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. He writes:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
***It accomplishes their purposes, which is to panic the people into letting them cripple Social Security.***
Duh. Not all that many assets left to raid. And many of the Social Security doomsayers don’t really understand that they are dealing with a fire hose, not a piggy bank.
I assume that they have finally figured out some way to steal from some more from widows and orphans by reforming Social Security, although it’s hard to tell if they have any clue what they are about.
I personally think that the Bush administration didn’t really understand that there was nothing much in Social Security that was easily looted until early days the dimwit’s second term when they had to come up with a “reform plan” with some substance.
I seem to be the only person who noticed that Bush never did promulgate a plan. One weekend, they were pedal to the metal pushing Bush’s still unrevealed Social Security reform. Along about Tuesday of the next week they suddenly didn’t want to talk about Social Security any more.
Coberly,
Nice rant, but the entire issue can be somed up in your statement right here:
“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.”
The general fund and unified budget all need the SS money to help offset some of Obama’s record setting deficits. By not having excess SS funds to burn (and give IOUs for) the general fund even runs further into the red. SS is not broke, the general fund is. The idea with SS ‘reform’ is to re-establish those excesses that can be diverted to the general fund.
Was it Dillinger that said he robbed banks becuase that’s where the money is? Same principle.
Islam will change
Which democrat is promoting reform of SS?
buffpilot–It was Willie Sutton who said he robbed banks cause “that’s where the money is,” not Dillinger.
Apart from that, a 2.5 trillion Trust Fund either exists or it doesn’t. This isn’t like believing in the Easter Bunny in the face of cold reality. If the law is real, the TF is real, and the program is real, why is Social Security, alone of all the functions of the federal government, perpetually on the verge of bankruptcy in the course of which it will destroy the world as we know it? Why isn’t the Defense budget the troll under the bridge, consuming every spare nickel, when Defense does just that?
Look at it another way. If the Trust Fund isn’t 2.5 trillion bucks worth of real money, why do people want to spend it on anything except SS benefits? If it doesn’t exist except as some sort of cruel hoax, then what’s the big deal? We might as well stop the checks now. Sounds good to me. Now, if those who want to see it small enough to drown in Orville’s or Norville’s (whatever his name is) bathtub will simply say they’re willing to pony up to their own family members equivalent monthly income in place of SS, we’re in business.
Meanwhile, suppose we just lay off the TF against the National Debt. Nothing happens because the present debt is something like 11 or 12 trillion and that doesn’t include debt service on it. You’d still have a huge debt. So, tell me what we gain by abandoning this program? Or don’t. Arguments about SS have something of a theological quality to them. And, there is no end to this argument.
Nancy said: “Meanwhile, suppose we just lay off the TF against the National Debt. ” We can’t do that, as it is already counted as part of the deficit. If we wrote it off, then we could lower the deficit by $2.5T, but that would only change the limit that the current Congress/administration can borrow. I really don’t think we want to give themn another $2.5T to spend and borrow. Cause they will!
CoRev–The SS Trust Fund is not part of the budget deficit because benefit payments are not figured into the budget. Bruce W. points out that the TF is intragovernmental debt–money we owe to ourselves. And, only future interest payments on the TF would be counted as part of the National Debt. We are not calling on TF interest to pay benefits now–still firmly in the pay-as-you-go mode. Looked at that way, we’d be pretty foolish not to pay ourselves when we must pay identical indebentures to foreign governments. Of course, I must be overlooking something. Presumably, the Saudis could invade us or bomb us or something if we didn’t pay. So, we have to pay them. But, we don’t have to pay ourselves. We don’t need those monthly checks circulating in the local economies out there in the flyover zone. Nope. Especially not in a recession. No need to prop up Main Street. Or am I wrong there?
Thanks Coberly. As you know I have had concerns going back several years with Obama’s campaign rhetoric about social security and his efforts to cater to young people and their misguided fears. Thankfully he at least has not had much to say about it recently. I hate to think what all of the people who have been forced into early retirement by the recession would be doing without social security and if young people think this economy is a tough one to get a job, they have no idea what would happen without social security. I am reminded of what my father told me when I asked about the deductions from my paycheck for social security 42 years ago. The money was going to pay his mother social security which allowed her to live independently rather than with us, but my dad would have none of it and told me that I would never see a nickel of that money just as he would never see any of the money he was paying into social security. I still have not seen a nickel of my contributions, but my dad has been getting that monthly social security check for the last 18 years and shows no signs of dying anytime soon. It is a shame when even smart and well educated people are blinded by ideology.
buff
i agree with you. even about Obama I am afraid.
It was Willie Sutton who made that famous observation about where the money is. But Ben Bernanke just made the same observation when he advised Congress to rob Social Security because that’s where the money is.
Cross posted from Krasting’s blog:
One learns a great deal about the veracity of an individual and the likely valildity of their commentary by the details of their past experiences. From Mr. Krsting’s own bio:
“Later I worked for Drexel and got to understand a bit about balance sheet structure and corporate bonds from Mike Milken.”
Mike sure knew how to present the numbers on a bond issue. It appears that Bruce learned at the foot of a master
Rdan
Alice Rivlin. at one time Bill Clinton had an agreement with Newt Gingrich that the “obvous answer” was to raise the retirement age. Of course they didn’t work in a “dead end” job with their knees giving out. Nor did they want to tell the people who did that they could pay for their own early release (before death) by raising their payroll tax twenty cents a week.
margery
not wrong, I think, but ironic language is often confusing to people who believe the ironic statements to be god’s truth. CoRev is on our side in this, I think. The trouble with the “reality” of the Trust Fund is that the people who want to kill Social Security are the ones telling you the Trust Fund is not real. Talk about your self-serving prophecy.
Well we can’t really say that the Trust fund enabled defict spending when it was being added too and then deny that it contributes to it when that trust fund is being drawn down. It is certainly dishonest by many on the right to accede to the trust fund when it was helping to enable tax cuts on the wealthy and then cry foul when tax revenue is expected to pay back the money to retirees. But it is equally disengenous to act as if the trust fund has marketable bonds that represend anything other than a call upon current general taxes to pay for current SS payments. There’s nothing WRONG with paying part of the costs of today’s SS payments with general fund taxes. That is what the trust fund DOES; that was the plan all along. But we shouldn’t pretend that the money comes from anything other than current taxes(both payroll and other) or future taxes (borrowing by the treasury).
Jim A
so who is pretending? there are probably some people who don’t understand and think Social Security is like manna from heaven. I try to correct them when I see them. But I don’t think the money to repay the Trust Fund will come from payroll taxes. It’s the other way around. There is no reason the “taxpayers” or “the government” should object to repaying the Trust Fund more than they object to repaying anyone else who has lent them money. Except of course, that they can always change the law and avoid repaying it… by cutting benefits low enough so the bill never comes due.
This would be criminal, but as Ben Bernanke points out, it’s only the law until congress changes it.
oops. that was Nancy, not Margery.
Terry
Thank YOU. My mother… who should have known better… didn’t “believe in” Social Security either. Blinded by the ideology of the newspapers she read. She died at the age of 66. With the “obvious answer” of raising the retirement age, she wouldn’t even have had one year, or one month, of retirement from a job she hated… a job that killed her.
Bush had three plans in hand. They were the work product of his Commission to Strengthen Social Security or CSSS. You can link to the final CSSS Report here: http://govinfo.library.unt.edu/csss/index.htm
The preferred plan was Model 2 but rather than release it directly the Bush Administration floated (but did not explicitly endorse) a version of Model 2 under the name of Democratic Commissioner Posen so as to demonstrate bi-partisanship while focusing his Social Security Tour on getting buy-in on ‘Crisis’ generally. If he was able to get Congressional buy-in via pressure from constituents (think health care townhall meetings last year) he could spring the actual Model 2 from CSSS and portray an subsequent resistance as Democrats simply denying the crisis they had just admitted to.
The plan was in place from pretty much Day 1 of Year 2 of the Bush Administration, it was released on Dec 21, 2001 and modified in March of 2002, but Bush didn’t have enough political capital to see it AND the war in that year, and then the 2004 elections started getting too close. Which left Bush to not start making his Bush until immediately after he was re-elected. Which he did. My very first posts on Social Security at my then just set up blog were on Thanksgiving 2004 and in direct response to his proposal to take his new “political capital” and use it.
They just didn’t blunder into this, the had both an economic plan and a political message carefully prepared, the pushback from us in “There is no crisis” was by no means a sure thing to be successful. Because of what “everyone knows”.
Before 1993 (sic) there were no Social Security funds to loot. First of all the cash surpluses over that time were tiny in comparison to either Reagan tax cuts or his military spending ramp up. Second they were only enough to slowly build Social Security up to the mandated TF ratio of 100. Which Bush the elder achieved by handing over a TF to Clinton at over 97
http://www.ssa.gov/OACT/TR/2009/VI_cyoper_history.html#159726
Total SS surpluses including interest totaled $22 billion from 1984 to 1986 and another $62 billion from 1987-1988 with much of that being reported in 1989. We did not win the cold war or give the store away to the wealthy with the proceeds of $70 billion in cash surpluses under Reagan. That part of the looting narrative is simply a myth.
A myth by the way balanced by the corrolary myth that the boondoggle of building up a paper surplus will be matched by strains on the economy to pay it back. In neither case are the numbers big enough to have the significance the myth makers put on them. Grab a calculator and break down the numbers in the linked table by year. You will find “there is no there there”.
The Bush years were a little different in that they deliberately set out to take a perfectly fine Social Security system and break it by running up Public Debt in a way that made paying back the TF a little problematic, but it isn’t a disaster even now. If we just started paying the bills for our wars in the form of reversing Bush tax cuts, something set to happen automatically absent intervention by Congress, we can retrieve this, or as Coberly and I note let workers tax themselves a cheeseburger a week and save it all ourselves.
My father was as unregenerate a redneck as ever drew breath. In 1935, when everyone had to apply for a SS card, he and a bunch of his scaly-necked friends down at the Armour Star meat cutting plant in Miami refused to sign up. His management decided that the feds should deal with this bunch of gun-toting, deer hunting fools. So, they called the FBI who promptly dispatched a squad of agents to “explain” the law to Daddy and his states-rights-believing buddies. They signed up.
Daddy later fell under a side of meat at the plant, pulverized several lumbar vertebrae and became disabled. He put in for SS disability benefits and got them when the first cash benefits became payable. He died in 1987 after having received checks continuously for more than 20 years. He said he was a fool not to see that SS would be good for working people way back in the Depression. FDR was a great man, he said. Of course, he wasn’t terribly fond of JFK, but that was another story.
Also, the “Entitlement Hawks” like Di Feinstein. Real concerned. Not concerned about DOD’s giant annual budget, but SS is a special case.
Nancy said: “And, only future interest payments on the TF would be counted as part of the National Debt. ” That is true nance, but if they started by taking the highest interest TF bonds and converted them at today’s interest rate, the difference would be a slowing of the rate of increase of the deficit. The rate would only be slowed at the difference in the two interest rates. Still a paper/accounting exercise.
“The general fund and unified budget all need the SS money to help offset some of Obama’s record setting deficits. By not having excess SS funds to burn”
Buff there are not actually much in the way of excess SS funds to start with. If we go back to the 2008 Report, which was the latest data the Obama campaign had and projected how much cash surplus was going to be from 2009-2012 you can see that actual cash surpluses (what CBO calls ‘primary surplus’) was estimated at about $300 billion and already dropping on an annual basis. Under the 2008 Report primary surplus was project to vanish altogether by 2016.
http://www.ssa.gov/OACT/TR/TR08/IV_SRest.html#253691
Given that these surpluses were scheduled to vanish anyway your formulation doesn’t make much sense in regards to actual cash flow to and from the General Fund, there was never going to be “money to burn”. Now for the Unified Budget it is a little different story, on paper Social Security surpluses that almost entirely come from accrued interest (which for that purpose counts as a surplus) serve to disguise the actual amount of borrowing needed. Because those interest dollars are not actually extracted from the current year economy and so cannot be borrowed as such.
Social Security surpluses operate on Public Debt and Unified Budget in largely opposite ways, something that becomes absolute after 2015 or so. When Obama entered office Social Security already was projected to go cash flow negative over his theoretical two terms, nothing important has changed except a little movement in the inflection points.
i am not sure about this, so i hope someone can help me with the facts and arithmetic, but
if social security can pay for the trust fund being stolen by Martians with just a one tenth of one percent of payroll tax increase for each the employer and the employee… call it a two tenths percent of payroll total… increase each year for ten years.
and if social security taxable income is about one third of GDP
then wouldn’t a one tenth of one percent increase in the tax on NON social security income (that’s rich people and corporations) pay back the Trust Fund honestly?
Bruce
a slightly different perspective on two points, about which you are right, but they can be looked at another way:
the money from the 1983 tax raise was not “looted,” but it was borrowed. The Trust Fund money will always be borrowed. That money helps pay for other stuff (arms buildups and wall street bailouts). If it is not paid back, then it was looted… or will be. Same thing.
Second, you are right that the current (recent or future expected)cash surplus to Social Security does not amount to much. But the “interest” is being borrowed. That is real money. Just as if the Trust Fund were entirely paid back, including interest owed. And then new money was borrowed to replace it. In any case, paying back the amount owed is what the Congress is hoping to avoid by cutting benefits. That amounts to using Social Security money to fund other programs.
There are two overlapping bi-partisan groups promoting Entitlements Reform with Democratic participation. One is the Brookings-Heritage Fiscal Seminar which produced a report called ‘Taking Back Our Fiscal Future’ pdf is here: http://www.brookings.edu/~/media/Files/rc/papers/2008/04_fiscal_future/04_fiscal_future.pdf
Press release here: http://www.brookings.edu/opinions/2009/0219_fiscal_responsiblity_sawhill.aspx
Of the sixteen authors nine including Rivlin are from Brookings or the Urban Institute, both considered left-leaning Democratic think tanks, as opposed to five associated with Concord, Heritage or AEI with two from the supposed center but committed to entitlement reform (Maya MacGuineas and Will Marshall)
A newer group is the Peterson-Pew Commission which mostly consists of past CBO and OMB Directors from both parties. Its report is called “Red Ink Rising” http://budgetreform.org/document/red-ink-rising Rivlin is a signatory here as well, having been both.
Even Bush’s Social Security Commission was evenly split between Republicans and Democrats as would be either the Cooper-Wolf SAFE Commission or Conrad-Gregg. The recurring trick is to define Bi-Partisan as a coalition between ‘Sensible Centrist Dems’ and ‘Deficit Hawk Republicans’ while carefully excluding delusional ‘Tax and Spend Liberals’. Imagine CoRev as personnel director and you get the general idea.
For example Biggs has put forth a plan that would have Social Security Reform be some compromise between the Democratic Diamond-Orszag Reform Plan and the Bi-Partisan Bush CSSS Model 2 which might land you somewhere near the LMS ‘Non-Partisan Social Security Reform Plan. Which would leave you with all kinds of Democratic representation, but all committed to reforming Social Security by cutting benefits. In the interest of ‘fiscal responsibility’ and ‘inter-generational equity’ of course.
which raises a point I think needs to be made.
while the accountants are inviting you to examine the “rate of return on investmetn” of Social Security… and to ignore the nuances that it’s not the average rate that counts, but the return to the poorer half who get the “insurance benefit”…
which of you, if you had one year to live, and you worked at a job you hated… that is you were not a high-end economics professor… wouldn’t regard the Social Security money that let you quit that job and spend a year living the last of your life on your own terms instead of the boss’s… would not think that Social Security was worth a million dollars… or “priceless.” whatever you had paid for it.
the fact is that it comes out of your paycheck in an amount so small you don’t really notice it, unless you have Scrooge syndrome. I doubt very much there is any of us who can claim that five percent more or less on our income is something we would either notice, or can claim is entirely the result of our own hard work.
“We can’t do that, as it is already counted as part of the deficit.”
AS much as people would like to conflate federal ‘deficit and federal ‘debt’ they are not the same thing at all. A small but important part of the problem is terminological. For example the Henny-Penny’s of this world would like people to equate ‘unfunded liability’ to ‘debt’ and that to ‘long term deficits’ when these are all very distinct concepts that yield very different numbers going forward.
The annual increases in balance in the Trust Fund have been counted as surplus for the purpose of Unified Budget even as they add dollar for dollar to Public Debt. A little precision is important here, particularly given the disinformation floating around.
‘Margery’ isn’t Nancy, it is instead a screen name for someone else I correspond with whose views are quite close but distinct from those of Ms. Ortiz. The sins/virtues of one should not be foisted on the other.
And I think you are mis-reading CoRev.
Hmm. in para 3 ‘see it’ should be ‘sell it’ and ‘making his Bush’ should be ‘making his push’. Though the latter is an interesting mental slip given that I capitalized it.
Coberly,
Social security is welfare and one with a questionable design. Rather than provide benefits based on what people need, benefits are set by how much people were taxed in the past. So if you were poor, did manual labor all your life for a low wage, social security is less of of a help to you in old age then its is to a corporate fat cat clipping coupons from his trust fund; and who could use his social security check to light his cigars with. Social security jumps through some hoops to make it look like its a real savings plan. I like the way they send me a letter each year like my bank does showing how much I earned in each year that I worked and then telling me what I would get in benefits — that is until they decide to change the law. I’m glad my mutual fund company can’t do that.
“Social security jumps through some hoops to make it look like its a real savings plan.”
You continue to act the fool. Social security has never been promoted as a “savings” plan by any adherent and is only described that way by fools who want to obfuscate the issue and confuse the ignorant. SS has similar characteristics of an insurance plan. That’s why your tax payments are referred to as FICA, as in Federal Insurance Contributions Act. Stop playing the troll or the fool, which ever you are trying to be. This aspect of SS has been explained repeatedly on this very site. So get with the program of commenting honestly or get lost, jerk.
Bait and switch is tiresome.
The conservatives plan all along has been to milk the annual surplusses as long as possible and hope to have enough negative sentiment against the viability of the trust built up by that time to try to force what would otherwise be an unappealing emergency reform along the lines of writing off the trust fund and shifting as much of the remaining annual revenue stream as possible to their favored monopolies on wall street.
Cantab,
you are so ignorant the department of sanitation is after us about letting you lie around here. if no one else does it, i’ll clean up after you when i get back.
Cantab et al,
Look go to the tab at the top and read, CAREFULLY, Webb’ Social Security primar. It will explain in detail (and with a mind-numbing amount of real data – thanks Bruce) why SS is just fine and at best needs some slight tuning in the out years. I admit I’m a fan of the “do-nothing” fix to SS but coberly makes a solid argument for a very minor tweek. So go get educated and come back.
And if you think I’m just a shill for Bruce and coberly either 1) you have not been reading here long, or 2) not sharing some very mind-altering substances with me!!!
Islam will change
Jack
in fairness to Cantab I, even I, often call Social Security a savings plan. That doesn’t make Cantab less wrong, or me less tired of him. I can’t afford to be tired of him, because he represents what probably most of the people in this country think. Even including the President.
It’s not what we call a thing that matters. It’s what it does. Social Security forces you to “save” a small percent of your income. It then insures that savings against a variety of losses. Inflation is the big potential loss. Another is “bank failure” or having your stocks tank just when you want to reire, Another big loss would be either that you fail to save enough, either from lack of prudence, or just becuse you never make enough money to be able to save enough to pay for an indoor retirement.
I’ll talk about Cantab’s misunderstanding of this when I get back.
I may not have been clear. I didn’t mean that the money to repay the trust fund would come from SS’s payroll taxes, but that the majority of the money to pay BENEFITS would continue to be funded by SS payroll taxes. And I agree there’s no reason to a priori act as if SS recipeints are somehow less deserving than others who have bought government bonds or, for that matter, any other use of tax money. But they aren’t specially priviledged, either. The fact that Boomer retirement means that we will have to tax more, spend less or borrow more is unaffected by the presence of the trust fund.
If it wasn’t for the “elephant in the python” demographics of the baby boomer cohort, we wouldn’t be having this conversation. There would be no large, decade spanning income to and outgo from the SS trust fund. At the end of they day, we will have to raise current taxes or reduce other government spending or (worst option I think we agree) borrow even more to pay current retiree. If one wishes to regard the trust fund as an asset to SS, one MUST also regard it as a liability to the Treasury. Of course when we can spend .7 trillion in a little over a year on bailouts, 2.5-3 trillion over a couple of decades looks almost like a rounding error.
I assume Rdan is talking about Cantab… though i don’t quite see it.
But given the way haloscan (?) mixes up comments, it is probably worth taking the time to include enough of what you are responding to so the guy who came in late has a clue.
Coberly,
I assume Rdan is talking about Cantab… though i don’t quite see it.
At least 50 percent of his comments are cryptic incomplete thoughts leaving the reader unclear over what he was trying to say, who he was addressing, and what particuar point in the post he was focusing on.
Cantab give it up.
First you claim Social Security is welfare and then turn around and claim it has a questionable design because its benefits are not even more redistributive, i.e. more welfare like.
Then you turn around and contrast a worker getting a minimum return to someone clipping coupons form this trust fund, which is just another version of the Bill Gates argument, and ignores the fact that tycoons who gained their ientire ncome from returns on capital (like clipping coupons) are not even eligible for Social Security having paid nothing in and so qualifying to take anything out. Further ignore that that worker in the absense of Social Security might well have nothing to fall back on, which means that his minimum benefit is a hell of a lot more help to him than the capped benefit is to the millionaire. Now if you were pushing to convert Social Security into a true national pension funded by a society-wide income tax this would have some coherence. As stated not so much.
As for your last paragraph. No your pension fund can’t arbitrarily change your benefits from the level they would be when you decide to sell. But they can manage their funds in such a way that you don’t get the return you expect by say investing a bunch of it in a ‘can’t lose’ fund run by a future Bernie Madoff, or by deciding to leverage everything using insured derivatives, or just decide to award all of their traders with the majority of revenues generated, or maybe just awarding themselves bonuses totally independent of actual fund performance. You know the kind of things you read about every time you open a newspaper?
Congress can pass a law, just as a corporate board can make decisions that effect your ultimate return. But wage workers have a hell of a lot more protection against adverse actions of Congress than they do against mutual fund companies. And besides Congress could pass a law protecting that mutual fund company from civil suits. If you didn’t have a court system whose rulings are based on laws backed by Congress what recourse would you have against that mutual fund?
Glibertarians have this odd idea that contracts somehow enforce themselves and are protected against the government when the truth is that without government there are no enforceable contracts. Unless of course you are a Mafia Don.
Buff,
Your post is full of minor contradictions.
In one sentence you say that social security is “Just fine” and then latter in the same sentence you say it needs to be tuned in the out years. I take it to mean that tuned means “needs to be fixed” and out years means “sometime before the flight of the starship enterprise”.
They you say coberly says the system needs more money after saying you favor doing nothing. Well why would you favor doing nothing if you believe in coberly’s corrective action plan?
Of course you explain all this by saying you are undergoing withdrawl symtoms from running out of mind-altering substances. That will do.
You are still confusing ‘debt’ and ‘deficit’. Redeeming higher interest rate bonds and replacing them with current lower interest rate ones would in fact reduce the rate of increase of the intra-governmental debt irrespective of everything else. You can’t make that same claim about deficits. The effect of the change would be in the same direction but the overall deficit could either be increasing or decreasing in ways that totally offset that effect.
In 2000 we had Social Security in both cash (primary) and total surplus. We had the General Fund in a small primary surplus. We had a big pay down in Debt held by the Public even as we had a big jump in Public Debt. Your failure to keep these concepts clear and separate undercut your attempted argument. And it is not a paper/accounting exercise because that combination had real effects on the borrowing markets.
Cantab,
SS IS just fine – read the information at the tab. I’m in favor of doing nothing for the next decade (at least) and then maybe adding a minor tweak (i.e a small increase in payroll taxes) when/if needed. coberly has made a good point that the ‘tweak’ may be more prudently applied a little earlier than I envision. Either way, SS does not need to be fixed. I have yet to see any ‘fix’ plan that doesn’t go way overboard with the fixing. We don’t need means testing, raising the retirement age, or putting the money on Wall Street.
SS is designed to insure people don’t end up living in a dumpster and eating scraps becuase of a financial disaster at the end of your working life. It won’t even let you keep your modest home in any high property tax state even with Senior tax abatements. If you want to do that you had better be saving additional funds past the payroll tax.
I could go on but don’t see the use. Read the tab and come back educated….
Your argument is, and has been, with the general fund. SS is just a sideshow….
Islam will change
Bruce,
Try to stay focused even though I know you find this difficult. Social security is like welfare since it’s a benefit at the discretion of the government. The U.S. Supreme court has already found that Its not property to the individual. What you pay in does not guarantee what you can take out. And benefits have been reduced in the past to make up for funding shortfalls. If it’s not savings then its welfare and by the way, what’s wrong with a welfare.
Do you know that Bill Gates will never collect a penny in social security benefit? How about Michael Jordan, Michael Douglas, Ned Johnson, Jack Welch or Opera? I don’t think you do. Moreover, I think all these people will be getting social security checks.
The point is question is should be means test social security to reduced the funds needed to provide benefits. This question demands a more serious consideration that apparently you or coberly have the capacity to provide.
P.S. So is the current recession making social security’s long term funding better or worse?
rdan,
The individual who identifies themslf as cantab can only be our old “friend” Brooks. He was equally tiresome though far more verbose. I cannot believe that cantab is just some less than thoughtful person who is trying to simply make good points in an argument. The facts of any issue seem to be irrelavent to cantab. His comments are idological in the extreme and contain many inaccurate talking points. He cannot be other than a troll. While coberly may be right in simply trying to correct what cantab popsts, I believe it to be counter productive to have to repeatedly argue the same points. The public is fooled by the argument just as much as it is fooled by the lie that starts the argument. A lie has to be erased. Its very presence on the site implies a debate over equally plausible points.
The Social Security surplus is needed to offset Obama’s deficit. Just like it was need to offset Bush’s deficit. The difference between the two, however, is that Obama’s contribution to the deficit, through policy efforts and not through business cycle effects, is temporary. The business cycle effect is temporary. Bush, on the other hand, passed unfunded tax cuts with the clear intent to make them permanent, though he sold them as temporary. He also gave us the first unfunded war in US history.
We came to this recession with a large structural deficit, a structural deficit that was the result of Bush administration policies. The addition to the deficit under Obama is in two parts – a cylcical component that is not the result of his policies, and a temporary, hole-filling component that is the result of his policies, both of which will go away. And out of that all you manage to mention is “Obama’s deficit”? Buffy, I understand that you might want to use dishonest language to sell your views, but why have you bothered to be transparently dishonest?
Jim A
I agree, except about “the crisis.” The only crisis hear is the man behind the curtain claiming there is a crisis. If you mean the budget crisis, they would have spent and borrowed the money if there was no Social Security at all.
Yes, of course the trust fund is an asset to SS and a liability to the Treasury. That’s what happens when you borrow money.
The fact that we will have to tax more,spend less or borrow more has nothing to do with the Boomers, or the Trust Fund. It’s to pay back money that was borrowed. If they didn’t borrow it from the Boomers through the social security trust fund, they would have had to sell bonds in the open market. The debt would still be the same. Except it would be harder for them to stiff the market.
Criminy, Cantab! It’s one thing to misconstrue something on a plot far enough way that effort is needed to catch you. This is the sentence you reference:
“I admit I’m a fan of the “do-nothing” fix to SS but coberly makes a solid argument for a very minor tweek.”
The form is “I think this, but coberly argues well for that.” There is nothing contradictory about what buffy said. Perhaps the strongest evidence of how utterly full of crap you are is that you have prompted me to stand up for buffy. A miracle.
Cantab
your brain appears to have no adjustment for quantity. everything Buff said makes sense. But in your nightmare world things loom up at you completely unconstrained by quantifiers or logical qualifiers.
Jack
i was thinking Cantab was formerly anonymous. Brooks had a signature style of whining that doesn’t quite match Cantab’s, though there are similarities in the type of brain damage.
CAntab
the tedium is trying to explain it all to you over and over again. your brain simply can’t hold anything you don’t want it to hold.
social security is not like welfare because you pay for your own benefits, and you don’t pay for anyone elses. there is an insurance factor that does mean some of what you “might have earned” will go to someone else who earned to little to survive. but the “insurance” is itself a benefit. and you pay for it exactly the way you pay for any insurance. you don’t get it by showing up at the welfare office and saying “feed me.”
i don’t think benefits have ever been reduced. unless you mean the 1983 increase in the retirement age… which sorta reduced the benefit schedule but not in a way that anyone got less than he paid for. it was just a way of holding down the premium. a foolish way in my opinion, because the premium increase that would have been needed to keep the retirement age at 65 was tiny. on the other hand, the people retiring at 62 on reduced benefits still get a pretty good return on their money.
my left shoe is not savings. does that make it welfare?
what’s wrong with welfare is that it is demeaning to the recipients, and the people who pay the money don’t like to. so they find a way to cut benefits to shockingly low levels and find more ways to demean the recipients.
bill gates will almost certainly collect social security if he paid the payroll tax. he will get a lower rate of return on what he paid in than the guy who earned minimum wage. so if your brain wasn’t so disordered you’d realize you are arguing at cross purposes with yourself.
there is no need to means test to reduce funds needed to provide benefits. the people are perfectly happy to provide the funds and collect the benefits without having to see the government proctologist every month.
the current recession arguably makes long term funding a little worse. but such a tiny bit that no one would notice if it wasn’t for the Big Liars lying about it. It’s only worse in that some of the money that would have helped pay for the boomers is now being used to help see us through the recession. But at the end of the day you couldn’t detect the difference in anyone’s pocket with a microscope.
Kharris,
They’re trying to downplay the funding shortfall that social security is projecting. Its their need to downplay that makes them speak with forked toungue.
And by the way you’re ranting and raving again — which is typical for. You picked a bad roll model in Don Quixote
Jack:
ahh yes, the inventors of the tranched CDO
coberly,Weren’t you and Bruce running around a couple of years ago telling us that there was no problemo with social security funding. Now you call is a small problemo. So what will you call it next year?
Kharris,
Obama is increasing the deficit in magnitudes that Bush could only dream of…so why again are you being dishonest???
Islam will change
Dale the interest is not borrowed in any real world sense. It is counted when calculating the Unified Budget and as such provide political cover for people who want to use it as Gingrich did in Clinton’s second term as an excuse for tax increases, but it can’t be used to pay for any real world spending. This doesn’t make it any less real an asset to Social Security or any less real a debt to Treasury.
This was the concept at the bottom of my old post “Interest on interest: a threat”. Imagine a Trust Fund with a TF ratio of 2000 earning interest at 5%, In principal that self-funds, we could reduce FICA to zero and still have enough income in the form of interest to pay all benefits. Meaning new entrants into the work force would be accruing future benefits without needing to contribute. As the years and decades roll on you increasingly would have people with earned benefits that they hadn’t paid for and after 50 years the process would be complete, Social Security’s own success would transition it into a 100% welfare program. On the other hand if Social Security is in actuarial balance at somewhere in the 125 TF ratio level it remains around 95% pay-go with 5% from the general fund in the form of interest.
That is what gives ‘Trigger’ its power, by targeting the TF Ratio we keep Social Security from either being starved or over-fed.
Well we certainly agree on the inappropriateness of characterizing SS funding issues as a “crisis.” It’s a slow, inexorable demographic shift, that lacks the sort of time-criticalness that is required to be called a crisis. But I suspect that you’re wrong about whether the liabilities held by the treasury would have been as great if didn’t have the trust fund. I suspect that the “debt held by the public” was the limiting factor in the deficits that congress allowed while pursueing their twin mandates of tax cuts and increased spending. I think that sans trust fund we would have taxed more or spent less. But as with most “what ifs,” we’ll never know.
These questions are simply variations on the same sentence and are tiresome. I think we are headed for a repeat of previous year. No one can dominate a thread through sheer volume of patter. Please desist…last time asked.
“In one sentence you say that social security is “Just fine” and then latter in the same sentence you say it needs to be tuned in the out years.”
Yeah because who ever heard of a car that was running fine but would some new tires in 40,000 miles and a tune-up sometime before that where projections showed that both the cost of rubber and that of real wages for mechanics would go up over the interim. We know what Social Security needs today, it needs an increase in that portion of FICA that goes to DI of 0.3%. We could simply raise FICA by that amount or reallocated existing FICA. If we decide the latter we move up the date that OAS needs a similar fix, if we take the increase to 12.7% that fix projects to stay in place, in this case around 2026, with yes more tune-ups in years after that.
This isn’t a metaphor based on spaceship it is one on how much you need to do to keep a classic car in good running condition on the road for the next 75 years. Somehow the concept of “scheduled maintanence” seems to flown over your head. Are you a city boy that gets around on transit and taxies? Because for people who own cars this is not a hard concept.
Jack and Coberly. Dan knows who Cantab is and was. Let us just leave it at that.
He’s a troll. No less abusive than was Brooks. Maybe he’s the same. and he is not simply being dense as coberly is kiondly implying. He is attempting to take over the thread with an endless stream of BS and has no interest in an honest discussion. Please
dump him out with the rest of the trash.
Cantab you mean serious consideration like this:
http://angrybear.blogspot.com/2008/07/soc-sec-xxxii-means-testing-as-trojan.html
If you would like to counter that argument then feel free to do so, but accusing me of ignoring the question is frankly bullshit.
As to welfare and discretion of Congress. Per the Consitution Congress has to provide for a Postal function, and a Copyright and Patent function, and a couple others. And it has to provide for funding for the Navy. But per your definition Doggies are just welfare recipients whose beans and bullets are at the discretion of Congress.
“To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
To provide and maintain a Navy;”
PLus that Supreme Court ruling does not mean what you claim. Social Security recipients do not have a property right to any given level of benefits, nor is there any guarantee that you will get out what you put in. Which doesn’t mean you are denied any rights held by any random soldier who can have his pay or retirement benefits changed at the will of Congress. Millions of vets were led to believe that they would get life-time access to medical care. Oops over time that got pared down to retirees and then some service connected disabled vets and mostly moved away from military medicine (my medical care up to 1966 was provided on base by the Navy) to CHAMPUS. By act of Congress. And so did that of my Mom (herself a vet) and mostly my Dad (career Navy). By your definition my whole family were just a bunch of welfare deadbeats.
Cantab in all your incarnations you have insisted that you had the ultimate right to define every term exactly to the limits you like. Well you don’t own discourse and meaning champ. Your definition of welfare is useless, which per my understanding of meaning (from Wittegenstein: meaning is use) makes much of your commentary literally meaningless.
yes. we’ll never know. meanwhile it’s not quite honest to blame the debt on Social Security,
We went through all this before when Bush had the brainy idea of trashing SS and making people buy stock for their retirement, just before the market crashed. It is hard not to think the idea was to reduce the public to groveling poverty and serfdom, the better for the plutocrats to work to death. You know, the GOP version of Arbeit macht Frei.
everything you say is true. especially about the wonderful idea of the Trigger.
the point i am beginning to feel is not worth making is this:
say Treasury borrows a hundred dollars from Social Security. at the end of the year it owes Social Security 105 dollars (5% interest). you are saying the extra five dollars is not real money if the Treasury just records it in a book and does nothing. But if the treasury pays Social Security including the interst, it has to find 105 dollars, not 100 dollars,from somewhere else to replace it. If it doesn’t pay it back but just keeps it on the books, it is effectively borrowing that interest.
It doesn’t really change the reality to run this process for forty years and claim the “interest” owed is “not borrowed in any real world sense.” That’s only true if it is never paid back, or never intended to be paid back.
Bruce/Dan,
On the thread concerning the life insurance journey of cactus, cantab claimed to have been involved with some form of research for an insurance comp. If either of you know who cantab is, can you verify that he does such research work? Or has cantab been cought in an outright lie? If so please to dump the deceitful ass.
The year before last we called the plan “Nothing”. Because when you take OAS and DI together “Nothing” was a perfectly good plan. Coberly had an alternative which we can call “Coberly” based on an immediate and complete fix using FICA. It was a reasonable plan that had some potential political defects, in that it ratcheted up income in advance of need and presented a situation difficult to back down from, because once Congress got their hands on that 2% of payroll of which most wouldn’t be needed for Social Security purposes for nearly 20 years, they might not want to let it go. Which induced us to listen to Arne Larsen who proposed a plan to not raise FICA until Social Security actually fell out of short term actuarial balance as measured by the Trustees, that plan we called “Trigger”, in the last year we decided to refine that plan in a way that recognized that DI and OAS were in different actuarial conditions and that it made sense to pull the Trigger on DI right away (0.3% FICA increase) and postpone increases in OAS FICA until the actual TF balance was projected to have OAS fall out of actuarial balance, this plan we called “The Northwest Plan for a Real Social Security Fix” because the principal authors are all from the Pacific Northwest.
That you didn’t track this in real time is because you are a blowhard determined to make the same crappy talking points with no obligation to actually follow the argument and engage in any substantive way.
Which I am not explaining to you but to any readers who tomorrow might be wondering “Where did Cantab go?” “Nothing” “Coberly” “Trigger” “NW Plan”. It was a process of development and collaboration. “Nothing” is still working and is still preferable to most of the alternatives presented, which is why it is still referenced.
Cantab
though it is against my religion to say it. you are a fool. as Bruce has ponted out, a tiny adjustment 20 years down the road is not a problem.
Why should deceitful be more repulsive than an adult as an ass?
Jack,
Do you have anger management issues?
Bruce, in the quest for precision, instead of “public debt” I think it is more likely counted as national debt. Public debt is representes by those treasuries/bonds already owned by the public.
Travis,
You seem to have overlooked the fact someone might be deceitful and also an ass.
Bruce, are you saying redeeming the TF bonds would not see them issued as public bonds?
As I understand it, the lower interest public bonds would then reduce the rate of increase in debt due to the lower interest rate paid when compared to the original TF bond rate. Then the rate of increase in the deficit is reduced.
This is a complex discussion assuming that the SS TF is redeemed using the high interest bonds. Then the difference in deficits is a paper difference compared to not redeeming those high interst TF bonds. At least that is what I was thinking.
Not at all. Jack”s formulation was ass + deceit was unforgivable. I merely pondered why an ass was any more tolerable than a deceitful ass. Too true one can be both if so inclined.
Here’s a list of names that should never be forgotten:
http://economicsofcontempt.blogspot.com/2008/07/official-list-of-punditsexperts-who.html
Seemingly yes. He manages them too well. Isn’t that what makes you dislike progressives? I think you despise them above all else because you think that they are too soft.
It’s so flattering to always be in people’s minds.
Coberly,
Could you do a better job quoting outside acedemic experts on social security. Maybe a PhD from a place like Havard, Yale, Stanford, or University of California at Berkely.
As with cactus on his economic policy by political party it was really helpful to get some expert opinion introduced into the debate which I did by quoting the writings of Christina Romer.
The bottom line is that you and Bruce can learn some things about social security but you can never be an expert in the field. Neither of you have PhDs and are specialists in economics or another field that one would look for a specialist on social security. Unlike Jack i’m not after your personal information to make trouble for you but can you tell us if you have ever published anything in an important acedemic journal. I’ll take your word on it.
All right this is gonna be a little long. Its gonna be a few posts but I am not going to make you link to anywhere.
Here is Warren Mosler on Social Security
Deadly Innocent Fraud #4:
Social Security is broken.
Fact:
Government Checks Don’t Bounce.
If there is one thing all members of Congress believe is that social security is broken. President elect Obama said the money won’t be there. President Bush used the word bankruptcy four times in one day, and Senator McCain said social security is broken. They are all wrong.
As we’ve already discussed, the government never has or doesn’t have any of its own money. It spends by changing numbers in our bank accounts. This includes social security.
There is no operational constraint on the Government’s ability to meet all Social Security payments in a timely manner.
It does’t matter what the numbers are in the Social Security Trust Fund account.
The trust fund is nothing more than record keeping, as are all accounts at the Fed.
Continued
………..
When it comes time to make Social Security payments, all the govt has to do is change numbers up in the beneficiary’s accounts, and then change numbers down in the trust fund accounts to keep track of what it did. If the trust fund number goes negative, so be it. That just reflects the numbers that are changed up as payments to beneficiaries are made.
And one of the major discussions in Washington is whether or not to privatize social security. As you might be guessing by now, that entire discussion makes no sense whatsoever, so let me begin with that and then move on.
The idea of privatization is that:
1. Social security taxes and benefits are reduced, and instead,
2. The amount of the tax reduction is used to buy specified shares of stock. And
3. Because the government is going to collect that much less in taxes the budget deficit will be that much higher, and so the government will have to sell that many more Treasury securities to ‘pay for it all’ (as they say).
Got it?
1. They take less each week from your pay check for social security and
2. You get to use the funds they no longer take from you to buy stocks.
3. You later will collect a bit less in social security payments when you retire, but
4. You will own stocks that will hopefully become worth more than the social security payments you gave up.
From the point of view of the individual it looks like an interesting trade off. The stocks you buy only have to go up modestly over time for you to be quite a bit ahead.
Those who favor this plan say yes, it’s a relatively large one time addition to the deficit, but the savings in social security payments down the road for the government pretty much makes up for that, and the payments going into the stock market will help the economy grow and prosper.
Those against the proposal say the stock market is too risky for this type of thing, and point to the large drop in 2008 as an example. And if people lose in the stock market the government will be compelled to increase social security retirement payments to keep them out of poverty. Therefore, unless we want to risk a high percentage of our seniors falling below the poverty line, government is taking all the risk.
They are both terribly mistaken. (Who would have thought!)
Continued
…………
The major flaw in this main stream dialogue is what is called a ‘fallacy of composition.’ The typical textbook example of a fallacy of composition is the football game where you can see better if you stand up, and then conclude that everyone would see better if everyone stood up.
Wrong! If everyone stands up no one can see better, and everyone is standing up rather than sitting down. So all are worse off.
They all are looking at what is called the micro level for the individual social security participants rather than looking at the macro level which includes the entire population.
To understand what’s fundamentally wrong at the macro (big picture, top down) level, you first have to understand that participating in social security is functionally the same as buying a government bond. Let me explain.
With the current social security program you give the government your dollars now, and it gives you back dollars later. That is exactly what happens when you buy a government bond (yes, or put your money in a savings account). You give the government your dollars now and you get dollars back later plus any interest.
Yes, one might turn out to be a better investment and give you a higher return, but apart from the rate of return, each is very much the same.
(Now that you know this, you are way ahead of Congress, by the way.)
Continued
…………
This is GOOD
Steve Moore story
And now you are ready to read about the conversation of several years back I had with Steve Moore, then head of economics at the CATO institute, now a CNBC regular, and a long time supporter of privatizing Social Security.
Steve came down to speak about social security at one of my conferences in Florida. He gave his talk that went much like I just stated- by letting people put their money in the stock market rather than making social security payments they will better off over time when they retire, and the one time increase in the government budget deficit will be both well worth it and probably paid down over time in the expansion to follow, as all that money going into stocks will help the economy grow and prosper.
At that point I led off the question and answer session.
Warren: “Steve, giving the government money now in the form of social security taxes, and getting it back later is functionally the same as buying a government bond, where you give the government money now and it gives it back to you later. The only difference is the return.”
Steve: “OK, but with government bonds you get a higher return than with Social Security which only pays your money back at 2% interest. Social Security is a bad investment for individuals.”
Warren: “OK, I’ll get to the investment aspect later, but let me continue. Under your privatization proposal, the government would reduce Social Security payments and the employees would put that money into the stock market.”
Steve: “Yes, about $100 per month, and only into approved, high quality stocks.”
Warren: “OK, and the US Treasury would have to issue and sell additional securities to cover the reduced revenues.”
Steve: “Yes, and it would also be reducing social security payments down the road.”
Continued
“Why should deceitful be more repulsive than an adult as an ass?” Travis
To try to answer your question I have to define an ass as I see it. An ass is often acts the fool. An ass can be inconsiderate of others, as is a bore. An ass is often thought to be stupid, as in the oft use phrase, that stupid ass! Bad enough as it is. A deceitful person tells lies in order to gain some advantage. A liar has no defense other than the need to lie to save a life in some unusual circumstance. Otherwise a lie is indefensible. To be both an ass and a liar is simply to have given up all pretense of acceptable social interaction. Such a person is of no good value to his fellow man (or woman).
I think that explains my point well enough.
……….
Warren: “Right. So to continue with my point, the employees buying the stock buy them from someone else, so all the stocks do is change hands. No new money goes into the economy.”
Steve: “Right”
Warren: “And the people who sold the stock then have the money from the sale which is the money that buys the government bonds.”
Steve: “Yes, you can think of it that way.”
Warren: “So what’s happened is the employees stopped buying into social security, which we agree was functionally the same as buying a government bond, and instead bought stocks. And other people sold their stocks and bought the newly issued government bonds. So looking at it from the macro level, all that happened is some stocks changed hands, and some bonds changed hands. Total stocks outstanding and total bonds outstanding, if you count social security as a bond, remained about the same. And so this should have no influence on the economy, or total savings, or anything else apart from generating transactions costs?”
Steve: “Yes, I suppose you can look at it that way, but I look at it as privatizing, and I believe people can invest their money better than government can.”
Warren: “Ok, but you agree the amount of stocks held by the public hasn’t changed, so with this proposal nothing changes for the economy as a whole.”
Steve: “But it does change things for Social Security participants.”
Warren: “Yes, with exactly the opposite change for others. And none of this has even been discussed by Congress or any mainstream economist? It seems you have an ideological bias towards privatization rhetoric, rather than the substance of the proposal.”
Steve: “I like it because I believe in privatization- I believe that you can invest your money better than government can.”
With that I’ll let Steve have the last word here. The proposal in no way changes the number of shares of stock, or which stocks the American public would hold for investment. So at the macro level it is not the case of allowing the nation to ‘invest better than the government can.’ And Steve knows that, but it doesn’t matter, and he continues to peddle the same illogical story that he knows is illogical. And he gets no criticism from the media apart from the discussion as to whether stocks are a better investment than social security, and whether the bonds the government has to sell will take away savings that could be used for investment, and whether the government risks its solvency by going even deeper into debt, and all the other such innocent fraud nonsense.
Continued
………..
Unfortunately, the deadly innocent frauds continuously compound and obscure any chance for legitimate analysis.
And it gets worse yet. The ‘intergenerational’ story continues with something like this:
“The problem is that 30 years from now there will be a lot more retired people and proportionately fewer workers (that part’s right), and the Social Security trust fund will run out of money (as if number in a trust fund is an actual constraint on govt’s ability to spend…silly, but they believe it), so to solve the problem we need to figure out a way to be able to provide seniors with enough money to pay for the goods and services they will need.”
With that last statement it all goes bad. They assume that the real problem of fewer workers and more retirees, which is also known as the dependency ratio, can be ‘solved’ by making sure the retirees have sufficient funds to buy what they need.
Let’s look at it this way. 50 years from now when there is one person left working and 300 million retired people (I exaggerate to make the point), that guy is going to pretty busy since he’ll have to grow all the food, build and maintain all the buildings, do the laundry, take care of all medical needs, produce the TV shows, etc. etc. etc.
So what we need to do is make sure those 300 million retired people have the funds to pay him??? I don’t think so! This problem obviously isn’t about money.
What we need to do is make sure that one guy working is smart enough and productive enough and has enough capital goods and software to be able to get all that done, or those retirees are in serious trouble, no matter how much money they might have.
So the real problem is, if the remaining workers aren’t sufficiently productive there will be a general shortage of goods and services and more ‘money to spend’ will only drive up prices, and not somehow create more goods and services.
The mainstream story deteriorates further as it continues:
“Therefore, government needs to cut spending or increase taxes today, to accumulate the funds for tomorrow’s expenditures.”
s.
Continued
Cantab
much as I hate to say it, 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.” By their fruit shall ye know them.
……….
By now I trust you know this is ridiculous, and evidence of the deadly innocent frauds hard at work to undermine our well being and the next generation’s standard of living as well.
Our government neither has or doesn’t have dollars. It spends by changing numbers up in our bank accounts, and taxes by changing numbers down in our bank accounts.
And raising taxes serves to lower our spending power. That’s ok if spending is too high causing the economy to ‘overheat’ as we have too much spending power for what’s for sale in that big department store called the economy.
But if that’s not the case, and, in fact, spending is falling far short of what’s needed to buy what’s offered for sale at full employment levels of output, raising taxes and taking away our spending power only makes things that much worse.
And the story gets even worse. Any mainstream economist will agree that there pretty much isn’t anything in the way of real goods we can produce today that will be useful 50 years from now. They go on to say that the only thing we can do for our descendents that far into the future is to do our best to make sure that they have the knowledge and technology to help them meet their future demands.
So the final irony is that in order to somehow ‘save’ public funds for the future, what we do is cut back on expenditures today, which does nothing but set our economy back and cause the growth of output and employment to decline.
And, for the final ‘worse yet,’ the great irony is that the first thing they cut back on is education- the one thing the mainstream agrees should be done that actually helps our children 50 years down the road.
Continued
Margery
actually, I am coming to believe this.
………..
Should our policy makers ever actually get a handle on how the monetary system functions, they would realize the issue is social equity, and possibly inflation, but never government solvency.
They would realize that if they want seniors to have more income at any time, it’s a simple matter of raising benefits, and that the real question is, what level of real resource consumption do we want to provide for our seniors? How much food do we want to allocate to them? How much housing? Clothing? Electricity? Gasoline? Medical services? Those are the real issues, and yes, giving seniors more of those goods and services means less for us. The amount of goods and services we allocate to seniors is the real cost to us, not the actual payments, which are nothing more than numbers in bank accounts.
And if they are concerned about the future, they would support the types of education they thought would be most valuable for that purpose.
But they don’t understand the monetary system and they won’t see it the ‘right way around’ until they do understand it.
Meanwhile, the deadly innocent fraud of Social Security takes its toll on both our present and our future well being.
THATS ALL
I know I cant say it better myself
Jack
It doesn’t matter to me if Cantab was one of the “subject” or if he directed the research. By their fruits shall ye know them.
Steve: “I like it because I believe in privatization- I believe that you can invest your money better than government can.”
Talk about your faith based initiative! The evidence is that the average person is a lousy investor.
Besides, this ignores the Tontine aspect of Social Security. Everybody contributes, the survivors collect.
“Any mainstream economist will agree that there pretty much isn’t anything in the way of real goods we can produce today that will be useful 50 years from now.”
They don’t live in Japan, do they? 😉
Do you know that a person who never has an accident will EVER be able to reap the benefits of their car insurance?? And look how much they’ve HAD to pay in……..what a travesty.
Do you know that I will unlikely ever be able to collect on my disability insurance?? I’ve been paying over 4000 dollars a year for it as well.
Jeez, lets see how many people we can find who were FORTUNATE enough to never need the coverage they paid for. Maybe then we can just obsess over all the other things they could have bought with that money now that those negative events they insured against never happened…..its a rip off I tell you, life is a rip off!!
“And, for the final ‘worse yet,’ the great irony is that the first thing they cut back on is education- the one thing the mainstream agrees should be done that actually helps our children 50 years down the road.”
They don’t want an educated proletariat, do they?
(Did Ronald Reagan actually say that?)
It’s worse than that. If you want to be cynical, you could say that the purpose of privatizing social security is to transfer money from ordinary workers to financial professionals. The rich get richer. It’s the law.
Oh please Cantab.
Try looking at the arguments not WHO IS MAKING THEM. Whether they have PhDs or not, the subject is not very hard to understand………well for most of us anyway.
Just because you are a PhD economist it doesnt mean you are A)intellectually honest or B) in fact an “expert” on SS
You are starting to sound like one of those educated northern liberals you so scorn.
“It doesn’t really change the reality to run this process for forty years and claim the “interest” owed is “not borrowed in any real world sense.” That’s only true if it is never paid back, or never intended to be paid back.”
Well, that’s our money system, isn’t it? The national debt is never intended to be paid back. If it were paid back, wouldn’t we have a rash of bankruptcies?
Greg,
your analysis is charming, and in some respects true (that means i agree with it, or like the sound of it) but you leave out so much of the real world that i suspect your ideas are ultimately no more practical than “pure communism.”
a lot of what you say about money is true. but we have invented money and the rules governing its use because it enables people to frame and plan their consumption and make choices about their work. think of it like counting sheep by making marks on a stick. you don’t need the marks, but they do help you keep track.
where you and Stever are the weakest, it seems to me, is that you don’t understand the insurance value of social security. you really can’t replace that with means tested welfare without introducing all kinds of inefficiencies and human unhappiness. but i agree with you in general that keeping track of the money is mostly missing the point. the money takes care of itself. but it’s still easier for us humans if we count it. or count what we value in units of it. some of what we value. we are damn fools if we forget about the parts that can’t be measured in money.
Jack
in any case Cantab has won. He has dragged the conversation down to his level.
Has anyone taken a look at the following OMB projections?
Projected Social Security Payroll Taxes vs. Social Security Outlays, 2010-2019
Comparing May 2009 to August 2009 OMB Federal Budget update projections
Social Security Payroll Taxes minus Social Security Outlays
(In billions of dollars)
2010 683 696 -13……..661 702 -41
2011 700 703 -03……..683 711 -28
2012 717 710 +07…….697 716 -19
2013 738 725 +13…….715 729 -14
2014 751 746 +06…….737 748 -11
2015 760 768 -08……..754 768 -14
2016 777 793 -16……..775 790 -15
2017 784 818 -36……..785 815 -30
2018 793 845 -52……..797 841 -44
2019 803 872 -69……..805 868 -63
Total Social Security Payroll Taxes minus Social Security Outlays, 2010-2019:
As of May 2009: -$171 billion
As of Aug 2009: -$279 billion
Sources:
May 2009 Updated Summary Table, Federal Budget, Fiscal Year 2010
Page 13
Table S–6. Proposed Budget by Category Adjusted for Inflation and Population Growth
(In billions of dollars, based on 2010 prices and population)
http://www.whitehouse.gov/omb/budget/fy2010/assets/summary.pdf
August 2009 Updated Summary Table, Federal Budget, Fiscal Year 2010
Page 35
Table S–6. Proposed Budget by Category Adjusted for Inflation and Population Growth
Mid-Session Review
http://www.whitehouse.gov/omb/assets/fy2010_msr/10msr.pdf
.
Okay let’s say I am secretary of Treasury and I borrow $100 from the Managing Trustee of Social Security at 5%. at the end of the year I owe $105 and pay $100 bucks from General Fund revenues or by borrowing it fom the public. Bit since the Managing Trustee doesn’t need the $5 extra bucks he agrees to accept a Special Treasury bond signed by the Secretary of Treasury. Because after all the Trustee knows that the Secretary has the credit to borrow that money in the future or take it from taxes it doesn’t have to be extracted out of the current economy in the form of borrowing or taxes. Sure that $5 is a current debt but it doesn’t crowd out current borrowing or current taxes, for the purposes of those guys marketing Treasuries to the current market it is phantom borrowing and only effecting bond sales in a very indirect way that makes it not borrowing at all.
Min
the national debt may never be paid back. but if you have a savings bond and you want to cash it in, you expect to be paid. Social Security has 2.5 Trillion in savings bonds.
CoRev you are wrong.
Public Debt at $12.4 trillion = Debt Held by the Public at $7.8 plus Intragovernmental Holdings at $4.6 trillion.
Google Treasury Department Debt to the Penny and check out the headings. To my knowledge the Treasury does not have a formal category called National Debt.
movie guy
help me out. it’s hard to read the numbers in that format. what is your point? (summarize the numbers).
Coberly,
What does your claim to be an expert on social security mean? For me the bar would be crossed if someone were an academician with a paper trail of writing in major journals; or it could be someone with a 30 year career in a high level position at the social security administration. These are the type of people that would be recognized as experts and perhaps be asked to give expert testimony to congress.
As I see it as an individual you’ve done some personal research on social security but that does not make you an expert on the topic. Therefore, when you write a column you ought to quote expert opinion or at least discuss how your analysis fits in with what others are saying; say what you agree on and what you don’t agree on.
I heard this on NPR:
http://www.npr.org/templates/story/story.php?storyId=122466410
And then you and Bruce come along and downplay the seriousness of the funding issues.
Bruce – “Sure that $5 is a current debt but it doesn’t crowd out current borrowing or current taxes, for the purposes of those guys marketing Treasuries to the current market it is phantom borrowing and only effecting bond sales in a very indirect way that makes it not borrowing at all.”
Doesn’t your thinking overlook the Federal Debt ceiling? Are you saying that the Federal Government doesn’t count the interest payment obligations on intergovernmental debt? There is no question that the original intergovernmental debt counts against the debt ceiling or total borrowing authority.
I believe that the interest payment obligations count against the Federal Debt ceiling as well, and therefore do impact current borrowing limits by the Congress and, hence, the Treasury.
CoRev whether the redemption of Special Treasuries comes in the form of selling regular Treasuries or simply coming from revenues derived from higher marginal rates is immaterial. In any event the rates earned on Special Treasuries is set by those sold into the Public market. Your formulation only works if interest rates on bonds are dropping, otherwise you are redeeming Special Treasuries locked into lower rates with new Treasuries at higher rates. This isn’t a one way street.
coberly,
In one way you are correct, but on the whole once he was allowed to commandeer the thread it became necessary, for me at least, to make an effort to draw Dan’s attention to the need to discard/block/prohibit the source of the trouble. I maintain that is cantab. Yes, cantab probably loves seeing his name repeated and being able to direct the conversation through his dishonest ravings. The other approach would have been to simply disregard his rants entirely. To have ignored his comments. That wasn’t done because some still feel the need to “correct” his inaccuracies. That is useless because his comments aren’t inaccurate they are intentional distortions and lies. The site administrator is the only one with the ability to resolve the problem in the most effective and efficient manner. I hope that that occurs.
maybe from the point of view of the Treasuy or the Bond Market… I would’t know. But it seems to me that when you go to pay off the debt, you have to pay the interest, including the interest on the interest. And that’s real money. The miracle of compound interest is what Moynihan called it.
i don’t understant your point of view. i guess you don’t understand mine: if you borrow a hundred bucks and instead of paying it back plus interest ($5) at the end of the year, you are borrowing another five dollars. this would be easier to see if the guy you borrowed it from insisted upon being paid that day, and you had to go out and borrow it from someone else: you’d have to borrow a hundred and five.
Greg,
You need more than having done some personal research on social security to be an expert on the topic. I have a masters degree and not a PhD. Thus I work with methodologies but I don’t invent them; and I know the difference between the two levels.
Cantab said
Social security is welfare and one with a questionable design.
>>You are actually changing the subject because you know you have nothing to say about the question at hand: the depletion or not of the Trust Fund.
Rather than provide benefits based on what people need, benefits are set by how much people were taxed in the past.
>> this is another way of saying they get what they paid for. that is, it’s not welfare.
So if you were poor, did manual labor all your life for a low wage, social security is less of of a help to you in old age then its is to a corporate fat cat clipping coupons from his trust fund; and who could use his social security check to light his cigars with.
>>no, if you were poor you get Social Security when you need it. you get all of your money back adjusted for inflation plus the growth in the economy plus an insurance benefit based on how badly you did. that benefit comes out of the benefits of the rich guy. but the rich guy has been getting back at least as much as he paid in adjusted for inflation plus about 2% real interest. the poor guy gets about 10% real interest based on his contribution.
Social security jumps through some hoops to make it look like its a real savings plan.
>>what is that supposed to mean. it looks like a savings plan, but you don’t want it to be one so you shut your eyes and say it’s all a trick?
I like the way they send me a letter each year like my bank does showing how much I earned in each year that I worked and then telling me what I would get in benefits — that is until they decide to change the law. I’m glad my mutual fund company can’t do that.
>>well, the only peple who want to change the law are the people who provided you with your talking points.
besides, your mutual fund can and does do that.
Coberly,
The projected Social Security outlays (costs) are exceeding Social Security tax receipts in every year according to OMB based on the August update. Hence, the negative running total of $279 billion for the ten year period. I don’t expect that taxes on SS receipts will offset the total negative position for some of the years concerned. Besides, I believe that some of the Social Security receipts head off in other directions, supporting some Medical program cost obligations.
Looks bad to me.
Maybe this will help:
Social Security Payroll Taxes minus Social Security Outlays
(In billions of dollars)
2010: 661-702 = -41
2011: 683-711 = -28
2012: 697-716 = -19
2013: 715-729 = -14
2014: 737-748 = -11
2015: 754-768 = -14
2016: 775-790 = -15
2017: 785-815 = -30
2018: 797-841 = -44
2019: 805-868 = -63
2010-2019 Total: -$279 billion
Jack once again the siteowner is on top of this. The decision to let Cantab post was made deliberately after consultation with front page posters. Which was nice of Dan but not strictly necessary. Rather than ask that a commenter be banned in a comment thread I would suggest a private e-mail to Dan/Rdan which Dan will or will not share with Front Pagers.
Not that it matters but in our last Bear discussion I suggested letting Cantab stay, not that I would shed a tear if he was sent away.
O R
2008 658 612
2009 655 675
2010 683 696
2011 718 722
2012 757 750
2013 803 791
2014 843 839
2015 879 892
2016 926 948
2017 963 1,009
2018 1,005 1,073
2019 1,049 1,141
2010- 2014 3,805 3,799
O R
2008 658 612
2009 655 675
2010 683 696
2011 718 722
2012 757 750
2013 803 791
2014 843 839
2015 879 892
2016 926 948
2017 963 1,009
2018 1,005 1,073
2019 1,049 1,141
2010- 2014 3,805 3,799
O R
2008 658 612
2009 655 675
2010 683 696
2011 718 722
2012 757 750
2013 803 791
2014 843 839
2015 879 892
2016 926 948
2017 963 1,009
2018 1,005 1,073
2019 1,049 1,141
2010- 2014 3,805 3,799
Cantab and your credentials are what? Your PhD came from where? You dare ask us for validation when you got nothing?
One. Coberly and I have been quite clear in using official numbers from SSA and CBO. Two we have submitted our numbers to a bunch of people who do have PhDs, some of whom you would recognize and others not, but not one of which has challenged our arithmetic. (Though a couple of very big names have accused us of knowing nothing about accounting as it relates to public borrowing one being a guy that has held top level positions at SSA and CBO for your 30 years but still accepts our numbers.)
Dale and I solely on the basis of our AB work were invited into a high level policy group. The group doesn’t always agree with our specific tactics or language, but they don’t dismiss us as clowns. On the other band all we know about you for certain is that your expertise is recognized by bartenders in Cantabrigia, i.e. Harvard Yard and Greater Cambridge.
But you are a sock puppet with your hand shoved up your own ass. Dale and I answer to you on credentialling how?
Movie Guy:
Maybe I am missing it as this is from Table S3
Jack I can supply Cantab’s name at which point you can establish his credentials. But really it is up to him to establish his own bona fides, something he has refused to do in favor of his own game of King of the Mountain.
Right now he is a screen name with no authority beyond the power of his argument. Meaning that implied importance is bullshit. Who cares? Let him post his own CV.
Cantab
you need to be careful of men calling themselves experts, or media telling you their sources are non partisan experts. i suspect you have never had the experience of realizing you knew more than the guy with the expert stamp on his forehead. a lot of people have not had that experience. but even Paul Harvey had enough sense to make fun of “government experts.” Bruce and I came along and downplayed the seriousness of the issue because we each, in our very different ways, did the research and thinking that showed the experts were lying.
as a sad corollary to this, i have observed over the past ten years that even the honest experts don’t agree with each other. most of them have got off on the wrong foot by a catastrophic misframing of the problem.if you have nothing to go on but the size of a man’s credentials you set yourself up to be his fool. i wish it wasn’t that way.
Cantab
sadly, so do I. but be of good cheer. many of the ph.d.’s don’t.
jack
i agree with you. still a little leery about refusing to talk to someone. maybe if we could just say, “bedtime, now, Cantie dear. the grownups want to talk.”
but i’m still being unkind. and that bothers me.
thanks. i’ll have to try to figure out Run below. but it looks to me like a 5% or so shortfall per year, which is manageable. and the ten year total is about one tenth the size of the current Trust Fund, and does not appear to count the interest earned by that trust fund.
this is still just the trust fund doing what it was designed to do: bridging hard times.
Think of Cantab as a straight man and it all becomes easier.
PRS, Brooks, anon/anonymous/FA (formerly Anonymous), gulp Aaron/Noraa/a dozen plus other screen names were frustratingly disruptive over the last few years but ultimately served as pinatas or maybe the other end of a Socratic dialogue. THat Cantab has presented himself for a new beat down is not in the end unproductive in relation to our end audience.
You are making the same mistake as Krasting. There are four inputs to Ss Revenue and three outputs for Cost, your numbers seem to exclude three of the former and none of the latter and so mean nothing at all. Can you add in and break out tax on benefits, interest and TF balance on the one side and admin and Railroad Retirement Exchange on the other or show that “outlays” doesn’t include either and maybe we can talk.
And I don’t care what you ‘expect’ or ‘believe’ give me a number and a source.
MG if you check the numbers projection of tax on benefits in the 2009 Report started at $24 billion a year and ramped up from there. Meaning your assertion that tax on benefits over ten years would not add up to $279 billion is based on nothing at all. Try reading the tables after linking to them.
run75441,
I used the correct table in my opinion. If you want to gauge the shortfall using the S-3 table, go ahead. You end up with a larger hole, to the tune of an additional -$63 billion over the -$279 billion from Table S-6. Here are the results:
Social Security Payroll Taxes minus Social Security Outlays
(In billions of dollars)
As of August 25, 2009
2010 661-702 = -41
2011 699-729 = -30
2012 734-755 = -21
2013 775-792 = -17
2014 823-837 = -14
2015 866-886 = -20
2016 919-939 = -20
2017 958-997 = -39
2018 1,003-1,060 = -57
2019 1,045-1,128 = -83
Total -342 billion
August 2009 Updated Summary Table, Federal Budget, Fiscal Year 2010
Page 28
Table S–3. Baseline Projection of Current Policy by Category
Mid-Session Review
http://www.whitehouse.gov/omb/assets/fy2010_msr/10msr.pdf
.
Bruce,
I am not making the same mistakes that Bruce Krasting made. I read his post and the comments. I am not attempting to make his points.
My focus is on projected inbound cash revenue. I elected to cite Federal Budget information.
I was noting the projected loss in Social Security payroll taxes as compared to the projected overall Social Security outlays. I don’t consider the various downward adjustments to Social Security tax receipts during the past year or so to be a minor problem. And, yes, I understand that Social Security payroll taxes do not constitute all source income for the SSA programs.
I looked for a summary roll up of taxes on benefits at the SSA and didn’t find that information. If you have it, you’re welcome to put it up. The RR retirement inbound funding is projected to be relatively flat but it is a line item in the Federal Budget. If there are many other cash revenue sources, I am unaware of them.
I do not consider the interest obligation as inbound cash revenue, as it must be funded at the expense of other Federal Budget elements or must be achieved through deficit spending…in the end. Granted, the obligation must be legally satisfied before all discretionary spending is obligated, but it’s still not available from a net inbound cash source to the Federal Budget.
I do not believe that the taxes on benefits will cover the gap for every year. What I stated was this: “I don’t expect that taxes on SS receipts will offset the total negative position for some of the years concerned. Besides, I believe that some of the Social Security receipts head off in other directions, supporting some Medical program cost obligations.” I find it hard to believe that tax on benefits will reach $52 billion in 2018 or $63 billion in 2019.
If any Social Security income is not inbound cash, I have no interest in it for purposes of my comment posts on this matter. The standard arguments over the SSA trust funds fail to address the inbound cash issue that I have elected to raise. I am attempting to view the projection program costs as may Members of Congress. Cash is king.
Bruce – “Meaning your assertion that tax on benefits over ten years would not add up to $279 billion is based on nothing at all.”
That is not what I stated. I said, “I don’t expect that taxes on SS receipts will offset the total negative position for some of the years concerned.”
If you have a projected roll up for the projected taxes on benefits, kindly provide it or the link. I didn’t find a projected roll up.
The analysis of SS is pretty simple. You are making up purely ideological/political roadblocks that avoid discussion of the real issues. Talk about methodologies is synonymous with ideologies
SS CANNOT go bankrupt.
There is no NEED to “back” it with bonds.
Privatization is a stupid idea from an economic perspective (only ideologically driven)
All the arguments are ideological and political…….NOT economic. If people would learn the operational realities of our financial system and stop using old rules which were generated when we were on a gold standard……………… we could actually start addressing our economic issues.
Sure. No drive by coberly.
Bruce,
If you wanted to improve this site you would bounce Jack for a week. Right now the left leaning posters are like bad children you see the train that act unrestrained making too much noise and in general ruin the comity of everyone elses commute; while the adults just stand there and do nothing. Jack flew off the handle after I said I had some experience in a certain area and jack asked that I be thrown off the side for this. His behavior is way over the line.
So there it is, a one week suspension of jack and the children will realize they are bound by limits on their behavior and will most likely behave better in the future.
Thanks Bruce. I had assumed that alll three of those options were dead due to the fact that they don’t seem to work if equity markets stayed unhealthy even to the degree experienced in 1965-1980 and the likelihood that by the time legislation was framed, the CBO and the media would be shredding them. I expected Bush to come up with a plausible looking variant tailored to look feasible but still able to somehow divert employee retirement savings into the equity markets. I’m pretty sure that he never did so. I was watching pretty carefully for such a plan and never saw it.
Cantab
most of the time i just feel sorry for you. i am happy enough to use you as a straw man, but it’s always a trap. the conversation degenerates and i end up losing my temper. if you are Brooks…i thought i could tell the difference… you need to get a life. even if you are not Brooks you need to get a life. you are using us as a kind of client directed therapy. and client directed never works (as opposed to client centered, which does). moreover you invite amateur diagnosis such as : you are the child of a father who was “intelligent” in some ways, but the only attention he ever paid to you was to call you stupid. so now you seek out intelligent people and annoy them until they call you stupid. there is evidence for punishment-seeking behavior in the operant literature, but any good neurotic is always hoping that “this time” daddy will say, “you’re not as stupid as i thought.”
well, stupid isn’t all that bad. you’d be surprised how many of us have had to learn to live with our own relative stupidity. you can too. and be happy. you may need help. this is not the place to get it.
Coberly,
You’re another person that I think needs to be bounced for a week. I think this because you’re too aggressive in your responses and you lose your temper too often. Losing one’s temper for you is a self-indulgence that you engage in too frequently because for far there has been no consequence for you doing so. Thus, to bounce you for a week you would suffer the consequences and this would probably lead to an improvement in your behavior (i.e. less losing of temper and overly aggressive writing).
So you and jack were the two that I had in mind.
But MG, wasn’t the short fall as you are describing it an expected phenomenon? And isn’t the Trust Fund the mechanism put into place twenty-five years ago in order to compensate for those shortages? And by the time the TF runs out of cash (or special Treasuries) won’t all of us so-called boomers be dead and buried so that the worker to retiree ratio will be more balanced?
It doesn’t look like a financial crisis, at least not for the Social Security system. Maybe those special Treasuries willl need to be redeemed by taxing the people in the one percent club who have been benefiting from the transfer of funds for the past ten or more years. They’re the ones who have been eating the cake, and our cake it is that they’ve been eating. Keep your a cool head. Vote Jacobin’s United. We need a third party at the cutting edge of policy.
But MG, wasn’t the short fall as you are describing it an expected phenomenon? And isn’t the Trust Fund the mechanism put into place twenty-five years ago in order to compensate for those shortages? And by the time the TF runs out of cash (or special Treasuries) won’t all of us so-called boomers be dead and buried so that the worker to retiree ratio will be more balanced?
It doesn’t look like a financial crisis, at least not for the Social Security system. Maybe those special Treasuries willl need to be redeemed by taxing the people in the one percent club who have been benefiting from the transfer of funds for the past ten or more years. They’re the ones who have been eating the cake, and our cake it is that they’ve been eating. Keep a cool head. Vote Jacobin’s United. We need a third party at the cutting edge of policy.
Movie Guy’s data is interesting in what it shows about how accurately the analysts are able to model things. It does show that costs exceed tax income in 2010. Last year’s Trustee’s Report gave that event a 10 percent chance. My takeaway is that the economy is simply much more volatile than analysts are willing to admit.
Because of this systematic bias, predictions in a bubble (1999 or 2007) are too high and predictions in a recession (1992, 2001, today) are too low.
In the long term, our “reformers” need to understand that a trust fund consistantly above 100 percent is an aberation. Once the demographic bulge has passed, the changes in Social Security funding will be driven by primarily the fact that people will keep living longer. Future trustees are going to have a more difficult job in not over-reacting to economic conditions, but living longer means the trend will be increasing premiums to match increasing benefits.
Jack,
I believe Cantab was referring to his experience in statistical studies of clinical trials.
FWIW, I like Cantab. Goethe famously has Faust refer to the Mephisto character as a “pike in a carp pond.” The reference means that carp (considered a delicacy in old Europe) had to be kept active to be tasty. The pike kept the carp active.
There was this guy who believed very much in true love and decided to take his time to wait for his right girl to appear.
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You may painfully regret, only to realise that it is too late.
Bruce,
I don’t want the same things that you do from the political process. Do you find this so hard to understand? You guys on the hard left have made fools of yourself though the unwarrented intensity of your animosity. It’s not me, it’s you.
Bruce,
I don’t want the same things that you do from the political process. Do you find this so hard to understand? You guys on the hard left have made fools of yourself though the unwarrented intensity of your animosity. It’s not me, it’s you and its always been this way.
Thanks for coming by Arne. Nicely stated.
hi Dale, I think it is great we are having this debate.
But there is actually an option for balancing the Social Security funding issue that would require forcing nothing on anyone. Presently it is thought that we can do two things, increase taxes or reduce benefits, however, there is a third thing we can do.
You can give people the option to buy out of Social Security. For example, according to projections on Wikipedia and the sites they source I, at age 29 will likely lose at least $200,000 and likely $1 million dollars by being involved in social security.
If I were given the option to buy out of social security for say $50,000 I would do it instantly. I would give up all future benefits, and pay a fee of $50,000 to be out of the system. If 10 million people this that would be $500 billion dollars that the fund would have available to spend on existing constituents. In fact the dynamics are such that with each additional person buying out of social security the fund becomes more solvent and people have less of an incentive to buy out. The more insolvent the fund gets the more incentive people have to buy out so more people but out thereby making it more solvent. It is a self resolving and self balancing situation.
And for those people who think the fund is solvent this is great because they get $50,000 bucks from all those crazies that think the fund is insolvent. 🙂
Furthermore, no one is forced to do anything. No one is forced to pay additional taxes. No one is forced to forego benefits. No one is forced to buy out. People within the system get more benefits. People who bought out are ecstatic they are now out of the abominable social security system. It is a win-win-win-win-win-win.
PLEASE, I PRAY TO GOD THAT THEY DO THIS! I WANT OUT OF SOCIAL SECURITY! I WANT FREEDOM!!!!!!!!!!