Destroying Social Security to ‘Save’ It: the Arithmetic of Benefit Cuts
by Bruce Webb
House Minority Leader John Boehner said in a statement marking the 75th anniversary that while the law has served the needs of millions of Americans seniors, the Social Security and Medicare Trustees have “repeatedly warned Congress and the American people that reforms are necessary or future benefits will be threatened.”
He added that Republicans are “committed to protecting Social Security and preserving this invaluable program for current and future generations of retirees.”
Time to take a little closer looks at this framing in light of the numbers. Boehner here is defining ‘crisis’ explicitly in terms of “threatened” “future benefits” and then commits his party to “protecting” and “preserving” Social Security. But how does his party propose to do this? Well by cutting benefits, either through an increase in retirement age or via a switch to some form of price indexing. Kind of like saving your foot by cutting off your leg.
We know what the Trustees say: 100% of scheduled benefits payable through 2037 and 78% after that declining to 75% at the end of the projection period. Meaning that any proposal based on a crisis defined by “threatened future benefits” that produces a worse result in 2037 and after is some mixture of ineffectiveness and bait and switch, particularly if if also cuts benefits BEFORE 2037, from the perspective of the future retiree no matter what the age that proposal represents a dead loss. For workers the simplest benchmark is ‘22%’, any ‘fix’ in excess of that is just theft from workers serving to advance some other purpose. Those purposes might be worthwhile on their own, but it is up to proponents to make the case to a democratic majority why the tradeoff is actually either in the interest of the nation and/or the vast majority of that nation that participates in Social Security.
Opponents of Social Security have tried to get around this difficulty, (and the even bigger one represented by what I call ‘Rosser’s Equation’, that 22% ‘cut’ is from a much larger baseline number than today) by using language that leads younger workers to believe that ‘benefits cut from a 160% baseline’ somehow translates to ‘no check for me’. It doesn’t. As long as FICA continues to be collected and is not permanently diverted to PRAs or something else, benefits will be paid at some level. It is up to reformers who are currently defining ‘crisis’ in terms of ‘benefit cuts’ to put up or shut up. Can they produce a better result for the democratic majority? If not why should we listen? And make them bring numbers and not slogans. Don’t let the Tan Man do the 2010 version of Ben Tre,
There are at least four sort of legitimate arguments or argument categories to justify benefit cuts. The argument from ‘private accounts’, the argument from ‘financing burdens’, a closely related one from ‘sustainable solvency’, and the argument from ‘Boomer politics’. None of them really compelling to me, but have at it. There is also a pseudo-argument from ‘deficits/unfunded liability’ that doesn’t stand up to scrutiny at all. But oddly the only ones you hear much about from top Republicans is the crocodile tears Boehner concern about future benefit cuts and the Peterson one about unfunded liability, because each reduces neatly to “think about the children!” that the end result for most of those children, at least the ones who aren’t grandchildren of billionaires, is a massive cut in THEIR OWN retirement kind of glides by. Thanks for nothing. Literally.
2 points! 1-a counter argument to the so called P.R.A’s, I believe the scheme was to allow individuals to put a part of the F.I.C.A. with held into the stock market? Didn’t a great many do just that in their 401’s, their stock portfolio’s ect, only to have lost their savings in the big Looting that recently took place?
2-if workers who pay F.I.C.A., do so up to the maximum cut off or cap, but don’t exceed that cap in wages, pay 12 months out of the year? Then what is wrong with setting the cap @ infinity? Shouldn’t those wage earners also share the obligation of contributing to the fund like the wage earners up to the cap? Seems to be to be a no brainer here. But then, I’m just one of the “lessor people” like Simpson calls us.
“and the Peterson one about unfunded liability, because each reduces neatly to “think about the children!” that the end result for most of those children,”
Unfunded?? Does that mean that all entities that hold T-Bills and expect to use the proceeds from such notes for their future benefit will face “unfunded liabilities?” Is China, and the rest of the industrial world, holding unfunded promissory notes from the US Treasury? Is Peterson invested in T-Bills that will prove to be a drag on the Treasury when they mature and during the period that they accrue interest earnings? If one category of T-Bills are unsecured by the full faith and credit of the US government then why wouldn’t any other category of T-Bills be equally unsecured by such a concept?
The discussion really has to move to the recognition that all T-Bills represent a burden on future tax receipts and the generations that are expected to pay them at maturity. How do we allow the discussion to ignore the relationship between the categories of debt? The special Treasuries are debt owed by the general fund/budget to the retirement account of all working Americans. Are they all stupid enough to allow debt to external entities to supersede debt to the people?
The ideal of actually lowering retirement age SS eligibility to 61 or 62 would lead to the lowering of our unemployment crisis, pumping more payroll taxes into the system across the board.
and it would help getting young people off the streets and out of trouble and they would contribute to their own retirement while they are young. In the end they would have the same or even more years of FICA contributions before retirement. Let them have jobs when they are young and need income even more.
The cap actually serves to prevent Social Security from being confiscatory / redistributionist to people at the high end of income distribution. Right now, SS arguably isn’t a great deal for high earners, but is a good to great deal for everyone else. But given how the Primary Insurance Amount formulae work, marginal income begins to produce negative returns for high earners. As a result, lifting the taxable maximum would make Social Security fundamentally redistributionist and a really bad deal for high earners.
If you completely raised the cap without changing the benefit formula, you could go quite a ways towards closing the actuarial gap. But an individual with a $1 million annual income would pay in $62,000 a year ($124,000 for Self-employed or if you include employer’s share) to receive $28,000 a year. Considering that the same individual pays around $6,500 ($12,800 for employer) a year to receive the same $28,000 under current law, Social Security changes to a terrible deal for that person.
Now, if we raised the benefit and the income cap, that same individual would pay in $62,000 a year ($124,000 including employer’s share) to receive $150,000 yearly benefit. A better deal, but still not a good one.
Politically, such a tax increase would be impossible to enact. Even if it were enacted, it would render tax increases to fix other fiscal imbalances difficult and would provide the perfect starting point for demagoguery on Social Security. Making Social Security too much like welfare is the perfect way to kill it.
NOTE: The numbers above are informed estimates, not the result of any rigorous calculations.
On Point 2. Social Security was set up as insurance, not welfare. There is a mild transfer built it from workers who earn near or over the cap to lower income workers but not enough to equalize actual payouts.
The cap serves as political insulation. Since Social Security draws nothing from holders of capital it owes nothing to them. One you break down that wall, you start allowing the time old principle of “He who pays the piper calls the tune to operate”
There are plenty of societal needs that could be met by restoring progressivity to the tax system, but FDR and Frances Perkins deliberately walled SS off from progressive taxation. And in my opinion wisely, otherwise it might be gone by now.
Bruce
They can’t put up. And they won’t shut up.
All they have to do is keep shouting “we have to destroy Social Security in order to save it” and enough people will believe them to let it happen.
I understand the Rosser equation, and I understand why it helps to explain it to people. But I am afraid that in evil hands it can be used to justify a benefit cut. After all, it the projected benefit cut of 22% is really “more than” what people are getting today, it’s not really a cut at all, is it?
Of course it is. It is the equivalent of saying that since most people didn’t have refrigerators in 1936, the “real” value of benefits in 2010 doesn’t need to be high enough to allow retirees to be able to afford a refrigerator.
We don’t know what living standards will be like in 2085, but we can be sure that an income level much lower than 40% of “average” wages will not be enough to allow retirees to live above what they will see as desperate poverty. Nor is it certain that this will be merely a perception of relative poverty. If you can imagine trying to buy groceries in 2010 without a car… as was easy enough to do in 1950… you can see that keeping up with the prevailing standard of living is not really an “option.”
I know you know all this, and I hope most Bears know this. But there are lots and lots of people who need to be reiminded that raising their own payroll tax an amount equivalent to 20 cents per week every year will allow them to retire at the current retirement age without any benefit cut at all… relative to the prevailing standard of living. That is such a painless solution, it is criminal not to tell all the people.
No unfunded liabilities are something else entirely. And not really related to Trust Fund balance directly.
Social Security has a ‘benefit schedule’ which projected out over any given period gets you a ‘cost rate’. Equally Social Security has dedicated tax revenue and a formula that projected out over that same period gets you an ‘income rate’. The ‘unfunded liability’ is simply the ‘cost rate’ minus the ‘income rate’ expressed in dollars and then with Trust Fund balances subtracted out. That is for the purpose of this calculation the Trust Fund is scored as an asset.
The problems with ‘unfunded liability’ are two-fold. One the probability band makes any projection beyond even the 25 year sub-sector unreliable, and while the traditional 75 year actuarial period is reasonable enough if discounted for that probability spread to proceed as they have since 2003 to project unfunded liability over the ‘Infinite Future’ is just to generate big scary but ultimately meaningless numbers.
But in the medium term ‘unfunded liability’ is not entirely meaningless. Under current law the Commissioner of Social Security has neither the legal ability to borrow nor the ability to change the benefit schedule. The widely expressed view that in 2037 or whenever Trust Fund balances go to zero that benefits will just reset is on examination not correct, the Commissioner would under law required to stumble through as best he could, presumedly by delaying payments. The period of time between Trust Fund exhaustion and whatever fix would be implemented might create an actual legal ‘unfunded liability’. But in the nature of things it would be time limited, either taxes would be raised or future benefits lowered and some accommodation would be reached about benefits authorized but delayed. From which point ‘unfunded liability’ would vanish becoming either funded or no longer a liability. We can imagine that intervening period to be weeks or months but certainly not years and centuries as Infinite Future would have it.
But to repeat ‘unfunded liability’ is not a measure of outstanding debt, though Peterson and pals constantly try to confuse the two in people’s minds.
Jack
all “unfunded” means is that we have not yet raised the tax to fund them. there is no need to raise the tax too early, and very good reasons not to. Congress would just “borrow” the surplus, and then cry that paying it back amounts to double taxation or some such nonsense.
All of what you say about Treasury bills is true, but it is also important not to get lost in a wilderness of financial arguments. The simple fact is that Social Security does not depend on paying back the Trust Fund, or ANY financial scheme beyond the very simple one of paying for benefits out of current taxes… pay as you go. The surplus created by the 1983 tax increase was potentially a good way to “finance” the boomer retirement, but the demagaoguery that has grown out of it is dangerous.
It would be better…. Coberly’s equation… to let them steal the damn Trust Fund than to let them murder Social Security.
All the trust fund does is save the Baby Busters a few dollars a week, which they would get back anyway during their own retirement, and which they will pay anyway by price increases and shifted taxes. But it gives the shouters and liars a chance to confuse them by telling them they are being robbed to pay for the Boomers, or “taxed twice” or any of a dozen other lies that depend on people not having the time to think through the whole situation.
The whole situation does reduce to the people working at any given time “pay for” the things consumed by the people who are retired at the same time. The financial arrangements turn out to be irrelevant in terms of cost to “the workers.” The only differences are the relative justice and security of any given arrangement. And there Social Security is in a class of its own.
Unless you are going to send the old folks out into the blizzard, you are going to end up paying for their groceries and housing anyway. Far better to let them do it themselves explicitly by a legally definable money trail that directly relates benefits to a tax explicitly designated for those benefits.
For illustration here is the calculation from the 2009 Report (the 2010 numbers vary some but this gives you the basic calculation)
Some guy
you are exactly right.
but i would quibble that for high earners, SS is still a very good deal. The return is not as high as they “might have gotten” on the market. But the whole point is they might also have “not gotten” it on the market, or run into some other form of bad luck. So SS is insurance against that. And you will not find an insurance program that provides as much for a better price.
The sad fact is that everyone who does well enough not to need the insurance thinks about what they “could have gotten” with their SS premiums (tax), and enough people who are really dumb are convinced they will be just like the lucky ones and could do so much better invesint their premiums in a sure thing on the market… that we have these stupid arguments… as long as someone like Peterson keeps funding the disinformation campaign. The sadder fact is that more than half the people in this country end up needing Social Security for more than half their income in retirement. It’s not like they would be rich without it. Or “could have” gotten rich investing their “tax.”
Norman
no. Social Security is an insurance policy. making the rich pay more for the policy than it will ever be worth to them would turn SS into welfare. That is not at all healthy for the peope getting the welfare, and the people who are paying too much for it will find a way to make it mean and miserable for those who ultimately collect the benefits.
BTW ‘future’ and ‘current’ participants as used in this table do NOT mean what you think they would
Bruce
they rely on confusing the people with numbers…or by hiding the numbers. that folks could save a benefit cut that amounts to reducing a thousand dollar a month pension to a 750 dollar a month pension, by paying an extra tax that amounts to 80 dollars a month out of a 4000 dollar a month salary is deliberately kept out of the discussion. So all people hear about is “looming” crisis, huge benefit cuts, huge tax increases. burdens on the young, generational inequity… all words that mean exactly nothing, but create frightening nightmare images in the minds of most people.
and of course that 80 dollar a month tax increase doesn’t happen all at once. it works out as about a dollar a month each year, while incomes are going up about 40 dollars a month each year.
in other words
there are NO legitimate arguments for benefit cuts.
i know you know this, but you are too generous with the enemy. he is a liar. he has always been a liar.
I didn’t know if it’s a good deal or not for high earners. I suspected it was, but I thought it depended on how you characterize the employer’s share. I was going off of a vaguely remembered report (GAO? CBO? maybe SS?) where the model showed top earners getting about 60-75% back.
But thinking about it on my own… Someone who turns 66 this year and earned $107,000 in 2010 dollars a year for 30 years would pay $200,000 into SS for a $28,000 annual benefit. The break even point for that person would be 7 years, 14 if self-employed or counting the employer’s share. Based on Krugman’s 18.5 number, that’s about a 50% return, so an annual return somewhere between 1 and 2%? It starts producing negative returns around 40 years of work at the taxable maximum (lucky soul).
This is only on the retirement side, clearly there’s value in the Disability side, too. In other words, it’s a good deal for high earners, too.
Well I find Rosser’s Equation a useful way-station along the road from ‘No Check for Me’ to ‘Northwest Plan’.
And while I fully understand the equity argument behind sharing future bounty with those that helped create it, the ‘Honor thy Father and Mother’ component, the fact is that even under adverse circumstances my nephews and nieces (who are already living in positions of material privilege far far removed from the ones I grew up in) would be getting a better relative deal from Social Security than my Mom is. If we can set it up so that they can get even a better deal then great, and I don’t even mind chipping in a few bucks to make it happen, but I don’t find the theoretical case for sacrificing current utility for workers over 50 for benefits that will mostly accrue to workers under 30 to be as compelling and slam dunk as your formulation assumes. That is I don’t see a 98% or even a 95% result as being unacceptable, not when it works out to be something like 140% in real terms.
That is ‘really cheap’ doesn’t mean ‘free to me’. And the reality is that if you sum it all up the argument for intergenerational equity really flows the other way, I owe my grandparents and my great nieces and nephews owe me.
Plus as a bonus you can marry a trophy wife ten years younger than you and add another decade and a half of checks after you peg out.
In all seriousness there are a lot of now high income people who wouldn’t have been if it hadn’t been for Social Security putting food and even tuition money on the table after Dad died in an industrial accident. I am not that kind of number cruncher but after you add in the inflation protection and survivors on top of that disability it starts looking like a real good deal.
Which of course is an argument for keeping the cap. I am perfectly willing to entertain suggestions that we get it back to the 90% income level, up from the 83-84% it is now, but it seems to capture the right risk/return ratio even for those lucky duckies who spend half or so of their lives earning cap level wages.
One nit to pick. . .
“Those purposes might be worthwhile on their own, but it is up to proponents to make the case to a democratic majority why the tradeoff is actually either in the interest of the nation and/or the vast majority of that nation that participates in Social Security.”
Considering those whose benefits are subject to less than 100% scheduled for the entirety of their retirement are 8 years away from being born and 26 years away from voting eligibility, convincing a “democratic majority” means you’re playing with a bit of a stacked deck, no?
No. Not unless the cost of the fix costs the unborn less than a 25% cut in benefits and/or a numerical equivalent reduction in debt service on the Trust Fund. If my great nephews and nieces to be aren’t going to see a net gain individually or as a collective majority I don’t have any problem being their fiduciary and making that decision for them.
The problem with the “intergenerational equity” argument is that it tends to be all concepts and slogans with no actual contextual numbers. Let them make the case rather than playing on some sort of liberal guilt about future generations.
I agree that the cap serves a purpose because if it did not exist then it would make social security look more like a welfare program. Now one could remove the cap and put a 3rd bend point in the benefit formula where the 3rd bend point is set at the 90% level of wages and above that bend point the benefit scales at 5%. Actually the benefit transfer is not exactly mild 90% wage replacement for the first 761 of average indexed monthly earnings then 32% to 4568 and 15% above it. I just went to immediateannunities.com, input my monthly benefit at 65 and to buy such an annunity today would cost about 4x what I paid in or about 2x if the employer contribution is included. Everyone can download the SS benefit program, and enter the data from their SS statement, and compare the cost of the annunity at the web site to the amount paid for SS and it is a very good deal. (Of course annunity rates are at very low levels right now (i.e. it takes more money at the start to get $1 of income) , so some of the advantage washes away if interest rates go back up)
I suggest people do as suggested and they can see what kind of deal SS is.
Why don’t we rank the relative 75 year “unfunded kiabilities” of the General fund, Medicare and SS. Then lets work on the biggest problem first.
Wait, that would mean that SS wouldn’t be “saved”…
Jack wrote:
Does that mean that all entities that hold T-Bills and expect to use the proceeds from such notes for their future benefit will face unfunded liabilities?
If one category of T-Bills are unsecured by the full faith and credit of the U.S. Government then why wouldn’t any other category of T-bills be equally unsecured by such a concept?
Are they all stupid enough to allow debt to external entities to supersede debt to the people?
Jack, those are very good questions.
I believe there are 2 types of Treasury securities – funded and unfunded.
Funded Treasury securities would be to an external party, like yopurself. You buy a Treasury note and pay for it. What the government does with your money is its business, but you funded that Treasury security with your own money, under your own volition.
Then, there is the unfunded Treasury security.
This is the internal transaction, when the Treasury borrows from the trust fund.
This is an unfunded liability, because the money was spent by the Treasury on current expenses. In addition, no citizen had a say-so in the matter of Treasury borrowing from the trust fund.
This was all done internally, through the bureaucracy.
The liability is unfunded, for in order to pay off that Treasury security, Congress will either have to raise revenues, reduce expenses, or borrow from the public (unless there is a surplus).
Actually, debt to external entities does supersede debt to the people, if you mean debt for Social Security purposes.
From a paper entitled “Federal Debt, Answers to Frequently Asked Questions, An Update,” published by the GAO:
Page 65 Q “Debt is one liability of the federal government. What are other potential ways to look at exposures or implicit commitments of the government?
A “Debt held by the public is the largest explicit liability of the federal government. However, the federal government undertakes a wide range of programs, responsibilities and activities that may explicitly or implicitly expose it to future spending. It is useful to think of fiscal exposures as a spectrum extending from explicit liabilities to the implicit promises embedded in curreny policy or public expectations.
(See Table 2).
Page 66 Table 2 Selected Fiscal Exposures: Sources and Examples
Level 1 (highest liability) Explicit Liabilities – Publicly held debt, Military and civilian pension and post-retirement health, Veterans benefits poayable, Environmental and disposal liabilities, Loan guarantees.
Level 2 Explicit Financial Commitments – Undelivered orders, Long-term leases.
Level 3 Financial Contingencies – Unadjudicated claims, Pension Benefit Guaranty Corporation, Other national insurance programs, Government corporations, e.g., Ginnie Mae.
Level 4 (lowest level of liability) – Exposures implied by current policies or the public’s expectations about the role of government – Debt held by government accounts, Future Social Security benefit payments, Future Medicare Part A benefit payments, Future Medicare Part B benefit payments, Future Medicate Part D benefit payments, Life cycle cost, including deferred and future maintenance and operating costs, Government Sponsored Enterprises, e.g., Fannie Mae and Freddie Mac.
Go to: http://www.gao.gov/new.items/d04485sp.pdf.
Don Levit
Hmmm:
Maybe you meant something different than this:
“I believe there are 2 types of Treasury securities – funded and unfunded.
Funded Treasury securities would be to an external party, like yopurself. You buy a Treasury note and pay for it. What the government does with your money is its business, but you funded that Treasury security with your own money, under your own volition.
Then, there is the unfunded Treasury security.
This is the internal transaction, when the Treasury borrows from the trust fund.
This is an unfunded liability, because the money was spent by the Treasury on current expenses. In addition, no citizen had a say-so in the matter of Treasury borrowing from the trust fund.
This was all done internally, through the bureaucracy”.
For all intents and purposes, this is the same statement. A security funded by multiple contributions is no differrent that one funded by one contribution. I suspect the same liability would hold in court. Who is to say the SS note went for expenses or was invested in a similar manner as as the one contributor? In any case a default on either one would have some rather dire consequences for either.
Bruce
I don’t think we should argue in front of the children. but you are nibbling at the Peterson poison. Let the old eat cat food if it only saves me a couple of bucks a week for a lottery ticket. The curren benefit level is none too generous. Using it as a baseline for benefits 75 or a hundred years from now is simply not thinking clearly.
Don
you keep working yourself into a froth to avoid seeing a rather simple fact:
the Trust Fund is currently being paid back. so much for “phony iou’s.” whether it is paid back with taxes or money borrowed from the king of siam is immaterial.
in fact, whether it is paid back at all doesn’t make a hill of beans difference to Social Security, which could adjust the tax rate to fund itself fully pay as you go without skipping a beat, and without the people paying the tax even noticing, except for the politicians shouting about it.
Starting last year, I was informed by my employer that I would be moved into a “Social Security Alternative” withholding. I was told that it was the law that all “temporary,” “adjunct,” or “intermittent” employees would have to participate (we work at a state university). Our withholding is the same amount that would have been taken out for SS but it now goes into an account that’s managed by some financial services company that the university contracted with. We have the option to contact the company and tell them how we want our contributions to be handled, or to just leave them in an interest-bearing account. They tell us that the advantage to this arrangement is that when we leave the employ of the university we can decide what we want to do with whatever balance we might have. All that is well and good, but if SS were in such a bind, why in the world did they *force* so many people out of the system – no more contributions from us to SS? It doesn’t matter how old you are or how much you make, if you aren’t a full-time employee, you are forced into the “alternative.” University adjuncts can make a decent salary even though we get no benefits, but now we aren’t contributing to SS. Where’s the sense in that?
The problem is not just SS. There are two other retirement programs that look just like SS. The Military has its own TF and so do the government workers. They all have the same fundementals. They are in the process of peaking out and in a few years they will be tapping into their holdings to make scheduled payments.
As Webb as said at least 1,000 times. That is what is supposed to happen. It was planned for many years ago.
I tell you folks again. That run off implies that debt held by the public will increase $ for $. That is a disaster. You can’t bring another $5t into the public debt while the real economy is producing trillion dollar deficits. It will not work. It is like putting two trains on the same track heading at each other. The wreck is inevitable. The consequences will be substantial.
You need to look at the TFs in a broader concept. If you let SS do what it is supposed to do it will muck up things for the next 20 years. Do you really want that?
bk
In addition, no citizen had a say-so in the matter of Treasury borrowing from the trust fund.
Don just stop digging. The Social Security Act of 1935, passed by a Congress duly elected by the citizens, and an Act that got effectively endorsed by a landslide victory by FDR in 1936 in a campaign where Alf Landon ran on an explicitly anti-Social Security platform, mandates that the Trust Fund be held in securities whose principal and interest are fully guaranteed by the Federal Government. Which in practice means Treasuries. Which means “borrowing from the Trust Fund”
You have gone beyond stubbornness and ignorance into the realm of malice, and what is more damning, silliness.
Well I would suggest that your employer lawyer up. Because I suspect some serious violations of tax law here. Either that or they have deliberately exposed you to the same by exploiting 1099 rules that would make you legally contractors, in which case you would be obligated to pay both halves of that Social Security contribution yourself. I am not licensed to practice law in this state or any other, but it is no crime to suggest you invest a couple hundred bucks consulting with an attorney.
Krasting bring dollars. And not the ones you make up for your own purposes.
Do you have any evidence that either the Civil Service or Military retirement systems actually rely on those Trust Funds for significant parts of their benefit payouts?
Frankly the quality of your argument is deteriorating over time, you used to be just factually challenged, now you have descended into pure fearmongering hysteria. “The wreck in inevitable”. Please.
Just to be fair the federal civlian pension system is not the problem Regan fixed in in 1986, no the problem is state and local governments. (An extreme example the Bell CA city manager is supposed to get around 600k a year pension). Private Erisa pensions are capped around 135k. If you read proxies you will see that there exist supplemental pension plans for top exec but they are not protected in a corp bankruptcy. You can get the federal pension plan details on a gov web site. In addition stupic states and locallities make the pension depend on the last year only, and include overtime in the calculation. Make it top 3 out of 5 and only allow 10% of overtime to count.
Steve–You need to turn these people into IRS ASAP! You were working in covered employment as a part time employee. They have to tell you whether they want to or not what the legal basis of their action is. If they are employing you as a contractor, THEY GOTS TO GIVE YOU A CONTRACT! No contract, they owe the FICA PERIOD. They wouldn’t be collecting that FICA if they didn’t know they should!
Man, I don’t know what these people are thinking. Interest bearing account? Insured by whom? The university? Yeah, right. Tell them what you want them to do with the money?? Are these people NUTS? You don’t have to make a fuss at work. Just ask the usual questions, get their answers, and nail ’em. Jeez, I’m no lawyer for sure. But, I know the rules of coverage. You are either under a real contract or not. That you can inquire without irritating anyone. But, if you don’t like the answers you get, talk to your Congress person. Good luck and I wish you well. Nancy Ortiz
Bruce wrote:
The Social Security Act of 1935 mandates that the trust fund be held in Treasury securities, which means borrowing from the trust fund.
No, it does not.
If I paid for a Treasury security, the government has borrowed the principal from me and owes me principal and interest.
The same dynamic happens when you pay FICA taxes.
The difference comes in when the government used your FICA taxsx to pay for battleships and education, instead of saving the proceeds for the beneficiaries.
I don’t know if it was put into the Social Security Act that Congress could do this internal borrowing, but it introduced a new dynamic in how government could spend the taxpayers’ money.
I posted a quote from the debate on Social Security addressing this Congressman’s concern.
Instead of using the trust fund for current government expenses, and still counting the surplus as reducing the deficit, the government should have left the trust fund intact.
At the very most, it could have used the trust fund to pay down the public debt.
Don Levit
Mr. Krastig–You are aware, aren’t you, that both federal civil service and military retirement systems were largely merged into SS during the Reagan administration and even earlier? You are wrong. Again. Nancy Ortiz
Bruce Kasting wrote:
The military has its own TF and so do military workers. They all have the same fundamentals.
Bruce Webb wrote: Do you have any evidence that the Civil Service or military retirement systems actually rely on those Trust Funds for significant parts of their benefit payouts?
From a paper entitled “Analytical Perspectives, Budget of the U.S. government, Fiscal Year 2009,” which I believed you used for a citation, it says on page 345 “In 1984 a new system was set up to finance military retirement benefits on a full accrual basis. In 1986, full accrual funding of retirement benefits was mandated for federal civilian employees hired after Dec. 31, 1983. The latter two changes require Federal agencies and their employees to make annual transfer payments to the Federal employees’ retirement trust funds in an amount equal to the retirement benefits earned by employees. Since many years will pass between the time when benefits are earned and when they are paid, the trust funds will accumulate substantial balances over time. These balances are available to finance future benefit payments, BUT ONLY IN A BOOKKEEPING SENSE. THESE FUNDS ARE NOT SET UP TO BE PENSION FUNDS, LIKE THE FUNDS OF PRIVATE PENSION PLANS. THE HOLDINGS OF THE TRUST FUNDS ARE NOT ASSETS OF THE GOVERNMENT AS A WHOLE THAT CAN BE DRAWN DOWN IN THE FUTURE TO FUND BENEFITS. INSTEAD, THEY ARE CLAIMS ON THE TREASURY. WHEN TRUST FUND HOLDINGS ARE REDEEMED TO AUTHORIZE THE PAYMENT OF BENEFITS, THE DEPARTMENT OF THE TREASURY WILL HAVE TO FINANCE THE EXPENDITURE IN THE SAME WAY AS ANY OTHER FEDERAL EXPENDITURE (just as if the trust funds didn’t exist, my words).; BY USING THEN CURRENT RECEIPTS BY BORROWING FROM THE PUBLIC, OR BY REDUCING BENEFITS OR OTHER EXPENDITURES. THE EXISTENCE OF LARGE TRUST FUND BALANCES, THEREFORE DOES NOT, BY ITSELF, INCREASE THE GOVERNMENT’S ABILITY TO PAY BENEFITS.
If the trust fund does not increase the government’s ability to pay benefits, what is the purpose of the trust fund, other than as a bookkeeping device.
The military retirement plans don’t function like pension plans. Why not? They are the highest level of liability the government has, level 1, including reirement health benefits.
It seems to me that we are depending on the full faith and credit of the government, plus bookkeeping devices to keep us solvent.
Go to; http://www.gpoaccess.gov/USbudget/fy09/pdf/spec.pdf.
Don Levit
To see how the Military Retoremet Trust Fund is being used, go to:
http://uncle-scam.com/Mil-Retire/a-main.html#.
Don Levit
Right on, its the state and local systems where the local pols were willing to make gifts to the workers (See Ca 1999 pension enhancments). One obvious fix is to move state and local workers onto SS in all states, and then adjust the pension downwards for SS, as most remaining DB plans to to offset the employeer contribution.
Krasting
you have a hole in your head. the place where “raise taxes to cover the deficit” is supposed to be.
Social Security has had nothing to do with the deficit. Wanting to cut Social Security it prevent the deficit from going too high is somewhere between stupid and embezzlement.
Don Levit
you appear to be seriously ignorant about what happens when you borrow money… or lend it. the borrower spends it. what you care about is that he repays it.
there was never any possibility that the surplus collected by Social Security would not be lent… and spent… but someone. But the United States of America used to be considered a safe place to lend your money. now the time has come to start repaying that money.
or you could recognize that this is an invitation to waste your time on an irrelevant issue.
the issue here is whether there is any need to cut Social Security. there is not.
Levit seems fixated on the fact that the Trust Fund “does not by itself increase the government’s ability to pay benefits.”
Of course it doesn’t. The government owes the money to SS. If it is going to pay the money back, it has to get it somewhere else than from the Trust Fund it borrowed from. The Trust Fund does however increase Social Security’s ability to pay benefits during times of lowered payroll tax collection. That’s what it is for.
See SS collected more money than it needed for 30 years in order to have a surplus to help pay during those timew when it would be collecting less than it needed, say for something like the current recession or the baby boom retirement.
Levit cannot understand this because he has a brain problem. I am not being snarky. The brain problem is diagnosable. He aquires lots and lots of “data” which in his mind supports his fixed belief that the trust fund is not real. He doesn’t even understand what the Trust Fund is. But he will invite you to join him in his delusion. You could make a whole career of it.
Some Guy,
If we view SS in isolation, it is not a great investment plan for high earners, but since it isn’t an investment plan, that’s probably OK. As an insurance plan, it works as well for high earners than low earners. If, at the beginning of our careers, we all have an equal shot at retiring rich (we don’t), then signing on for a retirement insurance plan that treats us all similarly (though high income does mean paying more for a higher benefit), then the plan makes sense.
If we look at the entire batch of taxes on income of all kinds, we find that the regressive FICA payment was used to fund tax cuts to more progressive taxes. This transfer of wealth from middle and low-income workers through FICA to those of high income from both work and inherited wealth through tax cuts funded by FICA will never be repaid unless Treasury’s General Fund repays its borrowing to the Social Security Trust Fund in full. So if you view Social Security in the broader context of the funding of all government activities, it has been a huge boon to the well-off, and a very expensive insurance plan for those who aren’t well off, unless we leave benefits more or less as they are, and allow Treasury to repay its borrowing from Social Security.
“the government should have left the trust fund intact.”
Don the government did leave the trust fund intact. You just don’t get it because you don’t want to get it. Let me try one more time:
Specify exactly the form those Trust Fund assets would have to be in to satisfy your objections? Gold bars? Passbook savings? Benjamins in a warehouse? Forget the reality or not of the Special Treasuries, what the eff would have been the alternative?
Don I am backing off my conclusion of ‘silly’ and returning to ‘malicious’. At this point it is pretty clear that you are intent on hijacking each and every one of my Social Security posts to push the same identical point and so distract attention from the actual thrust of the posts, which is in this case the duplitious arguments being made by Republicans to “preserve” benefits by cutting them.
Last warning. If your responses are in my opinion off topic hijacking attempts I can and will simply delete them as being a waste of everyone’s time. Fun is fun but you have taken many hours of my productive time that I will never get back.
Basta!
Plus your link still doesn’t work!
Uncle-scam dot com!!!??
Levit begone, any pretense of seriousness has been abandoned here. You are just working off of someone’s script, that is clear as day.
Bruce–Yeah, boy, what a source, huh? Pretty charts though. I think our conversations with Mr. Krastig and Mr. Levit are an enormous waste of time. I propose we refuse to engage them. You are serious about this subject so your time is valuable whereas Mr. Levit apparently gets paid by the word. Maybe he gets paid extra for throwing pretty charts in nice colors. One way or another, estoy harta. Nancy Ortiz
Bruce and Coberly:
This is your blog, and I understand if you want to ban my comments, due to disrupting the flow and theme of your posts.
I do think this is an excellent blog, with a lot of intelligent participants.
I have tried to be objective, by citing reputable government sources (except for uncle scam, but I was scurrying to get some figures for everyone; although it looks to be legitimate figures).
It seems to me that I do have little support for my remarks, and that the people participating believe primarily as you two do.
If you are looking for a different voice, I will be happy to continue.
If I am too disruptive, I respect your opinion, and will refrain from posting.
Maybe it would be good to hear from others.
Am I more of a liability than an asset?
If so, I will refrain from posting again.
Feel free to contact me off the blog.
Don Levit
In Vietnam we ‘burned the village(s) to save it (them)’. The idea was, if they would not throw off the VC then we burned them out and moved them on. Can you get the drift?
That said, no one who would burn a village or destroy SS is being honest.
The burners of SS are the same militarist imperialists that would burn down Afghanistan to “save” it for their colonists’ puppets.
That said the burn Afghanistan folk need SS so they can be blithely throwing the war machine unhindered by fiscal crisies to burning Iran in 2030………………………………..
What is the connection between a watered down sabotaged stimulus and SS troubles, I do not see it. So please explian.
One reason countries have social security, or national pension plans, or sovereign wealth funds is that some people never get the hang of money, finance, investing and contracts.
Both Darwin and Machiavelli say these people would die out in a modern world, so world governments have instituted these programs to preserve the species.
Glad to hear that Don,
Where did you getthat?
Being a military retiree I was saddened to discover that Heritage Foundation, a PNAC subsidiary, war machine cheerleader, and imperialist yellow journalist is throwing those high priority government obligations for military retirees under the bus for the military industrial complex’ materiel needs.
Seems only 1 in 5 soldiers around long enough to get a retirement and that munificent retirement is so good well hell they ought to help the boys whose dividends depend on buying expensive trash to plan to fight the Wehrmacht and reenact the Battle of Britain.
Good soldiers, and SS retirees will always have the soldiers’ homes and work houses, when their retirement is used to pay for dividends…………….
The stimulus did not deliver the desired results and people are having buyers remorse on the Obama paternalistic nany state (anyway this to me is what the polls indicate). The public let the democrats do their thing thinking that giving them what they want, more control and power, in return for providing economic security all motivated by fear of economic insecurity was a good deal to make. But the economics of fear is not improving the economic climate. So the democrats are going back to fear as a strategy. But then they never really left it. They sold healthcare on fear. Financial reform on fear. And the stimulus on fear. These issues are not working for them — so now they’re bringing back social security as a fear tactic. Social security is not a hot issue right now so it seems its being druged up as a talking point.
Is there an explicit goal of a one year balance for the trust fund?
Waht is the source for this?
Don your argument was received and rejected when it came around the first time with multiple explanations of WHY it was rejected. You have simply refused to engage those arguments and keep insisting of making this one time and again even where as here it is actually off topic to the post. That is not every Social Security thread has to revolve around the existential nature of the Trust Fund and the end result of dragging it in every time is, inadvertent or not, is to hijack the thread.
If I have to do some selective deletion of repetitious arguments in the interest of keeping the flow going I will. And if it matters have reviewed that decision with the siteowner, who has the last call.
It is implicit in the definitions fof actuarial balance and financial adequacy.:
Sec IV.B “If the 75-year actuarial balance is zero (or positive), then the trust fund ratio at the end of the period will be at 100 percent (or greater), and financing for the program is considered to be sufficient for the 75-year period as a whole.”
Sec II.D “For the short range (2010-2019), the Trustees measure financial adequacy by comparing projected assets at the beginning of each year to projected program cost for that year under the intermediate set of assumptions. A trust fund ratio of 100 percent or more — that is, assets at the beginning of each year at least equal to projected cost for the year — is a good indication of a trust fund’s ability to cover most short-term contingencies. The projected trust fund ratios for OASI alone, and for OASI and DI combined, under the intermediate assumptions exceed 100 percent throughout the short-range period and therefore OASI and OASDI satisfy the Trustees’ short-term test of financial adequacy. However, the DI Trust Fund fails the Trustees’ short-term test of financial adequacy. Its trust fund ratio is projected to fall below the 100 percent level by the beginning of 2013. “
I have seen it in more explicit form and have made this assumption in discussions with experts and not one has challenged my use of the word ‘statutory’ in relation to this, although I have never actually tried to find it in legislation or code. In any event there is not much logical space between ‘Trustees’ test’ and ‘goal’.
Glad someone picked up the allusion. The specific village in that famous quote is Ben Tre, people interested can follow the link at the end of the post.
Bruce,
I am a retired CSRS, and a retired military reservist.
The OPM trust fund is filled with CSRS and FERS deductions from salaires, in CSRS we were not in FICA and the OPM trust has accrued interest, I do not know if agencies put in matches to CSRS/FERS. Last I checked a few years ago the CSRS/FERS balance was $800B US.
The military has a trust fund with a balance, although there is no withholding so all moneyi n trust is appropriated in the DoD appn.
If it accrues interest I am not sure.
When I checked on the CSRS trust mil retirement had nominally $200B.
Last Saturday AM I was wasting time in a hotel, and saw a bit of C-SPAN. They had a young woman from Heritage talking about why the war machine needs much more than 5% of GDP and to hell with military retirees and social security, there are only 20% of each enlistment class which will ever get to the retired rolls and the money, like SS, is better spent greening the war profiteers.
The wreck coming is the one where all those deferred taxes are coming due. And the Laffer curve is BS as it did not grow an economy to sustain paying off deferred taxation.
Just fund the war machine and other discretionary spending as in the Euro Zone, cut it all to a third of current percent of outlays and everything is fine.
My primary reason for wanting the discussion to take the form that it has, putting a focus on the legitimacy of the Trust Fund assets, was to bait the reactions of people like Levit and Krasting. I continue to believe that they are both trolls on this subject matter. It is good to see that they have played out their cards and are shown to have no ace in the hole. They are cranks with no valid argument to make, but they seem to have no end of time to devote to their malicious efforts to obfuscate the issue. The law is clear, as Bruce points out above. There can be no distinction between funds borrowed and owed by the Treasury whether to external entities or between agencies of the government. That Levit harps on such a difference displays his lack of understanding of the legislation that had created and continues to govern the Social Security program. Or evidences that Levit is totally disingenuous in his pursuit of his argument. It is heartening to see that his arguments have been so totally exposed for their fallacious content by the several participants above.
Don, get a life and find another form of employment. I am curious to know what organization you represent in your efforts on the web. No, I don’t believe that you are simply expressing an ideological view point.
Well look what’s shown up on the Columbia Journalism Review. Read it. You’ll like it. Most importantly it is evidence that the world of journalism may finally be getting the message.
http://www.cjr.org/the_audit/what_is_social_security_trust_fund.php
And Don, just to make it easy for you, here’s a direct link to the LA Times article the the CJR article is based on: http://www.latimes.com/business/la-fi-hiltzik-20100808,0,4733595,print.column
Bruce,
Yes.
I think that goes beyond the goal being implied to being explicit. Thanks for the pointer.
Is it an unseemly mix of short and long range that I think the meaningful date from the long range projection (of OASDI combined) is 2023, the year when it is projected to fail short range financial adequacy?
That is the “best” indicator we have of how long we have before we need to act.
Interestingly the ‘phony IOU’ arguments had no particular currency in the mid-nineties, I think in large part because the dates of Trust Fund exhaustion and the dates of maximum Boomer impact on the system were roughly congruent and we were still trapped within the “deficits as far as the eye can see” narrative. That is we had the ideal setup for the “perfect financial storm” around 2029.
But a funny thing happened by the end of the decade. The Clinton years showed that deficits were not structural, that with the right combination of policy/taxes/sheer blind luck you could balance the budget. Moreover the date of Trust Fund exhaustion got successively shoved forwards past the point of maximum Boomer impact. That is when SSA was pegging that date at 2042 and CBO at 2048, dates by which Boomers will be “leaving” Social Security in large numbers, it began to be progressively harder just to blame all this on demographics.
So they simply switched gears and made the bald-faced claim that the Special Treasuries in the Trust Fund, whose legal, practical and political reality had never been questioned prior, were simply ‘Phony IOUs’, which at a shot allowed them to move the date of ‘Crisis’ from TF Depletion to TF Cash Shortfall, thus buying them three decades of space. It was a desperation move but it seemed to work okay, at least it gave people like Brooks, Krasting, and Levit some rhetorical space to work in.
But it was always bullshit. Social Security was in crisis in 1993, it was out of crisis and probably permanently by 1999 when Baker and Weisbrot released their book “Phony Crisis”. This current deep recession just allowd them one last bite at the apple in the form of “Vanishing Surplus Years Ahead of Schedule”, also bullshit but a little harder to counter.
Cedric
exactly.
in the world of pure competition envisioned by the Ayn Randians, the “fittest” would drive the less fit to extinction and human beings would become a species of money lenders.
Don
one thing you may not be aware of is that Bruce and I are not a duo. I disagree with him about a number of things. So when he agrees with me I take it as a kind of confirmation. Apparently he agrees with me that your commetns aren’t getting any of us anywhere.
I am not at all a fan of banning commenters. But I can certainly understand why a person who puts some time into making a careful argument would be angry about having his thread hijacked by someone who keeps saying the same thing over and over and at great length.
I don’t know what you can do about this. But if you do get banned, try to take it as a chance to find something better to do with your time. Good luck.
But if they feed us, we can continue to breed!
Bruce, Nancy, thank you for your replies. Apparently the “controling legal authority” for this nonsense is the 1990 Omnibus Budget Reconciliation Act, or so some of the educational institutions are saying. This is not an isolated case. From what little I’ve been able to determine, Schools, Colleges, and Universities have the option of doing this to their non-full-time, non-benefited employees. I’ve worked at three such institutions in my metropolitan area, two of which considered me a part-time employee while the third considered me an adjunct instructor. All three forced me into the alternative. For an example, see here:
http://www.seminolestate.edu/hr/benefits/ss_alternative_plan.htm
This is not one of the institutions that I work for. They reference a section of IRS code, but when I read that section I did not come to the same conclusion. I believe they are using that reference to determine what constitutes an employee. In any case, the benefit to the institution is that they don’t have to match the contribution as they do with SS. Also see:
www2.astate.edu/dotAsset/151516.pdf
which is an enrollment form from Arkansas State University (also not a place I work). And see:
http://www.unf.edu/dept/research/FAQ_FICA.pdf
which is a FAQ from the University of North Florida, one of the institutions where I DO work.
Basically they are making it a mandatory 403(b). Perhaps the idea is fine. It’s the mandatory part I don’t like. The considerations are quite different for a 55 year-old employee than they are for a 25 year-old employee yet if both are not full-time benefited, they MUST participate.
Bruce, Nancy, thank you for your replies. Apparently the “controling legal authority” for this nonsense is the 1990 Omnibus Budget Reconciliation Act, or so some of the educational institutions are saying. This is not an isolated case. From what little I’ve been able to determine, Schools, Colleges, and Universities have the option of doing this to their non-full-time, non-benefited employees. I’ve worked at three such institutions in my metropolitan area, two of which considered me a part-time employee while the third considered me an adjunct instructor. All three forced me into the alternative. For an example, see here:
http://www.seminolestate.edu/hr/benefits/ss_alternative_plan.htm
This is not one of the institutions that I work for. They reference a section of IRS code, but when I read that section I did not come to the same conclusion. I believe they are using that reference to determine what constitutes an employee. In any case, the benefit to the institution is that they don’t have to match the contribution as they do with SS. Also see:
www2.astate.edu/dotAsset/151516.pdf
which is an enrollment form from Arkansas State University (also not a place I work). And see:
http://www.unf.edu/dept/research/FAQ_FICA.pdf
which is a FAQ from the University of North Florida, one of the institutions where I DO work.
Basically they are making it a mandatory 403(b). Perhaps the idea is fine. It’s the mandatory part I don’t like. The considerations are quite different for a 55 year-old employee than they are for a 25 year-old employee yet if both are not full-time benefited, they MUST participate.
Bruce, Nancy, thank you for your replies. Apparently the “controling legal authority” for this nonsense is the 1990 Omnibus Budget Reconciliation Act, or so some of the educational institutions are saying. This is not an isolated case. From what little I’ve been able to determine, Schools, Colleges, and Universities have the option of doing this to their non-full-time, non-benefited employees. I’ve worked at three such institutions in my metropolitan area, two of which considered me a part-time employee while the third considered me an adjunct instructor. All three forced me into the alternative. For an example, see here:
http://www.seminolestate.edu/hr/benefits/ss_alternative_plan.htm
This is not one of the institutions that I work for. They reference a section of IRS code, but when I read that section I did not come to the same conclusion. I believe they are using that reference to determine what constitutes an employee. In any case, the benefit to the institution is that they don’t have to match the contribution as they do with SS. Also see:
www2.astate.edu/dotAsset/151516.pdf
which is an enrollment form from Arkansas State University (also not a place I work). And see:
http://www.unf.edu/dept/research/FAQ_FICA.pdf
which is a FAQ from the University of North Florida, one of the institutions where I DO work.
Basically they are making it a mandatory 403(b). Perhaps the idea is fine. It’s the mandatory part I don’t like. The considerations are quite different for a 55 year-old employee than they are for a 25 year-old employee yet if both are not full-time benefited, they MUST participate.
To be clear military personnel were entered into SS in or near 1956, prior to that they were as CSRS federal employees exempt from SS.
In 1984 during Reagan as it was in the works for a while the OPM went to FERS which is mix defined benefit, SS and a federal 401k called TSP. Those of us old and in kept the old CSRS.
What happened in the Reagan years was serious pay raises for the GI’s to make all vol work. Then it was decided to lower GI reitrement to 40% at 20 due to better pay scales. THis was called “redux”.
But, as recruiting plummeted in the years after Iraq Redux was repealed.
But not to worry it will be assaulted and Redux reinstated as they look for ways to keep the military industrial complex in green.
Nothing new here except……instead of Coberly trying run oxygen lines to the Canary in the coal mine, he’s duck taped a popsickle stick to him to make him look alive……..”No need to worry…everything is right on track…..move along everyone!”
Arne perfectly correct and typically (from you) precise. The trigger point for initiating discussions for a fix is the point that Social Security fails the Short Term Test, which as you point out is approx 2023. Leaving a year or two for drafting a fix, putting it through the legislative process suggests an implementation date around 2025-6, ten years before the actual point of crisis, currently set for 2037. It is not an accident that the NW Plan starts phased implementation in 2026, it explicitly includes your ‘trigger’ concept.
Uh, Jimi,
Do you have anything, you know, factual to add? Or are you trolling this thread?
To be fair Jimi is not just trolling THIS thread.
He is an equal opportunity troll at AB.
Steve
thanks for teliing us about this. i have no clue about the law. but i imagine they can do it legally. another way to screw the workers and cheat them out of retirement. this seems to be going on all over the world. so i expect that is their goal and that they will succeed. what comes after that won’t be good.
for what it’s worth
where bruce and others see malice i see neurosis, or given the limits of human intelligence, just a sad failure to understand even approximately the situation and a grasping at a kind of ego/life preserver offered by the people who sell the kind of lies that make you feel good while they are stealing your money, if not your birthright.
that said, when they start shooting at you, it’s easier to think in terms of malice and shoot back.
Worse than a trolls a paid provocateur. They are here at AB and they are running amuk at other populist blogs. The time and energy it takes to be so repetitively dishonest can only come out of a paid propagandist. They are all over the MSM and they are here at AB. They should be recognized as the scum that they are. They offer no honest argument. They only repeat in finitum the same BS talking points that are fed to them by their paymasters.
“Running amok”,
Comes from the US Army of occupation in the Musloim sections of the Phillipines. Every so often a terrorist Muslim would run through the market of an occupoied town slashing with his machete.
An old tempt of American imperialism with a more primitive form of IED.
A response was the .45 cal automatic.
Cheaper than predators and hellfires.
For the record the following own Special Issue bonds issued by Treasury. These are just the ones that relate to retireent liabilities:
Civil Service 744B
DI 193b
OSI 2.4T
Fgn Svs retirment 16b
Postal Retirement 37b
Total = 3.7T
They are all growing because of interest, they are all losing cash flow on an annual basis. All of them will run off their surpluses along with OSDI.
I present this becasue Webb and Ortiz think I make this stuff up. I do not. I tell you these surpluses running down will result in a $ for $ increase in the public debt number. There will be a problem with this at some point. And yes it will be a train wreck when it happens.
Bruce Krasting,
Unpatriotic war mongers who won’t pay for their war proifits. Lend themselves the revenues that give them dividends.
Hey let’s raise taxes to pay for the wars and the war machines. Let’s raise taxes to pay for deferred taxes which required trust funds’ cash to pay for stuff someone didn’t tax upper income people to get.
SS, and medicare as well as civil service retirement instruments are growing as a result of contributions as well as interest.
Military retirement securities held is an accounting image from the defense/service appropriations and no cash is put in that trust fund.
There are minor trust funds like airports and highways which are at times held back to reduce outlays and they are funded by user fees and interest as well. Highways and air traffic come to minds. All are in the link.
You should note a large withdrawl from the unemployment insurance trust fund. That increased the deficit required to deliver cash for paying UEI benefits.
Maybe all those deferred taxes’ securities being redeemed will result in raising tax revenues.
Check here: Fed Securities held as investments of government accounts: http://www.fms.treas.gov/annualreport/cs2009/sc4.pdf
Grand Total 30 Sep 2009: $4355B
SS 2296B
Civil Service (OPM) 754B
SS Disab 207B
Mil Retire 241B
DoD Medicare Elig. 127B
Fed Hosp Ins TF 310B
Fed Supp Medi Ins TF […]
Jack wrote:
The time and energy it takes to be so repetitively dishonest can only come out of a paid propagandist.
Jack, many of the sources I quoted were third party governmental agency publications.
Now, either I was quoting them out of context, or the CBO, GAO, Treasury Department, and the Social Security Administration are all part of the propaganda machine.
No one, to my knowledge, challenged me on the quotes, specifically.
They basically said I didn’t undfestand, or merely ignored the quotes.
Rarely do I see third party governmental quotes here, to back up people’s opinions.
If we’re searching for truth, wouldn’t third parties be helpful, as opposed to each of our various agendas?
Don Levit
Mr. Krastig–Sir, in law and in government, some things just don’t matter. The exact numbers at one instant in time in the eternal ebb and flow of federal expenditures and indebentures (sp?) just aren’t important. I know you don’t accept this as true and I can see you are unwilling to pursue a more interesting and productive line of discussion. And, that’s enough time spent on that. Nancy Ortiz
Nancy’s comment to Bruce is a good example of ignoring the facts.
Why can’t she discuss them?
Would it be easier to do so if Bruce provided various years?
Don Levit
Don Levit,
An internet troll on wiki is defined as someone who posts inflammatory, extraneous, or off topic messages with the primary intent of provoking others into a desired emotional response. The problem here is that a small group of individuals have an unintended strong emotional response if you have opinions other than they do. Using a reasonable person benchmark they should not be having this response to anything that you’ve posted. But they are and rather than accept responsibility for their emotions they blame you and call you a troll. Managed open discussion that caters to liberal bias is just the state of the internet in 2010. I just go with the flow and deal with the personal attacks and the blocking and deleting of my posts. Afterall, these personal attacks don’t leave a mark.
Don,
Notice also that you’ve been taking off the issue and are spending a lot of time defending against unmoderated personal attacks.
Don,
When you posted at 16 Aug 2010 8:05:51PM You referred to a GAO paper. The table you referred to had a note:
Notes: This list is illustrative and should not be interpreted as all inclusive or
universally agreed upon. Information updated March 30, 2004.
Now the balances of the SSTF are in liability group 1.
The stuff is 4 is all those extrapolations about paying out SS benefits after the TF is deplted which is about never.
Medi’s seem to have policy related exposures.
Why did you post those things without the note? Illustrative lists, is why the information was in a GAO report and not from OMB.
Bruce,
I believe in Equallity!
ilsm,
So the notes say that the SSTF is in the liability group? Isn’t a liability like an IOU?
ilsm:
What does the note have to do with the SSTF being on Level 1?
Don Levit
Krasting
there is always a train wreck when people don’t pay their debts. what is your solution?
Don
I don’t want to get into this here, because this thread is about Social Security, not Don Levit. Don’t know if you want to hear what I have to say anyway. But in reference to the specific question you raise here, I would say the answer is no. I don’t rely on citations except for basic facts, certainly not for opinions disguised as facts. The reason for that is the preposterous notion that I understand the issue better than the paid experts. Certainly there is a serious question in my mind whether you understand the material you cite. May I suggest you keep your comments in future very short, and try to understand the reply you get, and at the least don’t just keep repeating the same argument.
Templeton,
at the least it is difficult for two people who disagree to agree about who is being unreasonable. in principle i would have to agree with your observation that Don would get a more sympathetic hearing from people who did not like Social Security. But it is not clear to me that Don is “against” Social Security. He seems to have a fixed idea about the non reality of the Trust Fund. He might even be right about it… but his way of going about making his case is making people here tired of him. It seems to me that if he wants to be heard, he needs to modify his approach.
For what it is worth, I have been in exactly the same situation myself.
Templeton
so it is. what’s your point?
Levit
a word to the wise. you are perseverating. back off. give it a break. come back, if they let you, with short comments. and try to think about them. and keep them few.
Don you don’t understand what they mean by putting unfunded liabilities to SS at level 1. You think you do but you just don’t. From what you cited it has exactly zero to do with the Special Treasuries in the Trust Fund.
Don because Bruce Krasting insists on working from his own set of projections and not those used by any of CBO, SSA or OMB all without expaining his arithmetic in terms understandable by anyone except himself. When your argument starts and ends with “Using my numbers” there is not much to debate.
Whe
And I believe in Spelllling.
Jack if you could see the posts Dan and I see you would be amazed. We do control the troll traffic, it is just that a select few have been granted Village Idiot status and allowed to stick around. And over time some commenters who were on the verge of banning became valued, if often annoying commenters. In fact there is a noted LEFTY commenter who got dumped only to be brought back, while another lefty and three right folk wore out their welcome.
Krasting first there is no such thing as OSI. It is OASI.
Second DI is not growing due to interest, it in fact cashed in close to 10% of it’s principal in 2009 and will be cashing in more this year. I could check the rest of your claims but since you got the simplest things wrong off the bat don’t see why I need to.
Bruce:
Could you expound on that a bit?
It seems clear to me that debt held by the public is an important obligation – level 1.
Payments owed to our citizens for Social Security and Medicare are on the lowest obligation – levcel 4.
Included in level 4 is “debt held by government accounts,” which to my way of thinking, means debt held by the government account of the Social Security trust fund from the government account of the Treasury’s general fund.
Don Levit
Bruce,
I have found from a random sampling of Don’s links/quotes (starting with a quote from a narrow ruling by the Supreme Court as his confirmation of a broad interpretation of participants claims) , and now in addition the two example on this thread (GAO illustrations used as fact, and the one above) takes the discussion no where productive. Unfortunate, but to try to correct misunderstandings of source data is a neverending job that simply begins again with one new addition. I have no impulse to teach to such basics one reader at a time.
I suggest Don take the time to read materials on your site and others if he wishes to promote his understanding. It appears he is willing to work hard…there are plenty of places to read up on basics of government and reports.
A bit more good attention to the general SS isue and the role of both the press and the Deficit Commission in avoiding the whole truth appears again in CJR from Trudy Lieberman here:
http://www.cjr.org/campaign_desk/more_codes_in_the_social_security_war.php
Bruce,
“granted Village Idiot status”
That’s funny because you haven’t been right about anything yet. You started to get close with the Social Security stuff, but it looks like your going to end up being totally off base again on that topic when it is all said and done.
Village Idiots? O.K. whatever you say Bruce.