infinite horizon?) and the Treasury having to repay Social Security. As if the military having to repay Congress for cost overruns? What utter crap.
CAntab
leave an email and i’ll send you a pdf that outlines my analysis. you are on the right track above where you recognize that 2% OF PAYROLL is the ultimate tax increase after 75 years. that’s for each the employee and the employer. during that time wages will double. so even though you pay a larger fraction of your income to provide for a retirement that is a larger fraction of your life, you still have more than twice as much cash to spend every week after taxes.
Guest,
The social security administration is saying the tax rate will go from 12.4 percent to 14.4 percent. This in Bruce’s example comes out to just over 1 thousand dollars per year which is more than the 20 cents per day.
I’m assuming the 2.01 percent increase is for today and not a long time in the future.
I admire your certainty that benefit cuts will not be necessary. Do you also believe taxes will not have to be raised? Do you think there will be no inflation down the road? Gee, I wish I knew all this with the certainty that you do. All predictions, even yours, entail a considerable amount of guess work. My guess is what I have said. You disagree. We won’t know for sure until a number of years have passed.
Margery,
Get real. The projections, for what they are worth, are for something that’s said to occur in 2036. That’s about 25 years into the future. What have economists been able to project accurately even five years into the future? One thing we know clearly about economic projections is that they are worth about a dime for the dozen. How many accurate projections were made by esteemed, PhD economists over the past ten years that have been shown to have little or nothing to do with reality? You may as well go to your neighborhood bar and ask the bar keep what projections he or she may have for the future of our economy.
Cantab
i think you may be right about this. my last two posts on Krastings site are still there after several hours.
not sure why i am “guest”. this is coberly, expert blogger.
no. you are totally confused.
Krasting,
actually it does. i doubt you are a conscious tool of the Peterson cabal. But your writing fits in with their rather obvious plan to panic people into giving up their social security. So watch out who you hang around with.
post above is in ref to Guest at 12:00:39
Margery
if you had been reading all this, you would have noticed that a tax raise is contemplated. a rather small one. twenty cents per week per year. ring a bell?
as for inflation, inflation is factored out of the Social Security equation by “pay as you go with wage indexing.” just means that the money you pay in today goes to pay someones benefits today, and in your turn you will get benefits based on what someone pays in that day. it all works out very nicely, but it confuses the hell out of most people.
i am not making any guesses. i let the Trustees do the guessing. I am just explaining what they said. plain arithmetic.
jack
thats the lovely thing about “the northwest plan.” it doesn’t do anything based on predictions further down the road than ten years. and if the prediction turns out to be wrong, it can undo what it did… based on next years ten year prediction. it’s the difference between trying to get to chicago by, on the one hand, “aiming” for it and shutting your eyes for the rest of the trip (what the “bipartisan commission” wants us to do). and on the other hand, driving down the road with your eyeball pressed firmly to the white line. with the nw plan, you look out the windshield a short way down the road, but far enough to see the roadsigns. and make adjustments accordingly.
Because you have not done your homework.
You can fix Social Security with an immediate 2.0% fix or by phasing smaller increases in on a regular schedule that would have a small fix in 2010-2011 and a cumulatively bigger fix in 2026-2037. Something that should be obvious if you examined the spreadsheet.
This is a guess, yet destiny will cause it to happen. Not very clear thinking. And you have an answer without considering a mechanism, the same way Krasting does.
The dilemma is just that CoRev….it is a never ending series of comments, which at a penny a word adds up quickly. This is why asking some decent questions gets buried in a morass of associations in relation to C.
No to what?
The 2.01 additive increase is from the social security administration. Was that your “no” and if it was who are you arguing with, me or the social security administration?
I’m a believer in the concept of not fixing what isn’t broken. The problem is that the Petersons and Krastings of our country are using the ruse of a “broken” system in order to gain yet a greater share of the economic pie. It is no coincidence that evey so-called fix of the unbroken system is aimed at increasing lower income earner’s contributions and decreasing high earner’s eventual and potential liabilities to that system.
To clarify “potential lilabilities,” I mean to suggest that at some point it will likely be necessary to raise taxes in order to fund the Treasury’s need to pay its general debts which will include TF bonds. People may, one never can tell, begin to demand that the weathiest Americans actually begin to contribute a greater share to funding the Treasury. They do enjoy the greatest share of the income, therefore, it is appropriate that they contribute paying the lion’s share of the costs.
Can someone draw this?? Nice image.
Earn money through Online
Click Here
Earn money through Online
Click Here