Open thread Sept. 21, 2012 Dan Crawford | September 21, 2012 6:25 pm Tags: open thread Comments (20) | Digg Facebook Twitter |
dont know if anyone else noticed, but japan launched their 8th round of quantitative easing this week; they’re going on a slump lasting nearly 2 decades, their debt to GDP ratio is around 240%, and they’re still battling deflation…& despite all that, and demographics that make our baby boomers look like spring chickens, international yen for yen hasnt been much stronger…
@rjs Well, just goes to show you a whole bunch of big banks and corporations can exist quite happily in a world where most people are old and young people are largely SOL. NancyO
NPR reported that Chicago teachers will receive a 16 percent pay raise (over 4 years). The reporter says this multiple times with the implication that it is a large amount. What inumerate reporting. The previous contract provides step raise of between 3 and 4 percent as teachers gain years of experience until they top out at 16 years. The new salary schedule is not posted, but if 16 percent is correct for a person in the middle of the schedule going from step 7 to step 11, then it suggest that the teacher of 2016 at step 7 will have lost ground compared to the teacher of 2012 at step 7 when you take into account about 2 percent inflation.
I don’t know if I have the numbers right, but I am sure the reporter had meaningless numbers.
Draghi going QE, Japan QE’ing, China totally floating……
Bernanke is merely keeping up with the rest of the “inflators”!
No effects about to occur!
arne, the chicago teachers have another problem; a severely underfunded pension fund, the city aint contributed to it for years; moreover, they’re not covered by social security; more here:
“…..moreover, they’re not covered by social security,…” rjs
Yes, and a good reminder that should be for all those out there that think FICA contributions are money ill spent. Social Secrity remains the only retirement program for workers that can be relied upon to provide benefits to its participants.
That brings up a question regarding the oft heard comment that Social Security is running a deficit and having to draw down from the Turst Fund in order to pay current benefits. That does not coordinate with information easily obtained from the SSA web site. To wit: http://www.ssa.gov/oact/progdata/assets.html
That page gives ponly gross numbers, but it clearly states that Income was greater than Outgo for 2011 by $69Billion. I believe that the income refered to is the total of FICA receipts and Trust Fund securities interest earnings, but not actually Trust Fund principal.
So what’s the truth of the mater? Would the SSA present data on its web site that is substantively wrong or misleading? By what measure is the Trust Fund being depleted if SSA’s data is correct and Income is continuing to out pace Outgo?
The SS Trust Fund is not being depleted. Every year, the Treasury pays the TF interest on its 2.7 Trillion dollars in special treasury bonds. Interest is immediately converted into special treasuries and merged with the trust fund. Result–even with decreased revenues, the TF stays solvent and even increases it holdings. So, in answer to your question words to the effect does SSA lie about the amount of the TF, the answer is NO. Hmmm. Isn’t that interesting? My initials are NO. Heh heh. Liberals always do their homework, know the answers to the teacher’s questions and hold up their hands before anyone else. Whaddaya expect? NO is gonna be wrong about the Trust Fund? Fuhgeddaboudit. NancyO 😎
In fact I assume that SSA is being above board with its depiction of the financial “health” of the SS system. I was indirectly trying to instigate some discussion of what others are trying to suggest, that SS is this year at “negative” cash flow and by 2033-36(?) will be deplelted. How does on describe excess income as negative cash flow? How do you deplete an account that has a net surplus each year?
you are correct, but
the Trust Fund is not important. At some time, SS WILL need to start drawing down the principle. (note to Bruce… i know this is not technically correct, but too complicated to explain at the moment, or for the point i am trying to make).
It was money borrowed from the Boomers to prepay part of their retirement beyond what pay as you go would pay… due to their larger numbers. It will be paid back just about the time the Boomers are disappearing over that infinite horizon. Then SS goes back to pay as you go. no problem.
well, two. first, in the meanwhile life expectancies and birth rates have changed enough, along with some economic variables, that the income rate at the present tax rate will not be enough to provide future worker- retirees with the replacement rate that current retirees get… though it will provide them with a pension that is worth more in real dollars than today’s.
the workers could accept that, but they would be wiser to call for an increase in their tax rate… about one tenth of one percent per year… so they can keep the same replacement rate… it will be how they think of “basic needs” by then… and the same retirement age… which they will very much want, whatever they may think while they are “young.”
second “problem.” The Trust Fund could disappear today, and it would hurt no-one, as long as they raised the payroll tax enough to pay the boomers the retirement they paid for. this would not hurt the post boomers paying the tax, because those people would still get the retirement they are paying for. the extra tax would pay for a larger real benefit over a longer life expectancy.
There isn’t a damn thing wrong with Social Security. There are a lot of lies out there about it, and a lot of stupid thinking. The kind of thinking that looks at a percent and goes crazy because the percent is higher or lower than what someone else got… instead of looking at what they are getting and what they are paying for it.
Looked at that way, Social Security is “priceless.” and will remain so as far as the eye can see…
except for the lies and stupidity.
don’t worry about the trust fund. they bad guys are trying to get you to focus on that because it WILL run out of money, and they can make you think that means Social Security is going broke. it ain’t.
(re Bruce… if the tax is raised that one tenth ofone percent the “principle” in the TF is never touched. what happens is that as the yearly costs increase.. as they will because the population grows, and the amount of money the earn, are taxed, and is paid in benefits grows, the size of the “one year reserve” grows fast enough to equal the amount of money currently in the TF. but since the tax is growing, a balance is reached in which the tax rate plus the interest on the TF equals the benefit rate plus the amount the TF needs to grow to keep up with the size of “one year’s reserve.”
this is not as complicated as it sounds, but you’d have to spend some time with it to really see how elegant it all is. meanwhile the Liars are working as hard as they can to confuse you about it.
and they are winning. i was going to write another post, but unless people understand it well enough to get serious about telling their friends and yelling at their congressmen and getting in the newspapers, mr obama and simpson bowles are going to take it all away from you.
and you won’t even realize it… until your kids can’t retire. but of course you won’t be here then.
you are absolutely correct. the “negative cash flow” is how they lie. they define cash flow to mean taxes minus benefits and because that IS negative (as long expected and planned for and what the TF is supposed is in fact taking care of… that’s what it was designed for) they can run around and yell “bankrupt” and about 40 million idiots believe them. and about two hundred million more don’t give a damn… except to carry around in their sub-conscious (pretty much all they have is a sub conscious) the idea that SS needs to be “fixed” so they will smile and nod and keep on chewing while the O’s and the S-B’s cut it to death slowly.
Jack, Coberly is talking about the long run, when, in fact we WILL all be dead. I was addressing the current meme in the RW blogworld that the TF is already being depleted. This is being circulated by the Koch/Peterson think tanks and others like WaPo’s Samuelson (who has no resemblance to any real economist– living or dead.) Anyhow, as I explained, tain’t true, McGee. NancyO
Coberly–So, which is it? SB or BS?? 8-)NancyO
77 years of attacking the New Deal. How much agitprop has to be defeated?
FICA cash surpluses are for hiding deficits!
To anti New Deal propagandists, two of whom are on the top of the republican ticket, the important cash flow from FICA receipts is cash for perpetual war.
In the past year or so SS cash for perpetual war has not been available, due to the failings of the Reagan/Friedman voodoo economics to grow the productive economy.
So much for the $28,000B “investment” in the military industry complex over the past 65 odd years!
tea party MC’s are lying about national security, which is not in the US constitution, being the prime purpose of the federal government, that is military industry congress complex propaganda to pillage the US, and kill the New Deal for the onwership class.
I want to hear these guys discuss the alternative to SSI and Medicare, which currently supports 40 million helpless seniors after a fashion. http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/
Suppose SSI ended tomorrow, or reduced payouts sufficiently that seniors would not receive enough to survive (not much of a drop, frankly.) Then what happens?
40 million seniors living in their kid’s homes? Even if they had kids who could take them, those seniors would need an increasing level of care from their kids, necessitating them perhaps leaving the workplace or going part-time.
Obama could campaign with a focus on those “kids,” the prime working age and retirement age adults who would end up with mom and dad in their living room (too hard to get in and out of the basement.) Those adults who, like me, are learning how to adjust an oxygen tube, navigate a wheelchair, and apply a narcotic suppository, without medical training and certainly without being paid. Tell those “kids” that the programs they and their parents paid into will mysteriously never pay out again, at exactly the time that they are heading into their own physical decline, and have probably also lost most of the money they thought they had saved for themselves.
If everyone realized they are only one stroke away from a new forced career cleaning bedpans, you’d get a lot more than a little booing at an AARP campaign speech.
the “long run” is not so far away. if the tax is not raised that one tenth of one percent, the principle starts to be touched in just a few years… i forget exactly when, but i think it’s before 2018.
then the TF would run dry completely in about 2033 (by current Trustees projection). This is not a catastrophe, because at that time either the tax could be raised 2% on workers and 2% on employers, or cut the replacement rate by about 25%. Neither of these would be fatal, but they would be noticed and produce a lot of real tears.
And hard to tell people who are running around with their heads cut off to take the tax raise, it will hurt a LOT less than the benefit cut.
because of course the people paying the tax are not (yet) the people getting the benefits. and most people (99%) are too stupid to realize that one day they will be. and too “greedy” to really care about those whose benefits are being cut today, if it means a tax raise on them.
which, of course, is what the liars are depending on.
SSI is not Social Security
i don’t like to be a pedant, but I think it helps to sound like you know what you are talking about.
meanwhile the bad guys are saying no one 55 or older will have their SS cut. this means of course that their plan has nothing to do with “greedy geezers” but is a plan to take SS away from the next generation… and no doubt replace it with something “you can own.”
the next generation is not smart enough to understand the danger in that. so maybe your story about bed pans will get their attention.
but be ready when they come back with their argument about how much more the young can make on the stock market. a recent report about Galveston makes it sound all too plausible.
coberly, there has been an increasing number of those “not in the labor force” showing up on the disability insurance rolls, especially since the states started getting tripped of federal unemployment rations…Mish, & several right wing sites make it out to be a scam, but who’s to blame anyone for doing whatever they need to do to put food on the table & keep the utilities on?
it’s said to be 8,786,049 as of the latest report..
i know. i agree. back during the Reagan Recession we saw people applying for food stamps who did not “exactly” qualify. But if they had waited until they qualified they would have been in a hole too deep to climb out of.
i will say about the people what i say about the politicians: i don’t object to a little ordinary corruption. i object to corruption at the level that threatens serious harm to real human beings… which is how the US is being governed today.
here’s the right link: http://www.socialsecurity.gov/cgi-bin/currentpay.cgi
try clicking the box “Name/URL”
then typing “ilsm” in the box that appears
click on “Publish..”
this will put ilsm at the top of your comment and save you from having to put it at the bottom
i am not sure it saves you any work, but it seems to make some other people happier.