Social Security Update: 3 Items of Note (plus a maybe)
by Bruce Webb
First and foremost the long-awaited Social Security Annual Report will be released at noon Eastern on Thursday Aug. 5th. If the release holds true to form it will also go live to the web at that same time. I will have a breakout of the Report at my blog 2010 Social Security Report or you can get your own copy of the Summary (typically 15 pages) or the Full Report (250 pages) at the SSA Trustees Report page: http://www.ssa.gov/OACT/TR/index.html I will be posting extracted Figures and Tables here at Angry Bear over the next couple of days.
Second a Social Security news site was brought to my attention by its siteowner. It is devoted to the nuts and bolts of Social Security administration with a focus on Disability. Nancy Ortiz, frequent commenter and Social Security veteran tells me she checks it daily. Social Security News
Third Aug 14th marks the 75th anniversary of Social Security and is celebrated in the new release of the Social Security Bulletin: 75th Anniversary Edition. Of particular note is an article by the Social Security Chief Actuary Stephen Goss The Future Financial Status of the Social Security Program whose abstract is as follows:
This article describes four concepts—solvency, sustainability, shortfalls, and solutions—as they apply to the financial status of the Social Security program as well as how Social Security financing fits in the general federal budget. The little-understood basis for future projected shortfalls is explained and detailed in relation to the possible solutions.
A very valuable resource.
Fourth. August is also the normal publication month for CBO’s Long Term Projection for Social Security. If it is released on schedule it will go head to head with the SSA Annual Report which for the first time allows us a real apples to apples comparison of the respective projections and methodologies without the normal April to August time lag. If so it should be good fun.
Bruce–Thanks for the heads up. Nancy O.
I second Nancy’s motion.
I will be looking forward to the CBO report also.
And, thanks for making us aware of Social Security News.
Here is an excerpt from the report:
“Moreover, it is reasonable to assume that the financial markets understand that securities held by the trust fund may be redeemed in the future, requiring the Treasury to collect additional taxes, lower other federal spending, or borrow additionally from the public.”
Now, while this is considered an asset in trust fund terminology, you can see how this is a liability in budget terminology.
An asset is simply liquidated for cash. Here, we have a trust fund “asset” that cannot be liquidated for cash.
And, all along, this asset has helped lower the budget deficit, while increasing total debt.
To me, that makes no sense.
What do you think?
I think that as usual you make no sense.
The Trust Fund “asset” can be liquidated for cash and is in fact being liquidated for cash as we speak. The current cash shortfall in Social Security financing is being met by redeeming the bonds in the Trust Fund, exactly as planned, the reason the Trust Fund was created.
The Social Security Trust Fund only “helped lower the budget deficit” in the sense that “unified budget” accounting allowed the Congress to report a lower deficit by ignoring the money owed to the Trust Fund. That was Enron accounting. But it didn’t fool anyone except those who wanted to be fooled. And those who like to be fooled.
Have you come to grips yet with how this “ponzi scheme” has lasted for 75 years always paying each “investor” more than he paid in? or the fact that it can go on doing so forever… as demonstrated by the Trustees Reports, when one reads the numbers and not the somewhat misleading narrative?
Or why the congress and Roosevelt, went to all this trouble to create a Social Security system off budget, if the money was “really” just another part of the general budget?
Try, try, try to understand that it IS “reasonable to assume…the trust fund may be REDEEMED in the future, requiring the Treasury to collect additional taxes…” How the hell else do you pay back money you have borrowed?
The “only” difference between Social Security and a hundred million people buying Savings Bonds as individuals, is that the government collapses all those separate purchaces into a single fund for the purpose of providing insurance, and, yes, making the “buying” of those “bonds” mandatory, because no government is smart enough to “explain” the need for people to contribute “their own” money to “the general welfare”… including the people themselves. So it resorts to the “power to tax.”
And yes, this means the Congress can change the law. We are here trying to persuade you to keep Congress from changing the law. It’s called democracy.
Don–Government programs and processes (like tax collection via the IRS) have costs but do not create assets and liabilities per se in the ordinary accounting sense. You have to remember the Treasury’s power to create money. The money the Treasury creates to pay for govt. operations gets accounted for in different ways. But, no budget is carried on the books for more than one year. The reason is that Congress can change the law.
If SS actually was an insurance corporation, then you could talk about “unfunded liabilities.” But, because governments don’t operate like businesses at all, that concept just doesn’t belong in the discussion. When you refer to SS’s unfunded liabilities, you buy the Peterson “SS is Broke” notion as real, when it’s merely rhetoric. SS ain’t broke. Governments don’t go broke as long as they can print money. Yes, they can cease to exist but the US government isn’t going broke. Not even close. So, it would be wise for you to examine the language people use in the deficit debate. It’s intended to deceive you. And, you should be aware of that as the discussion proceeds. Nancy O.
The trust fund asset was liquidated for cash by issuing Treasury securities – additional debt.
It wasn’t liquidated for cash without issuing the debt.
That is why the trust assets do not help pay future costs.
They are merely a bookkeeping device to indicate how much it may need to borrow in the future, once outgo exceeds income.
For the government to consider itself so different from a business that it can continue to turn intragovernmental debt into public debt, and to continue issuing more public debt, ad infinitum, is dangerous.
At least, it is dangerous according to the Treasury and CBO, of which i have in black and white.
It is an unsustainable course, expressed many times.
Are you saying this is merely a scare tactic, we need not be concerned about?
coberly & Don,
You guys, once again, are talking across each other and are both correct.
Your both right, to pay back those treasuries we will “require (ing) the Treasury to collect additional taxes, lower other federal spending, or borrow additionally from the public.”
100% true and that’s how you pay back the funds spent by the general fund over the years of surplus and owed to the SS recipiants.
I’m not sure what you two are argueing about anymore.
Islam will change
Thanks for entering the discussion.
Intragovernmental debt is a subtle, sneaky kind of debt.
It doesn’t invlove the citizens; it is merely an internal transaction between 2 agencies, the Social Security trust fund and the Treasury.
These transactions have been occurring for years, without the public’s interest being considered.
Now that intragovernmental debt is turning into public debt, the situation, in my opinion, grows more serious.
The idea that the federal government is relatively immune to debt concerns, for it can merely print more money is not only arrogant, but an inaccurate assessment of risk, and an avoidance of acknowledging history.
In addition, it sets a horrible standard for our citizens, who have seemed to emulate the government in racking up our own debts.
Don first of all you cherry picked Goss, the whole piece had the opposite thrust of what you suggest.
Two you apparently have no real concept the the relation between Public Debt, Imtragoveernmental Holdings and Debt Held by the Public. Your statement that Intergovernmental Holdings are being converted to Public Debt ignores the fact that Social Security is foe Debt calculation purposes adding $138 billion to Intragovernmental Holdings. You don’t even grasp the basics.
For others. Intragovernmental Holdings score as a component of Public Debt. Redeeming them REDUCES Public Debt. Now it might be that funding that redemption has to come by borrowing, thus increases Debt Held by Public, but then the net effect on total Public Debt is neutral. On the other hand if that redemption is financed by say devoting a renewed Estate Tax to that redemption, then Debt Held by the Public is held harmless while total Public Debt goes down. But a decrease in Intragovernmental Holdings can NEVER add to Public Debt as that term is defined by Treasury. Don is not alone in this mistake, many people on both sides are confused by the terminology. Still he is mistaken, be is working from some false implicit claims of authority when instead he is just passing on years stale talking points.
When yiu wrote that Social Security addds $138 billion to Intragovernmental Holdings, you mean that was the surplus that year for Social Security?
In regards to intragovernmental debt turning into public debt, that’s exactly what happens.
Assuming the government is running a deficit, and it must redeem the Trust fund Treasury securities with Debt held by the Public Treasury securities.
So, intragovernmental debt goes down, public debt goes up by the same amount.
While the total debt is the same, a higher perecentage of the total debt now belongs to debt held by the public.
The difference is twofold: debt held by the public incurs a current budgetary interest expense; intragovernmental debt interest does not incur a present budgetart expense; its interest is credited with additional Treasury securities.
The second duifference is that now there is less trust fund surplus to make the unified deficit lower. In fact, it is higher by double, for you lose the trust fund surplus and you gained the same amount in public debt.
“How the hell else do you pay back money you have borrowed?”
And probably for the Thousandth time, what gets cut to prevent a tax increase being sold as “a double taxation to keep Social Security solvent?”
My understadning is, and maybe Bruce can piece the numbers together, but you can’t just start cutting something out of the budget, to match the coming storm, you’d have to cut too much. We’ll have to cut general fund spending, increase the tax, and cut the benefit, that is going to be a tough sell to an American public that is quite fed up.
If the economy could produce some major growth in the next few years that would have defintely put us back the type of idea you and Bruce have of a small tax increase. problem is things changed, and the exact opposite is the near future reality.
Don you are wrong because you are unclear on both the terminology and the interaction between the three categories of Debt.
More to come.
‘Public Debt’ is not the same as ‘Debt Held by the Public’. Not as defined by OMB and CBO. You keep skipping back and forth equating them, which leads any reader into total conceptual confusion.
Stop, listen and learn.
I think in this you are simply wrong Don.
SSA scores ‘surplus’ as equivalent to ‘increase in assets’ of the Trust Funds. And for calculating the top line ‘budget/’surplus’ number normally reported in the MSM (the so-called ‘Unified Budget’ surplus which legally doesn’t exist anymore). On the other hand CBO distinguishes between ‘surplus’ which mirrors SSA/’Unified Budget’ numbers and ‘primary surplus’ which is a measure of actual cash flow. In 2009 Social Security was in ‘surplus’ by something close to $138 billion even as it was in ‘primary deficit’ by some $20-40 billion. Oddly enough that $138 bn ‘surplus’ adds to ‘Public Debt’ even as the $20-40 billion ‘deficit” serves to reduce it.
Yes it is hard.
Bruce and Rdan:
Why don’t you fill me in?
What is the difference?
Please cite a reputrable government source.
How about this one?
From a paper entitled “Federal Debt: Market Structure and Economic Uses for U.S. Treasury Debt Securities,” issued by the Joint Committee of the U.S. Congress:
“As of March 31, 2001 the U.S. Government had a gross debt of $5.8 trillion, of which $3.4 trillion was net debt held by the public and $2.3.trillion was held in intragovernmental accounts. Ecoinomists consider net debtas the proper measure of federal debt. In contrast, the U.S. Govewrnment is both the creditoir and debtor for Treasuries held in intragovernmental accounts . President Bill Clinton explained this point in his Fiscal Year 2008 budget: ‘These balances in intragovernmental accounts are available… but only in a bookkeeping sense.’
Thus, an increase (or a decrease) in Treasuries in these accounts is merely a bookkeeping entry that does not affect financial markets or the broader economy. Placing Treasuries in an intragovernmental accoint is similar to lending money to yourself. You may increase your loan balance infinitely, or pay it off entirely, but neither action can change the amount of money in your pocket.”
This is on pages 2 and 12.
Go to: http://www.house.gov/jec/fiscal/debt.pdf.
Which makes your last sentence wrong, there is no such doubling effect. You are equating budgetary deficit with debt. They don’t track. In 2000 both Social Security and the General Fund were not only in surplus bit primary surplus, cash flow was positive, yet Public Debt increased. Not by much but there it is.
even without a pickup in the economy a quarter of a tenth of a percent increase in the payroll tax will not be felt.
but that is paying for Social Security’s projected actuarial deficit. Actually paying back the money Congress already borrowed FROM Social Security looks to me like it would take about a 1% increase in the income tax… best applied to incomes over 100k. that would be felt, but that’s what happens when you borrow money. you have to pay it back even if it hurts.
my earnest belief is that tax cuts have hurt the economy, and a modest return to fiscal honesty would likely help it. it’s funny as hell to listen to all you people hate Keynes and then turn around and demand a kind of “perpetual Keynesian deficit”… though Keynes himself did not argure for a perpetual deficit.
i hate to disagree with you. I really hate to. And I think you might be right in a sense about government printing money etc. But Social Security can be paid for, including operating expenses, by ordinary business accounted-for transactions, without printing money.
no. you are wrong. The Trust Fund is currently being paid back real cash money from the Treasury. this is the treasury honoring those “worthless iou’s” known to the world as United States Government Bonds.
The trust assets do help pay future costs. The government gets the money from the people by taxing them. This is how governments work. It is fair because people get value for their taxes. At a time not so long ago, instead of taxing the people for current needs, the government borrowed the money from Social Security. Now it is time to tax the people to repay Social Security.
This is no more “merely a bookkeeping device” than any other business record of its assets and liabilities.
I don’t know what CBO and Treasury you are reading. I suspect you have misunderstood it. Even the Trustees, who seem to want to scare you, are pretty careful about sticking to the truth.
Your problem is you read all this through the Peterson lens, and you simply aren’t capable of setting aside the Peterson view long enough to understand the reality.
maybe this will help: the Treasury can borrow money from the public to repay its debt to Social Security. That seems to be problematic in times of deficit hysteria. The alternative is simply to raise taxes or to reduce other spending. There is no mystery here. No fraud. No sleight of hand.
Of course with a Congress that can’t bring itself to raise taxes or cut spending, you have a problem, but the problem is not in Social Security. SS is just your granny’s purse, and the Congress has it’s eye on it.
hang in there Buff, Don is about to tell you. he thinks paying back the money is “dangerous” and “not necessary” because there is no law that forces congress to pay back the money. that is not true. but it is true that congress could change the law.
that is what i am trying to stop. i don’t know what Don is trying to do.
Also, the Treasury hasn’t created money in quite some time. I dimly recall seeing U.S. Notes in circulation occasionally in the 1970s, but I was a youngster then and did not understand the significance of the red seals on the money.
I agree with Coberly that the better analysis is that there is plenty of wealth in our economy, the problem is that the rich have an ever-increasing fast grip on it.
SS is $1.5T of overtaxation of the middle-class + $1T of accrued-interest, 1983-now.
Curiously, there is at least a $2.5T undertaxation of the upper class embedded in the US National debt.
How will we ever solve this problem ? ? ? What infernal financial device can pay this off ? ? ?
It is difficult for me to know what the words you quote mean, or what “economists” mean, or what Bill Clinton meant. It strikes me that it doesn’t even occur to you that what any or all of them mean might not be what you think it means.
The one thing it does not mean is that borrowing from Social Security is “like borrowing from yourself.”
And “merely bookkeeping entries” can get you in a lot of trouble if you think of them as “merely.” You should begin by asking yourself why anyone would bother with “merely.”
If paying it off entirely cannot change the amount of money in their pocket, you have to wonder what all the fuss is about.
Don, I asked once before, “what is your point.” I think you ignored me, but just possibly you think you answered me and I didn’t recognize it. So, let me ask again, “what is your point?” What is it you want us to do with the information you are giving us?
And don’t feel too bad. I got into a stupid argument with a genuine policy expert on a very similar question He said he “couldn’t explain it to a layman.” I think he couldn’t explain it because all he had was a pattern of words he had grown used to. He had no idea what the words “mean.” If you want to believe all that nonsense about “lending yourself money”, feel free. But, again, what in the hell does it mean to any of the rest of us?
I think it would help if you drew yourself a picture, a diagram. Draw little boxes for where the money comes from, and where it goes, and why, and what legal structures determine the “ownership.” It might get a little complicated for you, but with any luck you’ll come away understanding it a little better.
The Empire needs to be cut.
The scam ends, it is not national security it is empire.
And there is the 40% of USG outlays paying the rich competeing with 60% of USG outlays aiding the many. Empire security, half the wporlds war spending, is 20% of USG spending.
End the war machine and pay for commercial services with user fees.
Plenty of wealth, as long as the federal spending going to the rich is on the table
Yes its hard. And yes I think Don gets lossed once you get to deep. But his big picture is still correct.
To pay back what we borrowed from SS, using T-bills etc as the accounting means to do so, we will have to send funds from the general fund to SS. To generate those funds the general fund will have to increase debt, raise taxes, or cut something else and use the ‘something elses’ money. The alternative, which we all agree is the wrong answer, is to adjust SS (in a variety of possible ways) to avoid cashing in those T-bills and forcing the general fund to find the cash.
At the top level its really that simple. And congress and Obama, from every indication, do not want to send money from the general fund to SS to pay back what was borrowed. As coberly has pointed out that is stealing. yep and I cynically add, “what else is new in Congress?”
You and coberly are trying to get Congress to either step up to the plate and find the money, or in the worst case make small adjustments in SS that avoids SS benefit cuts.
And I applaud you that you have the perseverence and fortitude to wade into the accounting details. I have enough of this byzantine stuff at work (and what’s scary I’m starting to understand it….sanity is leaving….).
BUt you should be able to win th eargument at the macro level. People dragging you into the dirt are trying to hide the issues in the noise.
Just to help clarify the point. Directly from the SSA web site:
“In the 1983 Social Security Amendments a provision was included mandating that Social Security be taken “off-budget” starting in FY 1993. This was a recommendation from the National Commission on Social Security Reform (aka the Greenspan Commission). The Commission’s report argued: “The National Commission believes that changes in the Social Security program should be made only for programmatic reasons, and not for purposes of balancing the budget. Those who support the removal of the operations of the trust funds from the budget believe that this policy of making changes only for programmatic reasons would be more likely to be carried out if the Social Security program were not in the unified budget.” (Note that this was a majority recommendation of the Commission, not the unanimous view of all members.) This change was in fact enacted into statute in the Social Security Amendments of 1983, signed into law by President Reagan on April 20, 1983.”
Granted that this issue of inclusion and exclusion of the Trust Fund has been bounced around continuously. The fact remains that the program has a dedicated funding stream which is not in fact a tax, but instead a “contribution” made by workers and their employers for the purpose of an assurance against destitution in retirement or due to impairment. Scum occupy the nooks and crannies of a sewer and continuously look to muck up the works to their own gain and advantage.
You never addressed the alternative means of correcting some of the budget deficiencies. You seem to be a one track kind of guy and you’ve been running this “Social Security Trust Fund” isn’t for real track for a while now. Yes, you admit it’s real, but then you suggest that its content isn’t. I still want to know, why not reduce ouor cost of military adve00nturism? Why not end the Bush tax give away to the wealthy? Why not take back some of that decade’s long give away? Why not stop corporate welfare? Why not ask those with the real assets to bear the burden of protecting their assets? Come on Don. Can you spit and chew gum? Or, do you only know one theme, Steal from the Trust Fund, It isn’t real anyway.
The government considers loans to be of two types.
The first is to an outside entity, like individuals, corporations, countries, etc.
That is considered public debt.
The second type of loan is between 2 governmental agencies, which is considered internal borrowing, or the government borrowing from itself.
It is part of our total debt, typically known as intragovernmental debt or intragovernmental holdings.
For example, when the trust fund lends to the Treasury, we have 2 distinct entities. The Treasury records the loan as a liability. The Social Security trust fund records it as an asset.
Thus, in budget reconciliation, it is a wash – neither an asset nor a liability, from the total government perspective.
Interest paid is not a cash outlay, like on public debt.
Rather, the interest is paid by issuing Treasury securities.
The entries are bookkeeping entries, for the Treasury securities cannot be liquidated for cash.
However, apparentlty the “bookeeping entries” can be loaned to the Treasury.
The quote about it made no difference whether it was paid off or borrowed ad infinitum is a strange quote. I don’t know if it was meant in jest.
It does seem to suggest that he felt the government could simply keep raising the total debt, and not worry about paying it back.
The “full faith and credit” of the U.S. Government seems to be assumed to last forever, a faith we must earn and maintain. rather than a faith that is supported by accounting maneuvers.
It certainly looks that has been the government’s position for a long time.
Thanks for asking me my point, Coberly.
I believe there are a lot of myths about Social Security and Medicare that need to be exposed.
When I was doing my research, I could not believe some of the things I had discovered. It was almost too bad to be true.
This is why I cite good, reputable sources for my comments, for everyone has an agenda. My agenda is a deep, abiding concern for our children and grandchildren.
It is difficult for me to look my kids in the eyes knowing the amount of debt that is simply being passed on, so that we can overconsume and live better lives, materially.
We talk about raising more money by increasing the estate tax, which affects less than 2% of the people.
In effect, we are passing on an estate tax to every American through the debt we are amassing.
All of your suggestions are valid ones.
The tax benefits are skewed toward the wealthy.
Yes, the income tax threshold has been raised, protecting more lower income people from paying income taxes.
And, the earned income tax credit, I think, has been very effective and helpful.
But, when you consider that 10% of the people in our country control 72% of our financial assets, you know that the middle class is shrinking and suffering.
When household median income has shrunk over the last 30 years, while important items like a college education and health care have soared past inflation, you know that we are all in trouble.
Rich or poor, it doesn’t matter that much, for without a vibrant middle class, our boat is sinking.
I can cite sources for my 2 assertions, if anyone would like to see them.
But, it seems to me the people on this blog are very savvy, and already know about those 2 assertions.
“The first is to an outside entity, like individuals, corporations, countries, etc.
That is considered public debt.”
No it isn’t. It is considered and formally called by Treasury “Debt Held by the Public”
What the Treasury calls “Public Debt” means something else entirely. What it means you would know if you had stopped and read when I explained the difference the first time
“Thus, in budget reconciliation, it is a wash – neither an asset nor a liability, from the total government perspective. “
This is wrong too. The government has two measures one for total ‘Public Debt’ and another for annual ‘Surplus/Deficit’. A great many people believe that the former is just the sum of the latter, this is wrong, something you would understand if you tried to understand why in 2000 the overall budget was in Surplus with both components that go into that, the General Fund and Social Security/Intragovernmental Holdings being in surplus and yet total Public Debt went up.
Public Debt and annual Surplus can go in opposite directions, they don’t track in the way your argument seems to assume.
“The entries are bookkeeping entries, for the Treasury securities cannot be liquidated for cash.
However, apparentlty the “bookeeping entries” can be loaned to the Treasury. “
This is wrong too. Real cash is extracted from the economy in the form of FICA payroll tax. Surely you don’t dispute that. Most of that cash is more or less immediately returned to the economy in the form of Social Security benefit checks. If there is an actual CASH SURPLUS, that is real hard dollars, those dollars are borrowed by Treasury. In return the Trust Fund has Special Treasuries deposited into it. The cash is real, the Special Treasuries are real, the accounting is just how they keep track. And those Special Treasuries can in fact be cashed in at par by Social Security by requesting that of Treasury. In fact DI cashed in $16 billion of those Treasuries in 2009 in addition to taking the interest it earned in cash rather than new Special Treasuries.
Look Don your problem is that you are starting from sound bites and trying to impose some rigor on them while not understanding that both your terminology and concepts of what those terms mean don’t match up with the way they are actually deployed by SSA and CBO. As a result you are getting yourself into a muddle here.
“When I was doing my research, I could not believe some of the things I had discovered. It was almost too bad to be true.”
Apparently because there was no ‘almost’ about it. Either your sources were bad or you misunderstood what you were reading.
“In effect, we are passing on an estate tax to every American through the debt we are amassing.”
No we aren’t, not in the way you mean. Opponents of Social Security like to cite “unfunded liability” as if those numbers corresponded to “debt”. They aren’t. Social Security has NO UNFUNDED LIABILITY, under the law it can’t. What it has is a measure between what has been scheduled and what under current projections can be delivered. Whether this gap is backfilled by adjust the schedule to the projection or by taking steps to fund to the schedule is a political decision and not a legal one. None of which by the way has diddly to do with the reality or not of the Trust Fund.
You are drowning in conceptual quicksand.
“that 10% of the people in our country control 72% of our financial assets”
I think that the reality is that the former percentage is too high and the latter too low, so feel free to supply your sources even if you think we know about them.
“When household median income has shrunk over the last 30 years”
As stated this is wrong as well. It might well be true if you amended it to ‘real household median income’. But in these matters precision of language and concept really does matter and you seem to be coming up just short.
I don’t think you are malicious, just coming from an environment where in Steven Colbert’s word people don’t make hard and fast distinctions between ‘true’ and ‘truistic’.
The General Fund in 2000 was in surplus, because the Social Security surplus was larger than the deficit. Thus. public debt went down but total debt (which includes intragovernmental debt)went up by more.
You wrote “most of that cash is returned to the economy in Social Security benefit checks.”
“Taxes are collected as are other internal revenues and are not allocated as was proposed to an Old-Age Fund, but are merged with the General Funds of the Treasury.”
So, the benefits are paid not by the payroll taxes, but from all the taxes collected by the Treasury.
Go to: http://www.ssa.gov/history/reports/ces/cesbookc10.html.
Now, show me a good third party source to refute that, not including your hot air.
You wrote “The cash is real. The special Treasuries are real.”
“If the collection from taxes and other sources exceed the payments to the beneficiaries, the excess revenue is invested in Treasury securities or ‘loaned’ to the Treasury’s general fund. Therefore, the trust fund balances do not represent cash. The Government does not set aside assets to pay future benefits. The cash receipts collected from the public for an earmarked fund are deposited in the Treasury which uses the cash for general government purposes.” Fiscal Year 2008 Financial Report of the U.S. Government
Now, where is your third party source that refutes this?
Or, should we put all our faith and credit in Bruce?
When you refer to the $16 billion that DI cashed in, I assume that was due to disbursements exceeding income.
And, you said the DI fund cashed them in, I assume you mean like I went to my savings account and cashed in (a lesser figure, of course).
Wrong, again, Bruce.
When outgo exceeds income, excluding interest, the deficit is “paid” in the form of Treasury securities, but it is then public debt, just like the government raises other public loans.
Here is a quote which explains my point:
“These interest credits increase trust fund income exactly as much as they increase credits in the Treasury’s general fund. So, from the standpoint of the federal budget as a whole, these interest credits are a wash.”
Of course, in the future, money to honor the interest credited (like the $16 billion in the DI fund) must still be raised through taxes, spending cuts, or borrowing from the public.”
As far as I know, the $16 billion did not come from spending cuts or higher taxes, so that leaves borrowing from the public as option number 1 and only.
From a paper entitled “Social Security and Medicare Trust Funds and the Federal Budget.”
What source, other than your wisdom, do you have to refute this?
And, you say Social Security has no unfunded liability?
Well, what do you call the $16 billion the DI trust find had to borrow from the public?
Social Security is pay-as-you-go for budget purposes.
All the excess interest has been lent and spent.
That’s why when outgo exceeds income for every trust fund, excluding interest, from a budget perspective, either taxes must be raised, spending lowered, or money borrowed from the public.
actually, don levit
is beginning to sound like someone we have seen before.
don, i can’t spend my life trying to educate you. the DI trust fund did not borrow anything from the public. the DI trust fund cashed in some of its bonds from LENDING to the public.
you simply don’t understand what you are talking about.
Oh, Coberly, please educate me.
Why not start with the quotes I referenced for Bruce’s assertions?
Can you provide good third party sources to refute me?
And, Bruce where are you hiding?
Come on out and fight me, quote for quote, source for source, mano y mano.