First Report of the Trustees of the Social Security Trust Fund: 1941
for the longest time the earliest Annual Report of the Social Security Trustees readily available was that of the second Report in 1942 and that only in a fairly clumsy PDF format that doesn’t allow my browser to cut and paste (though I can from most PDFs). But the fine people (no snark) at ssa.gov/history made the 1941 Report available recently in HTML. And in the course of that dispel some myths about the origins of the Trust Fund which contrary to a certain strain of opinion was not a product of the 1983 legislation. Follow the link in the title or check out the excerpts under the fold. All from the actual text of the Report transmittal to Congress.
Update: Dan here…Paul Krugman comments in Conscience of a Liberal on this post.
The Federal old-age and survivors insurance trust fund was created pursuant to section 201 of the Social Security Act Amendments of 1939, approved August 10, 1939. This trust fund became effective on January 1, 1940, and superseded the old-age reserve account established under the Social Security Act of 1935. The trust fund is held by a Board of Trustees composed of the Secretary of the Treasury, the Secretary of Labor, and the Chairman of the Social Security Board, all ex officio. The trust fund so held is available for the payment of old-age annuities and survivors insurance benefits and the necessary expenditures incurred by the Social Security Board and the Treasury Department in the administration of the program. The Secretary of the Treasury is designated as the Managing Trustee.
Resources made available to the trust fund included the securities held by the Secretary of the Treasury for the old-age reserve account, accounts standing to the credit of the old-age reserve account on the books of the Treasury as of January 1, 1940, and interest on the investments. The appropriation to the trust fund for the fiscal year ending June 30, 1941, and for each fiscal year thereafter, are required by section 201 of the Social Security Act, as amended, to be equivalent to 100 percent of the taxes (including interest, penalties, and additions to taxes) received under the Federal Insurance Contributions Act and covered into the Treasury. Interest on and proceeds from the sale or redemption of any securities held by the trust fund are required to be credited to the fund.
i.e. receipts from FICA and any interest on the Trust Funds are not fungeable, they are required to be credited to the Trust Fund.
The old-age and survivors insurance trust fund provides a financial margin of safety for the system against the first impacts of unforeseen changes in the upward trend of disbursements as well as against these short-term fluctuations and contingencies. At the end of June 1940 approximately 50 million persons already held social security account numbers and about 42 million workers had made contributions toward benefits under the system. In the future, millions of additional workers will come under the program as they obtain jobs in covered employments. Most of the rights now being accumulated toward benefits by these contributors and insured workers will not mature for many years. Consequently, benefits under the program are expected to increase markedly over a long period. This results from the fact that larger numbers of workers will be eligible and will qualify for benefits and from the expectation that the proportion of the population in ages 65 and over, estimated at 7 per-cent in 1940, may eventually rise to perhaps 14 to 16 percent. Hence the essential assurance of future financial soundness of the system, with its rising rate of disbursement, rests on a graduated increase in contribution rates or provision of income from other sources, or both.
It is a reserve fund. And increases in contribution rates were anticipated right from the beginning, the common belief that FDR promised that rates would never go up being simple after the fact bullshit. And the growth in beneficiary population over time equally anticipated.
During the period January 1 to June 30, 1940, new investments amounting to $324.9 million were made for the fund and securities amounting to $22.0 million were redeemed as required to meet current withdrawals for benefit payments and administrative expenses. The new investments were in the form of special old-age and survivors insurance trust fund notes bearing 2.5 percent interest. As a result of these transactions the average interest rate on investments of the trust fund was 2.91 percent on June 30, 1940.
The assets of the old-age and survivors insurance trust fund as of June 30, 1940, were $1,744.7 million.
The Trust Fund has ALWAYS been invested in Special Treasuries designated for that purpose.
Currently Social Security covers about 17% of the population, and that after the implementation of the Disability program in 1956. That “14-16%” number 70 years after the date of this Report looking pretty damn good. The New Deal Brain Trust by and large knowing what they were doing when it came to this particular program.
I don’t think, in all my years on this earth (57), have I ever seen a dumber collection of Ivy League Asswipes governing this country. (Wiping the Bush years from my memory for mental health reasons). Ferociusly competing for the prize of the dumbest POS is surely the media, spotlight on Time magazine. Heck, even Greenspan’s cow is repeating the mantra expressed, most elequently, by the pretender from Minnesota, Timmy Pawlenty. “No balanced budget unless we kill the entitlements”.
Paul Ryan has a BA in basket weaving and has positioned himself as the deciderer on the budget. Good grief. This turd won’t even flush. He is stupid. Yes, he is stupid. Not one thing from this assholes mouth is intelligent.
I don’t think, in all my years on this earth (57), have I ever seen a dumber collection of Ivy League Asswipes governing this country. (Wiping the Bush years from my memory for mental health reasons). Ferociusly competing for the prize of the dumbest POS is surely the media, spotlight on Time magazine. Heck, even Greenspan’s cow is repeating the mantra expressed, most elequently, by the pretender from Minnesota, Timmy Pawlenty. “No balanced budget unless we kill the entitlements”.
Paul Ryan has a BA in basket weaving and has positioned himself as the deciderer on the budget. Good grief. This turd won’t even flush. He is stupid. Yes, he is stupid. Not one thing from this assholes mouth is intelligent.
I don’t think, in all my years on this earth (57), have I ever seen a dumber collection of Ivy League Asswipes governing this country. (Wiping the Bush years from my memory for mental health reasons). Ferociusly competing for the prize of the dumbest POS is surely the media, spotlight on Time magazine. Heck, even Greenspan’s cow is repeating the mantra expressed, most elequently, by the pretender from Minnesota, Timmy Pawlenty. “No balanced budget unless we kill the entitlements”.
Paul Ryan has a BA in basket weaving and has positioned himself as the deciderer on the budget. Good grief. This turd won’t even flush. He is stupid. Yes, he is stupid. Not one thing from this assholes mouth is intelligent.
Excellent points Sandi and fully endorsed by me. But maybe not worth saying thrice.
What are you seeing when you post your comment the first time? Delay? Outright freeze? Because I can tell you from frustrated experience that most of the problem is on the return side, that is mostly JS-Kit/Echo hears you but doesn’t actually get around to that ‘Echo’ part. But if you are just clicking ‘Post’ once then we need to get a report in with your specific computer/browser combination.
And for what it is worth I think Ryan is a blend of evil and Randite Fanboy but not stupid as such.
Bruce
thanks for this.
some times i may be guilty of sounding like i believe the Trust Fund was created in 1983 to pay for the boomer retirement. I know better, but sometimes it is useful to try to make a point by simplifying rather than force the reader to endure 300 pages of detailed nuance. Of course this leaves me exposed to enemy fire who may have their own ideas about what constitutes legitimate shortcuts. this can be sorted out by further argument when justified, but i really hate it when I attract fire from my friends who insist that you can’t teach first grade arithmetic without beginning with set theory.
Sandi and Bruce, we have ~2.14% of 2010 revenue left over for discretionary spending after paying the mandatories in the budget. Ryan has a plan. I have yet to see a Dem proposal that is more than hope (the economy recovers) and change (the revenue) to lower the rate of deficit increase.
Ofcourse adding a new entitlement program, based upon lies of revenue neutrality, is the best solution?
C’mon folks, instead of unbased anger, think of solutions.
Not to sound crass here, but, at the present time, I think the name of the Congress should be changed to the sycophantic brance of Government of the U.S. Love Sandi’s comment. I wonder, red hair?
CoRev–If I had a plan to conquer the Universe, would you take it seriously because, by God, it’s a PLAN! Imagine that! A for real plan with letters and numbers and everything!
As it happens, I do have a plan. It’s called the Social Security Act of 1935, as amended. It’s there and it works. The government doesn’t intrude into every aspect of everyone’s life. I provides for the defense, public welfare (SS, Medicareet al.) and a few other concrete services like the parks/wildlife/conservation, roads, directing air travel, and customs/immigration. That’s not a whole lot of different functions. Everthing it does is governed by law. Which our representatives wrote and passed. They call it government. Baseless anger, my ass. My solution is leave stuff that works alone.
NO, I did not even mention SS or its TF. What’s your point?
BTW, SS is not the deficit busting entitlement, but because we are spending nearly every dollar of revenue on mandatories gets lumped with the big budget deficit busters. Anyone who is not completely ignorant of the SS Act knows the SSTF, special treasuries, and the xfer of excess funds collected to the General Fund was part of the original Act.
So what’s your plan to reduce the deficit? How much? What of Ryan’s plan would you keep and what would you throw out?
I object to the whole notion that the “deficit needs reducing”, how’s that for a plan? Why dont we actually talk about what the deficit IS? The deficit is not monster that will kill our economic hopes, the deficit is a negative number on a spreadsheet, a measurement (given a “minus” sign) of the amount of “money” left in the NON GOVT sectors (you know….. we the people) bank accounts. ANY and EVERY attempt to reduce the deficit and the debt will IN FACT make we the people poorer, it will deplete our savings. The govts deficit is OUR surplus. I like my surplus, I plan to save it for the future. Go ahead and give yours up if you wish, but no one should be forced to give theirs up by Tea Party morons who dont understand finance and accounting.
Yes Bruce that was a good estimate back then. 16% was the high estimate. Here we are 70 years later and the covered population is 17%. So only 1% above the expectations way back then.
But what is the future Bruce? How high will the number go in the next 20 years? Over 65 will be 22% or so. That suggests that ~20% of the population will have benefits.
Still, only a 4% miss. Actually that 4% is a 25% miss, and that is a big deal, isn’t it?
You can’t fault the trustees back in 1940. They did not know the baby boom was coming. But it did, and of course that is the problem, isn’t it?
Your boy Greenspan fixed the problem back in 83 when it was clear the original assumption needed to be tweaked. We know now that his plan was a little light on how big the expenditures would be during the boomer retirement, right?
So we need some of that tweaking again. Right? Just like it was originally contemplated, as you so rightly point out.
So a question: If the origin of this clearly established the need for future changes in revenues/expenditures to adjust for changing demographics and other critical variables, why is it that all of you New Deal folks don’t want to change SS today? After all, it is pretty obvious that the circumstances warrant it. FDR would be proud of you to recognize that fact.
The NYT posted an interactive some time ago to play the game that I think you are requesting here, CoRev, so there’s no need to duplicate it via dozens of rambling blog posts that lack figures to support claims of effectiveness. Millions developed “plans” better than Ryan’s “plan.” It actually doesn’t take a genius to do this, nor does it take a genius to think-up many options that aren’t available on the interactive as choices in this interactive (for example, Schakowsky had ideas that aren’t among the choices). It’s at http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html.
There’s some wisdom in the results. Those who prefer spending cuts chose to addresss medicare costs more than anything else. The most popular choice by all users was to reduce defense spending to pre-war levels, followed by boosting taxes on the wealthy. I’m no huge fan of online polling, but any truly serious plan for addressing the budget imho should indeed begin with these three issues. A summary of what people chose is here: http://www.nytimes.com/interactive/2010/11/21/weekinreview/21leonhardt-graphic.html
The one SS cut that was popular was to cap benefits for the wealthy. Not my choice–I agree with the general sentiment for many reasons, but I think we might find a better way to address the sentiment. SS was and is exceptionally well-designed (even with Greenspan’s changes) and I’d prefer not to monkey-around with something that actually works.
Norman, how about we begin budget cutting with the $1 billion spent on Congress? It’s a complete waste of money–including their salaries! LOL. Entertaining data here: http://www.aolnews.com/2010/07/21/what-congress-bought-itself-with-your-1-billion/
Krasting
in spite of being chastised for my ad hominems, i have to say boy you sure are dumb.
let me help you out, by the end of the century projections show that one third of the adult population will be Social Security age. is that the time to cut Social Security? or is it the time to raise the tax a little so you will have enough to get by when you are too old to work?
here is a little more help for you: if the projections are true the combined SS tax would need to be about 16% of your income. a staggering burden, i know. except that you are paying for your rent and groceries for an expected twenty years after you will no longer be able to work… or did i say that already?
and since you are already making twice what your grandparents made… in real dollars… when they struggled and failed to save 10% of their income against a retirement expected to last ten years… you can probably find a way to live on almost twice what they lived on while paying for a retirement twice as long as they hoped to enjoy.
and they hoped to enjoy it too. they were not stupid enough to think they would enjoy working until the day the boss could no longer squeeze any juice out of them.
so, yes, you can turn a 4% increase in the combined tax into a “25% increase” as long as you don’t mind looking stupid to people who understand numbers, who know a small increase on a small base can be a bigger percent that a larger increase on a larger base.
Greenspan and the rest seem to have calculated the needs of the Boomer generation almost to the dollar. Only Peterson and the idiots who believe in him think the money the boomers saved should not be paid to them.
there is a difference between tweaking the “tax” to cover expenses, and “tweaking” the program to destroy the possibility that working people can ever afford to retire.
CoRev
something is wrong with your memory. people have proposed a “plan”. in my case tax increases to pay for what we have already bought. and tax increases to pay for what we know we are going to need.
it is your friends, and our dumb President, who think they can balance the budget by cutting taxes.
gizzard
though i am disposed to agree with you in some respects, it does make a difference where “we” spend our money… our resources. i’d be just as glad to see the US pay its bills, but, no, i am not panicked by the deficit… yet. i am panicked by the politicians who scream deficit one day, and cut taxes the next.
Ah….. so the SS Trust Fund had a design flaw.
If the original design had required that excess contributions be invested in marketable securities, like regular Treasuries, or even stored as cash in Al Gore’s lockbox, we would simply need to open the vault to pay scheduled benefits.
Instead, we spent the money. Congress found an easy way to overspend/undertax. Now we must raise taxes or cut spending elsewhere in order to redeem the IOUs. Ergo “the social security problem”
Ah….. so the SS Trust Fund had a design flaw.
If the original design had required that excess contributions be invested in marketable securities, like regular Treasuries, or even stored as cash in Al Gore’s lockbox, we would simply need to open the vault to pay scheduled benefits.
Instead, we spent the money. Congress found an easy way to overspend/undertax. Now we must raise taxes, or cut spending elsewhere in order to redeem the IOUs. Ergo “the social security problem.
The easier way out would be to “modify” the trust fund balances. And we know that politicians follow the path of least resistance.
I agree about Al Gore’s lock-box–that would have prevented “the social security problem” today. However, you also said that the US does not spend money collected by selling marketable US treasuries. (As far as I know, that cash isn’t sitting in anybody’s lock-box and it’s spent, just like special treasuries are spent.) In fact, the only difference is that the practice of issuing special treasuries instead of marketable treasuries effectively hides borrowing–in annual reports of the unified budget deficit–that is taking place to fund government operations. Hiding the annual borrowing has helped irresponsible politicians to justify tax cuts.
sammy
no design flaw. only your inability to understand ordinary money and banking.
the trust fund is LENT. otherwise it would sit idle. ALL trust funds, public and private, LEND money. the safest “person” to lend money to is the United States of America. that’s where the SSTF has lent its money. IF the money is paid back, as expected, there is no problem.
You DO have to raise taxes to pay back the money you borrowed. But don’t blame Social Security. IF Social Security hadn’t lent you the money, you would have borrowed it from the Chinese Communist government.
The social security tax… something else entirely… may have to be raised a tiny amount… one half of one tenth of one percent… if our children and grandchildren end up living longer than our grandparents. but only in Peterson’s mind is that considered an intolerable burden.
Sane people think of it as in increase in the standard of living. Hey, we are going to live longer, and we are going to have more money, so we can afford to retire “earlier.”
those regular Treasuries would have to be paid for with taxes too.
Krasting then and now the Trustees officially use a 75 year forecast and not an infinite future one. 1940 plus 75 = 2015. Plus that 14-16% number didn’t include the DI program. So they didn’t ‘miss’ anything by not using 90 year numbers.
And no I don’t know that the numbers that came out of the Greenspan Commission were “light” at all. In reading the Oral History of Bob Myers, who was Executive Director of the Commission, and the unpublished biography of Bob Ball, the lead Democrat on the Commission it is clear that they shot to solve the immediate 10 year gap (the official measure of Short Term Actuarial Balance) and did, in 1993 the Trust Funds once again had their mandated one year of reserves, while also addressing the 75 year gap ON AVERAGE. Which they also got pretty close to. The testimony of Bob Myers showed that the Commission didn’t have a lot of data about intevening sub-periods, CBO wasn’t scoring SS at the time and the Office of the Chief Actuary was acting as pretty much a black box, proposals would go in and come back with 10 and 75 year scores. Plus only a few of the Commissioners were actually equipped with the technical tools to precisely calculate impacts at what were then dates 40 years out, offhand I can only think of Ball and Greenspan of having that capability, although there was some talented staff on board.
And Krasting have you even paid attention AT ALL? Coberly and I presented a detailed plan that would have had its first step kick in last year, a second step this year, and third and succeeding steps starting in 2026. That proposal fills the entire gap while delivering 100% of scheduled benefits. The reason New Deal types are balking is because Bush deliberately took any across the board FICA off the table and NO ONE except me and Coberly are willing to put it back on. So until or unless the negotiators dump Bush’s six non-negotiable demands outlined in his guidelines for 2001 CSSS we see no reason to talk.
The other side are a bunch of dishonest negotiators insisting that the only possible solutions are increasing retirement age, changing the benefit formulas, or tinkering with the cap in ways that undercut political support for the program long-term. Well sorry you don’t negotiate with terrorists.
http://govinfo.library.unt.edu/csss/index.htm
Ryan doesn’t have a real plan. It is all smoke and mirrors and based on revenue estimates supplied by his staff to CBO that have no basis in reality at all, something that is pretty clear if you carefully read the letter CBO sent to him scoring it.
http://www.cbo.gov/ftpdocs/108xx/doc10851/01-27-Ryan-Roadmap-Letter.pdf
Under the Roadmap taxpayers can choose to file under the old rules, or file under new much simplified ones that eliminate all individual tax on capital while flattening rates. Meaning billionaires don’t have to pay taxes on 99% plus of their earnings. But blithely goes on to assume that enough people will stay paying taxes under the old system so that there are no net losses in tax revenue. Quoting CBO with bolding by me:
“Other Tax Provisions. The proposal would make significant changes to the tax
system.2 However, as specified by your staff, for this analysis total federal tax revenues
are assumed to equal those under CBO’s alternative fiscal scenario (which is one inter-
pretation of what it would mean to continue current fiscal policy) until they reach
19 percent of gross domestic product (GDP) in 2030, and to remain at that share of
GDP thereafter.”
Assusme current tax revenues while slashing taxes on capital and eliminating the corporate income tax. That goes a lot below traditional Voodoo to true Doo Doo. Ryan is just counting on people not actually having read his plan or the details of the CBO score he essentially extorted by insisting on bogus assumptions.
Read it for yourself, it is just a smelly pile of crap, basically a Randite Fanboy day dream of a time when ‘Producers’ don’t pay taxes only ‘Parasites’ do.
http://www.roadmap.republicans.budget.house.gov/
Didn’t Ryan and Franks have a plan to cut $1T from the war machine a few months back?
If so I give Ryan a D-, on the road up from F-.
Sammy,
The money was spent on war and no return.
Easy enough to cut war by 75%, since it double beyond case since 2001.
CoRev points out that there is not much revenue left after paying for mandatory stuff.
So, stop paying for stuff like war proifts, and perpetual war that only benefits war profiteers.
Yes, regular treasuries represent cash raised from folks with nothing better to do with the money that should have been paid in taxes.
Bruce,
You got linked from Krugmans blog this PM.
Great!
Sammy none of that is true. It is the fact that the Special Treasuries are NOT marketable that gives them their real value. Those bonds yield principal and interest precisely to the amount specified on their faces no matter the current state of the bond market might be. The yield of new issuances are adjusted to a balance of yields of existing bonds coming due, but the existing yields of the mostly ten years are not effected at all by current performance in the markets. The remaining 7.250% bonds from 9 years ago are still yielding that and their price is fixed in stone. That is the feature here.
The lock box was always a metaphor. And anyone thinking that somehow Benjamins have real value in ways that Special Treasuries don’t needs to think more or sniff less glue. Each is backed in the end by Full Faith and Credit of the United States, with the difference being that at least the Specials earn interest.
Since 2006 the Trustees of the Disability Trust Fund have been going to an actual locked box, that much mocked file cabinet, and taking a portion of the interest and principal on maturing bonds and used it for making payments. Similar steps were taken by the Trustees every year from 1971 to 1982 as the Trust Fund was drawn down to near zero.
There are only two types of people who buy into the Phony IOU narrative. Liars. and those successfully lied to.
For the billionth time: you give money to government, they give you a promise to repay with interest, and then they spend the money. That is not theft or diversion or looting, that is the fucking definition of buying a bond. The only real question is the credit-worthyness of the issuer. Which was never even in question until Cato and AEI started floating this crappy narrative mostly starting in the first Bush term. Trust Fund Depletion was being pushed back so fast and so far from 1997 to 2005 with CBO at one point putting it at 2049 that the whole idea of Crisis at Depletion got faintly ridiculous. So the folks at what was then known as the Cato Project on Social Security Privatization just switched gears and started insisting that Trust Fund balances, despite all evidence from history, didn’t signify anything at all, that the money had been stolen and the answer was to turn all future money over to the trustworthy folks who would be managing your private accounts.
I can’t believe you fell for this Sammy. In fact I am pretty certainly you really didn’t. Instead just saluting and walking out with the designated talking points.
Krasting cut the condescending shit
“Your boy Greenspan fixed the problem back in 83 when it was clear the original assumption needed to be tweaked.”
Greenspan is not “my boy”, he is a conservative Republican that has probably done more damage to this country’s economy than any other single person, in part by putting his oracle hat on to disguise the fact that mostly he is wearing keen-pads convenient for boot-licking the Republicans and the MOTUs.
And if you actually paused to read the post instead of jumping into comments as you generally do you would have seen that the design was such that rates would periodically be adjusted, as they were time and again between 1936 and 1977. The problem was that the 1977 fix was ineffective because the classical economics used by forecasters previous and after didn’t well handle the prospect of stagflation. Under standard theory you shouldn’t have had that particular combination of stagnant employment and rocketing inflation. But we did and it had some very bad short to medium term effects on Social Security as high unemployment sapped revenues even as an inflation adjusted COLA pumped up benefit cost with one result being that current law tweaks already in place by 1983 as a result of the 1977 deal were simply moved up in time.
Really the main reason we even had the crisis in 1982-83 was that Reagan made a serious run at Social Security in 1981. When that failed the Greenspan Commission was the fall back position, and when it deadlocked (which it did in December 1982 per insiders), the fallback fallback was a private dead negotiated mostly between Bob Ball as a representative for Congressional Democrats, Bob Darman as the representative for the Administration, with people like Dole, Heinz and Jim Baker playing important facilitation roles. From most of what I read Greenspan really didn’t play that much of a role in the final negotiations.
Really before you start making pronouncements on the history of Social Security ‘tweaking’ it would serve you to actually know something about what you are talking about.
Bruce,
The Social Security program is fine. I get that. Even Harry Reid gets that (see above). However, the reformers, the Congress, the President, the financial markets, and the people don’t look at Social Security as an individual program – they look at the Unified Budget, as well they should – $’s in, $’s out = debt, taxes, spending.
So you are looking at TWO DIFFERENT THINGS. When they say there is a problem, your only recourse is to call them some combination of liars, thieves, anti-New Deal conspiracists, or idiots. This guarantees you will be out of the discussion.
If you want to be part of the discussion I would encourage you to apply your analytical prowess on this issue to:
1) what is the true “cash call” including Special Treasury redemptions, of SS on the Unified Budget?
2) what combination of tax increases, spending cuts, and/or/no benefit cuts would be required to leave Social Security as relatively untouched as you espouse?
That’s where the real game is being played, not in your Social Security-only sandbox. Buckle your chinstrap and take them on!
“Sandi and Bruce, we have ~2.14% of 2010 revenue left over for discretionary spending after paying the mandatories in the budget. “
But that whole formulation is so dishonest that you leave no starting point for negotiations. Only the propagandists at Cato and Concord push the idea that somehow we pay for ‘mandatory’ prior to ‘discretionary’, each gets paid at the same time albeit under slightly different budget and appropriation rules. The whole crowding out argument is just bullshit special pleading, and we get angry because we know you know it is too. The possibility of entitlements actually crowding out defense spending is literally zero, not just politically and practically but constitutionally, certain expenditures that are for technical budgeting purposes considered ‘discretionary’ are in fact mandated by the Constitution. For example the Courts and the Navy (though interestingly not the Army). Using particular language drawn from the technical complexities of the budget process to imply real world contrasts is just a debating trick.
We know the solution. Scrape the Voodoo off our shoes, Supply side economics based on the efficacy of tax cuts boosting investment in productivity in ways that grow the economy for everyone DID NOT WORK. But by and large proponents of that totally failed policy don’t give a shit because THEY GOT THEIRS ANYWAY.
And we are seeing that played out today with the whole debt/deficit vigilantes vs actual spending that might put people to work and GASP require the predators who gamed the system for tremendous wealth while not really producing anything in proportion to their take maybe PAY SOME TAXES.
We are angry because the other side simply blocks off whole ranges of possible solutions, particularly any that would cause inconvenience to capital, while demanding that workers put everything on the table for discussion. Hopefully the days of us worker sheep following the Judas Goats up that one way ramp to slaughter are over.
Want a plan? Throw the entire Ryan roadmap on the manure heap where it belongs and return to 1984 tax rates. You know the ones in effect when Reagan proclaimed it was “Morning in America”?
Bruce,
The Social Security program is fine. I get that. Even Harry Reid gets that (see above). However, the reformers, the Congress, the President, the financial markets, and the people don’t look at Social Security as an individual program – they look at the Unified Budget, as well they should – $’s in, $’s out = taxes, spending, debt.
So you are looking at TWO DIFFERENT THINGS. So when they say there is a problem, your only recourse is to call them some combination of liars, thieves, anti-New Deal conspiracists, or idiots. This guarantees you will be out of the discussion.
If you want to be part of the discussion, I would encourage you to apply your analytical prowess on this issue to:
1) What is the total “cash call, including Special Treasury redemptions, on the Unified Budget
2) What tax increases, spending cuts, and/or/no benefit cuts would be required to leave Social Security as relatively untouched as you recommend.
This is where the real game is being played, not in your Social Security-only sandbox. Buckle your chinstrap, get in the game, and take them on!
Bruce,
The Social Security program is fine. I get that. Even Harry Reid gets that (see above). However, the reformers, the Congress, the President, the financial markets, and the people don’t look at Social Security as an individual program – they look at the Unified Budget, as well they should – $’s in, $’s out = spending, taxes, debt.
So you are talking about TWO DIFFERENT THINGS. So when they say there is a problem with Social Security, your only recourse is to call them some combination of liars, thieves, anti-New Deal conspiracists, or idiots. This guarantees you will be out of the discussion.
If you want to be part of the discussion, I would encourage you to utilize your analytical prowess on this issue to determine:
1) What is the true “cash call,” including Special Treasury redemptions, of SS on the Unified Budget?
2) What spending cuts, tax increases, and/or/no benefit cuts are required to leave SS as relatively untouched as you desire?
This is where the real game is being played, not in your Social Security-only sandbox. Buckle your chinstrap, get in the game, and take them on!
Bruce,
The Social Security program is fine. I get that. Even Harry Reid gets that (see above). However, the reformers, the Congress, the President, the financial markets, and the people don’t look at Social Security as an individual program – they look at the Unified Budget, as well they should – $’s in, $’s out = spending, taxes, debt.
So you are talking about TWO DIFFERENT THINGS. So when they say there is a problem, your only recourse is to call them some combination of liars, thieves, anti-New Deal conspiracists, or idiots. This guarantees you will be out of the discussion.
If you want to be part of the discussion, I would encourage you to utilize your analytical prowess on this issue to determine:
1) What is the true “cash call,” including Special Treasury redemptions, of SS on the Unified Budget?
2) What spending cuts, tax increases, and/or/no benefit cuts are required to leave SS as relatively untouched as you desire?
This is where the real game is being played, not in your Social Security-only sandbox.
Buckle your chinstrap, get in the game, and take them on!
Bruce,
The Social Security program is fine. I get that. Even Harry Reid gets that (see above). However, the reformers, the Congress, the President, the financial markets, and the people don’t look at Social Security as an individual program – they look at the Unified Budget, as well they should -dollars in, dollars out = taxes, spending, debt.
So you are talking about TWO DIFFERENT THINGS. So when they say there is a problem, your only recourse is to call them some combination of liars, thieves, anti-New Deal conspiracists, or idiots. This guarantees you will be out of the discussion.
If you want to be part of the discussion, I would encourage you to utilize your analytical prowess on this issue to determine:
1) What is the true “cash call,” including Special Treasury redemptions, of SS on the Unified Budget?
2) What spending cuts, tax increases, and/or/no benefit cuts are required to leave SS as relatively untouched as you desire?
This is where the real game is being played, not in your Social Security-only sandbox. Buckle your chinstrap, get in the game, and take them on!
Of course I am familiar with your plan. I have criticized it about a half-dozen times.
I repeat my concerns:
In my opinion the phased in approach you describe does not address the problem. If the problem is to be addressed with increased taxes alone then an immediate increase of ~2% is required. So we disagree.
We both know that there is not going to be any solutions put forward in the next year or two that starts with a tax increase. Not your plan and not the Trustee plan of ~2%. So move on. That door is closed. You say:
The other side are a bunch of dishonest negotiators insisting that the only possible solutions are increasing retirement age, changing the benefit formulas, or tinkering with the cap in ways that undercut political support for the program long-term.
But Bruce, “the other side” includes damn near everyone at this point (Except you and Dan). Is everyone dishonest but you two? I hope you don’t say “yes” to that.
Bruce,
The Social Security program is fine. I get that. Even Harry Reid gets that (see above). However, the reformers, the Congress, the President, the financial markets, and the people don’t look at Social Security as an individual program – they look at the Unified Budget, as well they should -dollars in, dollars out = taxes, spending, debt.
So you are talking about TWO DIFFERENT THINGS. So when they say there is a problem, your only recourse is to call them some combination of liars, thieves, anti-New Deal conspiracists, or idiots. This guarantees you will be out of the discussion.
If you want to be part of the discussion, I would encourage you to utilize your analytical prowess on this issue to determine:
1) What is the true “cash call,” including Special Treasury redemptions, of SS on the Unified Budget?
2) What spending cuts, tax increases, and/or/no benefit cuts are required to leave SS as relatively untouched as you desire?
This is where the real game is being played, not in your Social Security-only sandbox. Buckle your chinstrap, get in the game, and take them on!
Precisely Coberly, the deficit ia always for someone else to pay for. Deficts are not a problem when created by tax cuts according to our corporate republican masters, they are only a problem when it is the govt spending on some “un needed” program that uses unionized workers.
Of course where we spend our money matters…. but we still need to spend money or there wont be any incomes. Spending=incomes.
Why should they look at it in combination?
Look the instant the Social Security surplus put the overall Unified Surplus in positive territory Gingrich rushed to argue that NOW was the time for a income tax cut. That was a dishonest attempt to hijack a specific revenue stream mandated by law to go to the Trust Fund as cover for tax cuts that would continue to have the General Fund contribute to long term debt/deficit. Clinton beat that initial attempt back with ‘Save Social Security First’ but when Bush came to office one of his first steps was to appoint a Commission with specific instructions NOT TO FIX SOCIAL SECURITY WITHIN ITS EXISTING FRAMEWORK, that is my small adjustments in FICA rates going forward. And yet when the time came to launch his privatization campaign insisted that ALL OPTIONS WERE ON THE TABLE. Except of course the option he ruled out and the solutions (personal accounts) that he mandated by included. http://govinfo.library.unt.edu/csss/index.htm
The whole effort was throughly dishonest on any intellectual level and really their are only two appropriate terms for people who proceed in that way: Liar or Fellow of Cato/AEI/Heritage.
Social Security does not contribute to the 10 year deficit. Social Security does not under current law contribute to the 75 year deficit. Social Security is still running surpluses for the purpose of calculating the Unified Budget, and is projected to continue doing so to the tune of $1.2 trillion or so within the 10 year window. Given those facts the attempts to drag Social Security into the mix have to be measured against history. Which history shows us that Republicans care a whole lot less about deficits as such than they do about cutting social programs and especially Social Security.
They are not acting in good faith. A fact shown by their general unwillingness to use honest numbers. The Republican Party since at least Gingrich have give less than zero reason for anyone on the center-left to negotiate with. THEY DON’T CARE ABOUT THE UNIFIED BUDGET. THEY NEVER DID. IT IS ALL A SHAM OF A MOCKERY OF A TRAVESTY OF A SHAM AND I WILL NOT PARTICIPATE.
Appeals to Sweet Reason are discounted some when offered by Lizard People with Forked Tongues. Ryan is a liar, a swindler, a snake oil salesman.
I’ll answer your questions in a separate reply.
you give money to government, they give you a promise to repay with interest, and then they spend the money. That is not theft or diversion or looting, that is the fucking definition of buying a bond.
Hopefully that is not the definition of a bond. Most companies don’t spend the proceeds of a bond issuance. They invest it in something productive that provides the means to repay the bonds. Financing current consumption, rather than investment, with debt in large amounts, as in the case of the Special Treasuries, is a recipe for financial ruin.
However, back on the point. You can have it your way if you want. You would just need to go back are restate the annual budget deficits each year since the TF was building to get the real picture of the national debt.
Your Clinton balanced budget? No longer a talking point. This would have likely made it a much ore difficult environment to spend govt money, which you want. You can’t have it both ways. If spending had not been reduced, we would end up the sane way: with a big debt and nearly every spending item, including SS, likely on the table.
So we’re back to liar, swindler, snake oil salesmen, and wascally Wepubwicans. Oh well.
Meanwhile, this does not appear to be true:
Social Security does not contribute to the 10 year deficit. Social Security does not under current law contribute to the 75 year deficit. Social Security is still running surpluses for the purpose of calculating the Unified Budget, and is projected to continue doing so to the tune of $1.2 trillion or so within the 10 year window.
Not according to the NY Times: “Social Security to see Payout exceed Pay-In this Year”
http://www.nytimes.com/2010/03/25/business/economy/25social.html?_r=1&hp
http://www.nytimes.com/imagepages/2010/03/25/business/economy/25social_graphic.html?ref=economy
And while some would say that $40-45 billion a year is a lot of cash flow I would agree but point out a couple of things. One that cash flow is projected to reverse for a least a few years after 2012. And two it dollar for dollar reduces debt on the Intragovernmental Holdings side even as it possibly adds to Debt Held by the Public if it has to be financed from the markets (we could actually tax people to repay the money they borrowed) . Repaying the Trust Funds cannot increase total Public Debt only reduce it. And it can only contribute to the annual Unified Deficit in those years when combined TF assets are being redeemed which is to say under current projections under the closed end period from 2023 to 2037. And even that can be smoothed out and extended for at least 75 years by adopting the NW Plan which cuts any Unified Deficit impacts down to the $30 range at peak for a period from 2026-2037, and that amount not even adjusted down for inflation and runs Unified Budget Surpluses the rest of those years.
Bruce, your repetition of the same argument is getting tiresome. The ?new? plan 1984 tax rates will actually raise revenue? Not when we have a history of revenues staying within a relatively flat range. Only a zealot would continue to propose additional taxes without looking at spending.
Now, it you want to go back to a budget for some prior year and then tax, then let’s pick the years(s) and then do the math. Otherwise you are just burying your head in hope that ole change will kick in.
Furthermore, comparing crowding out of spending is the epitome of misdirection. Deficits are caused because of spending more than revenues. Not comparisons of where revenues are spent. Simple math.
You rightly tell us that the mandatory budget is actually much higher than what is typically listed. That actually makes the deficit situation much worse. There is no excess revenue for discretionary spending. But we continue to spend ~$1 borrowed dollar for every two received in revenue.
Gizzard thinks that’s just some magical number on paper. You seem to think that the deficit will just go away with extreme tax increases. Dale seems to think the deficit is just some minor correlation with the SSTF borrowing.
What belongs on the manure heap is this administration’s economic policies. They have done little more than slow a natural recovery while deepening the suffering and pain for those unemployed.
And, Coberly and I and the rest of the people within sight of retirement. In short, the only people who think otherwise are 70% of the voting public. No need to worry about them! NO
Bruce-I am not too interested in the current pissing match related to deficits, etc. I understand how the program works. However the thing that does concern me, and I’d enjoy reading your thoughts, are the actuarlial assumptions between IC and HC. Assuming that U-6 doesn’t move signifincatly from it’s current position over the next 5-10 years how will that impact future Trustee Reports? The assumptions behind IC and HC are seemingly basic but I’ve learned the hard way that a pessimistic view of actuarial assumptions is wise. Care to look into your crystal ball?
CoRev,
Look around you!!
Sec Def Gates offers $78B in tough “savings” to be put in weapons programs to keep war profits healthy, out of a growing 5 year 3.9 Trillion dollar spending plan!!!!!
How come no one is looking at cuts in the militarism and corporate welfare?
Not so ugly budget landscape if DoD gets the same chunk the pie as the Brits’ MoD.
NO,
The other day I read a debate somewhere, WSJ I think, about the alternate GE engine for the F-35.
One side said the engine needs to be done recalling the issues with P&W engines for the F-16. I lived those issues. The unreliable P&W engine was causing F-16’s to be lost to crashes.
P&W the supplier told AF to send more money!!!! No warranty no sympathy…..
So USAF put GE back to task, about 8 years late, but it got an engine eventually that was not flaming out, from both manufacturers.
In the other letter to editor retired USAF 4 star general Loh comes in and says the GE engine is not needed P&W is just fine implied the F-16 stuff never happened!!!
He did not see what we little two bar captains were seeing and he ignored all the F-16 class A mishaps from those P&W engines.
Somewhere else I read that F-35 is meeting its trest schedule. A schedule greatly reduced and wickered to success with no failed test point.
At $85M an airplane who will scream when it starts falling out of the sky.
The whole of DoD as well as most of the rest of federal corporate welfare is a con!!
Screaming about deficits and blaming the $2.5T in the SS trust fund is a massive bait and switch.
Oh, the concentration of frauds inside the beltway!
Krasting
your “opinion” doesn’t count if you can’t do the arithmetic. but the CBO did the arithmetic for you, and guess what, they agree with me: a tax increase of one half of one tenth of one percent per year will make social security solvent for the next sixty years. CBO doesn’t say it, but continuing that rate of tax increase another ten years would “fund” social security as far as the eye can see.
the other side is either dishonest or like you they can’t do arithmetic. if you had ever taught math, as i have, you would understand that this is by no means surprising. what might be surprising is the number of people with degrees in accounting that can’t do arithmetic in situations where they are not guided by an unseen hand… which is to say textbook algorithms that provide the right answer as long as you are using the right one for the situation at hand. they haven’t got a clue about that.
Little John I mostly don’t do projections. I just try to point out that people need to be consistent when describing crisis and its consequences and solutions.
If HC comes about we are kind of fucked. But then none of the proposed solutions would work, PRAs don’t seem to arithmetically work under IC (drawing on the BDK (Baker-Delong-Krugman) paper from 2005, and project to work even more poorly under HC.
The answer is to target the key numbers that separate HC from IC from LC and the key ones controllable even a little bit are employment and productivity and the ways those translate to Real Wage. Solve that little simultaneous equation and Social Security takes care of itself.
But when it comes to SS that is not the discussion we are having, instead it all seems to revolve around Libertarians wanting to piss on FDRs grave by ‘showing’ that Social Democratic programs are failures by nature.
Ultimately the discussion has about zero invested in the respective trends of U-3 and U-6, it really is not an economic discussion at all.
CoRev
i would prefer you not guess about what i think. you haven’t got a clue. as for tiresome, i’d say your failure to hear, much less understand what we have been saying gets a bit tiresome.
for your contemplation Dale thinks the deficit should be addressed by raising taxes until the deficit hawks shut up. you want to cut programs after that, go for it. but try to keep in mind that Social Security pays for itself and doesn’t have a damn thing to do with “the deficit.”
Sammy
you are essentially saying if you want to play with the liars you have to accept the lie.
i don’t want to play with the liars.
And lets add to that plan the end of military adventures in the middle-east. There’s the budget buster. Why, CoRev, do you persistently ignore the enormous waste that goes to military spending beyond the maintenance of a first class fighting force that is capable many times over of protecting our homeland? What iis there in the middle east that warrants such enormous waste of our taxes and our millitary forces?
sammy
you, and the times apparently, don’t understand the concept of “saving for a rainy day.” social security is cash flow negative, but it saved money when it was cash flow positive exactly for the day when it would be cash flow negative. your argument amounts to “you can save money, but if you ever try to spend what you saved we’ll call you bankrupt.”
no, coRev, it’s your friends who keep saying SS is the problem. when SS has nothing to do with the deficit.
and no, paying SS back the money the government borrowed from it is not SS causing the deficit.
you really need to get a grip on the difference between “borrower” and “lender.”
Sammy that article excludes interest on the Trust Fund. Which counts as a positive for the deficit even where it just comes in the form of extra asset/debt instruments added to the Trust Fund.
Then this shows what a sham the whole thing is. The accrued interest is a net positive for the deficit? The more you borrow, the more you save? Please. Focus on the cash flow!
Let me tailor NO’s comment about: “The United States through its government can do anything.” This point is paramount in this discusssion re deficits/budgets and Social Security. The whole cloth of laws that underpin these discussions are changable by those lawmakers that are being called all sorts of names.
Depending on economic conditions and politics any level of change is possible. Those changes can be to the existing SS laws, and to that you are objecting.
Thanks.
Dale said: “ when SS has nothing to do with the deficit.” May or may not! Depends on interest rates. But the REAL ISSUE is the context, revenues versus spending! And, yes, FICA is revenue.
Yes, CoRev–I object to any change in existing SS laws because I know that no change is necessary. Look at it this way–we got into Iraq because the Bush people lied to us. We stayed in Afghanistan after Bin Ladn left because people said Al Qeda was there–turned out not to be so. They’re in Pakistan, it seems, and the CIA knew that all along. Another misstatement, to be polite.
Now people are lying about SS. Is it wrong to see a pattern here? Lies based on bad policy decisions create unwinnable wars and other disastrous problems like MBS’s. Just on that basis alone I would think that you’d want to take a long time to approve of any changes in the program. Put it this way. Suppose Snap-On Tools went out of business and another guy came around in a different truck selling tools that were “just as good” as Snap-Ons.
So, the next time you needed a replacement for a Snap-On, you buy a tool from the new guy. And, the first time out of the box, it disintegrates into pieces that flew all over the shop narrowly missing several of your machinists. Would you ever buy a tool from the new guy again? Well, would you? Didn’t think so. NO
You got that right, ilsm. See my reply to CoRev below. NO
Dale said: “ when SS has nothing to do with the deficit.” May or may not! Depends on interest rates. But the REAL ISSUE is the context, revenues versus spending! And, yes, FICA is revenue.
You have yet to explain the mechanism for “paying back the money the government borrowed from it” (SS).
Getting a grip on “borrower” and “lender” when they are the same is a concept you should pursue.
HC has unemployment up and productivity down. That is not very likely. It also has lifespan up and immigration down. Another unlikely combination.
The reports do show a tendency to over-optimism during good times and over-pessimism during bad times. To me this says we need to make sure we do not over-correct the solution. The glut of workes and then retirees caused by the boomers has generated a very long time with no adjustments. We need people to understand that that is not the way it will be in the future.
Someone asked why we don’t want changes now. Not so long ago you could make a reasonable case that the correct adjustment was actually to decrease payroll taxes. Right now, in the middle of a poor economy, I don’t trust the numbers, so I resist making changes.
I say to you again. There is no fix for SS that starts with a a tax increase. Not one that is large and immediate or one that is small and grows larger and larger over the next 20 years.
We have always disagreed on one aspect of this. I have maintained that the US can’t afford to let the TF run down over the next 20 or so years. You say that it can. So we disagree on this fundamental point. Time will show that I am right.
You guys claim such unique knowledge of SS. Okay I grant you that. But you have little understanding of the capital markets and don’t seem to understand the issue that the US has a public sector debt that is already way too high for our collective safety.
I appreciate that you folks want to make sure that all those old folks who need a helping hand get it. But it makes no sense to jeopardize the broader economy to accommodate retired people. That will end up hurting those that you most want to protect.
This is not an attack on SS as you so often characterize it. It’s about creating a balance that works for everyone. The “don’t change SS” is not a balanced approach. I suspect you know that.
Coberly says to me:
your “opinion” doesn’t count if you can’t do the arithmetic.
My opinion does count. I am damn good at arithmetic. You sum it all up with those words. Anyone who does not agree with you is an idiot that can’t count. And you wonder why you are so isolated. You rely on insults to make a point? How old are you now? Eleven?
Krasting
i have seen no evidence that you can do arithmetic. perhaps i should make clear… you can probably do “sums” as well as any second grader, but when it comes to knowing what you are adding and why, you are as clueless as most of the people whose little hands i have had to guide over the years, and that includes accountants and engineers.
and if your problem is not arithmetic it is basic morality. if you want to “solve” the defict to save the bond market, then raise the goddam taxes and pay for what you already bought. don’t “save the bond market” by destroying the people’s right to save for their own retirement in a way which is perfectly secure and straight forward and doesn’t depend on the magic of the market… which has been known to let people down just when it hurts them most.
krasting’s idea of a balanced approach is when the mugger puts a gun in your face, you and he agree that he gets to take half your money.
this time.
no CoRev
they are not the same. Uncle Sam is not a real person. There are two hundred million taxpayers in this country. Some of them borrowed money from some others of them using a legal construction called the Social Security Trust Fund. All your scholarship about the deficit is willfully blind to the facts… the basic fact that the goverment borrowed the money from the workers in the name of providing them a retirement fund. you think you can just wipe out that fact by pretending “it’s all the government’s money.”
if you ever sell anything to the government, i hope you will understand that when they refuse to pay you on the grounds that “we” are all one, and since you are a taxpayer it would be like uncle sam paying himself. no need for that.
CoRev
you seem to fail to understand that while the government can do just about anything, in a democracy “we” are the government, and we can at least try to stop our representatives from stealing from us.
Social Security has worked just fine for over seventy years. During all of that time, and before, your political friends have been calling it a Ponzi scheme and theft and the money won’t be there. And your response is to vote for them, so now they can destroy Social Security and say, “see, we told you so.”
little john
if high cost comes about, we still have to pay for our old age. the best way to do that is still going to be to set aside enough of our money while we are working to pay for basic expenses when we are too old to work. and the best way to make that work is something called “pay as you go” with “wage indexing.” in other words, Social Security.
The worst that can happen is the brilliant Harvard boys send all the jobs to china and there is no way that workers can make money, except by gambling on the stock market… if they had any money to gamble with. if that happens we will still need to find a way to care for the old and sick unless we resort to the “final solution” that the Ayn Randians implicitly endorse… and the best way to do that is STILL going to be to set aside some of what we grow or make or do while we are young and use it to feed and house the old and sick. since the hard times will not be evenly distributed, but no one will know when their turn will come, the best way to manage the distribution of what we DO have is STILL going to be the basic design of Social Security.
What our friends from Peterson U are gaming for is that they can make a lot of money while things are going to hell, and with a little luck they can buy fortified estates and private armies to keep doing well for themselves after they have destroyed civilization.
Sigh!!!! Dale says: “they are not the same. Uncle Sam is not a real person.” with implcations that US treasuries are not REAL. Uncle Sam didn’t really borrow that money, bcause he’s not a person, no matter from where he borrowed it.
NO, because you object makes what point? Tell it to the Congress Critters.
Dale, better look at who is behind the attack on SS. Try your own friends on the left. BTW, don’t try the I’m not a lib…. You’ve go too long of a history and record here in your writings.
“Then this shows what a sham the whole thing is.”
Maybe you should have told the Republicans that when they used these exact numbers to sell tax cuts. Goose and gander.
CoRev. Nobody actually seems to ever use ‘primary surplus’ until Andrew Biggs resurrected it in the course of the “Vanishing Surplus” narrative he and Kevin Hassett launched in March 2009. I mean you could dig it out of CBO publications but it didn’t enter into the legislative scores that actually go reported in the MSM, instead those scores and their reporting relied on ‘surplus’ tout court. I find it interesting that you start from a place most people don’t even know exist. How did you know to focus in on ‘primary surplus’ to start with? Sharing a beer with Andy Biggs?
And that definition for ‘deficit’ aka ‘total deficit’ is wrong in that it implies that interest on the Trust Funds (which is scored for ‘total deficit’ purposes) is actually financed out of current year cash flow. It isn’t, though it takes a lot of digging around in the Analytical Perspectives on the Budget to figure that out. And frankly any argument that starts out in the form: “It’s totally simple, just take ‘Therefore, if t is a timeframe, Gt is government spending and Tt is tax revenue for the respective timeframe, then the primary deficit is
If Dt − 1 is last year’s debt, and r is the interest rate, then the total deficit is “
is kind of doomed to start with.
Arne,
Sun Tzu said: “No prince prospered by long war” about 2500 years ago.
“HC has unemployment up and productivity down.”
High unemployment and low productivity come from long war and the pillaging the war machine does for empire which does not send any money home to the center, other than war profits to a few.
The entire issue with SS is that the war machine has pillaged the SSTF similar to the rest of the economy.
20% of US spending for perpetual war has a huge opportunity cost which is coming due.
CoRev
your last is an example of what the human brain comes up with when it is desperate to avoid facing the facts.
the treasuries are real. i can’t even tell what you are trying to say here. the treasuries are a document of the fact that the government borrowed money from the trust fund.
try to think of “the government” as “congress”, and “the trust fund” as “the workers” who were told the money would be paid back to be used for their retirement.
CoRev
i’ll grant you that a Democratic President is the current focus of the theft. I’ll also grant you that the “left” is pretty feckless in its defense of SS. But your political friends have been attacking Social Security since before it became law. And the point i was making is that after telling you for seventy years you can’t trust the government, now they ARE the government, and you can’t trust them.
You are like some psychopath who has been making late night calls saying “ooooh, beeeware!” and now shows up on your porch saying “boo! i told you to beware.” and expects us to give him credit for being “right all along.”
btw
a man who is driving in the ditch on the right hand side of the road is in no position to be calling the guy in right hand driving lane a “leftist.”
i am a conservative just like Eisenhower who said “the enemies of Social Security are few and they are stupid.” See, a regular ad hominemer just like me.
Huh?!??? “20% of US spending for perpetual war has a huge opportunity cost which is coming due.” The entirety of the Defense budget is less than 20%. War costs are in the range of ~$100-125B/Yr. Your one trick pony has thrown a shoe.
Nice one Coberly. Stupid actually. Do yourself a favor. Read it over again. You look silly saying this stuff. You opine like you’re an expert and a scholar. But these words don’t convince me of that.
Bruce,
The begnnings of your original post seem to be missing. I read it briefly on my RSS aggregator so apologies if I misinterpreted something I think I read – which was the notion of rising FICA contributions from the original SS Act:
http://www.ssa.gov/history/ssn/ssb36.html
“After the first 3 year–that is to say, beginning in 1940–you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. This will be the tax for 3 years, and then, beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. After that, you and your employer will each pay half a cent more for 3 years, and finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.”
m.jed
I really can’t speak for some flack writing a brochure in 1936. I am quoting from a report from the Trustees officially submitted to Congress in 1941.
There were a lot of changes between the Social Act of 1935, the Amendments of 1939, and the first monthly checks going out in 1941. For example there was no Trust Fund in 1936 and no survivors’ benefits either, what we know as Social Security today is the result of the 1939 Amendments.
And please! Did you just stumble on this document? Or is it from some list of talking points? “Well I just happen to have this pamphlet from 1936 in my back pocket”. Man there are MREs & even K rations that are less pre-packaged than that.
Bruce, 1) I don’t know a Mr. Biggs. I just pulled the defintion from Wiki. Are you objecting to its use by CBO? Why?
2) You still don’t get the difference between actual expenditures and backroom accouonting functions. Your example, interest on the Trust Funds, is not an expenditure until the TF treasuries are redemed. Then only if the treasury amount is borrowed.
3) You still fail to understand the difference between a “budget” deficit and actual/total “deficit. The budget is a spending projection/authorization. The “deficit” is the actual calculation between revenue and expenditures.
4) Saying this is impossible to understand: “is kind of doomed to start with.” Doomed??? How about rising for the foraseeable future? Ow will continue to rise at such a rate to doom our future economies? If you mean the latter defintion then yes, and MAYBE SOME DAY YOU WILL UNDERSTAND THE ACTUAL “DEFICIT” ISSUE and why that issue includes SS.
The actual/total “deficit” is not scored. It is, however, calculated.
There has beena LOT OF CONFUSION over two concepts, debt and deficit (total/primary/simple). They are not the same thing but related.
Debt is the total amount plus interest borrowed from all sources by the Govt. Some debt and its interest is paid out of annual revenues.
Deficit is the difference between revenues and expenditures (actual Govt payments.) If the debt and/or interest is paid out of annual revenues it DOES NOT increase the deficit.
The KICKER, when debt is paid out of borrowed funds it raises the “deficit” without raising the debt. If there is an interst rate difference between the old and new debt instruments, then that amount may rais/lower the overall debt.
So when some people here say: “Social Security does not add to the defict.” They are actually wrong, and are confusing debt with deficit.
There has been a LOT OF CONFUSION over two concepts, debt and deficit (total/primary/simple). They are not the same thing but are related.
Debt is the total amount plus interest borrowed from all sources by the Govt. Some debt and its interest is paid out of annual revenues.
Deficit is the difference between revenues and expenditures (actual Govt payments.) If the debt and/or interest is paid out of annual revenues it DOES NOT increase the deficit.
The KICKER, when debt is paid out of borrowed funds it raises the “deficit” if the debt paid was intragovernmental it does not raise the debt. If there is an interst rate difference between the old and new debt instruments, then that amount may raise/lower the overall debt.
So when some people here say: “Social Security does not add to the defict.” They are actually wrong, and are confusing debt with deficit.
The deficit/cat food commission understands this. Many do not.
There has been a LOT OF CONFUSION over two concepts, debt and deficit (total/primary/simple). They are not the same thing but are related.
Debt is the total amount plus interest borrowed from all sources by the Govt. Some debt and its interest is paid out of annual revenues.
Deficit is the difference between revenues and expenditures (actual Govt payments.) If the debt and/or interest is paid out of annual revenues it DOES NOT increase the deficit.
The KICKER, when debt is paid out of borrowed funds it raises the “deficit”. If the debt paid was intragovernmental it does not raise/lower the debt unless there is an interst rate difference between the old and new debt instruments.
When TF treasuries are redeemed and paid from added private sector borrowing the deficit is raised by that borrowed amount.
So when some people here say: “Social Security does not add to the deficit.” They are actually wrong, and are confusing debt with deficit.
The deficit/cat food commission understands this. Many do not.
There has been a LOT OF CONFUSION over two concepts, debt and deficit (total/primary/simple). They are not the same thing but are related.
Debt is the total amount plus interest borrowed from all sources by the Govt.
Deficit is the difference between revenues and expenditures (actual Govt payments.) If the debt and/or interest is paid out of annual revenues it DOES NOT increase the deficit.
The KICKER, when debt is paid out of borrowed funds it raises the “deficit”. If the debt paid was intragovernmental it does not raise/lower the debt unless there is an interest rate difference between the old and new debt instruments.
When TF treasuries are redeemed and paid from added private sector borrowing the deficit is raised by that borrowed amount.
So when some people here say: “Social Security does not add to the deficit.” They are actually wrong, and are confusing debt with deficit.
The deficit/cat food commission understands this. Many do not.
There has been a LOT OF CONFUSION over two concepts, debt and deficit (total/primary/simple). They are not the same thing but are related.
Debt is the total amount plus interest borrowed from all sources by the Govt.
Deficit is the difference between revenues and expenditures (actual Govt payments.) If the debt and/or interest is paid out of annual revenues it DOES NOT increase the deficit.
The KICKER, when debt is paid out of borrowed funds it raises the “deficit”. If the debt paid was intragovernmental it does not raise/lower the debt unless there is an interest rate difference between the old and new debt instruments. When TF treasuries are redeemed and paid from added private sector borrowing the deficit is raised by that borrowed amount.
So when some people here say: “Social Security does not add to the deficit.” They are actually wrong, and are confusing debt with deficit.
The deficit/cat food commission understands this. Many do not.
CoRev
you appear to be one of those who do not understand this.
Social Security does not add to the deficit. Or did not before Obomba came up with the tax holiday.
Social Security is fully paid for by the payroll taxes and the interest earned by excess payroll taxes.
What adds to the debt (sum of deficits outstanding) is the government borrowing from any source. You do not add to the debt by buying a Savings Bond. The government adds to the debt by selling you a Savings Bond. The difference is critical.
Dead wrong on this one Coberly. Regular Treasuries do not have to be paid back with taxes. Only the interest has to be paid with taxes. The principal will be rolled over for ever and never be repaid.
Do you have that concept? Do you understand this now? If not let me know and I will go through it again and again until you do understand that. Once you undertand that we can talk more sanely.
The SI bonds DO HAVE TO BE PAID BACK IN FULL. THIS WILL HAPPEN IN THE NEXT 20 YEARS OR SO.
We can’t afford that. Sure we can service the debt in terms of paying interest. THERE IS NO WAY THE 2.6 T can be paid back.
Please tell me you undertand this key difference. If you try I am sure it will sink into you that SI bonds have a much different profile than do regular Treasury debt. Yes, they HAVE to be paid back or ss blows up. But to pay them back in full as scheduled will cause great problems elsewhere.
If you do not get this simple fact then I hold out little hope for you. This is not so hard. Just think about and it will open your eyes.
That you would write this shows you don’t really understand how things work:
“those regular Treasuries would have to be paid for with taxes too”
Completly wrong there my friend.
Too bad you fail to understand the critical difference. What is the difference between borrowing (Savings Bonds) to pay for non-transferable treasuries to borrowing (Savings Bonds) for the F35 engine?
As I said: “The deficit/cat food commission understands this. Many do not.” We know where you fall are on that issue.
I had the triple post problem back when I had just a dial up connection speed. It went away since I upgraded to broadband speed. I only pushed the post button once, but JS still would triple post, even tho I wouldn’t press the retry button it gave me when first telling me the post failed. I did have to manually refresh/navigate to the page to see my posts.
Also, when I first registered at AB, I wasn’t getting a delete option for my posts, so I couldn’t go and delete the extras. Later on the delete option appeared. I assumed it was some admin change to my account by the webmaster and had nothing to do with the quality of my comments.
BTW Dale, how wrong can you be? “What adds to the debt (sum of deficits outstanding)”
Bruce K,
I think you need to try it over. Something like this:
Treasuries and special treasuries are USG debt obligations. The difference is special treasuries are an obligation to US workers (paid in full by workers from payroll deductions, unlike other Fed pension plans that are also holding intergovernmental debt in trust funds, but I digress). The “public” traded Treasuries are an obligation to pay off the Chinese, Arabs, Zombie Banks, Federal Reserve or whomever else holds these Treasuries at any point in time.
If we we believe economists (not something I generally recommend), a deficit of 3% of GDP is “sustainable”. This gets conflated to the belief that we will never have to pay off USG debt obligations, just the interest. But this belief will get challenged if we get rising interest rates.
As far as “paying off special treasuries”, what is really happening is the government is supposed to pay on SS benefits by redeeming special treasuries, which is the reason for having the SS trust fund in the first place, and these special treasury debt obligations get rolled over into regular treasury debt obligations. That was all by design in a world before a multi war Middle East, before bank bailout/ financial crisis, and before outsourcing of the US economy. Granted the numbers have changed somewhat since these events, but we have to draw the line on where the fix gets made.
The only difference is prioritizing whom to screw. I think it’s someone else’s turn.
Here goes nothing. It’s true that SS does not add to the annual unified budget deficit, UNLESS we choose to increase the public debt to offset decreases in intragovernmental debt (the SSTF). One may and should predict that paying back the SSTF will result in an increase in the annual unified budget deficit. This increase is not required or somehow built-into the SS system (Coberly is right), but it’s gonna happen (CoRev is right) because we will not reduce the national debt anytime soon. The prediction says nothing about what’s inherent to the SS system.
Coberly might win debating points by arguing that any new public borrowing is optional and for defense and other things past and future–he has argued along these lines before, and rather effectively imho. But CoRev get all of those points back because he’s right that Congress and unified budget analysts do not view the situation this way, ethical arguments notwithstanding. I’ll take Coberly’s ethics over those of my congressman (if he has any–no evidence here), but guess who votes on the budget.
PJR
Assuming that your analysis of the circemstnaces is correct, the question arises as to what is a good citizen to do? CoRev describes, and maybe supports, the idea that Congress should take the least ethical approach and screw its citizens. Congress could take lots of other approaches to the budget deficit. Military spending could be significantly reduced, starting with the war budget. Corporate welfare could be attacked. There are too many examples to start delineating here. The wealthiest one, two or three percent could be more heavily taxed in a variety of ways. Call your local Congressperson and discuss their approach to good government and deficit reduction. Should the bulk of the workiing class pay the bill? I think not, but the result depends upon the vociferous manner of the citizenrys’ response.
oh, god, Krasting called me stupid. now i’m gonna die.
but K, read WHAT over again? what looks silly? just to you? or to people who know what they are talking about?
what exactly is your argument here?
Krasting
and exactly why is it completely wrong? do you have an argument, or do you find you can often bluff people into thinking you have one.
The Trustees seem to expect the Trust Fund to be paid. So does CBO. Whether it is paid by more borrowing, more taxes, or less other spending doesn’t matter.
Do you think you could find your way back to a substantive point?
CoRev
you have completely lost me. i don’t know what you are talking about.
PJR
you are undoubtedly right. but i iike to think that if the public understands what is happening they won’t let congress get away with it.
“One may and should predict that paying back the SSTF will result in an increase in the annual unified budget deficit.”
But it is not at all clear that it would. The unified budget surplus/deficit is not a measure of cash flow, which is why Social Security added $80 billion or so in surplus even as it dragged down $46 billion in cash from Treasury last year.
I am not a budget expert but from what I see it doesn’t appear that Treasury redemptions are scored for budget purposes. Interest yes, principal no. And on the narrowest definition of ‘budget’ even Social Security interest is officially ‘off-budget’ whether paid in cash or in new Special Treasuries. I think. Because its complicated. And loose talk about ‘debt’ ‘deficit’ ‘budget’ and easy equations between them can get you into trouble.
Dale, I know you do not understand. It is what MG and I were trying to tell you in the earlier thread.
PJR, you have the concpet correct, but I would caution use of “unified” as a qualifier. The deficit is simple math, revenues (any color) in minus expenditures (any color) out.
PJR, you have the concept correct, but I would caution use of “unified budget” as a qualifier. The deficit is simple cash flow math issue, revenues (any color) in minus expenditures (any color) out.
The budget is an expenditures planning, authorizing and tracking document.
Bruce, you keep flailing on the “deficit” concept as it is not a budget issue but one of cashflow.
Let me explain it this way. If Congress decides not to add to the debt ceiling. The budget essentially must be totally rethought, because expenditures could only be made from available tax revenues. (A very simple cash flow situation.) There will be no additional private/public sector borrowing because they add to the debt. Furthermore there would be no increase in the “deficit”because there is no additional borrowing. There is even a question of debt going up due to interest on TF assets because they would add to the total debt.
Bruce, you keep flailing on the “deficit” concept as it is not a budget issue but one of cashflow.
Let me explain it this way. If Congress decides not to add to the debt ceiling. The budget essentially must be totally rethought, because expenditures could only be made from available tax revenues. (A very simple cash flow situation.) There will be no additional private/public sector borrowing, because they add to the debt. Furthermore there would be no increase in the “deficit”, because there is no additional private sector borrowing. There is even a question of debt going up due to interest on TF assets because they would add to the total debt.
“Huh?!??? “20% of US spending for perpetual war has a huge opportunity cost which is coming due.” The entirety of the Defense budget is less than 20%. War costs are in the range of ~$100-125B/Yr. Your one trick pony has thrown a shoe” CoRev
There seems to be lots of confusion regarding the amount spent on “defense” in this country. Let’s start with Wikipedia’s analysis of that issue.
“For the 2010 fiscal year, the president’s base budget of the Department of Defense rose to $533.8 billion. Adding spending on “overseas contingency operations” brings the sum to $663.8 billion. When the budget was signed into law on October 28, 2009, the final size of the Department of Defense’s budget was $680 billion, $16 billion more than President Obama had requested. An additional $37 billion supplemental bill to support the wars in Iraq and Afghanistan was expected to pass in the spring of 2010, but has been delayed by the House of Representatives after passing the Senate. Defense-related expenditures outside of the Department of Defense constitute between $319 billion and $654 billion in additional spending, bringing the total for defense spending to between $1.01 and $1.35 trillion in fiscal year 2010.“
So total defense spending is a matter of how one defines defense spending, what is included in the budget. One trillion per year!!! It’s hard to tell iof even those dollars count the wars in the middle east. It is a confusing and easily misleading count. At best CoRev is being flipent when he suggests that the defense budget is only 20% of the total budget. Even the most conservative estimates have it closer to 25% and those are unclear as to how much of the total spending is accounted for in the estimate given. Here’s a less conservative view that is interesting to read through. God we spend a lot of our total budget on palying soldier.
http://www.warresisters.org/pages/piechart.htm
CoRev
I stopped playing this kind of game when i turned six. if you have something to say try making a grownup argument.
CoRev
in all sincerity this is doubletalk. it may work to confuse congressmen and the press enough to shut them up, but when you get down to the actual real world facts, they are these:
the people put their money into social security on the promise that they would receive commensurate and timely benefits at a reasonable retirement age.
the bad guys… the double talkers… are trying to claim that somehow SS is responsible for “the deficit.” but SS is more than fully paid for. the bad guys are trying to claim that if the government repays the money it borrowed from SSTF that will increase the deficit (or debt, which is the sum of deficits in any sane accounting). this is nonsense.
and if you play games with your bookkeeping so that repaying a debt is scored as increasing your debt, you ought to go to jail, even if you wrote the law.
jack
and corev accuses me of ad hom when i say that either he is lying or he is insane. i don’t mean that to be an insult. i mean it to be the best explanation i can come up with for why he presents the “argument” he does.
NO, I presume the response was to me. There may be no rethinking of the budget necessary when you say: “ After all, IRS keeps collecting cash, and if all we do is keep up with the debt service and pump out SS checks, we’ll survive.” you have defined the worst case (well almost) scenario. Which BTW makes my cased for crowding out.
Dale, earlier you admitted to not understanding what I was saying, and now you occuse me of double speak.
Your actual real world facts are not facts, but your own perceptions ofd reality. Show us where and who is claiming: “are trying to claim that somehow SS is responsible for “the deficit.”” Now you are claiming they are playing games and should go to jail.
So, you’ve fallen back on calling people names and making unsubstantiated claims of what is reality.
I request PJR deduct style and debate points.
Jack, you are correct. I took my numbers from the pie chart which is not too clear with dark on dark coloring. Either I misread it or the chart does not match the text you found.
Maybe you can see the percentage better than these ole eyes.
Dale is back to his old tricks of name calling and then making some excuse for his bad behaviour.
Dale you are wrong! Redeeming the SSTF treasuries via borrowing from the private sector adds to the deficit.
pjr
i am not interested in debating points. i am trying to make as clear as i can a few facts about social security.
the most important of those are, first, that SS has nothing to do with the deficit… that is,it did not cause the deficit, and it will not cause any future deficit. second, social security is not in any kind of funding crisis of its own. it can pay for itself forever. what that means is that the workers who pay a portion of their income into social security can continue to get it back “with interest” when they need is… mostly when they retire, but also in case of disability or death-with-dependents.
under some circumstances this might require a very small increase in the “tax”, as when the average life expectancy in retirement increases. optionally, the workers could decide to receive a smaller monthly payment over the longer number of years they will live. but under most circumstances that would be foolishness.
feel free to examine co-rev or MG or Krasting for any actual content.
CoRev
borrowing money to pay back money you borrowed from someone else does not add to your “deficit.”
in any case, your decision to pay back A by borrowing from B has nothing to do with A. except, of course for the fact that you owe him money and he isn’t willing to write off the loan.
the kind of argument you are offering here would either get you put in jail or sent to an insane asylum if you tried it in your personal life with strangers.
to make it a little clearer…
CoRe has been borrowing from his grandmother for forty years. but he “knows” granny will never ask for the money back, so he doesn’t even bother to keep track of it in his “budget.”
then one day granny does ask for it back. so CoRev has to go borrow money from a banker. This he has to keep track of, so he claims that granny has increased his “deficit.” Or… which is what he seems to be trying to do… he tells all his friends that he doesn’t really owe granny the money because it was “all in the family” and it would be intolerable for granny to force him to increase his deficit by expecting him to pay back the money he has borrowed from her.
if he can get his friends to agree, he can stiff granny, and never feel any guilt, because after all “all the responsible people agree.”
CoRev
there are two kinds of “not understanding.” I could say I don’t understand quantum physics and be saying something about me. Or I could say I don’t understand the ramblings of a schizophrenic, and be saying something about him.
Now, when I “admit” I don’t understand you, which kind of not understanding do yo think I mean?
Bad with arithmetic? Maybe you will recall our argument in Feb 2010 about my numbers: These were my forecasts for 2010 that I put on the table. Recall that you guys said I was full of hay at the time. Would you like me to go back and get your words? My forecast made 10 months before the end of the year:
PR Tax…… $640b
Other Tax….$25b
Interest……$110b
Benefits……$700b
Overhead….$6b
RR EX……..$5b
The actual results:
PT tax….641.5
Other tax…25
Interest..118
Benefits… 701.6
Overhead..6
RR Ex….4.4
So I hit the nail on the head. I said:
-The annual Payrolls minus Benefits will be in deficit by $60 billion.
The actuall number was 59.9 billion. A 100mm miss. Barely a rounding number at SSA.
Don’t mess with me on SS projections. I will eat your lunch, every time.
CoRev the most commonly reported number for ‘surplus/deficit’ is precisely that derived from unified budget calculations and it doesn’t measure cash flow. Where is the ‘simple’ source for this ‘simple’ concept of revenue – cost calculation?
Bruce and Dale, as cursed said on a much earlier thread “It is possible to endlessly explain something and still be wrong.”
Krasting
I never argue about predictions. The numbers you dan’t do are the ones that show the Social Security projected shortfall amounts to a tax raise of forty cents per week per year.
And the moral computation you can’t seem to manage is that you want to save the bond traders by stealing from the workers.
CoRev
An insult is when you try to hurt someone’s feelings or humiliate him in public.
But when you are brought into the hospital raving about invisible reptile beings from outer space telling you that you are their messiah, and i write “paranoid schizophrenic” on your chart, i am not insulting you. I am describing you.
If I am wrong in my diagnosis, that can be changed by further observation, or maybe a smarter doctor, but it’s the best I can come up with for now. No insult intended.
I repeat: Dale is back to his old tricks of name calling and then making some excuse for his bad behaviour.
You are still wrong!
mjed
you might find out how old the person addressed in 1936 was when the payroll tax was raised to more than 3%… my guess is that he never did have to pay more.
The problem is not with your eyes nor mine, which I assure you haven’t functioned as well since bi-lateral cataract removal. The problem is that it is far too easy to hide the true extent of military spending and war costs. The numbers are beyond enormous. Military, so called defense spending, is eating up some 40-50% (maybe more) of our budget. What is there to show for it beyond Lockheed Martin as a good long term stock holding? Though once their executives and all the Generals on their Bd of Directors gets done taking their slice I wonder what’s left for all the institutional investors. Cut the Defense Dept spending in half and we wouldn’t’ have to worry about balancing the budget.