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

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  •  SS could contribute to debt. Think stolen pension (1+ / 0-)
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    pfiore8

    No I'm not a troll but very few people seem to understand that this about stealing the trust fund rather than cashing it out because so few understand what has happened.

    Your monthly FICA tax is invested in a trust fund which in turn buys US Government securities.  So you indirectly make a loan to the government each month which it promises to repay in Social Security benefits over the next 37 or so years.  In and of it's self it's not a bad thing.  The trust fund is paid interest and the investment is backed in theory by the "full faith and credit of the US."  You don't want the money sitting in a sack in the basement of the WH.  It should be making some money.  OK.

    On one hand it's a self funding trust on the other it's also a loan.  Except for the interest which isn't huge the payments in and out offset on the balance sheet which is what Sanders and others mean when they say it doesn't contribute to the debt.  

    However in order to pay you the government has to buy back the securities and like the bonds we sell to China and elsewhere it's a debt.   When the bills come due it has to be paid out of tax revenue since they already spent the money (your money) they borrowed.  Get it.  As more benefits come due than people are paying in it will add to the deficit if the government is running one.  Of course the government doesn't have to run a deficit with or without social security but they do and that also isn't necessarily a bad thing. It's just bad when they start try to get out of paying up.    

    Now if you were a smart and sneaky son of a bitch what you would do is figure out a way to default on the loan which you can do as congress since you say what is legal and what isn't.  Or you could actually honor the full faith and credit of the treasury and accept that you borrowed and spent the money and now it's time to begin paying it back.  

    To do so you A. Spend less on things a larger military than the rest of the world put together and or B. Raise the tax on those who can afford it.  You don't default on your obligation.  Last I checked defaulting on a loan isn't a family value.

    So once again.  Follow the money.  Don't take your eyes off the money.  They money doesn't lie.  IMHOP the goal is to get the trust fund off the books.  One way is to pass a law and declare it void.  If SCOTUS went along, who is going to stop them?  The other, more likely, is to sell the trust fund debt to Wall St.  That way they would recover some of the money and make the ultimate payoff to their lords and masters.  The trillions in the trust fund are the single largest fruit that the banks salivate over.  

    Selling the trust fund, which will be called privatizing Social Security, gets it off the books.  They get pennies on the dollar, the wealthy make the biggest heist in the history of mankind and you get zip.  It's what happens  when the foxes have completely over run the hen house.  

    A bad idea isn't responsible for those who believe it. ---Stephen Cannell

    by YellerDog on Tue Apr 09, 2013 at 12:38:48 AM PDT

    •  privatizing SS... i keep asking: (0+ / 0-)

      does anyone remember when they wanted to initially privatize SS and the figure was 700 bn?

      with public opposition, it didn't happen. instead 700 bn found its way into wall street via the bailout.

      i'm pretty sure they knew the economy was going to freefall and were looking for cash flow.

      but something better happened: they got away with the bailout, fronted by Dems, and they kept going.

      btw: I think most of us understand the money taken from our paychecks for SS is invested in gov't securities... but it's like depositing money in banks: now we learn once we fork over the money, it really doesn't belong to us anymore.

      in the short term, for many of us, this is about our money. in the long run, it is about our liberty. control the debt. control food production. control water.

    •  Eh.. not quite (0+ / 0-)
      On one hand it's a self funding trust on the other it's also a loan.  Except for the interest which isn't huge the payments in and out offset on the balance sheet which is what Sanders and others mean when they say it doesn't contribute to the debt.
      The Federal debt exists because the Federal government has spent more on various programs than it has taken in revenue.  That's necessary or else it wouldn't have the cash to spend as much as it has to date.

      Who it borrows from is completely irrelevant to the magnitude of this borrowing requirement.  If Social Security never owned any government debt, took the $2.8 trillion in cash and stuffed it under the mattress instead, the borrowing requirement for federal operations would be unaffected - its total debt would still be (as of yesterday) $16,802,515,751,907.61.

      That is what is meant by "Social Security doesn't contribute to the debt" - the debt is no higher and no lower because of its existence.  Not that Social Security's current cashflows in & out are roughly equal.

      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 06:05:46 PM PDT

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