A Bit of Levity on Friday Night
I saw the first pic on Hullabaloo and I pulled a second pick from Google. The first pic looks remarkedly like General Flynn. Digsby has an article up called “More of this, please” from where the first picture came of a protestor to Trump’s visit to Maine. The look-a-like Flynn is protesting Trump’s visit to Maine. Do you agree on the similarity?
With the sunglasses it is hard to tell if he, like Flynn, has that 10,000 yard stare.
True . . I see him as a little weasel.
Good morning Run, sorry to barge in here with an unrelated issue but I was just admonished that I don’t know what I’m about.
Can you tell me what is wrong with the following;
“Social Security is self-funding, so not technically a Federal budget item.
It is congressional ‘borrowing‘ of SS funds for ‘other’ purposes (and the necessity of repaying those borrowed funds) that has enabled greedy oligarchs, and their bought and paid for pols to perpetrate the myth that SS ‘spending‘ is an unsustainable budget item.
Congressional ‘borrowing’ from Social Security is achieved by selling US treasuries into the SS Trust Fund.
Why is it that the only US Treasuries that congress envisions defaulting on are those in the SS Trust Fund?”
Was told it’s “noxious and tendentious mainstream economics propaganda.”
?
Coberly (who I will contact) may disagree with me on my points. SS is self funding as taken from Workers at ~6.something of their salary. The only reason it is in the budget is to account for the revenue which offsets other expenditures. The revenues go into the general funds, a special interest bearing treasury bond is issued for the funds, and the funds are used. “Why is it that the only US Treasuries that congress envisions defaulting on are those in the SS Trust Fund?” Has its easier to pimp people than a financial institute which has first draw on debt over widows as established by the 2005 Biden supported Financial Modernization Act.
You talking over at NC?
Let me ask Coberly to come by, he knows scads more than I do on SS. Indeed, Social Security acknowledged his plan as one capable of shoring for 75 years out.
Run
What you and Watt4 are saying here seems to me to be essentially correct. I don’t claim to know scads more than anybody…except Congressmen and the “reporters and columnists who cover them.”
There may be a little problem with exact wording… which means different things to different people and may lead to confusion.
Let me try my version:
SS is paid for entirely by the people who expect to get the benefits. Their eventual benefits are tied directly to their contribution, which in general is 6.4% of their wages over their working career. But SS is not strictly an “investment” or “savings” program. It is also an insurance plan. So that under some circumstances (early death, disability, a lifetime of wages too low so the “normal” return on “investment” would not provide enough for them to live on) some people will get “more” than they paid for. This is liike fire insurance in that people who had a fire get back more than they paid in. This “more” is paid for by those who do not have a fire, so they pay in more than they get back. Most people understand that the insurance is worth paying for, and do not complain that they get back less than they paid in. They much prefer not to have the fire.
With SS, a lot of people who don’t have the fire look back and regret having paid for the insurance… and obsess about it. Or they are like teen agers who don’t need no car insurance because they know they are such good drivers they will never have an accident. Experience has taught us we can’t agree with them. Just as experience has taught us that as a country we can’t afford to let millions of people fall into dire poverty because they didn’t think they needed old age insurance.
In fact, even the people who do not fall into poverty in old age get back everything they put into Social Security, but they get less “interest” on their investment than they “might have” gotten from some other investment. “Might have.”
Meanwhile. SS keeps a reserve of money it takes in to tide it over times when less money comes in than needs to paid out to those already retired. Times like recessions. Or, as was anticipated in the 1983 fix to an ongoing problem with SS “solvency” (failure of Congress to keep up with inflation and unemployment effects on SS finances) a larger reserve of money was required so that the Baby Boomers would pay for their own retirement beyond what would “normally” be paid under the then existing SS tax rate… which would not be adequate because the Boomer tax rate was low because it was needed “as we go” only to pay for the smaller preceding generation, and the generation following the boomers would have to pay more than “fair” for their own retirement because of the need to pay for the boomer generation (larger than the generation following them.
This larger than normal “reserve” (the Trust Fund) like all trust funds was not put in vault in the form of gold and jewels and paper money… as some people believe is what should have been done… but in the form of “iou’s” also known as government bonds, which the rest of the world, including rich people, know is “real money”.
But since then, certain very rich people have paid very good liars to convince everyone (including themselves) that the government making good on it’s bonds is SS “causing” the debt. It is the opposite: SS is lending money TO the government so the government can pay for its needs without raising taxes.
Now that the time has come that SS needs to cash in its bonds, the liars say this is “adding to” the deficit. This is the way liars talk, as you would know if you ever tried to get someone to pay back money he owed to you and he kept giving you dumb excuses why he can’t, or “it’s so unfair of you to ask him to pay back the money he borrowed.”
I can’t tell from the way Watt4 wrote in his comment what is “tendatious mainstream economics propaganda.” If he means what I am calling the “very good liars paid by very rich people” we agree.
I do not know exactly how Congress accounts for the money it borrows from SS and eventually pays back to SS. I know that some of their language is deceptive… or made deceptive by the paid liars. But so far in actual practice the money is being paid back as promised and in a timely manner. If you look hard at where the money goes you can see that paying back SS REDUCES the “Debt”, and it only “increases the deficit” if you are in the habit of calling paying your bills “increasing your deficit.”
I understand that for technical reasons this is the way some budgets “account” for their money flow… but even rich liars know the difference between paying back money you borrowed and borrowing money for things you want.
In the case of SS the Congress borrowed money FROM SS to buy things it wanted, and is now paying back the money it borrowed. It is simply a lie to call this SS adding to the deficit or debt. It’s the things congress bought with the money it borrowed from SS that added to it’s deficit/debt.
i hope that’s clear. It should be to anyone who tries honestly to think it through.
let me know if i left something out.
Thanks Dale:
I believe SS Revenue (by itself) from taxpayers no longer covers SS payout. I believe we are now drawing on the interest paid to equalize the SS payout of benefits? If beyond that, then we are drawing down the TF. I believe this is watt4bob is asking (I am not sure if we are at this point yet).
Run
I’d have to look, but I think the SS Trust Fund actually grew a little bit last year from interest credited to it but not needed to make up the difference between FICA taxes paid in and benefits paid out.
Thing is, it doesn’t matter much, except to give the Liars something to twist into language that makes people think SS is in trouble, or causing trouble. What is happening now with SS is very normal business earning, spending, saving, and withdrawing savings. SS does not borrow any money, so it cannot add to “the debt” or the deficit.
Because of the payroll tax holiday it is very likely that the Trust Fund will run out of money sooner than previously expected, and this will be used by the LIars to claim that SS is “insolvent”,
But the payroll tax holiday is Exactly what the bad guys have been trying to do for 80 years : cut SS income so that it will not be able to pay enough in benefits for it to be meaningful old age insurance. There is no law that requires congress to pay back the money lost to SS because of the “tax holiday.” But if it does pay that money back you can be sure the Liars will call it “proof” that SS does contribute to the deficit/debt. But it’s not SS that caused the need for it to be paid “back,” but Congress playing dishonest games with its funding. that includes Democrats in Congress as well as Republicans.
What is at issue is the reply I got from Strether, that I was posting;
“noxious and tendentious mainstream economics propaganda.”
Somehow I think he believes that my point somehow impacts his efforts to explain the implications of MMT?
I don’t see how the two ideas conflict.
It seems entirely possible to argue the point that the government can print as much money as needed for what ever purpose it deems important, AND that repaying funds ‘borrowed’ from SS goes a long way to ‘solving’ the SS ‘problem’?
The following text is what got me in trouble;
as regardsthis;
( Military spending is the second-largest item in the federal budget after Social Security.)
W4B replied;
Social Security is self-funding, so not technically a Federal budget item.
It is congressional ‘borrowing‘ of SS funds for ‘other’ purposes (and the necessity of repaying those borrowed funds) that has enabled greedy oligarchs, and their bought and paid for pols to perpetrate the myth that SS ‘spending‘ is an unsustainable budget item.
Congressional ‘borrowing’ from Social Security is achieved by selling US treasuries into the SS Trust Fund.
Why is it that the only US Treasuries that congress envisions defaulting on are those in the SS Trust Fund?
Watt4
I don’t argue with advocates of MMT. I don’t really know what they are advocating. We already print money for economic and political reasons. Up to a point this does no harm and probably does a lot of good. But (I think) it can’t go on forever. And with MMT it remains a political problem to decide who gets the printed money. So I don’t see the advantages of MMT.
Mostly I try to stay with what I know.
“Repaying the money borrowed from SS goes a long way to solving the SS problem.” No, it doesn’t. the money is being repaid right now exactly as it was intended to be.
The “problem” with SS is that current projections of future income levels, future birth rates, and future life expectancies show that the payroll tax would need to be increases 2% for workers and 2% for employers in about fifteen years.
this is not a huge amount, the workers will get their money back threefold with the effective interest that comes from pay as you go financing, PLUS they will have paid for a secure if modest retirement with an amount of money that is not a huge burden.
If you were told the cost of bread and food in genral was going to go up 2% in fifteen years you would not panic, or stop buying bread…. or stop paying in advance for the bread you will need after you can no longer work. You would just say, “well, that’s the cost of living,” and budget for it, maybe spending a little less on new cars or trips to Las Vegas.
Only in the case of Social Security does everyone go crazy at the thought of a modest increase in the price. an increase we can pay for by raising the tax one dollar per week per year while wages are going up about ten dollars per week per year.
Of course people don’t go crazy about SS on their own. they need to be lied to by other people who do not have their best interests at heart.
The fact is that the price of retirement is going to go up no matter what we do. SS gives us the chance to pay for it painlessly with the best insurance in the world that we will not lose our savings to inflation, bad days on the market, or personal bad luck.
Military spending IS the largest item of spending in the budget. SS spending is NOT in the budget. The government does not pay for it. The rich do not pay for it. The workers pay for it themselves… they are paying for their future groceries while they still have incomes…and getting interest on their savings.
The borrowing of SS money has provided words the liars can twist to make SS look like a drain on the budget. But the borrowing itself has no effect on the budget. You have to watch out for the doublespeak.
Coberly, and Run,
Thanks so much for your contributions to understanding this situation.
It appears my sloppy writing, and tendency toward polemics in some cases clouds my intent.
In essence, my intent was to argue there is no reason to let up on fighting folks like Allen Simpson of the ‘cat food commission’ on what might be be called traditional grounds, even as we argue the logic of MMT.
I had learned what I’m calling the ‘traditional’ argument through years of paying attention to people like Run, going back to the days of the Moneybox board at Slate.
MMT is a more recent discovery, and adds ammunition in the fight against the kleptocracy.
It appears yesterdays kerfluffle was mostly my fault, due to my sometimes sloppy writing.
Thanks again W4B
Watt4Bob:
I hate acronyms as it leads to misunderstanding and sloppy conversations. If one is going to speak, we should speak in detail. It leads to a better understanding of what each person means. I was sure you have heard the need over the next 75 years for unfunded obligations of $13.9 trillion in present value? Nobody budgets 75 years out as the economy changes over time. Clinton had a budget positive and bush a budget negative. Obama eliminated much of the deficit and for sure Trump will leave a large deficit. More than likely, a 10 year plan should be used. Dale Coberly’s Northwest plan calls for a 1 tenth of one percent yearly tax increase for employee and employer each over a 10 year span to resolve a short fall in funding. Would you miss 1 tenth of one percent of your salary?
Lambert really did not explain what he meant in his reply to you. He tossed some words out there rather than give a lucid response which was common practice by those at Slate to draw a response rather than engage in a discussion.
Watt4
you don’t need to apologize for “sloppy writing. certainly no sloppier than mine. communication is always hard. psychologists who study communication say we would be surprised to know how rarely we understand each other… and how little it (usually) matters.
the key is to keep trying (when it matters) to discover where the non-understanding is and to try to fix it.
i take the 13 Trillion as “given”. the Actuaries know their business. Where the mischief starts is that no one takes the trouble to understand what that means. It turns out to mean not much. running out of time on my laptop. back later.
I think this might be a good place to stop for now.
The 75 year “actuarial window” is not a “budget” though it is treated as though it was by the people who lie about Social Security. The ten year “short term” projections are probably a reasonable basis for making decisions about Social Security as they provide time for gradual changes if they seem likely to be needed.
But instead of taking advantage of the short term projections, we have ignored them, and recently decided to make the problem much worse with payroll tax holiday and other proposals to divert SS savings into immediate spending.
What you need to know is that Social Security can be saved essentially forever with a 2% tax increase (that is not really a tax, but a retirement savings and insurance plan). That’s 2% for the worker matched by 2% from the employer. We can wait and raise the tax all at once in about 2035 (or much earlier if the “tax holiday” is not paid back). Or we can raise the tax 1.5% immediately and expect to have to raise it another 1% 75 years from now (it is nonsense to worry about 75 years from now, but this is what the liars call “kicking the can down the road.”) Or we can raise the tax one tenth of one percent on average per year starting very soon.
You don’t need to understand this in all its detail, though I will be more than glad to try to help. It’s not hard, but it does take a little study. But I would say you don’t even need to understand it as long as it makes enough sense for you… us…. to DO it.
Instead we have a Congress that neither understands nor cares, and is doing the exact opposite. That is a political problem I don’t know how to solve.
I will be away for a while. Will check back this evening. Don’t really expect anyone to care as much as I do.
Dale:
Peter Ustinov played the part of an Old Man. Some dialogue:
Old Man : You mean to say that those people know ahead of time when they’re gonna die?
Logan : That’s right.
Old Man : Oh, that’s silly. What’s the reason for that?
Logan : That’s the way things are. The way things have always been.
Old Man : Yeah, it takes all the fun out of dying.
Old Man: The naming of cats is a difficult matter, it’s not just one of your holiday games. You may think at first I’m mad as a hatter, when I tell you that each cat’s got three different names.
A bit of Peter from the movie “Logan’s Run.”
I am not sure if we will ever bust through to sanctuary. But, you must keep telling them the facts as you know them. Then they can never deny having known them going forward.
Watt4 was a part of a cabal who had similar interests in the economy. So we talked on a site called Moneybox, a part of Slate’s The Fray. We did not have the benefit of the Barkleys and others like yourself. Even so we exchanged what we knew and argued back and forth.