quote:Originally posted by kmbboots: Was Wingracer just talking about Amtrack? He did not make that clear.
I was talking about all the budget points with "railroad" in the title. Now I have no idea what that money is specifically spent on but the only full railroad business the government owns to my knowledge is AMTRACK. Freight companies are all self sustained, private sector, for profit businesses. Now it is entirely possible that some of that money goes to those freight companies in the form of subsidies or bailouts or what have you but the vast majority of it is AMTRACK.
Posts: 891 | Registered: Feb 2010
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I would argue that, to an extent, both Rabbit and kat are right.
1) The money in the SS trust fund, which was not supposed to be spent as if it were part of the general fund, has been spent. It's simply not there.
2) As a consequence, the money we expect to cover upcoming Social Security "deficits" is not available, and either other debt will need to be issued to cover these shortfalls or Social Security payments will need to be drastically cut (or both).
3) However, this is not itself evidence of a problem with Social Security or "entitlements;" that's like calling someone irresponsible if someone else breaks into the house you're sharing with a friend and steals your rent payment, which your friend has been holding for you.
4) Of course, the problem here is that the person with the rent payment is mildly schizophrenic and is actually stealing from your rent fund, and then promising you that he'll put the money back in. Given this, it is not entirely surprising that you might be unwilling to continue to let him hold onto your rent money. But, again, the problem is not that you are attempting to pay rent; rather, it is that the person you're letting hold your rent money can't be trusted to do so without tighter oversight.
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Geraine: Amtrak owns extensive rail lines, which it leases to freight companies.
quote:I sincerely doubt this. Over the past 20 years, the US has closed most of its military bases in Germany. Over that same time frame, German military spending has fallen from 2.7% of GDP to 1.4% of GDP. The US, through NATO, pressures most Western European countries to spend more on the military than they would spend if the US pulled out.
The massive threat that was right next door to Germany went away, so the military assets deployed directly in Germany decreased. This is unsurprising. They still benefit from the military umbrella the US provides, they just don't require nearly the level of forward-deployed military assets as they used to.
I disagree that European military spending would triple, or that it would happen quickly. I suspect overall levels would double over the next couple of decades after a drastic draw drown in US military expenditures, though (not that I see any plausible story causing such a decrease).
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quote:Exactly. If the U.S. completely pulled out of NATO, the UN, etc. and shut down all our European bases, European countries would be tripling their defense spending within just a few years.
I sincerely doubt this. Over the past 20 years, the US has closed most of its military bases in Germany. Over that same time frame, German military spending has fallen from 2.7% of GDP to 1.4% of GDP. The US, through NATO, pressures most Western European countries to spend more on the military than they would spend if the US pulled out.
Initially you are probably right, so perhaps my "few years" time frame is untrue. But I would be willing to bet that sooner or later, someone (probably Russia but quite possibly someone else) would see an opportunity to take over a small neighbor for profit and before you know it, it's an arms race all over again.
Of course, I could be completely wrong. So let's look at the consequences of each approach.
1. Reduced defense spending.
No attack, economic growth is good, peace prevails, all is well.
Attack, country is conquered, enjoy your near enslavement.
2. Increased defense spending.
No attack, economic hardships but not totally bad as your defense industry will provide many jobs and possibly even exports. Perhaps not as efficient as you could be but not collapsing either.
Attack, successfully defend your country and possibly even profit from reparations.
So unless you know with absolute certainty that no one will ever attack you, option 2 looks a lot better to me. Are you willing to bet your life on it?
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quote:Originally posted by fugu13: Geraine: Amtrak owns extensive rail lines, which it leases to freight companies.
Makes sense. Don't we however essentially do the same thing though with our roads through gasoline taxes?
Wingracer: I suppose it wouldn't even have to be an invading army. A few nukes would completely decimate the country.
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Tom, Did you read the links I posted. It is 100% false that the Social Security Trust Fund is not included in the national debt. Read the government financial reports. In this respect, katharina is completely wrong. She is repeating a lie.
You are correct that there isn't a big pile of money sitting somewhere called the Social Security Trust Fund, but this really isn't any difference than any other investment. If you put money in the bank, the bank doesn't simply store the cash in a vault somewhere until you want it back. They loan the money to someone else or invest it somewhere, yet, with the exception of a few crazy people, no one considers the money they put in the bank to have been squandered by the bank on something else unless the bank actually goes bankrupt.
The US government has a legal requirement to repay the social security trust fund just like they have a legal requirement to repay all other government bonds. There are several ways the government could do that including selling more bonds (which would likely require paying a higher interest rate) or raising taxes. The US government turns over government bonds every minute. They get the money to do this by selling more bonds. If they can't sell enough to pay off bonds that mature, they have to raise interest rates.
Claiming that the Social Security Trust Fund doesn't exist, is equivalent to claiming that the US government is bankrupt and will inevitably default on its debts. If anyone seriously believed that, the interest rates on Government bonds would be skyrocketing. They aren't.
We pay into Social Security with the expectation that this is how the money will ultimately be spent. If our elected representatives are spending the money on something else -- they are cheating us pure and simple. We the voters need to hole them responsible for spending this money the way the law says it must be spent.
When they claim that the budget deficit is due to "entitlements", they are basically admitting to violating the law and cheating the American tax payer. As an American tax payer, I'm not going to let them get away with that.
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quote:They loan the money to someone else or invest it somewhere...
Except that, in the case of federal debt, this is not actually what has happened; we have not invested the fund, and in fact have promised to pay interest to people in exchange for their purchase of the monies that were supposed to be in the fund.
quote:We pay into Social Security with the expectation that this is how the money will ultimately be spent. If our elected representatives are spending the money on something else -- they are cheating us pure and simple.
Yes. They are cheating us, and they will get away with it.
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quote:Makes sense. Don't we however essentially do the same thing though with our roads through gasoline taxes?
I think that was part of the point of comparing the two .
quote:Except that, in the case of federal debt, this is not actually what has happened; we have not invested the fund, and in fact have promised to pay interest to people in exchange for their purchase of the monies that were supposed to be in the fund.
Whatever you think of social security, US savings bonds are a heck of a lot safer investment than any other they could make. Or is your assertion that somehow an economic event causing the US government to default on debt won't cause massive downturns in pretty much every market in the world?
Any potential problems with social security are due to the future liabilities of the social security program due to its structure combined with changes in the distribution of the US population. Whether social security invests its surpluses in federal savings bonds or stocks or anything else is irrelevant to that question. The federal government will need to issue the same amount of bonds in either situation (though likely with higher interest rates), and social security will be at least as vulnerable to lack of return on its investment in either situation.
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You're less cynical than I am, fugu; for my part, I strongly suspect that because the monies for Social Security are entirely virtual, the government will simply decide one day that they don't exist and aren't owed.
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quote:Except that, in the case of federal debt, this is not actually what has happened; we have not invested the fund, and in fact have promised to pay interest to people in exchange for their purchase of the monies that were supposed to be in the fund.
Please explain. According to the references I gave on the previous page, the Social Security Fund holds 2.4 billion in government bonds which accrue interest. This is included in official figures for the national debt. How is this different from investing the funds in (say for sake of argument) German treasury bills. In what way has the government promised to pay interest on the funds to any one other than Social Security beneficiaries. Your comment has me totally confused.
You are essentially arguing that US government bonds are not a secure investment. This contradicts what every financial analyst says. If investors did not believe US government bonds were secure, the US government would have to offer much higher interests to get people to buy them.
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posted
The US defaulting on any part of its debt would be a world-shattering financial event that would cause a heck of a lot more problems than repaying the social security debt liabilities at the gradual rate that will be required. There are so many much easier and less painful ways to act fiscally irresponsible.
Additionally, since the government controls social security as a program, it can sustain the situation by increasing social security's revenue, having social security continue to have a surplus and purchase new government bonds as the old ones expire (if it so chooses).
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quote:The US defaulting on any part of its debt...
Oh, I don't think the U.S. will default on this debt. It'll just say, "Oh, yeah, the Social Security fund doesn't actually exist; all this money here is just, y'know, the general fund" and then stop making Social Security payments.
Posts: 37449 | Registered: May 1999
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quote:The US defaulting on any part of its debt...
Oh, I don't think the U.S. will default on this debt. It'll just say, "Oh, yeah, the Social Security fund doesn't actually exist; all this money here is just, y'know, the general fund" and then stop making Social Security payments.
Either that or once it starts really bleeding money like crazy, they will have to keep it afloat from the general fund.
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quote:Oh, I don't think the U.S. will default on this debt. It'll just say, "Oh, yeah, the Social Security fund doesn't actually exist; all this money here is just, y'know, the general fund" and then stop making Social Security payments.
That is defaulting on its debt. The money is held in federal savings bonds. Not making payments on those is defaulting on the debt. There's no way to do what you're asserting without triggering a credit event that will result in a huge shock to world markets. I suspect it would make the recent recession look mild, as it would mean the US was having problems with its debt. Look at the problems when the (comparatively) puny economies of Greece, Portugal, and Ireland had less severe credit events than defaulting on the social security debt would be! And they're not the world's reserve currency like the dollar is.
As for ending social security, while there will definitely need to be changes made, I think how deadly even talking about the possibility of decreasing social security payments to anyone even a tiny bit causes serious political problems should tell you how much more likely it is some other choice will be made.
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quote:Not making payments on those is defaulting on the debt.
I don't mean that they'd stop paying interest to themselves. I meant that they'd stop paying Social Security to old people.
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quote:Originally posted by Blayne Bradley: Lower military spending to 1% gdp, done.
Yes. I think that everybody else in the world should do this.
True story. You've said this more than once Blayne, and it's never going to happen unless every country follows suit.
"Follow" doesn't make really sense in this context, unless you mean that the US is failing to follow. If you look at the sorted list of countries by military spending by GDP, there are only a handful of failed African and/or Middle Eastern countries with higher spending, Georgia, and Vietnam.
In the G7, the US could cut from 4.3% of GDP to 3.5% and still remain tied with Russia, which has a much smaller economy.
Despite what it says on that chart, you can bet your butt that China is spending much more than 2%. They don't publish half of what they spend, but most analysts agree that China's military capabilities are perhaps just over a decade away from matching ours, and that they wouldn't be able to do so without spending much more than is on the books. So as nice as it would be to for us to cut military spending, it's simply not going to happen. There is going to be a lot more military spending as a bipolar system emerges over the next few decades. We had our chance this decade and the last to reign in military spending, but now I think that the window of opportunity has passed.
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quote:I don't mean that they'd stop paying interest to themselves. I meant that they'd stop paying Social Security to old people.
Stop paying social security entirely? And you think there's any way a politician (excepting one or two extraordinarily quirky districts) supporting that would get reelected, ever?
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Yeah. They just need to wait until it's our generation's turn to actually collect it. The old people will still get their money, on our backs, and the young people won't care because they'll have been primed to not expect it. And our generation doesn't have the votes to matter, so we'll wind up screwed.
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Blayne Bradley
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quote:Originally posted by SoaPiNuReYe:
quote:Originally posted by Mucus:
quote:Originally posted by BlackBlade:
quote:Originally posted by mr_porteiro_head:
quote:Originally posted by Blayne Bradley: Lower military spending to 1% gdp, done.
Yes. I think that everybody else in the world should do this.
True story. You've said this more than once Blayne, and it's never going to happen unless every country follows suit.
"Follow" doesn't make really sense in this context, unless you mean that the US is failing to follow. If you look at the sorted list of countries by military spending by GDP, there are only a handful of failed African and/or Middle Eastern countries with higher spending, Georgia, and Vietnam.
In the G7, the US could cut from 4.3% of GDP to 3.5% and still remain tied with Russia, which has a much smaller economy.
Despite what it says on that chart, you can bet your butt that China is spending much more than 2%. They don't publish half of what they spend, but most analysts agree that China's military capabilities are perhaps just over a decade away from matching ours, and that they wouldn't be able to do so without spending much more than is on the books. So as nice as it would be to for us to cut military spending, it's simply not going to happen. There is going to be a lot more military spending as a bipolar system emerges over the next few decades. We had our chance this decade and the last to reign in military spending, but now I think that the window of opportunity has passed.
Until you realize that you're wrong.
While that the Chinese government certainly are spending more than they say, this isn't as large as a number as you think it is, at most its 150 billion$ or to put it in perspective 1/5th of the US budget for capabilities pound for pound matching US ones.
That capabilities match doesn't imply anything at all regarding how much is spent, they're a command economy with a armaments industry that since inception has been tried to do things as self sufficiently as possible.
Look at it in perspective, PLA Army Colonels arriving in the States for military exchanges are constantly shocked at just how much better paid US Colonels in the same rank are. Clearly this implies that widely speaking the PRC is demanding far more from their military and industry then the US is for the amount they pay.
Essentially your military-industrial complex is robbing you blind.
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Tom: the percentage of the population in the US over 65 is expected to grow, and fairly dramatically, over the next five plus decades. How does an increasing population not have the votes to matter?
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quote:Originally posted by Wingracer: ... Attack, country is conquered, enjoy your near enslavement ...
No country with nuclear weapons, or even countries with allies with nuclear weapons will ever be "enslaved" barring some pretty miraculous developments in missile defense.
quote:Originally posted by SoaPiNuReYe: ... They don't publish half of what they spend ...
If we're going to be using your gut feeling that the Chinese are spending more than the SIPRI estimates, then we're going to have to use the Muslim world's gut feeling as to how much the US has hidden on its books, and then its a short spiral into guesses against guesses.
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quote:Tom: the percentage of the population in the US over 65 is expected to grow, and fairly dramatically, over the next five plus decades.
Man, I am more cynical than you are. Because it astonishes me that you don't expect that they're going to just keep moving the target beyond 65.
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quote:Originally posted by Blayne Bradley: Lower military spending to 1% gdp, done.
Yes. I think that everybody else in the world should do this.
True story. You've said this more than once Blayne, and it's never going to happen unless every country follows suit.
"Follow" doesn't make really sense in this context, unless you mean that the US is failing to follow. If you look at the sorted list of countries by military spending by GDP, there are only a handful of failed African and/or Middle Eastern countries with higher spending, Georgia, and Vietnam.
In the G7, the US could cut from 4.3% of GDP to 3.5% and still remain tied with Russia, which has a much smaller economy.
Despite what it says on that chart, you can bet your butt that China is spending much more than 2%. They don't publish half of what they spend, but most analysts agree that China's military capabilities are perhaps just over a decade away from matching ours, and that they wouldn't be able to do so without spending much more than is on the books. So as nice as it would be to for us to cut military spending, it's simply not going to happen. There is going to be a lot more military spending as a bipolar system emerges over the next few decades. We had our chance this decade and the last to reign in military spending, but now I think that the window of opportunity has passed.
Until you realize that you're wrong.
While that the Chinese government certainly are spending more than they say, this isn't as large as a number as you think it is, at most its 150 billion$ or to put it in perspective 1/5th of the US budget for capabilities pound for pound matching US ones.
That capabilities match doesn't imply anything at all regarding how much is spent, they're a command economy with a armaments industry that since inception has been tried to do things as self sufficiently as possible.
Look at it in perspective, PLA Army Colonels arriving in the States for military exchanges are constantly shocked at just how much better paid US Colonels in the same rank are. Clearly this implies that widely speaking the PRC is demanding far more from their military and industry then the US is for the amount they pay.
Essentially your military-industrial complex is robbing you blind.
This is true. But it's not just that. You're right that you could pick a sector and find numerous inefficiencies when it comes to the way the US handles defense. It's also important to note that it's simply much cheaper to buy or manufacture weapons that are on the market as opposed to developing new ones. Because the United States is so determined to stay on the cutting edge of military technology, we're the ones paying the extra cost of developing those new weapons. The older weapons work just fine, and I would argue that that's the real reason why China is catching up to us, not so much as the inefficiencies within our system (not that those don't contribute).
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quote:Originally posted by The Rabbit: ... How is this different from investing the funds in (say for sake of argument) German treasury bills.
The problem is the conflict of interest. The US owns its own treasury bills in one hand and controls the money supply in the other.
The easiest way to visualize this is to consider the current dilemma that the Chinese are in. They hold, IIRC, over a trillion USD in short term treasury bills. But they are still worried that the US will print too much money and the actual value of their foreign reserves will go down. But the "good news" is that with short term bills, if the US starts doing that the Chinese can always sell the bills or wait until they expire.
The social security fund is also, IIRC, over a trillion. But they're essentially stuck with treasury bills that they can't sell on the market and they're forced to hold onto them until the ship goes down. No matter how much the US government decides to inflate.
The US doesn't have to explicitly default, it can simply reduce its debt that way. Indeed, thats why one of the choices in that NYT budget puzzle is "Use an alternate measure for inflation."
Edit to add: This is part of why the Canadian pension plan system is structured with an *independent* investment board, a board that invests all over the world, not just in Canadian or American assets.
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Tom: what age do you imagine it going to without getting the larger population of older people voting against the measure? I bet that even if you pick a fairly high age, the percent of the voting age population (or likely voters, or total population) above that age when you're retired will still be higher than the current percent above age 65. Who will apparently not vote for the fairly minimal measures that are required to make social security sustainable.
quote:The US doesn't have to explicitly default, it can simply reduce its debt that way. Indeed, thats why one of the choices in that NYT budget puzzle is "Use an alternate measure for inflation."
This is an inaccurate reading of that option. That option refers to how increases in benefits are counted, not anything to do with the debt. Changing the inflation measure is just another way of saying benefits in the future will be lower. However, the government changing how inflation is calculated won't affect the debt at all, only actual inflation will do that, however that inflation is approximated by economic statisticians.
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*shrug* I thought it was pretty obvious and didn't need spelling out.
Since benefits are indexed to inflation, you obviously have to weaken or remove that index before inflating aggressively to reduce your debt. Think of it as a prerequisite.
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quote:I bet that even if you pick a fairly high age, the percent of the voting age population (or likely voters, or total population) above that age when you're retired will still be higher than the current percent above age 65.
Honestly, I think an adjustment of retirement age to 75 would suffice; like I said, we've already conditioned a lot of people to not expect to receive Social Security already, and voters can't be reliably counted on to vote for their own financial best interests anyway. I would be surprised if our parents' generation were not the generation that voted to strip Social Security from us.
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Blayne Bradley
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posted
quote:Originally posted by SoaPiNuReYe: [QUOTE]This is true. But it's not just that. You're right that you could pick a sector and find numerous inefficiencies when it comes to the way the US handles defense. It's also important to note that it's simply much cheaper to buy or manufacture weapons that are on the market as opposed to developing new ones. Because the United States is so determined to stay on the cutting edge of military technology, we're the ones paying the extra cost of developing those new weapons. The older weapons work just fine, and I would argue that that's the real reason why China is catching up to us, not so much as the inefficiencies within our system (not that those don't contribute).
The Chinese do not buy nearly as many systems as you think they do, they buy a few yes, but they also get liscenses and produce them themselves, simply producing an aircraft isn't so simple that you can do so without already having a significant R&D Military Industrial complex in place.
Corporations like Norinco are huge defense establishments that not only produce parts but are actively developing new systems.
That the Chinese can start developing an aircraft carrier, main battle tanks and AFV's clearly in the same category as the Abrams and the Bradley, a 5th generation stealth air superiority fighter/intercepter as well as a whole host of other developments from small arms to electronics on a fraction of the US budget I think is showing far more than you think it shows.
But all of this is beside the point, cutting back the US budget to even 2 to 2.5% of GDP would still keep it well ahead of China's figures, thus there's no need to have China or any other nation reduce their GDP.
So stop shifting the goal posts, since the Chinese figures are clearly a certain number at most and thus most is still well below what the US military budget at 2% would be there's nothing to fear that couldn't be solved with burden sharing with allies.
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quote:Since benefits are indexed to inflation, you obviously have to weaken or remove that index before inflating aggressively to reduce your debt. Think of it as a prerequisite.
None of the savings in the chart have anything to do with inflating, and only have to do with the benefit reduction. In other words, it isn't what the entry is about at all. Benefit reduction makes social security more sustainable whether or not parts of the treasuries are inflated away. Which, since it's a debt owed by the government to itself in the first place, is actually pretty irrelevant. All that matters are the debt obligations. The government wants to inflate to reduce the burden of debt it owns to others, but if it shifts less to social security in one way, it has to make up for it some other way (such as taxes, or benefits reductions, or any of numerous other things). The benefits all come from the other debts; inflating actually causes costs for the social security parts of the debt.
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quote: I would be surprised if our parents' generation were not the generation that voted to strip Social Security from us.
Pick a year you think it is greater than 50% likely to have happened by . I'd also be interested in hearing when you think it is greater than 95% likely to have happened by.
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quote:Originally posted by TomDavidson: Honestly, I think an adjustment of retirement age to 75 would suffice; like I said, we've already conditioned a lot of people to not expect to receive Social Security already, and voters can't be reliably counted on to vote for their own financial best interests anyway. I would be surprised if our parents' generation were not the generation that voted to strip Social Security from us.
As a "younger" worker, I definitely fall into this conditioned category. I have no faith in Social Security, and wouldn't be upset at all if enrollment in the program ceased before my eligibility date. After all, it isn't as if the program is something I am investing in. I pay a tax for it.
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Instead, the age will be raised to 70 and it will be means-tested, which will make it obvious what it is: welfare. As a result, it will be combined - rhetorically if not beurocratically - with the rest of the welfare programs, growing steadily less popular and less funded as the people who vote are less and less likely to recieve any benefits from it.
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quote:The US government has a legal requirement to repay the social security trust fund just like they have a legal requirement to repay all other government bonds.
No. Not like the requirement to repay all other government bonds. Because they aren't the same bonds.
What matters here is the consequences of default.
If the US Government defaults on bonds bought by China or by citizens, then their credit rating drops. Interest rates go up, drastically, and there is economic debacle.
If the US Government doesn't repay the Social Security fund, the outside consequences are...nothing. Absolutely nothing. Defaulting on that "debt" will have zero effect on the USA's credit rating, because the rating agencies don't count accounting tricks as bonds. Who cares if one account is emptier than another account, or the US government doesn't transfer money back? According to the credit agencies, all the accounts are looked at as a whole, so...it isn't real debt. If there are no consequences of default, it isn't real debt.
It's theater, theater designed to hide that the money has vanished and isn't coming back. Theater designed to hide that FICA is a tax and SS payments are non-guaranteed welfare checks. The Supreme Court has determined that the Feds cannot be sued for lowering or eliminating benefits because there was no legal promise in the first place.
It isn't a pension program. The fund is EMPTY, and there are no consequences to default, which means the bonds are a trick.
quote:No. Not like the requirement to repay all other government bonds. Because they aren't the same bonds.
Once again, katharina if you are going to keep making this claim please provide a reliable reference. It contradicts everything in the references I've posted. As best I have been able to determine from my research, this is a lie promulgated by people who want to eliminate social security. It has no basis in fact. If you have a reliable source that says otherwise -- posted it.
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So not worth the effort. Do your own homework.
I've definitely read it in at least two separate places - one on The Atlantic.com and the other I can't remember. I'm not wasting my time on this. I suppose you could imagine I'm lying, which makes this even less worth any actual effort.
However, it doesn't even matter. Whether payments go straight from the general fund or else pause in a different account along the way, going forward, the money for SS will come from, in part and in a growing porportion, from the general fund.
You could eliminate every single government agency and there would STILL be a deficit, because the money for payments has to come from the general fund. The only way cutting non-entitlement spending and come out even or ahead would be if all the people in the SSA were fired so they didn't cut checks.
So whether the "bonds" are a bald-faced lie or a toothless illusion, the facts are that citizens have no legal claim on any taxes they've paid before, and that going forward, the money for the benefits will come from the general fund.
Everything is legally, and should be, on the table.
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katharina, I've done my own homework and posted the links. You won't post any links because there are no reliable sources for what you are saying. Its a myth. Its lies. If it isn't. Prove it by linking a reliable source for what you are saying. I have already done this. You are the one who flunks the homework assignment.
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A note on the timeline, that article is out of date already in this part.
quote:Today Social Security is collecting more money than it needs to pay benefits, but by 2018 it will begin running a deficit—
... compared to ...
quote:Payroll taxes exceeded benefit payments regularly until 2010. But the fact is that Social Security has now passed a tipping point, beyond which the Congressional Budget Office projects that it will permanently pay out more in benefits than it gathers from Social Security taxes. The imbalance is made even larger this year by a one-year "payroll tax holiday" that was enacted as part of last year’s compromise on extending the Bush tax cuts.
posted
No. Your statements are flat out wrong and wishful thinking. Rather than facing the reality, you are ranting based on lies. I won't do research for free for you because isn't worth the effort to me. I do research for money or credit. You can't give credit, but if you pay me, then I'll look up the links for you. My freelance rate is a flat $85/hour.
Tell you what - if those bonds are so real, then make the SS payments with those bonds.
Good link, Dark Knight. From the US Chamber of Congress, no less.
quote:The Social Security trust fund consists totally of special issue Treasury bonds and certificates of indebtedness. They are special in that these bonds can only be issued to and redeemed by the Social Security trust funds. These bonds cannot be sold in the open market.
The SS Fund is filled with "Bucks" as real and reliable as the bishop bucks we used at the last ward service swap. It's funny money. If it can't be traded on the open market, if it isn't transferable, then it means exactly nothing. Real bonds can and are sold on the open market.
Posts: 26077 | Registered: Mar 2000
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katharina: Is there a reliable email address I could contact you at? I've written you emails before but I am never certain you are getting them. If you could PM me through the forums your address I'd very much appreciate it. I of course, will not disseminate that information to anybody else.
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The US Chamber of Commerce is EXTREMELY biased. It may be correct, but I wouldn't use it as the sole source of info on this topic.
THat said, one thing I have heard was that the SS trust fund buying bonds was a decision made out of necessity AND convenience.
On the once hand, being "secure", SS couldn't exactly invest too speculatively, for fear of losing money on investments. That said, by just stockpiling cash, they were getting hit hard by inflation (especially in the 70s and early 80s). That dollar you put in last year was worth a fair bit less today.
So it makes sense that a decision was made to by government bonds, that accrued interest. The interest payments could at least mitigate inflation's effects on the fund.
On the other hand, there were the Reagan tax cuts. In order to get people on board with these cuts (which significantly reduced the top marginal rates aka the rates for wealthy folks), it was shown that by SS buying bonds, we could cover some/much of the revenue shortfall in the general fund. Of course this wasn't sustainable in the long run, and the idea was to get tax cuts then, and re-raise taxes later (10-20 years down the line) to cover the long term issues. Unfortunately, the raising of taxes never happened. Instead, the Federal tax rate for individuals is at the lowest its been in decades.
Now, that last line is not exactly apropos to the rest of it, except that when I hear people complaining about taxes, I can't gather much sympathy for them, especially since the proposed tax increases, by and large, would affect only the fairly to very wealthy to 10% or so, not the people generally doing the grousing.
(A complete aside, it seems to be a maxim in this day-and-age is that the poor and middle classes complain and protest, the wealthy classes lobby...)
Now, this is what I've heard, and it has a neat bit of logic. That said, it is also suspiciously conspiracy theory-esque, so I'm not exactly putting a lot of stock (ha!) into it.
Posts: 7021 | Registered: Nov 1999
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quote:No. Your statements are flat out wrong and wishful thinking.
My statements are backed by official treasury reports, statements by Alan Greenspan, expert opinions, reports from the social security adminstration and law. Your statements are backed by "I know I read it somewhere -- look it up yourself". Which would you say was best described by "wishful thinking"? I pretty sure your critical thinking skills aren't so bad you can't figure it out.
You're repeating Tea Party lies. If I'm wrong, prove it.
I don't even know why I continue asking that since it's evident that though you are willing to grandstand, you simply will not provide evidence to support your claims. When pressed you turn to snide personal insults. You have a great future in Tea Party Politics.
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Answer my points, rather than insulting me. And I meant what I said - this discussion isn't worth to me the bother of research.
If they were real bonds, then they would be transferable - that's the point of bonds. I've stated that all the bonds are theatre - pointing out the details of the theatre production isn't convincing.
I'll be convinced the "SS Bucks" have redeemable value when...they can be redeemed, for their face value. Until then, they are theatre. But none of that even matters - that's not the point of the present dillema.
And whether they are or not, the situation remains the same: from now on, Social Security is not self sustaining and must be paid, in a growing porportion, from the general fund. Social Security is a line item in the federal budget. The Supreme Court has found there is no legal claim on SS benefits.
That means it gets the same scrutiny as every other government program.
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kmboots - I read it, and I was struck that by proposing the methods of paying for it, it also ends the fiction that Social Security is self-sustaining. Eliminating all the income tax deductions and dedicating an estate tax to pay for it is finally admitting that Social Security is just another line item government payout program and not a government-run pension plan.
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quote:On the other hand, there were the Reagan tax cuts. In order to get people on board with these cuts (which significantly reduced the top marginal rates aka the rates for wealthy folks), it was shown that by SS buying bonds, we could cover some/much of the revenue shortfall in the general fund. Of course this wasn't sustainable in the long run, and the idea was to get tax cuts then, and re-raise taxes later (10-20 years down the line) to cover the long term issues. Unfortunately, the raising of taxes never happened. Instead, the Federal tax rate for individuals is at the lowest its been in decades.
This is so immoral it makes it me want to scream. Break it down. FICA is a flat tax on the first $106,000 of wages. No FICA taxes are levied against interest income, capital gains, dividends, benefits, or wages in excess of of $106,000/year. That means that the poor and middle class are taxed at a significantly higher rate than wealthier Americans. This is consider acceptable to most because there is also a cap on Social Security Benefits, so poor and middle income Americans get back more of what they pay into social security than wealthy Americans. But if we allow congress to default on the money in the trust fund (which they cannot do without a change in current laws), then we have a general purpose tax where levied on the poor and middle class that exempts the wealthy. That's obscene.
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Actually, I completely agree. Payroll taxes are horrendously regressive and that is so unfair it is immoral.
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They exist because it is all part of the theatre that Social Security isn't a tax and the payments are not a government check from the general fund.
Maybe one of the benefits of this thing finally blowing up in our faces is that the fiction will be so unsustainable that the FICA tax is eliminated and regular income taxes - which are progressive - will be adjusted to make up the difference.
Posts: 26077 | Registered: Mar 2000
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I am actually thrilled that the entitlement programs are being looked at closely, because it's fundamentally unfair. Why is there such a great - as flawed as it is, the others are worse - income payout for when citizens are old, but not for children. In terms of the most vulnerable among us, it's definitely kids. Three times the porportion of children live in poverty compared to seniors. And poverty at the beginning of life is worse - it has effects that are usually never recovered from. Poverty in childhood darkens the rest of their lives. Why are we so worried about poverty at the end of life but so blase about poverty at the beginning, when citizens are both unable - truly unable, all of them - to make their own way and are also completely not responsible for their own poverty.
What I would like to see is Medicare expanded to include everyone under 18, and benefits lessened for the older generation to do it, if necessary. Head Start programs for good preschool. Home nursing visits when there is a new baby. And a federally guaranteed at least two nutritious meals a day, instead of this piece meal version we have now.
There are a lot of problems with the structure of society today that leaves so many children in poverty, and it is absolutely reprehensible that needy children are left wanting while the oldest generations are robbing their presents and their futures for themselves. By saying Social Security is off the table, what is left on the table is disporportionally for the children, for the young. The grandchildren are left wanting because their grandparents didn't save. It's absolutely wrong. If I were to reform the system, that's where I'd start. Medicare for everyone under 18, paid for by eliminating the cap and, if necessary after that, adjusting benefits for the elderly.
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The debt, including that owed to the "trust fund" will be inflated away. They've already started printing the money.
Once again, the people who do the right thing (save money) are screwed and the people who run up debt are rewarded.
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. I'd also be interested in hearing when you think it is greater than 95% likely to have happened by.
