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View Diary: Hell, No! Social Security Contributes Nothing To Deficit (119 comments)

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  •  You got it. Social Security will bankrupt the US (2+ / 0-)
    Recommended by:
    Roadbed Guy, Wisper

    The happy talk about how SS doesn't contribute to the deficit is as delusional as the talk about how chained-CPI is not a cut. Technically speaking SS is indeed able to balance its books. But it balances its book by grabing money from the general funds. Since this money is a debt obligation to the SS, the federal government has to fork over the money to SS, even if every other federal program has to starve. Are you prepared to see a future where foodstamps, Headstart, Medicaid, TANF, EPA, FDA, Pell Grant, defense, air traffic safety, etc, etc are all sacrificed and compromised? So it is entirely disengenous to say that SS doesn't contribute to the deficits.

    I am not a huge fan the the chained-CPI, vs other cuts, like means testing, or cap-raising. But this talk of SS not  contributing to the deficits is just plain wrong.

    •  Um (3+ / 0-)
      Recommended by:
      rivercard, ezdidit, run around

      When Social Security redeems its Treasury holdings, the government replaces debt to Social Security with debt to the public.  The total government debt is unchanged and other government cashflows are completely orthogonal.

      The government's general fund has zero obligation to make those transfers in your scenario (although it has, see the payroll tax cut that expired recently), just to repay the SS-held instruments that are due.  Creditworthiness doesn't change between one debt-to-GDP ratio (where some fraction of the debt is public) and an identical debt-to-GDP ratio (where some other fraction of the debt is public).

      You describe a scenario where the United States' creditworthiness has gone to pot and therefore debt to SS cannot be replaced by debt to the public (which includes the Fed with its virtual printing press).

      However, this is no different from a case in which the SS trust fund never existed and the government borrowed from the public instead - the only difference being who the government borrowed from, not how much it borrowed.  The debt-to-GDP ratio would be the same, the public's lack of appetite for US debt would thus remain the same and the Constitutional requirement that all creditors be paid remains the same.

      The existence of the SS Trust Fund thus has nothing to do with the cuts of your scenario.

      Fake candidates nominated by the GOP for the recalls: 6 out of 7. Fake signatures on the recall petitions: 4 out of 1,860,283.

      by GeoffT on Mon Apr 08, 2013 at 08:06:32 PM PDT

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      •  Thanks, GeoffT - trolls abound. (2+ / 0-)
        Recommended by:
        GeoffT, Bruce Webb

        Also, SS is paid for by you and me during our working lives.  See Dean Baker ("Leave It Alone; It’s Irrelevant to the Deficit") and Paul Krugman ("Cheating Our Children").  

        I'd like to think #icemilkcoffee was being ironic, but I've been here before.

        I'm sick of attempts to steer this nation from principles evolved in The Age of Reason to hallucinations derived from illiterate herdsmen. ~ Crashing Vor

        by ezdidit on Mon Apr 08, 2013 at 10:20:07 PM PDT

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      •  debt to the public (0+ / 0-)

        You just said it yourself "the government replaces debt to Social Security with debt to the public.  "

        In other words, the government will have to borrow money from the public in order to pay social security. Money which has to be paid back. In other words, social security contributes to the deficit.

        •  Debt to SS has to be paid back too (0+ / 0-)

          Otherwise it's sovereign default, same as if it were public debt.

          You seem to be stuck on this idea that when the debt (to Social Security) is repaid somehow the debt (to Social Security) is not reduced, while the same doesn't apply to debt held by the public for reasons which will occur to you later.

          If I'm charitable then I'll presume that you're simply too used to seeing the deficit figures of combined budgets - that were introduced by LBJ - which fail to count the increasing government debt to SS towards the headline deficit figure.

          Fake candidates nominated by the GOP for the recalls: 6 out of 7. Fake signatures on the recall petitions: 4 out of 1,860,283.

          by GeoffT on Tue Apr 09, 2013 at 05:47:28 PM PDT

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