Debt Limit Bill and Social Security Benefit Cuts

This isn’t exactly the way to wake up in the morning, but the thought occured to me that because the Republicans that have been in office over X X # of years, have a combo plate on their table, “Dementia & Alzheimers”, and heaven help us if the “O” & Vice get it, we will be left with tears, in more ways than one.

Bruce,

This sort of highlights how vulnerable the Special Treasuries are.  There they sit…. like a sore thumb….an accounting construct that can be restated with the stroke of a pen…..by far the least painful way to reduce the national debt……..

Except that they can’t without defaulting on the rest of the $11 trillion owed to other parties.

They are not an accounting construct any more than that Benjamin in your wallet is. Or any less for that matter. There is no serious legal, political or historical argument to support the fact that these instruments are subordinate (though God knows Don Levit keeps trying over at Econospeak).

Plus I believe that the only reason Social Security checks stop going out is that the Administrative machinery shuts down. Treasury will still be collecting 12.4% of every non-federal wage dollar until or unless those contracts are terminated by the venders and the grant recipients. And since the Special Treasuries are not exposed to the market they do not in fact lose any value in the short run while Regular Treasuries presumedly would have their market price knocked out for anyone who couldn’t afford to simply hold them.

It only takes the stroke of a pen for the President to sign onto a declaration of war, the persistant attempts by critics to find some difference is just special pleading designed to get people to ignore the fact that the Trust Funds are solvent until 2037.

Back in the early nineties the prevaling wisdom and sentiments were that then current deficits were simply structural “deficits as far as the eye can see” AND that Social Security would exhaust its Trust Fund in the lated 2020s at the time of maximum Boomer impact. That combination backed ‘crisis’ into the pie. Well by 1999 we had shown that those GF deficits were not necessarily structural at all, because we were already running a surplus. Plus the outlook for Social Security had not only improved by nearly a decade, and at a rate of more than two years per year, suggesting further push backs in Depletion were at least possible. Which combination unbaked the pie. Which led opponents of Social Security to desperately seek a way to perpetuate ‘crisis’ and the one they came up with was ‘Phony IOU’, a notion that was totally novel at the time. But after 15 years of being pushed with fine sounding legalisms (“entities can’t hold their own debt”) have simply been internalized (or pretended to be so internalized) by Conservatives gripping desperately in turn onto their mantra ‘Government is not the Solution, Government is the Problem’. Well except when it had been shown that it wasnt’, as in this case.

So conservatives just moved the accepted goal posts and started making shit up. Again. And still.

jeff–Can’t find anything re Graham’s view of proposed fillibuster (sp?) rules change.

Re SS benefit reductions, etc. Fact: We don’t have to do anything now.
Fact: We have at least 15 years to raise FICA contributions to retain current benefit levels. People are perfectly willing to pay more FICA to maintain benefit levels as they are. Good–No problem!
Fact: Thus, the Debit Frenzy is pretext to bust SS.
Fact: SS is doing fine. Saying we have to do something now instead of later is an attempt to avoid the screams from affected future beneficiaries. This whole deal is a scam based on lies, and should be shut down.
 Fact: SS works great and without it, the gross float in the domestic economy would be more than $50B dollars a month less. Suppose that float were say $25B less. That would be just ducky in a recession like this one, wouldn’t it?
Doing anything now would be nutz. So, lets do something smart for a change, and concentrate on reducing the debt. That’s what this is supposed to be about. SS has nothing to do with it. NO 

This Angry Bear main post fails to provide or identify any quoted statements from U.S. Senator Linsey Graham. 
 
The full transcript of Senator Graham’s interview on NBC’s Meet The Press which was broadcast on Sunday is available.

MG,

You may be a little young: Maskirova.

Graham said “vote against its passage if medium- and long-term budget considerations were not identified in a plan to deal with long-term debt obligations.”

Like a plan will be ready by 31 Mar, like the one from Simpson’s cat food commssion that covers long-term debt obligations.

Don’t trust the frauds on Sunday talkies .  

So Bruce,

Did then Senator Obama understand “that he is simply holding the world’s economy and the retirement benefits of millions of people in the future hostage to a simple hatred” of then President Bush when he voted against raising the debt cieling in 2006?

Islam will change

ilsm, 

The quote you are attributing to Senator Linsey Graham is incorrect.  I made that statement based on Senator Graham’s responses in the Meet The Press interview.  All of the info is readily available in the transcript. 

Senator Graham has discussed Social Security reform for a number of years.     

Obama was on firmer footing than the tea partiers.

In 2006 the SSTF was growing, holding the debt limit made sense if you believed that US would eventually renege on paying off the SSTF.  Pay-go would have worked in 2006.

Today SS is a little less than surplus, so most SS checks would go out under pay go if the debt limit were kept, and the system went pay-go.

However, the war mongers would scream and demand the war machine be paid before granma.

As I see it the problem is not what any Senator or House Rep will do regarding tying a vote on debt limit to Social Security descruction.  There is no problem unless Obama allows the scam to move forward on his watch.  He could simply stand pat noting that there is no relationship between the deficit and the Social Security program.  He could go a step further and explain the lack of relationship to the public, or have some known expert do so.  My concern is all the contrary talk that Obama was dishing out about the need to “fix” Social Security and the incredible choices of the two Co-commissioners of his Debt Panel, Bpwles and Simpson.  Two more anti Social Security program ideoloques would be hard to name.  The Executive Office is the only loose end in this melodrama.

Nice argument Bruce. The way you put it, you have it right. Just cutting benefits would inrease SSTF assets and those assets are debt subject to limit at the federal level.

But you don’t think Lindsay G is that dumb do you? If you cut SSA benefits by 120b and at the same time cut SS taxes by 2% you would have downsized SS, cut taxes for workers and not changed the debt picture by a penny.

This approach would address your concerns, yes? I think this is referred to as, “starve the beast”.

BTW the debt ceiling isue is a canard. It will pass. It has to. Not to worry. That’s not to say cuts in SS aren’t coming. A wager?

Obama will call for SS cuts in the State of the Union address. He will ask for a means test.
bk

By jove, I think you’re on to something here.

If the debt cap has any meaning, it is that the Social Security trust fund bonds are not simply worthless IOUS, but that in fact, they represent real obligations, and those obligations are against the general fund.

Thus by definition of the debt cap, the crisis to solve is the general fund.

Jack – “He could simply stand pat noting that there is no relationship between the deficit and the Social Security program.”  
 
President Obama isn’t going to endorse that lie.  That’s just one of the phony statements spewed out on econ blogs and elsewhere. 

Jack – “He could simply stand pat noting that there is no relationship between the deficit and the Social Security program.”  
   
President Obama isn’t going to endorse that lie.  That’s just one of the phony statements spewed out on econ blogs and elsewhere.   
 
All of the SSA OASDI net cashflow shortfalls have impacts on the fiscal year budgets and/or fiscal year deficits.   And what do you think happens when the third SSA program, SSI, incurs a net cashflow shortfall? 

“All of the SSA OASDI net cashflow shortfalls have impacts on the fiscal year budgets and/or fiscal year deficits.”  MG

And those shortfalls when they occur are covered by Trust Fund assets resulting from all those years of positive FICA to benefits flow.  Yes, there comes a time for Treasury notes to be redeemed.  Why not cancel the value of all the T-Bills held by commercial banks, foreign countries and 401K plans?  That would be a big help in reducing the claims on ouor government.  On the other hand, why not tax the sector of the population  that has been receiving the greatest personal financial gain from tax revisionism during the past  several decades.   You call it a lie when, in fact, it is only your opinion that is differed with.

buff,

For once I agree, Obama was wrong it was not Bush or rethuglican failure to lead they were leading, but the leading was taking the US down.

What is implied in 2006:  Why raise debt ceiling in a boom, that is when laffer curve said it should be coming down.

The failure in leadership revolved around voodoo economics and the war machine pillaging the US.

In 2006 debt should have been retired.

That is not the failure in leadership.  It was planned and executed well to move wealth up rather than share the benefots of US enterprise with more of the population.

You are correct it was not failure in leadership, it was pillaging.

ilsm will not change

Jack,
 
The U.S. Treasury has issued official statements that refute your phony position.  CBO has provided similar guidance on this issue.  I have never read an officiial statement or position paper by anyone in the U.S. Government which supports your bogus claim.

It’s a phony argument that redeeming the interest and principal on special issue treasuries will have no impacts on the fiscal year budgets and/or deficits.  It’s downright laughable to pretend otherwise.
 
The clown show lives on at Angry Bear.   There is no question that some at AB are promoting the same lie that you spouted.  All the more reason why Angry Bear is losing credibility among economists and other well educated blog readers.  That problem is further evidenced by the declining quality of participant remarks. 

MG’s failure to understand notwithstanding

the facts are even simpler than Bruce’s analysis of the various kinds of debt:

Social Security is funded by its own “tax.”  It does not borrow money from the government and cannot contributed to the budget deficit.  As long as the people want to keep their Social Security benefits and are willing to pay for them, Social Security has not a damn thing to do with the deficit.  Ever.

The problem is that the Big Liars have been telling people for years that SS is welfare and represents a looming deficit… huge governmnet expense.  And people like MG buy into the confuse and promulgate it.

If we lose Social Security as an EFFECTIVE insurance against poverty in old age, it will because we are too damn dumb to stop the liars from “fixing” it. 

coberly,

Jack’s original statement which I cited and discussed is false. 

Now, you want to pretend (as always) that any net cashflow shortfalls in the three Social Security programs do not impact the Federal Government’s fiscal year budgets and/or deficits. 

You’re promoting the same lie that Jack is promoting.  Nothing new there.   

You’re a complete idiot on Federal budget matters. 

MG,

At ease!

You are out of line.

MG

this clown does not pretend that redeeming the debt will have no effect on the budget.  this clown says it is an honest debt and must be repaid.

you aren’t funny enough to be a clown.  

Yep, it’s the fly in the National Debt is Eating the Country argument. The TF is either real, or it’s not, and if real, any change in SS would make the debt worse, rather than better. Same deal with ACA, etc.

MG

you are repeating yourself.

when you put money in the bank, and then you take it out, resulting in a “net cashflow shortfall”  you are doing what is called “cashing in your savings.”  it’s a pretty normal operation.  only the fast talking of the confidence men makes it seem any different because it is Social Security cashing in on its savings.

of course the government having to pay back the money it borrowed from Social Security impacts the budget.  I have never said anything to the contrary.   

What I have said is that Social Security is not the cause of the budget deficits.  If your go into debt and borrow money from your brother in law,  when your brother in law asks for his money back, he is not the one who caused your problem.

You seem unable to understand that.  I guess that’s why your brother in law doesn’t call anymore.

Social Security is a front end loaded attention getter for the insane debt levels we are running..There is NOTHING Angry Bear about Bruce Webb or the other pretenders who feed off the name. Nancy Ortiz..and people like her..don’t get that this is a matter of jiggling some numbers here and there and raising a few peoples FICS contribs! Catch a clue girl..this IS about a debt and fiscal responsibility meltdown.

This meltdown should have happened in Jan of 2009..but we’ve put the reality of the smackdown off until Spring 2011.

Believe me dreamers..the Tea Party people who were elected and their constituency are VERY serious..
and the hammer on this phony charade is going to fall…

Nancy,  

You made the same “Jack” statement upthread before he added his remarks to this thread. 

Apparently, you haven’t learned that the redemption of special issue Treasuries has impacts on the U.S. Government’s fiscal year budgets and/or deficits.  Sounds like you bought into the phony coberly kool-aid repeated by Jack.   

You’re spouting the same clown shop crap as Jack and Coberly. 

coberly –  6:32:29 PM, Thursday – “Social Security is funded by its own “tax.”  It does not borrow money from the government and cannot contributed to the budget deficit.  As long as the people want to keep their Social Security benefits and are willing to pay for them, Social Security has not a damn thing to do with the deficit.  Ever.” 

coberly – 7:49:20 PM, Thursday – “of course the government having to pay back the money it borrowed from Social Security impacts the budget.  I have never said anything to the contrary.“

Your first statement is incorrect.  Try sticking with one story. 

U.S. Government program assets in the form of special issue Treasuries represent debt obligations of the U.S. Government.  The redemption of special issue Treasuries to an internal element of the U.S. Government has direct impacts on the fiscal year budgets and/or deficits.    It’s not more complicated than that.   

coberly –  6:32:29 PM, Thursday – “Social Security is funded by its own “tax.”  It does not borrow money from the government and cannot contributed to the budget deficit.  As long as the people want to keep their Social Security benefits and are willing to pay for them, Social Security has not a damn thing to do with the deficit.  Ever.”

coberly – 7:49:20 PM, Thursday – “of course the government having to pay back the money it borrowed from Social Security impacts the budget.  I have never said anything to the contrary.“

Your first statement is incorrect.  Try sticking with one story.

U.S. Government program assets in the form of special issue Treasuries represent debt obligations of the U.S. Government.  The redemption of special issue Treasuries to an internal element of the U.S. Government has direct impacts on the fiscal year budgets and/or deficits.    It’s not more complicated than that.

Nancy, 

You made the same “Jack” statement upthread before he added his remarks to this thread.

Apparently, you haven’t learned that the redemption of special issue Treasuries has impacts on the U.S. Government’s fiscal year budgets and/or deficits.  Sounds like you bought into the phony coberly kool-aid repeated by Jack.

You’re spouting the same clown show crap as Jack and Coberly.

Coberly’s game is to try to have it both ways.  He can’t stick to one version. 

Coberly,

Stop faking it.  You’re trying to have it both ways.  Try sticking with one story.

coberly –  6:32:29 PM, Thursday – “Social Security is funded by its own “tax.”  It does not borrow money from the government and cannot contributed to the budget deficit.  As long as the people want to keep their Social Security benefits and are willing to pay for them, Social Security has not a damn thing to do with the deficit.  Ever.”     

Your statement at 6:32:29 PM is incorrect. 

Let’s just say I still have a few friends in town.And no, the final version is not close being drafted yet. We shall see.

Smart politics? Maybe. It throws a wringer at the Republicans. Obama says, “We gotta bite the bullet”. COLA has to be adjusted and a means test for wealthy retired Americans is necessary”. (any thought of raising SS taxes is simply off the table at this point, agreed?)

Who would say “no” to that? Republicans. The ‘test’ would hit (a part) of their base. At that point everyone looks stupid. Should be fun.

Never wager huh? I understand you mean that you don’t put a dollar up and take a chance. Do you own or rent? That is a wager of sorts. Did you alter your investments in the last year in anyway? That surely is a wager. Buy a new car? Lease it, pay cash or finance it? The different outcomes are like a wager as well. Any choice you make that has an uncertain outcome is a wager. You can’t hardly avoid them.

MG

the statements do not conflict. you are too thick headed to tell the difference.

Nancy – “The TF is either real, or it’s not, and if real, any change in SS would make the debt worse, rather than better.”

How would any [supposedly proposed] changes in two of the three Social Security programs make the U.S. national debt worse?  You made the statement, so how do you back up that claim?     

coberly, 
 
Stop faking it.  You’re trying to have it both ways.  Try sticking with one story. 
 
coberly – 6:25:28 PM, Thursday – “there is no relationship between ss funding and the budget. never has been.  it was designed that way on purpose.”

Your statement at 6:25:28 is incorrect.  Here, you’re pretending that redemption of special issue Treasuries to the Social Security Administration will have no impact on the fiscal year budgets and/or deficits.  Moreover, you’re ignoring the transfers and other appropriated funding that is provided to the Social Security Administration each fiscal year.  Basically, you don’t appear to know how the funding of the Social Security Administration really works.

coberly –  6:32:29 PM, Thursday – “Social Security is funded by its own “tax.”  It does not borrow money from the government and cannot contributed to the budget deficit.  As long as the people want to keep their Social Security benefits and are willing to pay for them, Social Security has not a damn thing to do with the deficit.  Ever.”
 
Your statement at 6:32:29 PM is incorrect.  Not all of the Social Security Administration’s funding is provided by the FICA tax.  There are transfers and other appropriated funding that are provided to the Social Security Administration. 
 
coberly – 6:32:29 PM, Thursday – “The problem is that the Big Liars have been telling people for years that SS is welfare and represents a looming deficit… huge governmnet expense.”

The special treasuries issued to the Social Security Administration for two of its three programs on borrowed monies do represent a large U.S. Government expense in the future.  Redemption of the special issue Treasuries will directly impact the fiscal year budgets and/or deficits during the fiscal years in which they are redeemed.
 
coberly –  7:41:57 PM, Thursday – “this clown does not pretend that redeeming the debt will have no effect on the budget.  this clown says it is an honest debt and must be repaid.”

These two statements fly in the face of your other statements on this and other comment threads.  
 
You have misled many Angry Bear readers on this Federal budget matter due to your inconsistent statements. 

coberly – “the statements do not conflict. you are too thick headed to tell the difference.”

You’re dishonesty is a real problem on Dan’s blog. 

Your inconsistent statements misled Angry Bear readers.  Your typical backtrack game doesn’t make your previous statements vanish into thin air.  Instead of deleting the absurd statements, you switch your position and try to have it both ways.  That is BS.    

coberly – “i fall to insulting you because i am human and you irritate me.  but you have been spouting nonsense for this entire thread. real nonsense.  as well as being really unpleasant.  you sound like a belligerent drunk, determined to pick a fight no matter how much you have to twist the meaning of what your target says.  i am not optimistic.  i don’t think a shrink would help.  but you could spare yourself some humiliation if you would just go away quietly now.”
 
There is hardly a week and sometimes no more than a day that goes by that you don’t resort to insulting AB participants with your usual personal attack garbage.  That has always been your lowlife game at Angry Bear.  To make matters worse, you make false statements and then try to cover them up with conflicting statements along with your standard putdown game.  Same old coberly. 
 
In my judgment, you don’t have your facts straight on how the Federal budget process works, the total amount and purposes of appropriated funding that is provided to the Social Security Administration in support of its three operational programs, or how funding cycles through the Treasury to the SSA. 
 
Your lame attempt to back up Jack’s unfortunate misstatement and launch one of your ignorant personal attacks was your error.  But, in the end, you did admit that redemption of special issue Treasuries to the Social Security Administration will impact the U.S. Government’s fiscal year budgets and/or deficits. 
 
You should stick to one version of your position in the future.  Try sticking with the truth. 

I’m not going anywhere, coberly.  I’ll call you on your next lie if I see it.  Others should do the same if they have enough knowledge to refute your endless stream of BS statements.  You have done a lot of damage to the credibility of Dan’s blog with some of your phony statements.   

I put $130,000 into SSI in the last so many years, I expect to get something for it.  I won’t pay for the bailouts with it, got it?  My SSI contributions were not to “General Tax Fund”, but towards my retirement, got it?

Jack – “He [President Obama] could simply stand pat noting that there is no relationship between the deficit and the Social Security program.  He could go a step further and explain the lack of relationship to the public, or have some known expert do so.”
 
MG – “President Obama isn’t going to endorse that lie.  That’s just one of the phony statements spewed out on econ blogs and elsewhere.  All of the SSA OASDI net cashflow shortfalls have impacts on the fiscal year budgets and/or fiscal year deficits.   And what do you think happens when the third SSA program, SSI, incurs a net cashflow shortfall?”
 
MG – “It’s a phony argument that redeeming the interest and principal on special issue treasuries will have no impacts on the fiscal year budgets and/or deficits.  It’s downright laughable to pretend otherwise.”
 
Jack – “That’s a strawman having never been a part of my argument.  Yes,  paybacks a bitch.  Especially when the big income earners don’t want to pay their fair share.  All Treasury note interest and redemption have an impact on the budget.  They are debts with debt seervice to pay.”
 
I challenged only one statement in your original comment.  Now, you’re acting as though you didn’t make that statement.  Apparently, you’re attempting to backtrack or cover over your original statement. 

If you had made your subsequent statement instead of what you originally stated, I would have had no argument.  But that doesn’t change what you originally stated.

Jack – “You miss the point that the Trust Fund is not any more significant a debt of the government than are any other T-Bills, except for the fact that worker’s future Social Security benefits are tied to those Special Treasuries.   If debt repayment and debt service have a serious negative impact on the budget then I suggest that a tax increase is required to reduce the significance of that impact.   But don’t float the lie that it is the Trust Fund assets that some how are the greater burden.  The opinion of any current or past or future CBO Director is only that, an opinion.   And its a political opinion at that.”
 
First, there is no such thing as “the Trust Fund”.  The Social Security Administration oversees two trust funds and operates three programs, two of which are supported by dedicated trust funds.
 
I didn’t miss any point about the significance of redemption of special issue Treasuries held by the Social Security Administration.  The difference between special issue Treasuries held by the SSA and marketable Treasuries administered by the U.S. Treasury is that the interest costs for the marketable Treasuries are reflected in the U.S. Government General Fund budget as a line item cost in each fiscal year budget.  The marketable Treasuries cost, their interest obligations, are factored into the OMB budget proposals.  As the SSA special issue Treasuries are redeemed, as necessary, those costs will also be reflected in the budget, whether as part of the line entry for marketable Treasuries costs (or as an increase in debt financing for discretionary programs’ funding support or outright displacement of some level of discretionary program spending, which may or may not be discussed in OMB budget proposals).  The result will be the same if discretionary programs aren’t slashed to accommodate the SSA funding needs.  The same story will apply to Federal healthcare funding needs.
 
By 2020, the redemption of special issue Treasuries or their interest obligations held by the Social Security Administration are projected to reach the level of approximately $100 billion.  That is $100 billion that will be absorbed as a cost in the fiscal year budget or a displacement of discretionary spending.  By 2025, the SSA special issue Treasuries redemption cost is projected to jump to approximately $275 billion, and the redemption costs in future fiscal years rise substantially thereafter.  Now, you can pretend that the redemption costs of the special issue Treasuries is not a major financial obligation on the fiscal year budgets, but pretending is what it is.
 
You can foolishly scoff at the CBO director, but that doesn’t make the debt obligations vanish.  Those obligations are quite real, and the demands for redemption of special issue Treasuries for the Social Security Administration will constitute an increasing burden on the U.S. Government’s General Fund budget, notably by 2020 and thereafter.  The budget burden created by redemption of the SSA special issue Treasuries will become quite significant over time, combined with the Federal healthcare funding obligations.  The result will be a likely crowding out of discretionary spending in the Federal budget process.  The future budget problems are quite serious, regardless of your banter.

Jack – “And just to be clear to MG I’ll repeat myself.  All Treasury notes have an impact on the budget.  Trust Fund Treasury notes have no greater impact than those held by foreign entities ot private commercial banks or you, me or the psotman.  They’re all debt and they all have an impact if the Congress is going to refuse to tax its wealthiest citizens a reasonable amount that reflects the financial benefits they have been reaping for the past several decades over and far above the rest of the country.”

The special issue Treasuries held by the Social Security Administration are paid interest that is not reflected as a cost in the U.S. Government’s General Fund budget.  Interest paid on marketable Treasuries is reflected as a line item cost in the Federal budget.  Now, when the special issue Treasuries held by the SSA are redeemed, those costs may be reflected in the budget in two different manners.  Discretionary programs’ funding may be reduced to cover the additional costs of redeeming the special issue Treasuries or the financing to cover such additional costs may be reflected in the issuance of marketable Treasuries. 

The potential hit on discretionary spending in the future due to rising entitlement program costs may be very significant.  That has been an issue of concern for Members of Congress for many years.  The window for addressing this problem is closing quickly. 

Your wealthy taxpayers argument doesn’t do much for me.  I recommended that all of the Bush II era tax cuts be eliminated.  Focusing solely on the upper income earners and their sources of income fails to acknowledge that those income earners already pay the majority of personal income taxes in the USA.  Moreover, eliminating their Bush II era tax breaks provides less than 25% of the available revenue to the U.S. Government that could be achieved by eliminating all of the Bush II era tax cuts.  I have no problem if all of the Bush II era tax cuts are eliminated and the upper income earners are pushed into even higher tax rates with fewer deductions than existed under President Clinton’s era of governance.  It’s my opinion that all U.S. citizens should incur some of the national governance burden associated with the have-it-all party that was underway in the USA from 1994 to 2007. 

I look forward to seeing some spending reductions at the Federal level, too. 

Nancy,   
 
You made a similar “Jack” statement upthread before he added his remarks to this thread.  Were you referrring to the national debt or fiscal year deficits?  If you are talking about the national debt, we’re not anywhere in the ballpark of reducing that for a very long time.     

Did you know or have you learned that the redemption of special issue Treasuries has impacts on the U.S. Government’s fiscal year budgets and/or deficits?

Coberly’s game is to try to have it both ways.  He can’t stick to one version as evidenced on this thread.

Note Jack’s updated remarks as well. 

The blog isn’t a clown show, rather it’s some of remarks thrown out by its readers.  And, yes, the blog could be much stronger but that will probably require the addition of a few well read economists and real world analysts. 

coberly, more of your usual personal slimeball comments. 

Pinelli understands the fiscal crisis that is underway.  That’s more than I can say for some of the participants on the Angry Bear comment threads.   

The whole discussion has been interesting, now that I have read through the comments.  MG is correct in his budget issues.  Coberly is partially correct in his FICA revenue stream issues.  What everyone is missing is the real world revenue/expenditure context in which these issues exist.

MG hit on it briefly early in his comments regarding crowding out of discretionary spending.  Many, many decades ago I was taught that entitlement/mandatory spending would overwhelm the budget/revenue stream.

We have been there for several years.  We borrow every dollar of discretionary spending.  Moreover, with the expansion of entitlement spending, Obamacare, Boomers aging, longer lving seniors, entitlement/mandatory spending is about to crowd out entitlement/mandatory spending!  So without expenditure/revenue change we will be borrowing even more.  Our borrowing is crowding out the less rich borrowers around the world affecting world economies.

The fundamentals for this borrowing disaster have been in place for decades.  The solutions are political disasters, but budgetarily simple.  Stop spending money we do not have!  There is no area to cut spending in the discretionary portion of the budget that does more than slow the rate of borrowing.  Every discretionary dollar is already borrowed. Our borrowing is impacting world economies.

That leaves the remainder of the entitlement/mandatory budget to cut spending to actually have an impact.  Now you know why legislators are looking at the entitlment programs for cuts.  It’s the only place where revenue that isn’t already borrowed is being spent.

CoRev,

“MG hit on it briefly early in his comments regarding crowding out of discretionary spending.”

Servicing the massive debt will crowd everything, as MG stated some months ago.

Crowding out discretionary spending is long overdue in the US.

As if it will be an emergency if the 37% of US G outlays for corporate welfare and the war machine were pared back.

Got to consider the impact of “crowding out of discretionary spending” in some context.

UK spends 6.3% and declining on war, Germans 3.4% and the US 19.7% (2009 figures)

A little crowding down of the war machine which has 90% of the world’s capitol ships , 85% of the world’s bombers and 70% of the world’s mechanized forces is about due.

MG is wrong in asserting the debt crisis should have been addressed in 2009, presumably when Obama was inaugurated.  It should have been addressed in 2001.  That is Greenspan should have gone the path of ‘austerity ‘in the face of a slight downturn, not set the way for the current massive recession and not broached building debt during boom we saw in the oughties.

I suggest the time for fixing voodoo was 1987.

MG

i started out in life to understand mental illness.  i switched over to try to understand cognition more generally.  then i got an honest job.  but my point of view continues to be informed by what i thought i learned when i was interested in the way people fail to think clearly.  that’s just the way i talk. nor is it meant as an insult.  i can tell the difference between an insult and a diagnosis.   sadly, most patients cannot.  that’s why you never get a straight answer out of your therapist.

MG

The accounting for the interest owed SS is essentially Enron accounting.  As long as the interest didn’t have to be paid they could carry it on their books without budgeting for it.  That’s pretty much all your distinction means.

Now that they have to pay it, they have to budget for it.  That is the crisis you are shouting about.

The wealthy taxpayers pay the majority of personal income tax in this country because they have the majority of the money. (majority is MG’s word…  i am trying to keep my response parallel to his “argument.”_

There is no potential hit on discretionary spending if the beneficiaries of Social Security continue to pay the payroll tax.  An increase in that tax of forty cents per week per year will cover the expected incrase in Social Security (OASDI).  A similar increase in the Medicare tax would similarly pay for Medicare, which is the same, if the people want the medical care, they are going to have to pay for it anyway.

If there is a budget crisis that reduces the “credit” of the United States, it will be because we don’t pay enough taxes to pay our bills, for the wars and the “stimulus”.   

ILSM, your mil-based response was anticipated, but completely ignoring the contextual reference is astounding.  There is NO DISCRETIONARY spending that is not borrowed.  REvenue for it is well past being crowded out.

We are in the unenviable position of crowding out  entitlement spending with entitlement spending.  While at the same time adding a huge entitlement program with Obamacare.

People are saying “enough is enough” spending and/or adding entitlements.  Whether they understand the ramifications is debatable.

CoRev

not quite.  general taxes could be raised to pay for what we have already bought.  Social Security pays for itself, so it is not costing “the budget” a dime.   What is costing the budget, with respect to Social Security, is the money “the budget” borrowed FROM Social Security.   Cutting your deficit by killing the person who lent you money is not generally considered the moral way out of your budget problem.

coberly,

I asked that question of Nancy, not you.  And your comment is not necessarily the answer that Nancy would provide. 

I want to read what Nancy thinks. 

MG – 12:16:43 AM, Friday – “The potential hit on discretionary spending in the future due to rising entitlement program costs may be very significant.  That has been an issue of concern for Members of Congress for many years.  The window for addressing this problem is closing quickly.” 

coberly – 8:37:52 AM, Friday – “There is no potential hit on discretionary spending if the beneficiaries of Social Security continue to pay the payroll tax.  An increase in that tax of forty cents per week per year will cover the expected incrase in Social Security (OASDI).  A similar increase in the Medicare tax would similarly pay for Medicare, which is the same, if the people want the medical care, they are going to have to pay for it anyway.”

There is no indication from the previous or current Congress and the Obama Administration that any plan to increase FICA taxes by any amount is being considered seriously. 

The current Congress, based on news reports and statements from some Members of Congress, is likely to oppose any tax increases, relying instead on spending cuts to eliminate some of the short- and medium-term problems with the Federal budget.  It’s pretty clear thus far that the Congress and Administration intend to focus on entitlement programs’ projected spending growth in order to address long-term budget problems. 

The potential hit on discretionary programs’ funding is quite real, considering the projected growth for entitlement programs’ spending.  How the Congress intends to address that problem remains to be seen.

The Congress is also faced with the issue of rising interest payment obligations on marketable Treasuries.  That obligation is projected to be quite large by 2020, perhaps $900 billion or more should interest rates jump later on. 

as to whether or not investing is gambling…  well, there is a difference that makes the two words have different meanings.   if i cross the street, i am “gambling” that i won’t get hit by a car.  if i don’t cross the street, i am “gambling” that a safe won’t fall on my head.

but such use of language is silly.

and i provided an answer to your question for the benefit of other readers.  i didn’t think it would help you.

MG

it is not Pinelli’s level of concern we don;t share. it is his comic book languate and evidence of non rational thinking.

CoRev

yeah, and i used to try to teach math to people who couldn’t understand what i was saying either.

i want to increase the payroll tax forty cents per week per year.  that would pay for Social Security forever,

and i want to increase the income tax 3% for ten years to pay for what we have already bought,

don’t see how this is “having it both ways.”

Jack,

How many more lies are you going to tell in your personal attacks? 

coberly,  
 
You’re busy pretending to be a know-it-all and telling lies about other Angry Bear participants.  You are the ringleader of the clown show on this blog.  No question.

By your own admission, you don’t understand economics or the Federal budget.  Yet, you spend much of your time telling lies about many people on Dan’s blog when those subjects are discussed.  What a joke. 

Mr. MG–I just arrived here. And, I certainly can speak for myself. Now, in answer to your question, see explanations given by Bruce and Coberly. This issue has been explored here many times that I am aware of.

Once more, the logic is conclusive. The TF is either part of the national debt as a real obligation or not.  If it’s not real, it can’t add to the debt. All we are talking about then is a current rev transfer program covered by a dedicated portion of gen rev–.

If SS’s revenues that come up short, then we could simply raise the dedicated taxes that pay for SS current benefits with the excess being future taxes earmarked for a specific spending purpose. So, if people agree to pay more FICA, and polls say they do overwhelmingly, then the problem is solved. One way or another any excess FICA gets borrowed and earmarked for future obligated funds for benefits but in the interim, income taxes get a break. It’s a nifty deferred tax arrangement, looked at from that perspective.

Nevertheless, if the government can’t pay its bills without borrowing, then there isn’t enough tax revenue coming in. QED the problem can only be solved by increasing revenues first to reduce the scale of the borrowing. (Obligations are by definition promises to pay in the future and are enforceable.) The existing debt was promised out long ago. So, hysteria over cutting everything now is ridiculous. You can’t cut enough to reduce the Natl Debt significantly even in the mid-term.

As an aside just to address Mr. Krasting’s questions. I do business only in cash and don’t have any speculative investments. I have one vehicle which is in perfect mechanic condtion. I own my house. I ain’t going nowhere and hate travel. So, I’m a sweet little ole lady in a nice Southern town where everyone knows me and my picket fence is nice and white. Y’all kin come anytime my dog will let you in. Be sure to call in advance. She has many grumpy days. 😉 NO

coberly – 10:11:59 AM, Friday – “btw  i have tried to be kind to both you and MG.  but you both start in with insults and then act hurt when you get insults back.”
 
You are a dishonest person. You’re just telling more of your usual lies at Angry Bear. 
 
CoRev’s initial comment at 7:38:07 AM, Friday, included this statement: “Coberly is partially correct in his FICA revenue stream issues.”  CoRev was being supportive of your position in part.  He didn’t attack you in that comment. 
 
I hadn’t said a word to you when you first attacked me with these ignorant statements at 6:25:28 PM, Friday:  “the fact that you don’t understand social security does not make those who do understand it liars.  there is no relationship between ss funding and the budget.”   
 
There is no end to the nonsense and lies that you throw out at Dan’s blog.   

coberly – “it is not Pinelli’s level of concern we don;t share. it is his comic book languate and evidence of non rational thinking.”

You’re the only clown that launched a personal attack on Pinelli.  Stop pretending that you speak for the thousands of readers of Angry Bear. 

pjr

thanks. i am sorry if it is not obvious i agree with you. except i insist that “taxes” is a better response to deficit than more borrowing.  you seem to agree with this but discount it as politically unlikely.  i agree that it is politically unlikely, but that should not stop me from trying to point out the folly.

go back and look at MG’s 9:12:48 today and see what he is calling an “insult”:

“the fact that you don’t understand social security does not make those who do liars.”

the only insult in that statement is MG’s calling me a liar.  “you don’t understand” is not an insult.

SS spending does not exceed SS income.  SS income was collected over the past 30 years to pay for the current “cash flow deficit”…  but calling that spending in excess of income is like saying you can never draw money out of your savings account to buy something you need today that this week’s paycheck won’t cover.

MG calls me a liar because he can’t understand what i am saying.  he can’t understand it because he desperately wants to score points in a debate. he doesn’t give a damn about Social Security or the people who depend on it… the people who paid for it.

you can’t just write off the Trust Fund… money that people paid for their own retirement… by saying that repaying the money will cause the budget problem.  problems that could be easily fixed by paying the taxes needed to pay for what “we” have bought with the money we borrowed.

and this is not the same as saying there is no budget problem that will arise from repaying the money “we” have borrowed.   

MG. whether because he can’t tell the difference, or because he seeks to misdirect, constantly accuses me of meaning what i did not say.

he is doing a good job of wasting your time.  and, i suspect, doing exactly what he is accusing me of doing… turning away readers who have better things to do than follow a pointless argument. 

PJR,

Your points are well taken. 
 
Let’s break it down a bit more.
 
The U.S. Government will support legal payment obligations to the mandatory entitlement programs and interest payment obligations for sold marketable Treasuries.  The Congress is well aware of these responsibilities.  As these financial commitments grow, representing a larger share of fiscal year budget obligations, the Congress is faced with decisions regarding how to proceed.
 
There is a stronger likelihood at this time that some payment obligation changes affecting the mandatory entitlement programs will occur, but those efforts alone may not resolve the U.S. Government’s General Fund short-, medium- and long-term budgetary problems.  But some of the entitlement programs will be reviewed by the Congress. 
 
The U.S. Government is already attempting to control discretionary spending obligations.  Whether that is viable over a long period may be questionable, but the effort has been in place for quite a while in terms of allowed annual growth in many discretionary spending programs.
 
The level of debt financing that the U.S. Government has engaged in during the past decade and in recent years raises the issue of further crowding out of discretionary spending caused by payment of interest payment obligations on marketable Treasuries.  It’s possible, based on projections, that interest payment obligations may reach $900 billion or more in each fiscal year by 2020.  Should the U.S. Government not rein in deficit financing during the next few  decades, the budget problem could spiral out of control.
 
As we know, the Congress can reduce Government spending, increase available revenues, or any combination of the two. 
 
The absence of Congressional efforts to put the Federal budget on a sustainable path threatens discretionary spending programs first and, as CoRev has pointed out, mandatory entitlement spending programs ultimately.  The Congress, Treasury, and Federal Reserve will undertake every effort to support the financial obligations of marketable Treasuries held by the public, so there should be little expectation that the U.S. Government will default on those obligations unless a credit or currency crisis unfolds. 
 
The next few years will be very interesting. 

PJR,
 
Let’s break down the big picture from Congress’ perspective.  
 
The U.S. Government will support legal payment obligations to the mandatory entitlement programs and interest payment obligations for sold marketable Treasuries.  The Congress is well aware of these responsibilities.  As these financial commitments grow, representing a larger share of fiscal year budget obligations, the Congress is faced with decisions regarding how to proceed.
 
There is a stronger likelihood at this time that some payment obligation changes affecting the mandatory entitlement programs will occur, but those efforts alone may not resolve the U.S. Government’s General Fund short-, medium- and long-term budgetary problems.  But some of the entitlement programs will be reviewed by the Congress. 
 
The U.S. Government is already attempting to control discretionary spending obligations.  Whether that is viable over a longer period may be questionable, but the effort has been in place for quite a while in terms of allowed annual growth in many discretionary spending programs.
 
The level of debt financing that the U.S. Government has engaged in during the past decade and in recent years raises the issue of further crowding out of discretionary spending caused by payment of interest payment obligations on marketable Treasuries.  It’s possible, based on projections, that interest payment obligations may reach $900 billion or more in each fiscal year by 2020.  Should the U.S. Government not rein in deficit financing during the next few  decades, the budget problem could spiral out of control.
 
As we know, the Congress can reduce Government spending, increase available revenues, or any combination of the two. 
 
The absence of Congressional efforts to put the Federal budget on a sustainable path threatens discretionary spending programs first and, as CoRev has pointed out, mandatory entitlement spending programs ultimately.  The Congress, Treasury, and Federal Reserve will undertake every effort to support the financial obligations of marketable Treasuries held by the public, so there should be little expectation that the U.S. Government will default on those obligations unless a credit or currency crisis unfolds. 
 
The next few years will be very interesting. 

For anyone who still cares

when I say

Social Security has nothing to do with the budget deficit

I mean, first, that I am referring to OASDI, the target of the attack, and not SSI which is welfare and is not the target of the attack,

second, that Social Security has its own funding, legally separate from “the budget.”  Social Security is not pair for by general taxes, but by the Federal Insurance Contributions (not voluntary) known as the payroll tax.  This is the means by which workers are able to save a small percent of their own money for their own retirement.  The government manages the savings and protects it from inflation and market gyrations, but the government does not provide the money. This is why Social Security (OASDI) IS NOT WELFARE and HAS NOTHING TO DO WITH THE BUDGET DEFICIT.

It is true that the government has borrowed surplus Social Security money and will need to pay it back, and this will affect the budget.  But honest people do not blame the guy they borrowed money from for their budget troubles.  When MG says I ignore the budget problem or lie about it, he is the one who is lying.  He keeps doing it because he hopes you will not have read what I actually say, or remember it.

The cost of Social Security paying for itself forever… that is the workers paying for their own retirement even if they are going to live longer but don’t want to, or can’t, delay retirement… looks like it would be one half of one tenth of one percent per year.  One half of one tenth of one percent of an average worker’s pay today is forty cents per week.  This amount will grow over time, but never be “felt” any more than forty cents per week would be felt today.

The cost of paying back the money the government has borrowed from Social Security would be about a 3% increase in taxes on incomes over 100k for about ten years… paying in effect for the the tax cut that was supposed to pay for itself but didn’t.

We have passed the point where that simple, honest, straightforward solution can simply be enacted, because Our President, his advisors, and the Congress are not honest, or don’t understand Social Security.

They can rely on people like MG to keep the people from understanding that they are not just stealing your money, they are killing the program that keeps you from providing for your own retirement security.  The people who pay their campaign expenses don’t want their workers to have security, even if the workers pay for it themselves.

PJR,
 
Let’s break down the big picture from Congress’ perspective.  
 
The U.S. Government will support legal payment obligations to the mandatory entitlement programs and interest payment obligations for sold marketable Treasuries.  The Congress is well aware of these responsibilities.  As these financial commitments grow, representing a larger share of fiscal year budget obligations, the Congress is faced with decisions regarding how to proceed.
 
There is a stronger likelihood at this time that some payment obligation changes affecting the mandatory entitlement programs will occur, but those efforts alone may not resolve the U.S. Government’s General Fund short-, medium- and long-term budgetary problems.  No doubt, some of the entitlement programs will be reviewed by the Congress and more changes to their financing may occur. 
 
The U.S. Government is already attempting to control discretionary spending obligations.  Whether that is viable over a longer period may be questionable, but the effort has been in place for quite a while in terms of allowed annual growth in many discretionary spending programs.
 
The level of debt financing that the U.S. Government has engaged in during the past decade and notably in recent years raises the issue of further crowding out of discretionary spending caused by payment of interest payment obligations on marketable Treasuries.  It’s possible, based on projections, that interest payment obligations may reach $900 billion or more in each fiscal year by 2020.  Should the U.S. Government not rein in deficit financing during the next few decades, the Federal budget problem could spiral out of control.
 
As we know, the Congress can reduce Government spending, increase available revenues, or any combination of the two. 
 
The absence of Congressional efforts to put the Federal budget on a sustainable path threatens discretionary spending programs first and, as CoRev has pointed out, mandatory entitlement spending programs ultimately.  The Congress, Treasury, and Federal Reserve will undertake every effort to support the financial obligations of marketable Treasuries held by the public, so there should be little expectation that the U.S. Government will default on those obligations unless a credit or currency crisis unfolds. 
 
The next few years will be very interesting.

Thanks for your answer, Nancy.

Buff nothing is simple about hating Bush.

Seriously. Threatening to vote against the limit is one thing. And you can make a case for making that threat even if it might cause the vote to fail if you were demanding changes that were actually germane to that bill. But Social Security is not in that category since benefit cuts to it, particularly ones that start years hence, have no effect on the debt limit.

There is a difference between negotiations and extortion. Attaching this particular demand to this bill is the latter. Bush took a surplus and turned it into huge liabilities arguably causing the entire need for that debt limit increase to start with. And registering an objection to it on that bill is legitimate just as if Graham had inserted a direct attack on Obama stimulus on the basis that it too was the cause of this need. But that is not what is happening here at all. The objection is not germane to the purpose.

“All of the SSA OASDI net cashflow shortfalls have impacts on the fiscal year budgets and/or fiscal year deficits.   And what do you think happens when the third SSA program, SSI, incurs a net cashflow shortfall? “

Except that every bit of this is wrong. So-called ‘unified budget’ deficits count Social Security as being in surplus whenever its income is above its cost whether or not the actual cash flow is negative or positive. Nor is it at all clear that interest on the Trust Funds has any impact on fiscal year budgets since on my reading OMB considers them officially ‘off budget’. Tell you what why don’t you read all of the relevant sections of the most recent Analytical Perspectives on Budget, extract the sections that would actually support your argument and present them to us with page citations and discussion.

And since SSI is funded out of General Fund revenues and is such cash flow negative every year and has been since inception that sentence is a little confusing as well.

I don’t see that you even know what you are talking about here.

Webb,

Don’t you remember what happened? 

Which one should I reread?

Buff circumstances alter cases.

Bush inherited both large current surpluses and huge projected ones and proposed tax cut packages that he said would not adversely effect the latter. In that he was dead wrong, and rather than doing what both Reagan and his father did refused to take any steps to reverse course on taxes even a little bit. Nor did he attempt to make any attempt to actually pay for his wars or even account for them on-budget, which latter would have revealed earlier the folly of his total fiscal policy. It was perfectly fair to hold him to the fire for a situation of his own making. The situation here is a little different, Obama was handed the largest deficit in history, one that in his first full year he actually reduced. Now people can argue that the SPECIFIC steps taken by Obama were ineffective but no one has made a convincing case that absent those steps that we wouldn’t be hitting the debt limit sooner or latter. In fact if we ever reached a perfect world where debt stabilized at the perfect share of GDP we would have to raise the debt limit periodically anyway simply to reflect the growth in GDP.

And Obama is my President, he is not an object of my worship and your constant attempts to throw “Well even Obama” have as little effect on me as “Even Bill Clinton thought”. Who cares what Senator Obama said or thought in 2006? Conservatives have this odd tick where they can blame any  liberal for any view of any other liberal remotely associated with them while conservative are purely autonomous individuals not tainted by others past views. Making Obama responsible for every act of the Weathermen committed when he was in elementary school while absolving Beck from violent acts clearly the result of his demagoguery. (No one seriously believes the Tide Foundation simply came to that madman’s mind independently)>

MG,

Do you mean delusional tea baggers in the term congress’ perspective?

webb – “The situation here is a little different, Obama was handed the largest deficit in history, one that in his first full year he actually reduced.”

President Obama certainly inherited a very large budget deficit, but not the largest in terms of GDP measurement.   

webb – “Who cares what Senator Obama said or thought in 2006?” 

Some representatives in the news media appear to care based on news coverage thus far.  There is reason to expect that the President’s statements about the debt level back in 2006 wouldn’t be raised now. 

MG the one thing that can’t be said about you is that you are inconsistent. Bullheaded even when shown to be wrong on the facts and prone to projecting your own analytical errors on people who actually have their facts right. But by God you are consistent.

You have made the following statement in various forms over and over on this thread:
“Now, you pretend (as always) that any net cashflow shortfalls in the three Social Security programs do not impact the Federal Government’s fiscal year budgets and/or deficits.  That is a laughable position. “

One third of this is a lie. Coberly has never to my knowledge made any such claim about SSI (which is the other of three programs  you seem to reference). And the other two thirds are mostly to totally wrong. Net cashflow shortfalls in OAS and DI DO NOT impact the bottom line of the Federal Governments fiscal year deficits. Increases in Trust Fund balances from whatever source count as surpluses for the most reported deficit numbers.

The situation is a little more complicated when you talk ‘budget’ but we could start with this from the 2011 Budget Historical Tables: http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf

“The Balanced Budget and Emergency Deficit Control Act of 1985 (Public Law 99–177) repealed the off-budget status of all then existing off-budget entities, but it also included a provision moving the Federal old-age, sur vivors, and disability insurance funds (collec tively known as Social Security) off-budget.  To provide a consistent time series, the budget historical data show Social Security off-budget for all years since its inception, and show all formerly off-budget entities on-budget for all years.”

No if you like you can explain why “off-budget” doesn’t equate to “do not impact the Federal Government’s fiscal year budgets” but it is hardly laughable when people are simply quoting OMB by saying that Social Security is “off-budget”. That may not mean exactly what they think it means. But your formulation is not at all as well-founded and obvious as you think it. You might start by offering your own definition of “budget” and then explain why receipts and outlays that in OMB’s budget tables are labeled “off-budget” by right should be included when reckoning “impact”. But until then your claims to be the only person on this thread to understand or honestly deploy budget concepts and numbers is pretty damn suspect. Why should anyone believe your formulation as opposed to Jack’s?
And for all your bluster about “not going anywhere”, in the end that question is not up to you.

MG show us you are right in your formulation. And not by pointing us to a 2000 page Budget Document. Show us where exactly in that document is the justification for your claims on this thread. You ask a question above to Nancy:

“Are you aware that the redemption of special issue Treasuries has impacts on the U.S. Government’s fiscal year budgets and/or deficits?  If you’re aware of that, then you should know that your cited statement is incorrect.”

If you had asked that of me I would have answered ‘No I am not aware of that, at least as the words ‘fiscal year budgets and/or deficits’ are commonly used and reported, where did you get that and why does it make my statement incorrect?’ But really your only answer has been in effect “From my vastly superior understanding of budget numbers and concepts as derived from reading primary materials.” Sorry, pal that’s no longer good enough, because I have read them to, or enough of them to know that at best you are over-simplying a very complex reporting environment. Show us that you know what you are talking about using something more than waving your walking stick in the air and shouting at the Coberly Clouds.

MG, two reactions/thoughts, related to two of your statements that AB folks might most “appreciate.” You said “There is a stronger likelihood at this time that some payment obligation changes affecting the mandatory entitlement programs will occur . . . . ” And you said “The Congress, Treasury, and Federal Reserve will undertake every effort to support the financial obligations of marketable Treasuries held by the public . . . .”

The first sentence is correct, but you can say that about any part of the budget problem–it’s more likely that taxes will be affected, the defense budget will be affected, etcetera. What’s actually affected will be a political decision. Congress knows that more than anyone.

Your second sentence also is correct as far as it goes. It also will be a political decision whether the government will “undertake every effort to support the financial obligations” to the SSTF and SS beneficiaries, and to others (beyond “marketable Treasuries held by the public”). By “others,” just so the point isn’t lost, I might include current budgetary obligations to quadriplegic veterans and many many more. I am completely aware that Congress puts the T-bill owner in Riyadh ahead of these people, and I understand the reasons for this. I’m not arguing with you–I’m saying, to repeat myself, that the seriousness of Congress to meet these obligations is a political decision. If Congress wants to reduce obligations to support quadriplegic veterans rather than raise taxes on billionaires, it may do so. It may do so. It may do so.

“MG is correct in his budget issues.”

No he isn’t. He is just about dead wrong on every single claim. And is lashing out in the course of his projecting his own stubborness and foul temper on others. You could summarize about half of his last comments on this thead as “Jack and Coberly are slimeball lowlife liars. And worse THEY CALL PEOPLE NAMES!” Buh-wuh.

Yes! Shut it down. Turn off the lights. Screw this stinking empire 

CoRev this is analytical nonsense:

“ALL discretionay spending is from borrowed revenue. EVERY dollar of revenue is going to mandatory spending, of which entitlements make the preponderance. “

You have elevated one view of looking at Federal accounting into some law. It is just polemics.

The United States does not have to maintain a standing Army. On the other hand it has a Constitutional mandate to maintain a Navy. It equally has a mandate to establish and maintain Courts complete with a requirement that salaries for judges can’t be reduced. To that degree the Navy and the Courts are more ‘mandatory’ than so-called entitlements are. The total functions of government are establlshed by the Constitution and such laws as are considered ‘Necessary and Proper’ to carry out those mandates. Some of those functions could be funded in perpetuity by a dedicated tax, for example we could have a Navy Tax that dedicated all revenues from say the customs to maintaining and operating the core functions of the Constitutionally mandated Navy and so as far as I can see exempt those continuing expenses from the Appropriations process. On the other the Constitution forbids us from doing the same for the Army, at least on my reading, and in any event we chose to fund the Army and Navy Departments and the Defense Department that encompassed them through the same process.

Anyway people are trying to do one to one mapping between ‘discretionary/mandatory’ ‘budgeted/off budgeted’  and ‘dedicated/general receipts’ that don’t make sense given the complexities of the actual process. And all of this is quite separate from the ‘tax/borrowing’ equation. That in this current budget year there are rough equivalencies between those categories of ‘mandatory’ spending we call entitlements and total non-borrowed revenues is interesting but in the end meaningless, there being no reason not to claim that the roughly three-quarters of Medicare funded from the General Fund are actually borrowed and the mandatory expenditures on the Navy and the Courts are paid from revenues. it is all just a verbal shell game put out by Heritage and AEI to fool the rubes. That you can slice the pie that way doesn’t mean those pie slices were baked in. The llne you are drawing is just that, a drawn line, it has no necessary connection with pre-existing reality.

webb,

You’re obviously not particularly well informed on how the Federal budgeting process works.  Your comments on that subject on this comment thread reinforce that point. 

You would do yourself a favor if you called someone at Treasury, OMB, and the SSA before you make any more ill informed comments. 

How do you think the SSA covers a $41 billion net cashflow shortfall in the combined OASDI accounts during a fiscal year?   

Impugn truth and the Chesty Puller of economics ( MG ) defends it with a shock and awe barrage. What a mensch!

“the Tea Party people”

Americas first false flag operation.  

Actually, Pinelli should be careful whom he calls “girl.” I have to say that was uncalled for. I don’t like to be called “girl” any more than he would like to be called “boy.”  Of course, P could be under the impression that those of us who disagree with him are unable to defend ourselves. Or, are ill-informed old dudes and ladies with wandering minds who don’t know squat about “real man things.” Sorry to disappoint.

Your excerpt from the transcript equally chopped of the relevant bits that followed. And so obsured the fact that Graham doubled down on Social Security.

And this is just nutty: “Not much point in clowning around with other articles’ cut and paste efforts when one can read the actual transcript. “

With that logic nobody should be reading blogs, or watching news, or even reading the newspaper. Apparently for you a survey of relevant literature on anything should just be reduced to a bibliography. if there are only two minutes of timely material in the course of a one hour show, and someone has extracted most of that and pointed to a place where you can find more, than demanding that everyone go back everytime are read/watch the entire thing goes beyond diligence into obsession.

When I post to Angry Bear I am mindful of how much front page space I am taking up, because you can’t expect people to scroll forever and scan hundreds of lines of quote and reference and then just give up before ever reaching the next post. Instead if I am going to go long I stick most of it under the fold, and generally quote just enough of the source to make my specific point and then almost always leaving links for either further reading or for someone to double check my  work. But extensive quoting and huge lists of links don’t in themselves add value. Except of course to subtly brag “my reading/link list is thicker/longer than yours”. Sorry i gave up towel-snapping some time back.

Bruce, that was long winded and eloquently stated, but it did not really say much while getting all wrapped around the axle in budget accounting terms.  Budgetting processes are only loosely related to the daily processing of revenues and expenditures.  On a daily basis it is revenue in and expenditures out with the difference borrowed from the various sources including the TFs, and a bunch of computer accounting buckets updated in the backroom in accordance with the budget authorizations.

No, MG

there is no question but that you are floundering.  when i say the president and congress are not honest or do not understand… i am including the democrat congress so it is somewhat missing the point for you to tell me about Pelosi and Reid.  

I know you say you support SS, but your contributions here are all the direction of aid and comfort to the Big Liars trying to destroy it.  In fact I believe you are honest, but I also believe… not as an insult… that your brain has gone bad on you.  You don’t make much sense and your are unpleasant to a fault.

You might note, in terms of brain damage, I said “not honest or don’t understand”  you come back with “not honest because they don’t agree…?”  because you are incapable of processing an OR statement, or you can’t imagine that i might have other reasons for thinking they are not honest other than their simple disagreement with me.  

the budget deficit is being used to scare people into giving up their social security.   not because it has anything to do with social security but because they know people don’t think and they can make it sound like it does.

a few years ago they wanted to privatize SS because the stock market was never going to come down again.  they knew better, but they will use ANYTHING to fool people into thinking they have to cut SS.

webb,

Senator Linsey Graham hasn’t threatened to put a hold on any legislation regarding the debt ceiling.  That was just a phony claim that you stuck in the main post. 

You just launched into one of your standard main post attacks and didn’t back it up with any supporting evidence.  Zip.

Screw you, webb. 

webb – “Nobody in their right mind should give a crap about ratings put on U.S. Debt by Moody’s or Standard and Poor. …People or at least Central Banks don’t by Treasuries because they are on a jerkable string pulled by a couple of profit based and in the end unofficial rating agencies mostly owned by the financial industry itself.”

Now, you’re a supposed global bond market and central banks expert? 

Why don’t you tell Dan’s AB readers how much experience you have in the financial field and, more specifically, the global bond market.

Bond ratings aren’t limited to Moody’s and Standard and Poor’s. 

webb,

You’re making phony claims on this thread. 

I don’t pretend to speak for any Angry Bear readers who are still participating on Dan’s blog.  The numbers in that group have declined significantly for reasons that are obvious to others.   

I will speak for those individuals who email or call me when their issues are pertinent and they allow me to share their viewpoints.  None of them now post at Angry Bear, for obvious reasons in their opinions.  

Any reader can refer to Dan’s comment policy as it is published on his blog.  I will continue to do that as I deem appropriate.  You violate Dan’s comment policy whenever you please; you’re the worst violator participating at Angry Bear other than coberly.  You try to force a dual standard of conduct at Dan’s blog.  One for you and one for participants you don’t like.  All part of being a bully. 

You are quite wrong on your no Federal budget impact claims regarding net cashflow shortfall redemption of special issue Treasuries by the SSA.  That reinforces my previous judgment that you have a weak understanding of the Federal budgeting process and actions by the U.S. Treasury.     

webb,

You’re making a growing list of false claims.  All part of your standard conduct at Dan’s blog. 

coberly,

You have made an endless stream of claims against other parties.  Sometimes, it’s pretty clear that you have bothered to read their materials or listen to their speech commentary.  On other occasions, you’re on target. 

Your personal attacks at Angry Bear, in evidence on thread after thread, are ridiculous.  You pretend to be a doctor, analyzing the behaviors and commentary of others.  Give it up, coberly.  It’s laughable. 

There wouldn’t be a problem if you would stick with one coherent presentation of thought on the matter of what happens when the SSA redeems special issue Treasuries in support of the combined OASDI accounts (or programs), instead of flipflopping and using the same words to describe two quite different issues.  It’s not more complicated than that. 

Now, you’re faced with a simple choice:  Either stand by your latest statements on this thread or fall back in line with webb who thinks that redeeming the special issues Treasuries held by the SSA to offset net cashflow shortfall in the OASDI accounts (or programs) in any given fiscal year has no impact on the Federal budget for that fiscal year. 

We’ll see what you path take as time unfolds.   

Yeah, Good plan. Wait till the last minute. Then we can have a crisis.
PS SSTF had a $49B cash flow deficit in 2010. They will never have a cash flow surplus again. The shortfalls that you are referring to actually started in 2009. So the time in now.

Own a home do you? Happy for you. In the last ten years did the value double then fall by half? Your intent was not to speculate. But at any point and time you had significant swings in value and thus to your net worth. Sort of like one of those speculative stocks you don’t seem to favor.

By only owning “non specultative” investments you probably mean nice long term bonds issued by Uncle Sam. Am I right about that? If so let me assure that you are speculating. Long term government bonds have fallen by 10% in just the last two months! That drop in value on your statement of those safe  bonds is all you need to know.Hang on. In the next year you will see many 10% swings in your nest egg in a month.

You think you are not taking risks. But you are.

webb,

U.S. Government program assets in the form of special issue Treasuries represent debt obligations of the U.S. Government.  The redemption of special issue Treasuries to an internal element of the U.S. Government has direct impacts on the fiscal year budgets and/or deficits.    It’s not more complicated than that.   

Apparently, you don’t have this basic understanding of how the Federal budgeting and accounting processes work. 

How do think that deficit spending and interest payment obligations on marketable Treasuries are accounted for in the Federal budget?  Where do you think those numbers come from in the proposed or end of year Federal budget summary tables?

An alternative that the Administration and Congress have in offsetting the redemption payment of special issue Treasuries to an internal Government entity is to eliminate an equivalent level of spending elsewhere in the proposed or approved Federal budget.  Absent that effort, the net result is an increase in Federal budget spending.  Presently, that would also result in an increase in deficit spending which would be annotated in the Federal budget by the end of the fiscal year and additional obligations for interest payments on the marketable Treasuries would be also be recorded.  Moreover, related interest payment obligations on the new marketable Treasuries debt would be carried forward in the next year’s Federal budget unless the bond issues were paid off prior to the beginning of the next fiscal year. 

You’re more than welcome to contact representatives of OMB, Treasury, and the SSA to verify this information. 

I did read about it. Your query suggests I didn’t. Based on no evidence. I am not a mind-reader who can determine what YOUR particular formulation based on YOUR specific recollection would be in a way that taking your advice to “read about what happened” would make any sense at all. If you have a specific objection to MY formulation then state it. But this is just bullshit, making insinuations that I am just ducking something:

“Webb,  
 
Don’t you remember what happened? “

That advanced things how? Beyond simply trying to cast doubt on my credibility at large?

Is putting up a single question and response more valid than just referencing the entire interview as widely reported? If so why? And why it is it superior to say quoting the question, the response with less relevant parts noted but omitted via ellipsis followed up by more recent material as Nancy did. Your attack on first me and then Nancy seem undermotivated by any desire to advance the debate, and instead only to cast meta-dust by hinting at nefariousness at foot.

And MG I notice you quietly backed off on your claims about the deficit and now are throwing full weight on ‘budget’, a point that I was objecting to with the qualifier ‘probably’. I knew I had you nailed on the deficit question, something which by silence you are conceding.

webb,

If you read about the 2006 debt ceiling vote, then you should be able to answer your own questions.  You didn’t accomplish anything by throwing those questions to another Angry Bear participant. 

You don’t know what the Congressional Republicans are going to do regarding the forthcoming debt ceiling resolution.  It may work out fine in the end.   

As an example, there is no evidence whatsoever that Senator Linsey Graham’s stated position that he will oppose the next debt ceiling bill for the reasons that he has stated will “threaten to shut down much of the world economy?”  He is only one U.S. Senator.  Besides, he already made this opening acknowledgement during his NBC Meet The Press interview:

“Well, to not raise the debt ceiling could be a default of the United States’ bond and Treasury obligations. That would be very bad for, for the position of the United States in the world at large.”   

And then he continued with this in his first response:

“But this is an opportunity to make sure the government is changing its spending ways. I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I’m not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending.” 

The remainder of his statements on this matter and other subjects are readily available in the NBC Meet The Press interview transcript.    
There is no evidence thus far that the world economy will be threatened by any of the serious statements or theatrics by any Members of Congress in the forthcoming Congressional discussions about the debt ceiling.  I don’t know any principals or staff members on the Hill who believe that a new debt ceiling resolution will not be passed. 

We’ll just have to see how the Congressional presentations and arguments unfold.  Hopefully, everything will be fine by the time the votes are recorded.       

MG you can’t be this obtuse. The entire line of argumentation advanced by the Republicans is designed to convince people that Social Security ‘reform’ has something to do with short term debt limits or medium term deficit scoring. Which is why they attached it first to what everyone called a ‘Deficit Commission’ and now are attempting to do the same with a Debt Limit Bill. They have been using bait and switch tactics from the beginning.

The fact that Republicans are scared shitless of a direct assault on Social Security is shown by the 97-0 vote on the Baucus Social Security Amendment on last years Debt Limit bill. And two of the ‘Not voting’ people were Democrats, when Republicans were asked if Social Security should openly be subject to  non-debatable proposal with up or down vote from the Conrad-Gregg version of the Catfood Commission they ran like scalded cats. You could look it up. Since you obviously have time to read every transcript and report coming out of DC. (Pretty impressive BTW, I used to work in a Government Documents Library and we got big boxes of stuff from the GPO on a regular basis).

MG I never said anything about GDP. And when Republicans attack Obama about deficits (including saddling him with that record deficit scored under Bush) they don’t either. They use nominal dollars.

And a lot of the media appear to care what Sarah Palin is tweeting. And for that matter Justin Bieber. If i was to base my understanding on the relative degree of attention paid to something by Fox I wouldn’t know anything at all.

And as I said to Buff, circumstances alter cases. The perceived economic situation in 2006 was entirely different than that of Feb 2009, the remedies suitable to taking the air out of a bubble being totally different from those needed after it blows. You are straining for relevance that doesn’t exist once you place the two situations in respective context.

webb,
 
If you read about the 2006 debt ceiling vote, then you should be able to answer your own questions.  You didn’t accomplish anything by throwing those questions to another Angry Bear participant.
 
You don’t know what the Congressional Republicans are going to do regarding the forthcoming debt ceiling resolution.  It may work out fine in the end.
 
As an example, there is no evidence whatsoever that Senator Lindsey Graham’s stated position that he will oppose the next debt ceiling bill for the reasons that he has stated will “threaten to shut down much of the world economy?”  He is only one U.S. Senator.  Besides, he already made this opening acknowledgement during his NBC Meet The Press interview:
 
“Well, to not raise the debt ceiling could be a default of the United States’ bond and Treasury obligations. That would be very bad for, for the position of the United States in the world at large.”
 
And then he continued with this in his first response:
 
“But this is an opportunity to make sure the government is changing its spending ways. I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I’m not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending.”
 
The remainder of his statements on this matter and other subjects are readily available in the NBC Meet The Press interview transcript.
 
There is no evidence thus far that the world economy will be threatened by any of the serious statements or theatrics by any Members of Congress in the forthcoming Congressional discussions about the debt ceiling. 
 
I don’t know any principals or staff members representing either political party on the Hill who believe that a new debt ceiling resolution will not be passed.  We’ll just have to see how the Congressional presentations and arguments unfold.
 
Hopefully, everything will be fine by the time the votes are recorded.

Senator Lindsey Graham stated his position during the NBC Meet The Press interview.  He only stated that he wouldn’t vote for the forthcoming debt ceiling resolution for the reasons he cited during the interview.   
 
Senator Graham has only been a U.S. Senator since 2003.  He has no major pull in the U.S. Senate, though he has been more than willing to reach across the aisle on certain issues.  He not known as a primary spokesman for the Republican Party nor is he known to always tow the party line.  That’s hardly his record. 
 
I would be more concerned about Senator McConnell and other senior Republican Senators.  Senator McConnell and other seniors Senators have already provided some statements to the news media. 

Now, you can stay worked up about Senator Graham, but I would move on to the heavyweights.   

No, Coberly, I do understand that SS has its own source of funding. Actually, sources. One is the SSTF (built using SS taxes) especially during the next three decades. I’m simply recognizing that a link to the budget, and the budget deficit, exists because when money is drawn from the SSTF, it comes from someplace else–income taxes, borrowing, budget cuts in DoD, whatever. That’s how the “loans” from SS over the past three decades get paid back. That’s been the plan for three decades.

“You’re obviously not particularly well informed on how”

Apparently not so obvious that you could inform that ‘how’ with some detailed exhibition backed with something concrete rather than fall back on your possibly mythical rolodex. Since you won’t explain exactly where I am wrong what am I supposed to do? Call some busy official blind and lay out some portion of my case so that he can explain where i got it wrong? And what portion should I ask about?

You are just avoiding any responsibility for your claims of “lies”. When your own formulations turned out to be a mix of wrong and muddled. Or at least inexplicible by you.

CoRev perhaps it is not clear to you that your whole statement about ‘all revenue’ going to ‘mandatory’ programs and all ‘discretionary’ programs being paid from ‘borrowing’ is based on your understanding or budget accounting terms and have very little to do with ‘daily processing of revenues and expenditures’. You are forcing the latter into conceptual boxes designed to handle the former.

Since obviously I am not convincing you perhaps you could read the following very helpful description of the entire process from Steve Goss, Chief Actuary of Social Security:
http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html
The Future Financial Status of the Social Security Program or read the introduction to the Budget document I linked to above.

webb,
 
You’re reaching at this point.  More of your usual personal accusations and lousy, immature intimidation tactics that have driven many readers from Angry Bear.  There are people watching this blog that are well informed on Federal budget matters.  I alerted a few of them to some of the statements here.
 
There is little device known as a telephone.  Anyone can make an inquiry with Federal, state, county, and municipal officials.  I have no problem calling such officials when I have questions whether for work or personal interest.  Develop your own contacts with the Government elements concerned.  It’s not that hard.
 
You don’t appear to understand the simple basics of how marketable Treasuries and interest payment obligations are recorded in the Federal budget or why they are recorded as spending obligations.  Perhaps you have the same problem with other spending obligations.
 
I may go into more detail on the net cashflow shortfall and special issue Treasuries redemption issue later on as time permits, and share my opinions with the general readership of Angry Bear. 

webb,

It’s reasonably clear that you haven’t bothered to read many of Senator Lindsey Graham’s statements on entitlement reform.   

I see no evidence that the senior or junior Congressional Republicans are attempting to frame entitlement reforms as short- or medium-term issues of primary concern.  Same story for the President’s fiscal commission.  Statements that I have read put those budget issues in the long-term category.   

As a sidebar, have you bothered to read any of the senior Republican Senators’ statements?  Senator McConnell and Senator Hatch made statements that were cited in the Wall Street Journal earlier this week. 

You’re obsession with Senator Graham is skipping right over what the heavyweights are saying.  I would be concerned about the senior U.S. Senators.  Senator Graham has only been a U.S. Senator since 2003.  He doesn’t have much pull in the U.S. Senate. 

I’m glad that you used to work in a government documents library, by the way.  Good experience. 

webb – “It is funny how none of that e-mail traffic ever gets direct to any of the Bears, why are they just whining to you? And you are privy to our traffic how?”

That’s easy, webb.  They’re my friends and associates.  I alerted over 400 individuals to Angry Bear years ago via email and phone calls.  Some well known economists, analysts, government officials, and many others well qualified in their fields tracked the blog for quite a while.  Many have dropped monitoring Angry Bear in the last year as it’s focus appeared to change from monitoring key current economic issues and the quality of many other main posts declined considerably.  Some are still watching it, but they’re not overly impressed at this point.  The reasons are clear based on email and telephone communications.  Unfortunately, I agree with them.  I hope that Dan is fortunate enough to eventually bring in some new well read economists and analysts that may attract a stronger readership.       

webb – “And as I have said a dozen times you are not in a position to make the judgement of whether I am in violation of the Comment policy.”

Every reader of this blog can make a determination as to whether you’re in violation of Dan’s comment policy.  Your abuses of Dan’s policy are obvious. 

webb – “And you keep doubling down on “quite wrong” but never explain WHY? In what ways? Where? I don’t care what reinforces what in your judgement, I don’t know of anyone who has actually agreed that you are a superior authority here.” 

Who is now in agreement with your stated position on this comment thread?  Jack?  coberly?  Arne?  Who has said that they agree with you? 

I may provide more detail on the redemption and Federal budget and/or deficits issue at a later time if time permits.  This is basic budget stuff that many others appear to grasp.  I don’t see anyone supporting your position at the moment. 

webb,

Look around elsewhere on this thread.  I have provided a bit more detail in responding to one of your comments. 

No, I don’t believe that you have a good understanding of the Federal budgeting process.  It’s pretty obvious on this comment thread. 

I may provide a more details comment later on as time permits.  Meanwhile, I am just responding to your stream of comments. 

webb,
 
You’re lost on this issue, aren’t you?  You apparently can’t explain what happens in the Federal budgeting process once a marketable Treasury is sold on the open market.  Where do you think that sale and the related interest payment obligations are reflected in the Federal budget?  Do you even think that they are reflected in the Federal budget?

You keep pretending that I have dismissed the Federal budget deficits from my thinking.  You couldn’t be more wrong.  For obvious reasons.   

webb,

It’s very clear that you have a poor understanding of the Federal budgeting process. 

U.S. Government program assets in the form of special issue Treasuries represent debt obligations of the U.S. Government.  The redemption of special issue Treasuries to an internal element of the U.S. Government has direct impacts on the fiscal year budgets and/or deficits.    It’s not more complicated than that.
 
The Social Security Administration is projecting a net cashflow shortfall of roughly $100 billion in 2020.  By 2025, the projected cashflow shortfall is roughly $275 billion.
 
How do think those financial obligations will be supported, particularly if the U.S. Government is still operating with deficit financing?  Where do you think the funds to support those net OASDI cashflow shortfalls are coming from?  How do you think it will be accounted for in the Federal budget process? 
 
There are three general ways to cover those net OASDI cashflow shortfalls through the General Fund budget (the Federal budget):  Reduce Government spending within the Federal budget; increase Government revenues for the Federal budget; or increase deficit financing.  All three of those methods of covering the net OASDI cashflow shortfalls have impacts on the Federal budget and those changes would be reflected in the fiscal year Federal budgets concerned, including any future interest payment obligations on marketable Treasuries sold to finance the net OASDI cashflow shortfalls. 
 
If the special issue Treasuries held by the SSA are redeemed by the Treasury having to sell more marketable Treasuries to cover the fiscal year net OASDI cashflow shortfall, where do you think the additional marketable Treasuries interest payment obligations are recorded and supported?  Where do think the additional deficit spending is recorded?  This goes to the matter of deficit financing in support of the Federal budget fiscal year spending and fiscal year deficit spending, more specifically.
 
The same net OASDI cashflow shortfalls could be covered by legal obligation changes to the combined OASDI programs, but that’s a separate issue.  And it flies in the face of supporting the debt redemption obligations represented by the special issue Treasuries held by the SSA in support of two of the three programs that it manages on behalf of the U.S. Government.

webb,

It’s very clear that you have a poor understanding of the Federal budgeting process. 

U.S. Government program assets in the form of special issue Treasuries represent debt obligations of the U.S. Government.  The redemption of special issue Treasuries to an internal element of the U.S. Government has direct impacts on the fiscal year budgets and/or deficits.    It’s not more complicated than that.
 
The Social Security Administration is projecting a net cashflow shortfall of roughly $100 billion in 2020.  By 2025, the projected cashflow shortfall is roughly $275 billion.
 
How do think those financial obligations will be supported, particularly if the U.S. Government is still operating with deficit financing?  Where do you think the funds to support those net OASDI cashflow shortfalls are coming from?  How do you think it will be accounted for in the Federal budget process? 
 
There are three general ways to cover those net OASDI cashflow shortfalls through the General Fund budget (the Federal budget):  Reduce Government spending within the Federal budget; increase Government revenues for the Federal budget; or increase deficit financing.  All three of those methods of covering the net OASDI cashflow shortfalls have impacts on the Federal budget and those changes would be reflected in the fiscal year Federal budgets concerned, including any future interest payment obligations on marketable Treasuries sold to finance the net OASDI cashflow shortfalls. 
 
If the special issue Treasuries held by the SSA are redeemed by the Treasury having to sell more marketable Treasuries to cover the fiscal year net OASDI cashflow shortfall, where do you think the additional marketable Treasuries interest payment obligations are recorded and supported?  Where do think the additional deficit spending is recorded?  This goes to the matter of deficit financing in support of the Federal budget fiscal year spending and fiscal year deficit spending, more specifically.
 
The same net OASDI cashflow shortfalls could be covered by legal obligation changes to the combined OASDI programs, but that’s a separate issue.  And it flies in the face of supporting the debt redemption obligations represented by the special issue Treasuries held by the SSA in support of two of the three programs that it manages on behalf of the U.S. Government.

webb,

It’s very clear that you have a poor understanding of the Federal budgeting process. 

U.S. Government program assets in the form of special issue Treasuries represent debt obligations of the U.S. Government.  The redemption of special issue Treasuries to an internal element of the U.S. Government has direct impacts on the fiscal year budgets and/or deficits.    It’s not more complicated than that.
 
The Social Security Administration is projecting a net cashflow shortfall of roughly $100 billion in 2020.  By 2025, the projected cashflow shortfall is roughly $275 billion.
 
How do think those financial obligations will be supported, particularly if the U.S. Government is still operating with deficit financing?  Where do you think the funds to support those net OASDI cashflow shortfalls are coming from?  How do you think it will be accounted for in the Federal budget process? 
 
There are three general ways to cover those net OASDI cashflow shortfalls through the General Fund budget (the Federal budget):  Reduce Government spending within the Federal budget; increase Government revenues for the Federal budget; or increase deficit financing.  All three of those methods of covering the net OASDI cashflow shortfalls have impacts on the Federal budget and those changes would be reflected in the fiscal year Federal budgets concerned, including any future interest payment obligations on marketable Treasuries sold to finance the net OASDI cashflow shortfalls. 
 
If the special issue Treasuries held by the SSA are redeemed by the Treasury having to sell more marketable Treasuries to cover the fiscal year net OASDI cashflow shortfall, where do you think the additional marketable Treasuries interest payment obligations are recorded and supported?  Where do think the additional deficit spending is recorded?  This goes to the matter of deficit financing in support of the Federal budget fiscal year spending and fiscal year deficit spending, more specifically.
 
The same net OASDI cashflow shortfalls could be covered by legal obligation changes to the combined OASDI programs, but that’s a separate issue.  And it flies in the face of supporting the debt redemption obligations represented by the special issue Treasuries held by the SSA in support of two of the three programs that it manages on behalf of the U.S. Government.

“If you read about the 2006 debt ceiling vote, then you should be able to answer your own questions.  You didn’t accomplish anything by throwing those questions to another Angry Bear participant.”

You ever hear of a rhetorical question? My recollection was that the answer to those question was ‘no’, something that should have been clear to anyone. Except someone being ridiculously literal.

“There is no evidence thus far that the world economy will be threatened by any of the serious statements or theatrics by any Members of Congress in the forthcoming Congressional discussions about the debt ceiling”

So is Graham just a poseur running a big bluff here, it’s all just theatrics? I at least gave Graham the courtesy of taking him seriously, it is interesting to see that you see the whole performance as clown act.

Pretty weak tea.

Faking what? You just don’t have answers and are trying to turn that around on me. You are trying to set standards for acceptable quotes that come out of nowhere. Your objection seems to boil down to “That is not how I would have written this post”. Who cares? Particularly since you refuse to submit anything of your own, suggesting to me anyway that you have nothing but kvetching and useless pedantry  to contribute. Certainly you don’t supply any substance in this thread.

“You apparently can’t explain what happens in the Federal budgeting process once a marketable Treasury is sold on the open market. “

Since it is irrelevant to my post and only fronted by you to obscure that you can’t actually explain how interest or principal on the Trust Fund are reflected in the Budget I hardly see that the burden is on me. It is your claim that statements that the SS Trust Fund have no effects on the Budget are laughable to informed persons, but when asked to explain the precise nature of the joke instead answer a question with a question. Why not explain the relation and settle the question once and for all?

Because based on what I am seeing here you simply can’t, you just started from the position that those who suggest the opposite are fools and that you didn’t have to supply any rigor but instead could just fall back on authority. Authority which you have never earned by actual demonstration.

ILSM said: “The cash is there to be loaned, take it in taxes!!”  but, then you are taking away the cash owner’s investment discretion.  In fact we borrow from many outside US sources, and US institutions.  Your proposal crowds out investment into the world economies. 

Implicit in your proposal is the belief that all cash is owned/owed to the Govt.  No!,  Not ever!  And, what kind of wierd, misguided statement is this: “The wealthy 1% benefit from the 37% of discretionatry spending.”?   Take a closer look at who/what institutions buy treasuries.

Sheesh!  I hope you had your tougue deep into your cheek when you wrote this.

Bruce, let’s get one thing settled between us her.  This thread was about:  Debt Limit Bill and Social Security Benefit Cuts.  Remember?  It is about the relationship of US debt to SS.

It is not about budget accounting, nor even just the SS, as debt is increased for all agencies.  Increasing US debt is a simple calculation.  Revenue in minus expenditures, when that remainder is negative it is borrowed.  Borrowing occurs first from the TFs when they are in surplus, and then from the public.  BOTH sources of borrowing raise the US debt until hitting the ceiling.  Very simple mechanically and conceptually.

As I have stated many times over our borrowing now equals the equivalent ~1/3 value of the discretionary budget.  So, for a legislator looking at cutting spending as a partial solution, cutting discretionary spending does not stop the borrowing unless discretionary spending is cut 100%.  That leaves the entitlements (SS) area of the budget in the cutters’ spotlight.  Another simple concept, but difficult politically.

That explains why SS is in the spotlight, and when we get to the two political alternatives (raising taxes, cutting spending) failing to raise the debt ceiling is less politically painful because it immediately balances the budget.

Do I think not raising the debt ceiling will happen?  NO!  Do I think raising the ceiling could be delayed?  Possibly.  The political forces are in place to dramatically cut spending.  Not raising the debt ceiling is a chance for legislators to point out the seriousness of the deficit train wreck path we are on, as it demonstrates what would happen if buying our treasuries were seriously impacted by higher interest rates (raises mandatory spending) or a growing number of treasuries not sold (leaves the US in the same place as not raising the ceiling — a nearly balanced budget.)  Another very simple concept without hyper sensitivity to Social Security.

Bruce, let’s get one thing settled between us here.  This thread was about:  Debt Limit Bill and Social Security Benefit Cuts.  Remember?  It is about the relationship of US debt to SS.  
 
It is not about budget accounting, nor even just the SS, as debt is increased for all agencies.  Increasing US debt is a simple calculation.  Revenue in minus expenditures, when that remainder is negative it is borrowed.  Borrowing occurs first from the TFs when they are in surplus, and then from the public.  BOTH sources of borrowing raise the US debt until hitting the ceiling.  Very simple mechanically and conceptually.  
 
As I have stated many times  our annual borrowing now equals the equivalent ~1/3 value of the discretionary budget.  So, for a legislator looking at cutting spending as a partial solution to raising the ceiling, cutting discretionary spending does not stop the borrowing unless discretionary spending is cut 100%.  That leaves the entitlements (SS) area of the budget in the cutters’ spotlight.  Another simple concept, but difficult politically.  
 
That explains why SS is in the spotlight, and when we get to the two political alternatives (raising taxes, cutting spending) failing to raise the debt ceiling is less politically painful because it immediately balances the budget.  Do I think not raising the debt ceiling will happen?  NO!  Do I think raising the ceiling could be delayed?  Possibly. 

The political forces are in place to dramatically cut spending.  Since cutting spending on discretionary spending has minimal effect on the borrowing ceiling, that leaves entitlements.  That is especially true when they look at longer term solutions. 

Not raising the debt ceiling is a chance for legislators to point out the seriousness of the deficit train wreck path we are on, as it demonstrates what would happen if buying our treasuries were seriously impacted by higher interest rates (raises mandatory spending) or a growing number of treasuries not sold (leaves the US in the same place as not raising the ceiling — a nearly balanced budget.)  Another very simple concept without hyper sensitivity to Social Security.

Dale said: “except of course if the budget deficit gets so bad the country collapses.”  If only the light would go on.  Unless things change dramatically, that is exactly the track this train is on.

Sigh!!!  How many times do we need to explain the mechanics and politics associated with the “debt celing” and SS?  SS is on the table, and it is there because a Dem administration wants it there.  It is there because a Dem administration understands the potential deficit spending train wreck on the horizon.

MG,

” Federal budgeting process.”

Two different worlds, budgets and financing them, IRS and treasuriy pillaging for the [DoD, HHS, etc] budgets’ execution.  

CoRev,

It would help if we used labels like “budget” process and “finance” process, then we can get off the “ire” about SS and recognize there arre two diverse and often contradictory approaches, one largely economic dealing with the “price” paid for federal actions on an economy (fincance) and the other budgetary/executionary largely operations, disbursements, and accounting.

Keeping the cost appropriate to the pricing is the issue inside the 5 sided wind tunnel as well as congress and the other cabinet departments.

SS is just a hot button here.

Following is my one trick pony:

The price of the 19.7% of USG expenditures DoD wastes is far higher than the cash profits going to war profiteers.

Rdan,

I was wondering, is this thread the longest ever?  At least the longest from number of words.

I suggest everyone back away from teh table and go get adrink – preferably scotch….

No countersigniture about sons of Mohammad (may he forever boil in the semen of swine) will lick my imperial boots, or be ground into history spiel? Do you not get paid on the Sabbath to shill for empire, or are you looking for another darkie to ostricize? 

That the current Democratic adminnistration may be complicit in some plan to “raid” the Social Security assets does not make Coberly’s analysis any less valid.  Nor does it make CoRev’s misguided analysis any more correct.  Yes,  both branches of the government are populated and staffed by a corps of sycophants to power and wealth, and they would tarnish the word if described as whores.  That doesn’t make it  true that Social Security benefits cause a deficiency in the general budget.   Redeeming the Special Treasury notes may have budget impact, but those same Treasuries had budget impact when first issued as a mechanism for accounting for the excess FICA collections when they were being spent by the government as a supplemental income stream rather than raising taxes or spending less, especially on military adventures in the middle east.   The government spent receipts intended for the payment of future Social Security benefits, the FICA contributions of emloyees and their employers.  The government issued Treasury notes to signify those expenditures and account for the debt.  Pay back’s a bitch.  To find means by which to avoid paying benefits is no different from raising the taxes of those persons who had been entitled to those benefits.  So there’s a tax increase by one means ot another.  The question is, who is going to bear the brunt of such a tax increase?

cursed

perhaps.  and i am not a boomer.  but in general your formulation is is brain damaged.  (sorry, my brain just thinks in those terms.  no serious insult intended.)   “the boomers”  haven’t done anything to create the current economic situation.  certain persons, who may or may not be boomers, have done things… the same things rulers have always done… do make conditions worse for the workers.
you cannot blame a generation for the acts of individuals, or conspiracies of individuals.

there may be “historical forces” (i hate the term, but can’t think of another) at work.  The combination of lots of nearly random events that synergistically  (hate that word too) combine to produce an observable change in the economic condition of the people, and their more or less predictable response to that economic condition/change.

now, perhaps that’s all you meant by “boomer greed.”  in which case i’d join you in lamenting a generation of vipers.  but from what i can see it’s not so much “intent” as simple ordinary human stupidity.

MORE FUN TOMORROW! I think we can wrap this one up.

But by God we did get the word count up! Somewhere Atrios is cursing the clouds at his petty 880 comment count. Bwa haw,  what we can’t make up in crappy pith and snark, we can equal in logorrhea!

But I am thinking reset button. Thanks for almost everyone that stopped by.