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View Diary: Failing To Respect The Third Rail (290 comments)

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  •  It actually does affect the budget (6+ / 0-)

    Until the last few years, FICA tax collections have exceeded Social Security outlays, and it was possible to borrow the surplus to make the budget look better.

    Now and for the future, outlays will exceed collections and by increasing amounts, so not only will the absent surplus not be there to make the budget look better - Congress will either have to appropriate tax money or take on more debt to pay back the bonds that Social Security holds.

    That means there will be less money for defense contractors, for wars of choice, for bailing out banks when they fail again, for cutting the taxes of the wealthiest, and all the other things the owners of your government would like to do with those funds that will now be going to support old people.

    Modern revolutions have succeeded because of solidarity, not force.

    by badger on Wed Apr 10, 2013 at 04:07:22 PM PDT

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    •  Not exactly true (49+ / 0-)

      Outlays won't exceed collections for at least another 10+ years.

      And even after they do, it still won't affect the budget.

      The problem is SS has been running massive surpluses that the fed gov't has been stealing to help pay for other shit.  Once that surplus money is gone the fed gov't will have to find other places to steal that money from OR they'll have to raise taxes to help pay for it instead.

      In the end Social Security is NOT the problem, the rest of the budget is the problem.  Maybe we shouldn't be spending so much on fucking wars and unnecessary weapons programs or bailing out these motherfuckers on Wall Street.

      This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

      by DisNoir36 on Wed Apr 10, 2013 at 04:29:32 PM PDT

      [ Parent ]

    •  Oh, OK, yeah it does affect the budget that way. (1+ / 0-)
      Recommended by:
      Words In Action

      forgot about that part!

      if necessary for years; if necessary, alone

      by SouthernLiberalinMD on Wed Apr 10, 2013 at 04:30:15 PM PDT

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    •  That's not exactly so (22+ / 0-)

      The Social Security Trust Fund balances are projected to grow until 2020, even under the Trustees’ pessimistic economic assumptions, because interest earnings will exceed trust fund asset redemption.  After that date, some of the Treasury securities in the trust funds would be redeemed each year to ensure all scheduled benefits could be paid.  The Treasury would  have to raise taxes or borrow additional money to redeem these bonds.  In all likelihood, they would borrow the funds.  However, that doesn’t mean the country would be taking on more debt.  Treasury would merely be exchanging one creditor for another.  The debt  on the books which was owed to the Social Security Trust Funds would be paid off, replaced by bonds purchased by individuals, banks, insurance companies, or other countries.  So debt wouldn’t be increased, just the creditors changed.

      •  In balance sheet terms it's an even swap (11+ / 0-)

        but the cashflows will be going to SS beneficiaries instead of defense contractors, corporate welfare, or tax cuts for the wealthy.

        And the SS bonds are debt Congress didn't have to sell - the proceeds were collected from all of us. To swap in new debt, they'll have to sell bonds to other people in addition to "normal" government debt, or raise taxes.

        I'm not sure about the Trust Fund balances now - one poster upthread says collections are exceeding outlays and you're saying it's interest covering outlays. Collections don't affect the budget, but paying interest does.

        At any rate, if the government honors its obligations to beneficiaries (moral, not legal) and doesn't cut benefits, then who benefits from the Federal budget is going to change in coming years. I think in addition to wanting to get access to SS funds, those changes in the budget - expenditure shifts or increased taxes - are what Wall Street, Peterson, Simpson, Bowles, et al are concerned about.

        There's money out there they want to get their hands on, and cash flows they don't want to lose. Either way, they want to screw the American people if they can get away with it.

        Modern revolutions have succeeded because of solidarity, not force.

        by badger on Wed Apr 10, 2013 at 05:09:35 PM PDT

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        •  but the interest is paid whether SS is in surplus (1+ / 0-)
          Recommended by:
          Robobagpiper

          or not.

          As you said, when SS draws down the trust fund by selling bonds (in about 10 years), other people are happy to buy those bonds. The rest of the budget isn't affected.

          In other words, SS doesn't affect the budget. (Other than being a convenient buyer of bonds.)

          •  But again, in terms of cashflow (1+ / 0-)
            Recommended by:
            mike101

            if collections exceed outlays, the government is paying interest to itself - it's an accounting entry, more or less.

            If the interest is instead paying benefits, it's paid to beneficiaries, and that's a real outflow.

            It's the difference between an accounts payable entry and actually writing a check. Either has the same effect on the value of the enterprise, but in reality their effects are a lot different.

            Viewing the budget as a financial document, the distinction maybe isn't significant, but in one case the Treasury is cutting checks and in the other case it isn't.

            Modern revolutions have succeeded because of solidarity, not force.

            by badger on Wed Apr 10, 2013 at 08:28:26 PM PDT

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          •  The interest is being paid with more securities (0+ / 0-)
            In addition, interest on debt held by the public is paid in cash and represents a burden on current taxpayers. It reflects the amount the federal government pays to its outside creditors. In contrast, intragovernmental debt holdings perform an accounting function but typically do not require cash payments from the current budget or represent a burden on the current economy.
            http://www.treasurydirect.gov/...

            They have been doing it going back at least to 2003. From 2003 to 2007 Bush spent nearly a trillion dollars in interest that should have gone into SS. There reasoning is that we don't need to pay it since we owe it to ourselves.

            Some people have short memories

            by lenzy1000 on Thu Apr 11, 2013 at 01:41:26 AM PDT

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    •  They didn't need any surplus in SS (3+ / 0-)

      to borrow money. If they hadn't borrowed from SS they would have borrowed it elsewhere. Either way it's borrowed money that has to be paid back and has no effect on the budget.

      We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

      by denise b on Wed Apr 10, 2013 at 05:27:57 PM PDT

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      •  They didn't "borrow" (1+ / 0-)
        Recommended by:
        goodpractice

        they just used the surplus to make the deficits look better each year. They still paid into the trust fund.

        Want a progressive global warming novel, not a right wing rant? Go to www.edwardgtalbot.com and check out New World Orders

        by eparrot on Wed Apr 10, 2013 at 05:57:37 PM PDT

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        •  How can it make the deficits (0+ / 0-)

          look better when it's a liability in the Federal budget?

          We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

          by denise b on Wed Apr 10, 2013 at 06:18:32 PM PDT

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          •  perhaps it's terminology (1+ / 0-)
            Recommended by:
            goodpractice

            liabilities are part of a balance sheet, not a budget. The budget says "We are going to outlay 'x' dollars this year and take in 'x' dollars this year." If we take in less than we spend, we have a deficit.

            So if SS takes in more than it spends in any given budget year, it makes the deficit look better. There's no "borrowing occurring.

            Every year, SS buys bonds with its surplus (the "trust fund"). This increases the national debt by making more bonds outstanding, though of course those bonds are owed to future beneficiaries not bondholders. No one has "borrowed" from social security, this trust fund debt keeps increasing exactly as it must by law. This would happen regardless of whether lawmakers slashed spending for a given year and balanced the budget, or not.

            Want a progressive global warming novel, not a right wing rant? Go to www.edwardgtalbot.com and check out New World Orders

            by eparrot on Wed Apr 10, 2013 at 06:34:41 PM PDT

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          •  it depends on the newspaper headlines (0+ / 0-)

            While accounting-wise SS doesn't affect the budget, the number that gets reported by the newspapers smashes together the SS budget and the Federal budget into a single somewhat-fictitious number.

            •  which number? (0+ / 0-)

              You mean the deficit? Yes, it is true that the deficit number gets reported as a single number. I still don't see how that's borrowing. It is simply misleading the public about the nature of the deficit.

              Want a progressive global warming novel, not a right wing rant? Go to www.edwardgtalbot.com and check out New World Orders

              by eparrot on Thu Apr 11, 2013 at 06:22:42 PM PDT

              [ Parent ]

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