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“First, any value in the balances in the Social Security Trust Fund is derived from dubious government accounting. The trust fund is not a real savings account. From 1983 to 2011, it collected more Social Security taxes than it paid out in Social Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing.”

Concurrent Resolution on the Budget— Fiscal Year 2013 (aka The Ryan Budget)

The House Budget Committee Chairman, Rep. Paul Ryan, has been keeping a low profile lately.  His absence is conspicuous.  Ryan will have the Budget Committee chair for two more years but he’s quiet for now.  His House web pages are full of stale outdated articles.  The only recent update doesn’t say anything new.

“In an exclusive statement to Breitbart News, Ryan specified that new revenues should come through economic growth and tax reform, not tax hikes.”
Obviously there's no shame in giving an exclusive statement to Breitbart and announcing it on a taxpayer funded official government webpage.  Ryan’s statement illustrates why negotiating with Republicans about fiscal matters is so awkward.  The famous Ryan Budget is the Republican default position on fiscal matters.  What it proposes is indefensible and can hardly be mentioned in public by Republicans.  The Ryan Budget’s defects have already been thoroughly inspected and analyzed.  I still decided to take another look at it because it is where the Republicans will land when the circus reaches its finale.

Ryan’s budget, The Path to Prosperity, has its own webpage.    I downloaded the “Full Report,” which is a copy of the “Concurrent Resolution” that was actually passed in the House of Representatives on March 29, 2012.  It isn’t law because the Senate didn’t pass it and a budget resolution isn’t binding even when passed by both chambers of Congress.  This is Paul Ryan’s masterpiece, a fantasy/nightmare of what the world would be if he could remake it.  

There’s nothing unexpected in the first hundred pages.  On page 104, in the section titled, “Facing Social Security’s Fiscal Problem” the document takes a detour into a rabbit hole where facts and reason don’t matter, and logic is turned inside out.  A reasonable person, using her intellect would pause and protest against Ryan’s claims about Social Security here.  I'm referring to the annoying excerpt at the start of this diary.  Dwell on it for a moment.  To me, it sounds a little bit too much like, "Your Social Security savings have already been spent to fund tax cuts for the rich, which I, Paul Ryan voted for.  Sorry bro."

The 2012 Social Security trustees report says, “The Trustees project that the OASI Trust Fund . . .  will have sufficient assets to pay full benefits on time until 2035.”  The revenue collected from payroll taxes, combined with the interest earned on the trust fund’s assets have been more than adequate to pay benefits.  The government borrowed the surpluses.  Between now and 2035, the OASI Trust Fund will lose its ability to fund itself under current law because the growing number of beneficiaries will outpace revenues.  To make up the difference, current law could be changed in a number of ways.  The government could also begin to repay the $2.5 trillion it borrowed.   But Ryan's language in the paragraph I cited above suggests that there might be some difficulty doing it.

Ryan seems to contradict the OASI Trust Fund trustees report.  The fund either has sufficient assets or it doesn't ('dubious government accounting') or the assets are questionable.  Using a few carefully chosen words, he introduces a hint of doubt about the Treasury securities that the fund holds and/or  the Treasury’s ability to redeem them.  How did this find its way into a wannabe concurrent budget resolution.

1.  With a sleight of hand, could $2.5 trillion in OASI Trust Fund assets be gone?
2.  Would Treasury have to raise money through taxes or borrowing to repay Social Security?  
3.  If it did, would the public debt increase from the current level of $16.3 trillion to $18.5 trillion?  
4.  What about the public debt statutory limit, aka the debt ceiling, currently set at $16.394 trillion?  

These may be brain teaser questions for the public who shouldn’t have to second-guess their elected officials.  The answers are:

1.    No.
2.    No.
3.    No.
4.    It doesn’t matter.

Where would the government get the money to repay its loan?  If it can’t repay, as Ryan almost implies, then the Treasury securities held in the trust fund would be worthless.  The US Treasury would be in default of its obligation to repay the principal amount of its bonds.  That would be a very big deal with repercussions around the globe.  What does Treasury say about the securities it issued to Social Security?

The current debt consists of two parts, Public and Intragovernmental.  Combined they equal an amount most Americans recognize, just over $16 trillion.  The Intragovernmental Holdings are in a separate bucket where debt issued to the OASI Trust Fund and numerous other Trust Funds is kept.  The $2.5 trillion borrowed from Social Security is part of the $4.8 trillion in Intragovernmental Holdings.

The Treasury also keeps track of the interest it owes on the debt.

Detailed monthly reports on US Debt include information about Intragovernmental Holdings.
Changes in the amount of debt from month to month would show up in reports like this and elsewhere.
The debt issued to Social Security and other Trust Funds is classified as non-marketable or non-negotiable.  It’s ownership cannot be transferred.  That means the principal can only be repaid to the trust fund that lent its funds.
So how would the government repay what it owes? It’s simple.  It just moves the number from the column on the right (in the table above) to the column on the left.  Paying down debt doesn’t create additional debt.  If the government decided to repay one trillion dollars to Social Security, it would issue marketable Treasury securities at auction like it normally does.  When investors buy the newly issued Treasuries, the government has one trillion dollars and an equal obligation to the new investors but the public debt amount isn’t increased.  Why?  The government would simultaneously transfer one trillion dollars to the Social Security Trust Fund and retire an equal amount of nonmarketable debt. The right hand column would be reduced to 3,849.872 and the left hand column would be increased to 12,411,598.  The sum total of the two would be unchanged.

I have no explanation for Ryan’s nonsense:  ” The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing.”   I'm probably reading too much into his words.  The impression I get is that he's trying to create a misleading picture of more debt piling on top of debt.  Perhaps the transaction I described is what he considers “dubious government accounting.”  

Reading more of Ryan’s Budget, there’s another puzzle in the next paragraph:

Beginning in 2011, Social Security started paying out more in benefits than it collected in taxes—in other words, running cash deficits—a trend that will worsen as the baby boomers continue to retire. To pay full benefits, the government must pay back the money it owes Social Security. [ I guess it can be done, after all.]  Those who wish to solve this problem by raising taxes ignore the profound economic damage that such large tax increases would entail. Just lifting the cap on income subject to Social Security taxes, as some have proposed, would, when combined with the Obama administration’s other preferred tax policies, lift the top marginal tax rate above 50 percent. Most economists agree that raising marginal tax rates that high would create a significant drag on economic growth, job creation, productivity and wages.
Lifting the cap to remove the exemption from payroll tax on income over $110,100 wouldn’t change the top marginal rate.  It would change the taxpayer's effective rate.  I’d love to see the Arithmetic Ryan used to calculate a rate of 50%.   Instead of raising more revenue to fund future benefit payments, Ryan proposes a reduction in benefits and changes in qualifications like raising the age of eligibility.   He's always consistent in his protection of upper income from taxation while burdening those who can least afford it.  

This graph shows the relative impact of his budget on taxpayers at different income levels.  The blue bars extending to the right represent the federal income tax reduction he proposes.  Incomes over a million would be taxed about $270,000 less, relative to current policy in effect today.  The orange bars extending to the left represent additional tax liability if all deductions were repealed.  The net effect labels indicate the resulting amounts when the blue and orange bars offset each other.  The result is clear and it results in an overall reduction in the amount of revenue that would be collected. Disastrous spending cuts would be necessary to reduce the deficit, which is where it all started.  As Barbara Boxer said on the floor of the Senate, "It's a recipe for a third world nation."

10:13 PM PT: Thank you for the Spotlight.

Originally posted to leftreborn on Sun Dec 02, 2012 at 05:14 PM PST.

Also republished by Progressive Policy Zone, Social Security Defenders, and Community Spotlight.

Poll

Should Americans forgive the $2.5 trillion borrowed from Social Security?

0%6 votes
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12%76 votes
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51%310 votes
26%163 votes

| 605 votes | Vote | Results

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  •  Tip Jar (178+ / 0-)
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    jennylind, divineorder, cherie clark, Louisiana 1976, S F Hippie, USHomeopath, Simplify, Habitat Vic, freerad, limpidglass, JeffW, markthshark, a2nite, George3, maggiejean, pickandshovel, Brahman Colorado, Karl Rover, ExStr8, hubcap, MKHector, Getreal1246, merrily1000, Free Jazz at High Noon, science nerd, antirove, Throw The Bums Out, erratic, BlackSheep1, mzinformed, fixxit, hooktool, Lujane, Einsteinia, notrouble, means are the ends, walkshills, The Jester, abarefootboy, PrahaPartizan, millwood, out of left field, snoopydawg, Odysseus, eyeswideopen, Chaddiwicker, bluesheep, CA wildwoman, YellerDog, Egalitare, flowerfarmer, radarlady, PvtJarHead, nuclear winter solstice, DRo, dkmich, ccmask, Chi, SD Goat, third Party please, dharmafarmer, No one gets out alive, skyounkin, yoduuuh do or do not, hazzcon, Robobagpiper, Alfred E Newman, GreyHawk, lurkyloo, marleycat, Ophelia, GDbot, newfie, gchaucer2, Gustogirl, jasan, cactusgal, molecularlevel, katiec, jrooth, Joieau, YaNevaNo, PhilJD, colleen, Debs2, ctsteve, ichibon, Sybil Liberty, truong son traveler, Mentatmark, pat bunny, hestal, Jane Lew, zerelda, chicagobleu, 2laneIA, Bluehawk, Bruce Webb, tle, environmentalist, kerflooey, emmasnacker, ferg, karlpk, rigcath, CorinaR, ogre, Oldowan, ricklewsive, Temmoku, Oh Mary Oh, TX Freethinker, rmonroe, middleagedhousewife, JDWolverton, xanthippe2, WheninRome, magicsister, Wino, Jakkalbessie, DeminNewJ, Byron from Denver, redlum jak, Jim R, nzanne, Robynhood too, muddy boots, jfromga, Calamity Jean, jm214, Sylv, eeff, tobendaro, Wife of Bath, jhb90277, TAH from SLC, rmx2630, marina, side pocket, VTCC73, greycat, winsock, wayoutinthestix, deboChicago, eOz, Patricia, Skennet Boch, surfbird007, greenomanic, RWood, spunhard, bfitzinAR, Haf2Read, Bcre8ve, prettygirlxoxoxo, WiddieDawg, bewert, Captain Chaos, cocinero, allenjo, leevank, saluda, FindingMyVoice, boatjones, OMwordTHRUdaFOG, splashy, UFOH1, Johnny Nucleo, anafreeka, NoMoJoe, ColoTim, MBramble, DvCM, D minor, bluezen, arizonablue, Larsstephens, skywriter

    "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

    by leftreborn on Sun Dec 02, 2012 at 05:14:35 PM PST

  •  And without our constantly calling out their crap (23+ / 0-)
    "Your Social Security savings have already been spent to fund tax cuts for the rich, which I, Paul Ryan voted for.  Sorry bro."
    is exactly what they'll say (and they'll get away with it).

    -7.38, -5.38 (didn't see that coming) I lie to myself because I'm the only one who continues to believe me. - Vermin

    by 84thProblem on Sun Dec 02, 2012 at 06:20:33 PM PST

    •  There's another angle on it too. (14+ / 0-)

      All during the Bush years there were good sized surpluses that were spent.   The surpluses are gradually declining. When Obama took over, he diverted the surpluses back to the taxpayers via the payroll tax cut.  

      Bush made himself look better by using those surpluses.  He gave himself an advantage.  If the surpluses weren't used, his revenue amounts would have been lower.  Instead, the extra revenue made his deficits smaller and disguised the effect of his lousy policies.  When you think about that, it's literally true that the Republicans used Social Security to fund the tax cuts and the wars.  They never worried about replacing what they borrowed before they left office.  

      Obama could have used the surpluses the same way.  He didn't have to forego the advantage Bush took.  No one would have objected because no one was expecting a payroll tax cut.  To me, that says a lot about character.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 06:49:54 PM PST

      [ Parent ]

      •  I think the "temporary" tax cuts... (17+ / 0-)

        ... instituted by BOTH Bush and Obama need to revert back to the level they were at before they were instituted.  I never did understand the extensions of either, or why they were voted for in the first place.

        Obama's, in particular, cuts into FICA, thus reducing the amount that goes to the Social Security fund.  Let it revert back to what it was.

        Bush's tax cuts to corporations and the uber-rich are just motivated by greed.  Let them revert back to what they were.

        If taxes are so bad, then why were we doing better in the 1950s under Eisenhower when taxes on the rich were 90%...?  Lower on the income levels that were lower...?

        The uber-rich & corporations are the ones putting us in debt because they are the only ones profiting from wars..., and soon, from our health insurance and health care systems.  Let THEM pay the ungodly tax burden since they profit so much more and we're forced by law, now, to pay outrageous health insurance premiums.

        Seniors get Medicare, but it's not free - as implied by the morons in government and media who call it an "entitlement program."  [They are "Earned Benefits" - NOT "entitlements."]  The cost of the Medicare insurance is deducted from Social Security checks before it's auto-deposited in their checking accounts, so senior citizens and disabled people who receive Social Security and/or Medicare are NOT receiving welfare, as implied by the word 'entitlements.'  Social Security insurance is not free since it was paid for when we were working, and we also paid into Medicare when we were working, before we could use it, and still pay for Medicare after we start receiving Social Security.

        LIFT THE CAPS for Soc Sec and Medicare on all the higher income levels, eliminate the extravagant tax breaks to uber-rich and corporations (also don't let them hide their money offshore!), and that will do much to alleviate the financial shortfalls for the US Treasury AND Social Security and Medicare.

        Better yet, instead of forcing us to buy into private corporations' medical insurance programs, let us buy into the only not-for-profit, single-payer plan already in effect and actually working efficiently:  Medicare.  [Bonus: we don't pay overhead for Medicare, there's no executive bonuses, no stockholders to pay.]  Force caps on the corporate medical institutions, hospitals and clinics who are already charging outrageous fees (which means people can't get by on Medicare, but have to buy additional medical insurance, for which they get soaked a ton of money they can't afford to spend on a Social Security income)..., and it will boost the economy very well when additional employees will need to be hired right here in the US to handle the increased paperwork.

        MOST OF ALL:  Do NOT borrow against the Social Security Trust Fund..., particularly for stupid illegal, unjustifiable, unethical, immoral, dishonorable, unconstitutional wars that gain us nothing!!!

        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 NonnyO on Mon Dec 03, 2012 at 02:24:24 AM PST

        [ Parent ]

        •  Originally there was ideology derived from (9+ / 0-)

          economic theory behind the trend to lower tax rates.  I call it Rightwing Republican Religion. Its almost in the DNA of this country going back to the first monopolies, trusts (business corporations) and robber barons.  Even earlier, at the founding of the country, there was the noble principle and ideal of equality and freedom for the common man versus the privileged few of the aristocracy.  I say it's in the DNA of America because we repeat this struggle and that's where we are again.  From 1880-1907 (approx), "Horse and Sparrow" was an earlier form of trickle down.  The elite self-identified as the Horse that deserved more than his share of oats to fortify him for pulling the wagon and if he had enough some would always pass through in his droppings for the Sparrows.  By the time of the Panic of 1907, the ratification of amendments instituting the income tax (1913) and women's suffrage (1920), and incidents like the Triangle Shirtwaist Factory fire in NYC (1911) when 146 women who were locked inside a factory that caught fire and died, there was consciousness that people needed protection from a predatory class of a privileged few who threatened to destroy the entire nation.  The formation of the Federal Reserve (1913) and the income tax were considered to be blows directed at wealth and government interference.   The wealthy gained an upper hand once again in the 1920s.  The stockmarket crash of 1929 was an echo of the 1907 bank panic.  FDR did a good job of instituting permanent provisions for people who were vulnerable to predators. It fuses together business and labor with both contributing to Social Security.  Medicare, Medicare, the Civil Rights Act and the Voting Rights Act represent a high water mark for progressivism in the US.  

          Somehow, by 1981 Reagan was able to sell the poisonous Nihilism that government is the problem and that it should abdicate its role in favor of the privileged few once again.  Capitalism was replaced with corporate fascism that reduced the consumer classes to subservients who waited for benevolence from a Job Creator God on high.  This was the biggest high-stakes con job the world has ever seen.   Americans still don't fully grasp the magnitude of it.  

          Everything you say is true and then some.  Even though the election is over, the struggle goes on.  The "owners" and their agents in Congress are not going to give up. A broad and prosperous middle class does not happen by itself.  It takes interference and intervention to make it happen.  This little bit of foolery buried on page 104 or a "concurrent budget resolution" betrays the vulture who still wants to take what you have if you don't protect it.

          "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

          by leftreborn on Mon Dec 03, 2012 at 06:27:17 AM PST

          [ Parent ]

      •  Correct me if I'm wrong (0+ / 0-)

        But I seem to recall it was Reagan who was the first to begin to raid Social Security.  I wonder if it is only Republicans who have done so.

        Government of the people, by the people, for the people, shall not perish from the earth - Abraham Lincoln

        by Gustogirl on Mon Dec 03, 2012 at 06:11:47 AM PST

        [ Parent ]

        •  Well you ARE wrong (2+ / 0-)
          Recommended by:
          84thProblem, Roger Fox

          I bow to no one in my general disdain for Ronald Wilson Reagan and all his works, as a Californian I am just old enough to remember his commencing the tear down of what was the finest top to bottom public education system IN THE WORLD.

          That said, and against his nature, and indeed against an abortive effort made in 1981, Reagan did not "raid" or to anything untoward as regards the Social Security Trust Funds. When Reagan entered office the Trust Funds were hurtling towards insolvency having been cash flow negative for years, not only wasn't there anything to steal or borrow the Special Treasuries were being redeemed right down to the last dollar. And by some reckoning beyond that, Treasury Secretary Baker did some fine dancing and intra-fund borrowing to keep checks flowing prior to approval of the 1983 legislation that was the ultimate result of the Greenspan Commission. And that legislation phased tax increases in so slowly that the Trust Funds were only at 48% of their legal minimums by 1988. And since law since 1939 mandated that any such reserves be invested in Treasuries (I.e. borrowed by the GF) he was only doing the legal minimum.

          The Reagan Raid on Social Security is a pure myth. Much like the similar one that had LBJ looting the TF to pay for Vietnam. Neither happened, the dollars just were not there to steal. In fact even Bush II never managed to steal anything, in fact his Administration started redeeming principal in the DI (Disability) Trust Fund starting right in 2005, ironically at the same time that he was loudly claiming "Phony IOU!".

          Lots of what people "know" about SS breaks down once you actually examine the numbers. As the poster in this excellent post does and helpfully points the way for others to do. Read and heed.

          bruceweb.blogspot.com

          by Bruce Webb on Mon Dec 03, 2012 at 07:25:23 AM PST

          [ Parent ]

        •  The data I have goes back to 1990 but (2+ / 0-)
          Recommended by:
          saluda, DvCM

          the political angle is tricky.  It always ends up in cross accucations and blame shifting depending on which party has a majority in Congress or was in the White House.  It gets into hair splitting over the fiscal year calendar versus the calendar year versus inauguration dates and sessions of Congress.  

          The borrowing itself doesn't bother me as much as a politician who could use it along with the public's lack of understanding, to spread fear, confusion, and doubt.  Especially when the politician is so dishonest that he omits the role that he played as a member of Congress controlling the purse strings.  

          The bad crop of Republicans we have in Congress is hell bent on F'ing everything up so they add an element of risk that shouldn't be there.

          "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

          by leftreborn on Mon Dec 03, 2012 at 08:01:26 AM PST

          [ Parent ]

      •  Do I understand correctly (1+ / 0-)
        Recommended by:
        DvCM

        that most of the $2.5 trillion benefited the MICC and those who received tax cuts, from which we might say the wealthy benefited most? Do we know the details of where it all went?

        I've often wondered if we could determine specifically where the social security fund money went and who was it that benefited from it.

        In all fairness those who benefited should be made to pay it back but we might suspect that political influence will not allow that to happen.

        Orwell - "Political language ... is designed to make lies sound truthful and murder respectable"

        by truong son traveler on Mon Dec 03, 2012 at 07:08:34 AM PST

        [ Parent ]

        •  Yes we can (8+ / 0-)

          Surplus funds that flow to Social Security have since 1939 by law (and in practice before that) been invested in Treasuries, these days in a separate class called Special Treasuries. The resulting cash simply goes to regular governmental operations without distinction, to say that they funded a specific tax cut here or spending there is between simple rhetoric and hyperbole. Greek either way.

          Social Security "reformers" can rage and bluster, but there is zero chance that there will be an actual default on the Special Treasuries, each issue has been quietly redeemed on schedule for 70 years and Social Security actually was cash flow negative more years from 1956 to 1980 than not. And the DI Trust Fund has been a net redeemer of its bonds since 2005. With nobody noticing, because it was a non event.

          What is really going on is an attempt to slow or stop net redemptions of those Special Treasuries by slashing benefits and so cut out-go. But this (while a crime against seniors and the disabled) doesn't remotely rise to the level of default or even proposed default. That just isn't in the cards, the theft isn't from the Trust Funds as such.

          bruceweb.blogspot.com

          by Bruce Webb on Mon Dec 03, 2012 at 07:36:22 AM PST

          [ Parent ]

          •  True, Factual, Correct, but . . . (5+ / 0-)

            the borrowing of Social Security funds moved from non-controversial to controversial because conservatives pushed it in that direction.  They deliberately decided there was an opportunity to further their agenda by spreading lies, and manufacturing their own set of facts.
            This bit of nonsense inserted into the Republicans budget resolution is an example.

            The borrowing itself isn't really the problem.  It turns out that it depends who's involved and nowadays we have an unprecedented situation with members of Congress who play a game of brinksmanship with the debt.  That ain't cool says S&P.  

            I wish I could pretend that there's no risk.  

            "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

            by leftreborn on Mon Dec 03, 2012 at 08:16:12 AM PST

            [ Parent ]

            •  Progressives took the bait (3+ / 0-)
              Recommended by:
              saluda, 84thProblem, DvCM

              The whole 'Phony IOU' 'Trust Fund has been LOOTED' meme was cooked up by the right as part of the Butler-Germanis 'Leninist Strategy' (a real thing-Google it) to undermine faith among younger workers in Social Security. Which has led to all too many progressives solemnly proclaiming that Reagan "stole" the money to pay for tax cuts. But nothing was stolen, not a single penny ever sent to the Trust Funds has been treated in anyway not mandated by the Social Security Amendments of 1939. Not by Reagan or Bush II for tax cuts, not even by LBJ for Vietnam (another version).

              It never happened. Unless we let ourselves believe it already happened and open the barn door and let the horse thieves in ourself. Which is the plan.

              Don't buy into Phony IOU on any level or in any narrative form. Especially those which pose Reagan in the role of horse thief. Cuz he didn't steal nothing. Not that he didn't TRY. As did Bush II. They just got caught, stymied by the locked door that current law affords the Trust Fund. It works and will continue to work. If we don't get hornswoggled.

              bruceweb.blogspot.com

              by Bruce Webb on Mon Dec 03, 2012 at 10:24:34 AM PST

              [ Parent ]

              •  Of course nothing was stolen and the (2+ / 0-)
                Recommended by:
                84thProblem, DvCM

                Government Account Series bond issues are solid.  Maybe I didn't emphasize it strongly enough but anyone who implies that redemption of the securities depends on anythng other than the full faith and credit of the United States of American is full of crap.  

                People say all sorts of nonsense.  In one ear, out the other.  I didn't mention Reagan anywhere in the piece and I'm not very familiar with SSTF activity that occurred in the early 80s.  I believe its solvency was enhanced or restored but the details are hazy.  Problems I have with Reagan are outside the scope of this diary.

                "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

                by leftreborn on Mon Dec 03, 2012 at 11:38:38 AM PST

                [ Parent ]

    •  Unfortunately, lots of Democrats who putatively (4+ / 0-)
      Recommended by:
      WheninRome, JohnnySacks, 84thProblem, DvCM

      want to protect SS say the same thing. It's a meme that needs to be retired.

      Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

      by Robobagpiper on Mon Dec 03, 2012 at 05:44:43 AM PST

      [ Parent ]

      •  Money = a commodity is also a meme that needs (7+ / 0-)

        to be retired.

        Talking as though we're still on the gold standard has great political advantages for the plutocrats.

        Fiat money is not a thing.  It's a unit of account, like inches or miles.

        What would it mean to say that X owes Y some inches or some miles?  

        That it's money owed to the US by the US makes such talk even more odd.

        "Yikes, I owe myself money."  Whatever.  But especially since I also have a money making machine.

        "Yikes, I owe myself money, which I create at will, whenever I want to and in any amount."

        Yep.  That's a real problem.

        No wonder we can't concentrate on the little, tangible things like good jobs and a burning planet.

        •  Funny, the Fed probably could buy the General (2+ / 0-)
          Recommended by:
          katiec, DvCM

          Account Series held in the trust funds.

          "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

          by leftreborn on Mon Dec 03, 2012 at 08:22:27 AM PST

          [ Parent ]

          •  It could also just simply fund SS directly. Not (1+ / 0-)
            Recommended by:
            DvCM

            saying that this would be better.  Just that it's possible.

            And this possibility is one that should be well known.

            The issue is never what the Fed Gov can "afford", it can afford anything it wants to.  

            People really need to understand that the issue is not one of affordability, but whether the US has the real resources to take care of the elderly:  enough labor to build houses, make clothes, produce medicine, provide health care, etc....  and all those natural resources that go into making all those things.

            The answer so far is simply:  Yes.

            Where do we find the money?  On a computer key board.

            We really need to be thinking much bigger regarding our economy -- what we want out of it, etc....

            And stop treating each and every issue as though there's a limited amount of money that everyone's competing over.

            Fighting over inches makes no sense.

    •  He's not sorry. /eom (1+ / 0-)
      Recommended by:
      84thProblem
  •  We Had Marginal Rates Over 70% for the Half Centry (24+ / 0-)

    when we created the middle class.

    If most economists agree that's an economy killer, they also mostly agree in biblical creation.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Dec 02, 2012 at 06:24:50 PM PST

  •  Thanks (1+ / 0-)
    Recommended by:
    leftreborn

    (R's) take those tired memes and shove 'em, Denise Velez Oliver, 11/7/2012.

    by a2nite on Sun Dec 02, 2012 at 06:35:57 PM PST

  •  thanks for dumbing it down, and creating (8+ / 0-)

    talking points (facts) that can be used in 'conversations' with RW's.
    It has been a little muddied and I've never really delved into the subject.

    "We can't solve problems by using the same kind of thinking we used when we created them." - Albert Einstein

    by pickandshovel on Sun Dec 02, 2012 at 06:53:42 PM PST

    •  facts, yup. Sound fooking facts (2+ / 0-)

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Sun Dec 02, 2012 at 08:36:28 PM PST

      [ Parent ]

    •  Such fact based stuff should also include a (0+ / 0-)

      mention of our in fact monetary system:  a fiat system.

      That's why the accounting matters, cuz with fiat, it's all accounting.  Nothing else.

      Fiat money is a unit of account.  It's just math, or accounting.

      There's no THING that is owed.

    •  Yes, this paragraph in particular is an eye-opener (2+ / 0-)
      Recommended by:
      katiec, pickandshovel
      So how would the government repay what it owes? It’s simple.  It just moves the number from the column on the right (in the table above) to the column on the left.  Paying down debt doesn’t create additional debt.  If the government decided to repay one trillion dollars to Social Security, it would issue marketable Treasury securities at auction like it normally does.  When investors buy the newly issued Treasuries, the government has one trillion dollars and an equal obligation to the new investors but the public debt amount isn’t increased.  Why?  The government would simultaneously transfer one trillion dollars to the Social Security Trust Fund and retire an equal amount of nonmarketable debt. The right hand column would be reduced to 3,849.872 and the left hand column would be increased to 12,411,598.  The sum total of the two would be unchanged.

      "Safety and security are the result of collective consensus. We owe our children, the most vulnerable citizens in our society, a life free of violence and fear." - Nelson Mandela. Donate to TREE Climbers

      by TX Freethinker on Mon Dec 03, 2012 at 07:35:51 AM PST

      [ Parent ]

  •  I propose we lift the cap and lower retirement age (11+ / 0-)

    to 60 and SS will self fund another 100 years.

    Why can't we change the debate?

    After all is said and done, a lot more is said than done.

    by Brahman Colorado on Sun Dec 02, 2012 at 06:57:40 PM PST

    •  Things the cons think are crazy would bring (7+ / 0-)

      back a solid economy.  When average people have tangible evidence that their circumstances are improving it unleashes potential that's missing now.  People might scoff at your suggestion but they think cutting tax rates on upper income will bring jobs.  A broad and prosperous middle class is what brings jobs and it doesn't happen by itself.  Prosperity has to be extended to more people in a deliberate effort.  History proves it.  The Progressive Era a hundred years ago.  Bob LaFollette, a Wisconsin (ironic) governor and Senator and others like him preached about the continual struggle.  He was vilified then and nothing has changed.  

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 07:16:18 PM PST

      [ Parent ]

      •  Ryan lies. (1+ / 0-)
        Recommended by:
        Calamity Jean

        Why do the republicans want to bankrupt America?  Who do they expect to collect money from if they achieve their aim?

        A broad and prosperous middle class is what brings jobs and it doesn't happen by itself.  Prosperity has to be extended to more people in a deliberate effort.  History proves it.

        Time is a long river.

        by phonegery on Sun Dec 02, 2012 at 07:30:51 PM PST

        [ Parent ]

        •  Their aim is to collect all of the money ASAP ... (5+ / 0-)

          so they don't have to worry about anybody else, ever.

          Greed is an ugly & evil disease that threatens civil society.

          "The Midas Touch" was meant as a cautionary tale, but too many people don't get metaphors (like fundamentalist bible thumpers & emotionally stunted abusers.)

          Something that doesn't make good sense, makes bad sense. That means someone is being deliberately hurtful & selfish. Look for motives behind actions & words.

          by CA wildwoman on Mon Dec 03, 2012 at 12:34:55 AM PST

          [ Parent ]

        •  They don't care about America. (3+ / 0-)
          Recommended by:
          leftreborn, Calamity Jean, phonegery

          They hate the government (although their teeth are firmly attached to the govt teat.) The normal things that any government has to do to keep a country strong, they call socialism. In their eyes, the sole function of govt is helping business. And that includes selling off public investments at fire sale prices.
             Look what their ilk did to post Communist Russia before Putin (more or less) reined them in.
             Despite their Ayn Randian self identification, their model for how a society should work is China.

          •  And they LOATHE poor people. (2+ / 0-)
            Recommended by:
            leftreborn, phonegery

            This comment is a natural product. The slight variations in spelling and grammar enhance its individual character and beauty and in no way are to be considered flaws or defects.

            by blue muon on Mon Dec 03, 2012 at 09:47:44 AM PST

            [ Parent ]

            •  Which makes it even more tragic when the poor (1+ / 0-)
              Recommended by:
              phonegery

              line up behind them.  I guess they think that Big Daddy will save them when push to shove.  But that contradicts one of their core principles --- self-reliance.  It's absurd that so many Americans forego their own self-interest in favor of others who return nothing to them.

              "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

              by leftreborn on Mon Dec 03, 2012 at 10:08:37 AM PST

              [ Parent ]

    •  How 'bout we fix the economy (3+ / 0-)

      and adjust the income cap from the current 84% to 90% where the income cap was after the 1983 deal.

      This would effectively be as much as a $5,000 COLA (roughly).

      Then hands off SS, theres nothing wrong with SS that a good economy wont fix.  Its important to note that in the low cost scenario the Trust fund is not depleted thru 2090. That assumption is based on moderate growth in:

      Workforce growth of .5% or higher, currently at .95%
      Wages, can we raise the min wage?
      GDP growth of 2.8% or higher

      And widespread job creation.

      The 2035 date is reliant on the most conservative estimates of Workforce growth: .2%-.3%, GDP growth of 2.3%, and maintaining the current 20-25 million people looking for work, essentially 20 more years of recession.

      And lifting the cap creates a giant monthly check (10k?) for a select few.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Sun Dec 02, 2012 at 08:35:43 PM PST

      [ Parent ]

      •  Well, can we agree that lowering, rather than (1+ / 0-)
        Recommended by:
        Calamity Jean

        raising, the retirement age would be a good thing? It'll increase the pressure on employers to correctly compensate labor (because labor would become more scarce and considerably less desperate), and it'll improve quality of life.

        Now I agree we shouldn't do anything other than adjust the income cap to capture 90% of wages again if we don't change the benefits structure, but if we lower the retirement age, wouldn't we need to increase revenues?

        Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

        by Robobagpiper on Mon Dec 03, 2012 at 05:49:35 AM PST

        [ Parent ]

        •  Lowering the retirement age (1+ / 0-)
          Recommended by:
          Robobagpiper

          is a small order effect.

          Using year old CBO numbers, the SS shortfall is .6% of GDP, lowering the retirement by 2-3 years might add .1% to the shortfall.

          http://2.bp.blogspot.com/...

          Creating 20 million jobs, well you have to ask yourself how much FICA that represents, or 10 million jobs.

          Raising the min wage means more FICA.

          Job creation is the largest order effect. Then wage growth, and workforce growth. These are the big three the Trustees tells us make the low cost scenario possible.

          FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Mon Dec 03, 2012 at 08:18:01 AM PST

          [ Parent ]

          •  Interesting. How about adding 7 years to it? (1+ / 0-)
            Recommended by:
            Roger Fox

            Would it really scale linearly?

            Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

            by Robobagpiper on Mon Dec 03, 2012 at 08:22:14 AM PST

            [ Parent ]

            •  Look at the link I dropped (0+ / 0-)

              Its a great chart.

              retirement at 70 would equal .3% of GDP

              FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

              by Roger Fox on Mon Dec 03, 2012 at 08:53:36 AM PST

              [ Parent ]

              •  That's raising the age. (1+ / 0-)
                Recommended by:
                Roger Fox

                What about lowering it? That's what we're talking about.

                After all, with many people taking reduced benefits at 62 and 65 becoming suddenly eligible for full benefits, should the retirement age be lowered - and a greater fraction of people alive to collect benefits for several years, it can't be that small of an effect.

                I imagine that raising the age will have a smaller effect for the same number of years as lowering it because more people would opt to take the smaller benefit early, partially offsetting the savings, coupled with the mortality issue.

                Non enim propter gloriam, diuicias aut honores pugnamus set propter libertatem solummodo quam Nemo bonus nisi simul cum vita amittit. -Declaration of Arbroath

                by Robobagpiper on Mon Dec 03, 2012 at 09:36:24 AM PST

                [ Parent ]

            •  Remember in low cost scenario (0+ / 0-)

              the Trustees tell us the Trust fund is not depleted thru 2090.

              And thats not touching a thing in SS, just fixing the economy.

              FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

              by Roger Fox on Mon Dec 03, 2012 at 08:56:45 AM PST

              [ Parent ]

  •  Where's the poll? I wanna vote no! (3+ / 0-)
    Recommended by:
    leftreborn, NonnyO, blue muon

    “I have made this letter longer than usual because I lack the time to make it shorter.” –Blaise Pascal

    by dskoe on Sun Dec 02, 2012 at 07:20:59 PM PST

    •  Ok. Done! (2+ / 0-)
      Recommended by:
      NonnyO, blue muon

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 07:41:54 PM PST

      [ Parent ]

    •  Didn't we just do that on Election Day? (1+ / 0-)
      Recommended by:
      saluda

      This comment is a natural product. The slight variations in spelling and grammar enhance its individual character and beauty and in no way are to be considered flaws or defects.

      by blue muon on Mon Dec 03, 2012 at 09:49:38 AM PST

      [ Parent ]

      •  Yes. We also did it in the 1960s when the (1+ / 0-)
        Recommended by:
        saluda

        Civil Rights Act, the Voting Rights Act, Medicare and Medicaid were enacted.  We also did it in the 1930s when Social Security was passed.  Before that we did it in 1920 when women were given the right to vote, in 1913 when the income tax went into effect and the Federal Reserve was created.  And so on.  It never ends and it will go on after we are all gone.

        "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

        by leftreborn on Mon Dec 03, 2012 at 10:12:36 AM PST

        [ Parent ]

  •  So the Ryan Plan suggests a partial debt default? (7+ / 0-)

    Defaulting on the public debt sounds like a winning idea, I am sure creditors would love it when the Treasury decides certain debts should just be ignored.

  •  SS Trustees (8+ / 0-)

    in each report give us 4 scenarios.

    The way you wrote your diary was as if they issue one scenario.

    They do low cost, intermediate cost, high cost and a stohastic model. Its important to note that in the low cost scenario the Trust fund is not depleted thru 2090. That assumption is based on moderate growth in:

    Workforce growth of .5% or higher, currently at .95%
    Wages, can we raise the min wage?
    GDP growth of 2.8% or higher

    And widespread job creation.

    The 2035 date you cite is reliant on the most conservative estimates of Workforce growth: .2%-.3%, GDP growth of 2.3%, and maintaining the current 20-25 million people looking for work, essentially 20 more years of recession.

    I truly believe that the only thing wrong with SS is the bad economy.

    TnR.

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Sun Dec 02, 2012 at 08:28:59 PM PST

    •  Yes you are correct. I looked at all that and I (4+ / 0-)

      saw a timetable that was even shorter than what I quoted.  It's based on funding from payroll tax only. For some reason it excludes interest earned by the accumulated balance.  My main concern is adequate funding and repayment of the loan.  At the same time, the program should be protected as Al Gore used to say with his lockbox.  It's on the budget today.  Taking it off has pluses.  If it runs at a deficit in the future the funding question remains.  As long as it's on the budget, the revenue that comes in is exposed to a "free-for-all."  There's nothing to prevent it from being used for something else

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 09:16:42 PM PST

      [ Parent ]

      •  YES! (4+ / 0-)
        At the same time, the program should be protected as Al Gore used to say with his lockbox.
        In this, Al Gore was absolutely correct!  It's one of the smartest things he talked about during the 2000 presidential "debates" - where political pundits said Dumbya "won."

        I never did figure that "judgment" out; I thought the pundits lost their minds, and had some magnificent rants in my journals about how I couldn't understand how anyone would vote for anyone that stupid since I thought he'd invade Iraq to finish his daddy's war and we'd go into a recession if he were elected.  [Well, I got two right.  That is not comforting.]

        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 NonnyO on Mon Dec 03, 2012 at 02:40:34 AM PST

        [ Parent ]

      •  "Interest earned by the accumulated balance..." (0+ / 0-)

        I have a weak grasp of all of this stuff but my understanding is that the interest earned by the accumulated balance of the Trust Fund can also be described as interest due from the American taxpayer/borrower.

        I realize that the US budget is not like a household but it seems apparent that the US has been spending more than its revenues+borrowing from SS Trust Fund+borrowing via US Treasuries.  Once the Trust Fund is depleted then it becomes a liability that must be repaid through either increased revenues or increased borrowing via US Treasuries.  Or, of course, changes need to be made.

        My big question is how the SS payments to retirees are accounted for.  Do the calculations end once the payment is sent out of is that payment tracked as it enters the economy and have a multiplier attached to it?  A retiree on a fixed income is guaranteed to spend that money quickly and locally.  That money is not launched into the sun - it enters the local, American economy.  Any ideas on that topic?

        Please do not be alarmed. We are about to engage... the nozzle.

        by Terrapin on Mon Dec 03, 2012 at 09:37:31 AM PST

        [ Parent ]

    •  It may not be the only thing, (2+ / 0-)
      Recommended by:
      JeffW, Roger Fox
      I truly believe that the only thing wrong with SS is the bad economy.
      but it's far and away the biggest thing.

      Renewable energy brings national global security.     

      by Calamity Jean on Mon Dec 03, 2012 at 08:45:22 AM PST

      [ Parent ]

  •  I just don't understand how Ryan (6+ / 0-)

    got his reputation as a serious numbers guy

    He has presented several documents that are not based on any reality (that I know of)

    Then again he believed the un-skewed polls
    that explains allot...

    Great Diary..thanx

  •  I wonder what China thinks of Ryan's (7+ / 0-)

    take on the full faith and credit of a US Treasury Note? Apparently, he believes that "We spent it on beer and whores so bite me" is sound economic policy.

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Sun Dec 02, 2012 at 09:17:33 PM PST

    •  I noticed something when I was looking at the (4+ / 0-)

      materials on his budget website. There's a document that includes a table with the debt amount starting in 2012 and projected 10 years forward.  Rather  than use the Public Debt number that ticked over $16 trillion this year, he used the Debt Held by the Public which excluded Intragovermental Holdings.  So the numbers start at $11.3 trillion and increase each year from there.  The ending number is obviously going to be lower than it would be if he used the higher Public Debt number.  I wouldn't be surprised if he takes credit somewhere in the literature for creating a plan with a better result than Obama's when he's really using an entirely different set of numbers.  That's probably the closest he can get to erasing debt for real.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 09:43:32 PM PST

      [ Parent ]

      •  I just read about FOX news screwing w/ econ data (5+ / 0-)

        using charts & graphs that make no sense, but seem to support GOP claims about the economy.

        http://www.businessinsider.com/...  

        It's hilarious in a really sad & very scary way - much like Ryan's budget gaffs & the GOP scripted crapola.

        'Baffle 'em with Bullsh*t' is an operating principle for all abusers.

        Thanks very much for the diary - I have been too afraid of having my brain injured by trying to read the Ryan budget proposal myself.

        Something that doesn't make good sense, makes bad sense. That means someone is being deliberately hurtful & selfish. Look for motives behind actions & words.

        by CA wildwoman on Mon Dec 03, 2012 at 12:50:41 AM PST

        [ Parent ]

  •  Here is an explanation & the solution (3+ / 0-)
    Recommended by:
    leftreborn, katiec, Calamity Jean

    Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

    by whoknu on Sun Dec 02, 2012 at 09:25:46 PM PST

    •  And maybe that also explains why Ryan proposes (3+ / 0-)
      Recommended by:
      CA wildwoman, NonnyO, saluda

      taking Social Security off the budget now.  Of course he says it's to save it but that just means it's to destroy it.  What's strongly implied if not stated outright, is that once it's off the budget it stands alone.  He makes no provision for a possible future date when benefits must be cut.  It's the flip side of what was presented in the video.  Social Security is fine to have on the budget as long it runs surpluses and revenue is there for the spending.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 09:51:03 PM PST

      [ Parent ]

      •  Remember Enron? (8+ / 0-)

        That's what would happen to our Social Security if anyone succeeds in making them "private accounts" and investing the funds at Casino Wall Street.

        All those private accounts in the Cayman Islands (or wherever) that the investment bankers have will be stuffed to overflowing.

        The first rule of casinos:  The House always wins.  Always.

        And Dumbya thought he could go to a senior citizens' living facility and talk the old geezers into his scheme.  What?  Did he think all senior citizens have Alzheimer's and can be talked into anything?  We're old.  Not all of us are senile!!!  A few of us have been around the block more than once..., and are a lot smarter than Dumbya, the liar and con man.

        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 NonnyO on Mon Dec 03, 2012 at 02:48:58 AM PST

        [ Parent ]

  •  Nicely done! (10+ / 0-)

    We really need to push hard to realign the Overton Window with reality, and this is a great diary in that direction. A smaller example of this (which always infuriates me) is that the debate about the status of the Bush tax cuts is always framed as raising taxes, whereas actually we've postponed by several years the scheduled expiration of those cuts (that scheduled expiration was the only thing that made them remotely palatable at the time, from an economic perspective).

  •  F No! Social Security must be lock boxed (9+ / 0-)

    as rightful elected President Gore suggested,.

    This raiding the poor peole box and then shaming then for "entitlements" is beyond the pale.

    Stop the brazen Marie Antoinette-like insanity!

    Separation of Church and State AND Corporation

    by Einsteinia on Sun Dec 02, 2012 at 09:46:25 PM PST

  •  No (2+ / 0-)
    Recommended by:
    NonnyO, Calamity Jean

    Next silly question?

  •  Civil War assured if Soc Sec is fucked with. (5+ / 0-)

    Apparently the Filthy Rich (tm) just don't get the message.

    Just as the atmosphere likely has a climate tipping point, so does the American people.

  •  There are 142 Federal Trust Funds, (1+ / 0-)
    Recommended by:
    Calamity Jean

     and none of them have anything in them but  U.S. Bonds.  By the way, the SS fund has 2.7 trillion in Bonds.  If banks, the other trust funds. foreign countries, and individual bond holder would forgive the loan  they made and  burn the bonds, then I think SS should consider doing the same.   The National Debt would be zero!      

  •  Let me explain again (3+ / 0-)
    Recommended by:
    This old man, FG, CA wildwoman

    Social security is already in bonds.  The fund is in special bonds that are paid back with a small amount of interest.  Why do it this way?  Because a lock box is absurd.  What would you do with the money?  Keep it in a safe?  Turn it into gold?  Instead the money is used in the general fund.  But it must be paid back.  The special bonds have been paid back many times before.  So before we get confused by right wing nonsense please understand how money is handled in social security.  There is nothing dubious about it.

    "The real wealth of a nation consists of the contributions of its people and nature." -- Rianne Eisler

    by noofsh on Sun Dec 02, 2012 at 10:29:17 PM PST

    •  Pssst (7+ / 0-)

      I know it's kind of long and boring so I'll summarize.  The point of the piece is to point out pretty much the same as what you say and to illustrate a right wing liar, Paul Ryan, telling right wing lies along the way.  

      Kos members are a pretty knowledgable bunch.  I'd be surprised if anyone thought that the term, Lockbox, in reference to Social Security, was meant literally.  People use the term when they mean that the program should be "off the budget" so that its revenues and outlays are excluded from the US Federal Budget.  

      I hope we can benefit from each other's knowledge and support and encourage each others efforts.

      Have a nice evening.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 11:00:28 PM PST

      [ Parent ]

    •  generally, i disagree. (1+ / 0-)
      Recommended by:
      Dream It Real

      which doesn't make me a lot of friends around here.

      my argument, which i've made more than once, is that:

      A. You are correct, it makes no sense to talk about a "lock box". Money is debt. Debt is money. Whether the debt held by Social Security is in the form of US bank notes or US treasuries is irrelevant from the perspective of whether it is debt.

      B. Debt is inherently barren. Whether the debt is in US bank notes or in US treasuries, it represents an obligation -- an obligation by future generations of wage-earners to "pay back" the generation of wage-earners that is currently "foregoing" spending all of that money -- and somehow those future generations are going to need to find the wherewithal to honor that obligation.

      C. Implicit in that obligation is the idea that the current wage-earners are, indeed, "foregoing" spending that money. Yet ... clearly, they are not foregoing spending the money, because they are lending it to themselves -- where themselves is understood to mean, the federal government, which they control, and which spends money on their behalf.

      D. Given this implication, the current generation of wage-earners are cheating future generations of wage-earners. How? This is how:

      By pissing away the money borrowed from Social Security on barren government consumption (e.g., munitions) and private consumption (e.g., whatever toys people are buying for themselves with the additional personal income they have because the government is selling Treasuries to raise revenue, rather than taxing that personal income).

      This isn't hard to understand. Here is how the current generation of wage-earners should be spending the money that they are putatively "saving for retirement":

      A Post-secondary education, whether training in the skilled trades, or in 2-year high-tech, or in 4-year colleges.

      B Transportation infrastructure. Roads, mass transit, bridges, whatever the future generations are going to need in order to get where they need to go. If future generations are busy building roads and monorails and high-speed railroad beds and bridges that the retirees neglected to build on their watch, how are they supposed to find the time to honor their financial obligation to the retirees?

      C. Health care infrastructure. Hospitals. Clinics. Equipment. And people to staff the hospitals, clinics, and labs.

      D. Affordable housing, both for seniors and for young workers and young families. If the next generation is busy building housing for seniors, who will build homes for them? Where will they live?

      E Alternative energy development. Instead of subsidizing the consumption of fossil fuels, the current generation should be ensuring that the subsequent generations will have the energy resources needed to meet the Social Security obligation.

      The basic problem is this: The current generation (which includes me, BTW -- hypothetically, I will be a retiree in 15 or 20 years) is not investing the money that is being "saved", but rather it is squandering the money that is being "saved". It's exactly as if 100,000,000 Americans did this:

      A Deposited 3,000,000,000,000 dollars in a bank account
      B Borrowed 3,000,000,000,000 dollars from the bank and threw an enormous party
      C Told their grandchildren that they would be expected to pay off the 3,000,000,000,000 loan by earning money doing odd jobs for their grandparents ( who would pay them by drawing on that 3,000,000,000,000 in savings ).

      Well, how in the hell are the grandchildren supposed to support themselves, when all of their labor is going to go into doing odd jobs for their grandparents, and all of their income is going to go into paying off the bankers?

      It's not a complicated formula. The current generation is borrowing from itself and having a party, while telling future generations that they are expected to make good on the loan.

      It's what 30 years of Reaganomics have produced. It didn't have to be done like this. It doesn't have to be done like this. The current generation could be electing governments that would invest those savings in real, public, economic goods: Whether physical assets like housing, transportation infrastructure, alternative energy infrastructure, and health care infrastructure, or intangible assets like education.

      As long as the current generation refuses to do this -- refuses to properly take care of the coming generation, and to prepare the economy for the future -- the borrowing of Social Security funds represents a racket being run by older wage-earners (particularly, those over forty or so) against young and future wage earners.

      The accounting is not difficult. One hundred percent of the money borrowed from Social Security each year should be spent only on projects that can be directly foreseen as providing economic wherewithal to future generations. Period. Education. Housing. Transportation. Health Care. Energy.

      To put the torture behind us is, inevitably, to put it in front of us.

      by UntimelyRippd on Mon Dec 03, 2012 at 02:12:12 AM PST

      [ Parent ]

      •  Um, what is money? A unit of account, nothing (1+ / 0-)
        Recommended by:
        Calamity Jean

        more.

        We're no longer on the gold standard.

        What does it mean to borrow or pay back, say inches or miles?

        How difficult is that to do when you have an inches making machine?  Lol.

        Fiat money doesn't ever have to be paid back, just as inches don't have to.  

        They're infinite.  As all non-tangible things are.

    •  The only dubious thing is that we should be (1+ / 0-)
      Recommended by:
      yoduuuh do or do not

      lending our Social Security money to the Federal Government at the same rate of interest that the banks charge us!!!

  •  It's not awkward (5+ / 0-)
    Ryan’s statement illustrates why negotiating with Republicans about fiscal matters is so awkward.
    It's a waste of time.  
    •  I cannot disagree and I've said the same thing, (7+ / 0-)

      too.  I even thought it was pointless to debate during the campaign except for the sake of convention and expectations.  Why did I use the word awkward?  I didn't say what I was thinking:  cons attack and criticize but they don't do defense.  It's always the same one note disparaging others so that they hardly say anything about the constructive alternative they have to offer.  If they complain so bitterly they should have a plan that will produce the satisfactory result they say they're not getting. But it's as if they have nothing to offer and all the fuss they make is pointless.  What they stand for is so unappealing that they try to get by saying the least about it. I don't think I've ever seen a political party as absurd as this anywhere in my entire life.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Sun Dec 02, 2012 at 11:22:24 PM PST

      [ Parent ]

      •  I've never seen anything like this either (1+ / 0-)
        Recommended by:
        WheninRome

        The GOP is a political party completely devoid of ideas other than discredited ones.  How can you possibly negotiate with a party who's fanaticism about tax cuts has not resulted in jobs and for 30 years.  Yet the Republicans soldier on if this is the heyday of the Reagan administration and "supply side" economics is all new and different.  

        Let's not even mention the death wish the GOP must have to continue to rely on the every shrinking "southern strategy" demographic.  

        The definition of insanity is doing to same thing over and over again and expecting a different outcome.  Watching the GOP in action leads to only 1 conclusion:  The GOP is insane.  

      •  "...cons attack and criticize but they don't do (2+ / 0-)
        Recommended by:
        leftreborn, Calamity Jean

        defense."  That phrase should be tattooed on our foreheads.  I've found it to be the case over and over again, and it's because their positions are basically indefensible.  Bluster and innuendo are their only weapons, and when they run out of Limbaugh-speak, they slither under a rock.

        Brilliant diary by the way.

      •  It's all about the hostages you can take. (1+ / 0-)
        Recommended by:
        leftreborn

        reason is for losers.

        There are some things that are unforgivable. Your willingness to play political games while people suffer and die is one of them--Onomastic

        by SouthernLiberalinMD on Mon Dec 03, 2012 at 07:11:34 AM PST

        [ Parent ]

    •  Too bad Obama and the centrists don't agree. n/t (0+ / 0-)

      There are some things that are unforgivable. Your willingness to play political games while people suffer and die is one of them--Onomastic

      by SouthernLiberalinMD on Mon Dec 03, 2012 at 07:11:01 AM PST

      [ Parent ]

  •  Not a practicing Economist (7+ / 0-)

    But it seems to me that all the "studies" and commissions that look at the "dire state" of Social Security never look past the year 2040. As a Boomer, I know why. Those of us in that demographic group, no matter how top notch our health is or will be will be - to put it indelicately - will be dropping like flies and becoming "no longer eligible for benefits" at a much faster rate the cadre of citizens in the age cohort right behind us (they used to be called the "Baby Bust" Generation).

    I contend that getting even a flawed, patchwork fix to pull the system past 2040 - a transaction tax on equity trading and dedicating 1/4 of the revenue to the Trust Fund as an example - completely eliminates the peril to the system. I would like to see more done than patchwork: the Financial Elites have gamed so much of our system that most personal savings for retirement has become simply money waiting to be stolen at some point before one of "us lesser mortals" plans on using it

    When you are right you cannot be too radical; when you are wrong, you cannot be too conservative. --Martin Luther King Jr.

    by Egalitare on Mon Dec 03, 2012 at 01:11:44 AM PST

    •  They also never tell us that fiat money is (2+ / 0-)
      Recommended by:
      kovie, truong son traveler

      infinite.

      How can you run out of it?  You can't.

    •  Yeah the models they use to forecast the program's (0+ / 0-)

      performance show what I call "a snake swallowing an elephant."  It's not a GOP reference.  It's the sheer volume of the baby boomer generation which will eventually taper off.  If the model is carried forward far enough it shows.  That's part of what was in the back of my mind about the $2.5 trillion.  It will continue to grow for a while too and it will help improve the capacity of the system to absorb the baby boomers.  It's probably not enough but it's far too much to let the vultures take it.  

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 06:53:37 AM PST

      [ Parent ]

    •  It's really impossible and pointless (1+ / 0-)
      Recommended by:
      leftreborn

      to predict what will happen beyond 30 years. Birth rates, workforce participation, economic activity and retiree health and economic needs will change in ways that we simply can't predict, such that things might be much worse than we predict by 2040, or much better. There's just no way to tell.

      What we CAN do, though, and I believe should do, is reform our social safety net system such that it won't really matter, by increasing, not decreasing benefits, and funding it by making our tax system more progressive. Sure, that'll cost the rich. But I fucking don't give a fucking damn about their fucking whinging.

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Mon Dec 03, 2012 at 06:58:13 AM PST

      [ Parent ]

      •  Couple of funny anecdotes (3+ / 0-)
        Recommended by:
        kovie, blue muon, bewert

        Republicans in Congress were badgering Harry Reid about the need to reform Social Security because of some future disaster they were predicting.  They kept asking him when he was going to do something about it and finally he blurted out, "20 years from now."

        At the same time, Republicans were badgering Nancy Pelosi the same way.  After being asked over and over when she was going to do something about Social Security she blurted out, "Never.  Is that good enough for you?"  

        I don't know if these stories are true but they do make me laugh.

        "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

        by leftreborn on Mon Dec 03, 2012 at 08:51:36 AM PST

        [ Parent ]

        •  Even if the SSTF runs out of money in 20 years (1+ / 0-)
          Recommended by:
          leftreborn

          if we don't make any changes to SS, no one's asking what happens after that. Does SS remain in permanent deficit, or are we talking 5, 10, 15 years of deficit, following by another 10-20 or more years of surplus due to more people working than retiring again, and if so, doesn't this suggest a financialization solution to SS's supposed "crisis" in 20 years that doesn't need to involve benefits cuts?

          Seriously, have these people never heard of future value amortization?

          Obviously, they have, because it's precisely what was used to justify supply-side tax cuts that would supposedly pay for themselves.

          "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

          by kovie on Mon Dec 03, 2012 at 09:21:40 AM PST

          [ Parent ]

        •  Just to add (0+ / 0-)

          It just occured to me that we could possibly avoid having the SSTF run out of money in 20 years merely by investing in the economy over that period to an extent and in a manner likely to generate sufficient extra payroll tax revenues to close that deficit, at present rates and with the cap continued to be adjusted upward according to present formulas and not otherwise lifted. And even if this won't be enough to completely avoid a future deficit, it's more than likely to push it well beyond 20 years. Why aren't Dems saying this?

          "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

          by kovie on Mon Dec 03, 2012 at 09:33:00 AM PST

          [ Parent ]

    •  Yep. I was born in 1951, so in 2040 I'll be (1+ / 0-)
      Recommended by:
      JeffW
      But it seems to me that all the "studies" and commissions that look at the "dire state" of Social Security never look past the year 2040.
      89 years old.  *I* expect to live that long, but many of my contemporaries can't.  Climate change will help; old people are more suseptible to heat exhaustion and other heat-related health problems.  Hmmmm..... Is that why the Rethuglicans are so reluctant to deal with climate change?  If so, 'Thugs, give it up; we've got enough lag in the system to get plenty hot in 2040 - 2060 even if we drop our carbon emissions to zero tomorrow.  

      Renewable energy brings national global security.     

      by Calamity Jean on Mon Dec 03, 2012 at 09:03:20 AM PST

      [ Parent ]

    •  Look at the Trustees low cost scenario (0+ / 0-)

      it stops at 2090. And the Trust Fund is not depleted.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Tue Dec 04, 2012 at 07:52:34 AM PST

      [ Parent ]

  •  Al Gore was all over this long long ago- (1+ / 0-)
    Recommended by:
    truong son traveler

    whose got the keys to the lockboxes.

  •  Drum... (0+ / 0-)

    ....who apparently is 100% against the idea of eliminating the SS cap, calculated it's a tax increase of about 12%.

  •  Short answer, No! (0+ / 0-)

    No, no, no!!!! And it's time that the money deposited in the Social Security accounts be locked away and not borrowed against.

    To the world you are one person. To one person, you are the world.

    by p a roberson on Mon Dec 03, 2012 at 03:34:25 AM PST

    •  That's actually a really bad idea (2+ / 0-)
      Recommended by:
      p a roberson, TacoPie

      Taking this much money out of the economy hurts it, because it's money that could and should be used to keep it functioning as close to capacity as possible. And if it were "locked away", more money would likely be printed to replace it in the economy, leading to inflation, devaluing the money in it.

      Obviously, we should be smarter and wiser about how we spend this money than we have been, in ways that will ultimately generate enough economic activity to justify such spending. Like, on schools, roads, green energy, etc., and not wars or tax cuts for the rich. But it does need to be spent.

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Mon Dec 03, 2012 at 06:48:42 AM PST

      [ Parent ]

      •  How about if the money were to be used... (0+ / 0-)

        for infrastructure, education, etc.

        Much like what you would use a credit card for, something durable and not expendable. No using the money to fund wars or to loan to other countries, but to build roads, schools, electrical grid in this country. That I could accept, none of this "slush fund" antics that have gone on before.

        To the world you are one person. To one person, you are the world.

        by p a roberson on Mon Dec 03, 2012 at 10:53:46 AM PST

        [ Parent ]

  •  And that's without interest? (2+ / 0-)

    The plan is to make us pay for the money they took.  It is their plan for all the money they spend.   They need to be paid based on merit pay and shouldn't have ten cents in benefits.  

    If money is speech, then speech must be money.

    by dkmich on Mon Dec 03, 2012 at 03:38:31 AM PST

  •  This should be on the rec. list, at least (5+ / 0-)

    it got rescued.   Thanks for the read.

    If money is speech, then speech must be money.

    by dkmich on Mon Dec 03, 2012 at 03:48:22 AM PST

  •  Don't want to defend Ryan, but your scheme of (3+ / 0-)

    issuing treasuries to pay off the debt to SS would be a form of borrowing, so technically he's not wrong.  And, in the end, the amount owed would still ultimately have to be paid in real money.  And Republicans do work to create conditions under which redemption of treasury securities would be difficult to redeem, by cutting taxes and refusing to raise them, e.g. right now, so that the government does not have the money.  Remember Grover Norquist and "starve the beast"?  That is the strategy they are  pursuing.

    They have borrowed our Social Security savings to pay for the rest of government and frankly I don't know why more people don't make more noise about it. They spent the money that is supposed to fund Social Security and they can damn well find the courage to raise taxes and pay it back.

    The elevation of appearance over substance, of celebrity over character, of short term gains over lasting achievement displays a poverty of ambition. It distracts you from what's truly important. - Barack Obama

    by helfenburg on Mon Dec 03, 2012 at 04:09:00 AM PST

    •  You have a fundamentally mistaken view of "money" (4+ / 0-)
      Recommended by:
      katiec, databob, leftreborn, Calamity Jean

      It doesn't exist, as a real thing, and hasn't since we started using fiat currency. It's something the Fed creates out of thin air to match what it believes is the true value of everything in the US economy, including foreign holdings, and so it doesn't need to "be there" for SS to draw on it.

      A T-Note that SS or any other T-Note-bearing entity has legal claim upon is, from a monetary point of view, about as real a claim on "money" as it gets. It doesn't matter whether the govenment "has" the "money" it represents. It will find it, one way or another, whether in its "holdings", or by taxing, borrowing or "printing" it.

      The entire US monetary system, and really the global monetary system that is built upon it, relies upon the honoring of such Treasury instruments, and the belief that they will ALWAYS be honored, which they ALWAYS have been. Were the US to someday not do that, we'd have vastly bigger problems than SS being short on money. We'd have a global monetary collapse the likes of which we haven't seen since the early 30's. I.e. Monetarygeddon.

      But as for SS, I wouldn't worry at all. The money that's owed to it in the "trust fund" is "there", and always will be so long as the US monetary system is sound. Anyone claiming otherwise either doesn't know what they're talking about or is lying to frighten unwitting dupes to convince them that SS really is a Ponzi scheme. Which it isn't, of course.

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Mon Dec 03, 2012 at 06:41:10 AM PST

      [ Parent ]

    •  The US government is self-funding. It creates (3+ / 0-)

      money out of thin air.  

      The gold standard is long gone, and won't come back any time soon.

      The Fed Gov doesn't need to borrow or tax to fund itself.

      It has the fiat money making machine with an infinite supply of the units of account we call dollars.

  •  Splendid Diary This should be on the Rec List (5+ / 0-)
  •  The fact this did not make the rec list really (1+ / 0-)
    Recommended by:
    truong son traveler

    bugs me.  What is really important and really documented and really into the nitty gritty rarely gets read.  We are our own worse enemies.

  •  Good diary, but it's simpler than that: (2+ / 0-)
    Recommended by:
    databob, Calamity Jean

    The Trust Fund is essentially imaginary. The only effect of putting this "borrowed" money into "bonds" is to give it the same status as other government debt. IOW, repayment has prioirity over other spending.

    The reason that the T-Pubs are gunning for SS is that we're nearing the point where the Trust Fund is going to be drawn down to pay SS benefits - which, remember, is its original purpose.

    Up to now, the Social Security surplus has been free money to the Treasury, paid for by a regressive tax only on working people. That means that income and capital gains taxes can be lower than they otherwise would be.

    If they can cut Social Security outlays, they can keep this flow of money alive, meaning less pressure on the elites to pay more taxes.

    Even better from their standpoint would be privatizing SS. That would bring a massive cash flow into the fabled "markets" and inflate the value of equity holdings.

    •  It's even simpler. It's imaginary to think that (1+ / 0-)
      Recommended by:
      truong son traveler

      Fed Gov spending is revenue contrained in any way.

      Fiat money is fiat money, not a commodity.

      The US Gov creates it out of thin air, which is how all units of account are created.

      Want to fund SS?  Just mark up the appropriate account.

      Done, done and done.

      Simple.

  •  No, this is wrong. Ryan is right. (0+ / 0-)

    ah just kidding! This is right of course.

  •  Thanks, I have a good use for this diary. nt (0+ / 0-)

    Might and Right are always fighting, in our youth it seems exciting. Right is always nearly winning, Might can hardly keep from grinning. -- Clarence Day

    by hestal on Mon Dec 03, 2012 at 06:59:31 AM PST

  •  HELL NO!!!! (2+ / 0-)

    The Bush tax cuts of 2001 and 2003 created huge deficits, some of which was filled by money "borrowed" (i.e. stolen) from the SS trust fund.  It was a case of robbing the poor to pay the rich.  

    So, if anything, the reverse operation has to take place now.  There is absolutely no question of "forgiving" the money borrowed from the SS trust fund.  

    (-7.75,-5.64) Headline: "Man who told half the nation to go screw themselves somehow loses a national election".

    by Whirlaway on Mon Dec 03, 2012 at 07:08:07 AM PST

  •  Excellent diary. I hate the title, though. (2+ / 0-)
    Recommended by:
    Whirlaway, Calamity Jean

    My immediate reaction was HELL NO!

    Regarding the budget claim that it would push marginal rates above 50%, I think that's another one of those intentional distortions, lying through word choice. Add 38.6 + 15.2 (the employer plus employee portion of SS and Medicare), and you're above 50% - but then, as the Repubs always say, those aren't "income taxes".

    I am become Man, the destroyer of worlds

    by tle on Mon Dec 03, 2012 at 07:18:45 AM PST

    •  Agree (1+ / 0-)
      Recommended by:
      tle

      "...as the Repubs always say, those aren't "income taxes" "

      Yes, because they say that 47% of the people are paying "no taxes",  lifting the cap from 110K should mean that high-income folks will not be paying any more of those "no taxes" than they used to before!

      (-7.75,-5.64) Headline: "Man who told half the nation to go screw themselves somehow loses a national election".

      by Whirlaway on Mon Dec 03, 2012 at 08:30:41 AM PST

      [ Parent ]

  •  Bookkeeping (0+ / 0-)
     If the government decided to repay one trillion dollars to Social Security, it would issue marketable Treasury securities at auction like it normally does.  When investors buy the newly issued Treasuries, the government has one trillion dollars and an equal obligation to the new investors but the public debt amount isn’t increased.  Why?  The government would simultaneously transfer one trillion dollars to the Social Security Trust Fund and retire an equal amount of nonmarketable debt.
    The analysis leftreborn offers treats the bookkeeping as a closed system. It isn't.

    SocSec's capital comes from marketable, private wealth via payroll tax. Funds surplus to immediate requirements are loaned via special securities to the Treasury, which spends the money for General Government (GG). The money owed SocSec ought to be treated as part of the deficit, but has been treated as "off-budget" since 1990 and the repeal of Gramm-Rudman [http://www.ssa.gov/...]. "Only debt held by the public is reported as a liability on the consolidated financial statements of the United States government. Debt held by government accounts is an asset to those accounts but a liability to the Treasury; they offset each other in the consolidated financial statements." GAO: http://www.gao.gov/...

    The end result is that if, as seems highly probable, the GG is running a deficit at the time it must redeem those special obligation bonds, then it must add more debt (fresh capital from outside) in order to issue marketable securities. Using real-world accounting to revise leftreborn's example. the GG was already one trillion in the hole for money it borrowed from SocSec and spent (but did not record on its books as debt). Now it needs to raise a fresh trillion dollars, adding that trillion to deficit and debt.

    •  We lost each other somewhere. (1+ / 0-)
      Recommended by:
      TacoPie

      Maybe it's just terminology.  

      There's a graphic in the diary that's titled, "The Debt to the Penny and Who Holds It" which appears on the Treasury website.  There are three categories and a date:

      Current -11/29/2012
      Debt Held by the Public - 11,493,262,670,990.20
      Intragovernmental Holdings - 4,829,820,778,614.76
      Total Public Debt Outstanding -    16,323,083,449,604.90

      The money owed SocSec ought to be treated as part of the deficit
      Agreed. The deficits have appeared to be smaller than they are because of the methodology that was used.  However, the smaller deficits don't diminish the "Total Public Debt Outstanding."  Instead, the debt incurred from borrowing Social Security funds is recorded in the "Intragovernmental Holdings"  instead of the "Debt  Held by the Public" which is where the deficits go.   In effect, "Debt Held by the Public" and "Intragovernmental Holdings" are two separate buckets.  They both hold debt. The total of the two combined is the "Total Public Debt Outstanding."  The debt ceiling covers both buckets.  Most people are familiar with the largest one, the Total and don't realize that it consists of two sub-buckets.

      To address your point, I would modify my terminology to say:

      If the government decided to repay one trillion dollars to Social Security, it would issue marketable Treasury securities at auction like it normally does.  When investors buy the newly issued Treasuries, the government has one trillion dollars and an equal obligation to the new investors but the [TOTAL] public debt [OUTSTANDING] amount isn’t increased.  Why?  The government would simultaneously transfer one trillion dollars to the Social Security Trust Fund and retire an equal amount of nonmarketable debt.  [INTRAGOVERNMENT HOLDINGS would decrease by one trillion dollars. The sum of Debt Held by the Public + Intragovernment Holdings would be unchanged.]
      Yes the government would have to raise money but it would also retire an equal amount of debt so it's a wash.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 10:49:53 AM PST

      [ Parent ]

      •  Laundered, not a wash (0+ / 0-)

        You're right, of course, that if you use the total outstanding debt, the special issue bonds are included.

        My point, probably made poorly, was that the original borrowing from SocSec was a kind of financial sleight-of-hand that resulted in the Treasury having essentially borrowed from its left pocket in order to pay out from its right, creating the illusion that it could spend the money while still retaining it. Both at the time of the borrowing and the special bond issuance and up to the present moment, no deficit has been recorded in the budget. At some future point, when the SocSec bonds need to be paid off, all of a sudden it will turn out that there is a previously-unaccounted-for hole that will form a significant part of that year's budget. [As a side issue, in addition, there are/will be no further use of SocSec as a source of invisible budgetary funding].

        So, to my mind it's not really a wash. There is no accounted-for debt to exchange. The failure to properly book the debt in first place has in reality pushed its true accounting forward to the time when we will need to issue ordinary Treasury debt to pay off SocSec recipients from general tax revenues.

        In a time of steadily rising deficits at all levels of government, and given a probable 20+ years to recover from the present recession, 2023 looks to be a foreseeable disaster coming straight down the pike. And we haven't even mentioned the issue of what sorts of interest might be demanded for those T-bills in the future.

  •  Social Security is stand alone pay-as-you-go (4+ / 0-)
    Recommended by:
    2laneIA, leftreborn, saluda, TacoPie

    In 1983 Reagan and Congress stepped up to address the future retirement of the baby boomers.  The argument was made that their generation should be responsible to save for the future demand they would place on the system, understanding the alternative was the program would otherwise go bust or the future workforce and employers would get stuck with a gigantic bill.

    Social Security did what was prudent, it began saving for the future so that it could could afford to pay people what they were being promised during their working lives. And the Trust Fund grew.

    If its surplus is not honored it will be greatest financial abuse ever perpetrated by a government against its people.

    If, in fact, the surplus is simply deemed to have been a part of the general revenues then the reality is that for 30 years workers and their employers have been paying a much higher income tax, about 12% of their total income more.  This would mean that we have had 30 years of the most regressive income tax in the entire world.

    In his push for privatization Bush make statements contending that the surplus didn't really exist. The media let him skate on that. The proper reaction would have absolute outrage. That it continues to be bandied about and treated seriously is an outrage. those elected officials that do so are giving their approval to what then becomes the greatest lie perpetrated by our government against its own people, a lie which by design had the least impact on the richest.

    It should be obvious to everyone by now that the modern Republican party exists to screw over the vast majority of Americans for the economic benefit of the richest. Period. Stealing the surplus should be expected of them and denying them this goal should be the unwavering goal of the Democratic party.

    These truths should be self evident: the Republican party lies, it cheats, and it steals.  It does so to deceive the vast majority of the country in its service to the rich. They are a cancer on the economy and to our democracy.

    •  This will end badly. (0+ / 0-)

      "Social Security did what was prudent, it began saving for the future..."

      But the fund contains assets that are also liabilities of the government.

      That would be like me writing a check to myself for $5 million and claiming that I am $5 million dollars richer.

      leftreborn highlights the problem perfectly, "It just moves the number from the column on the right (in the table above) to the column on the left."

      Somehow that is offered as a solution, though.

      I read a comment further up which described what I believe is likely to happen. SS beneficiaries will receive nominal checks until the day they die, but those checks won't buy them much as the dollar continues its path towards oblivion.

      This will end badly.

    •  When I came upon the statement in the budget (0+ / 0-)

      resolution about the surpluses that were borrowed, I didn't know what to think.  I let it sink in for a couple of days and I began to do some research around it.  I don't want to alarm people without reason.  

      The surplus has to be honored.  It must be honored.  I don't know why there seems to be a concerted efforted among a number of conservatives to imply that repaying the funds won't be as easy as it was to borrow them.  Is it ignorance?  I don't know.  I looked into this topic thoroughly before writing and uploading the diary.  Conservatives who cast doubt on the government's debt to Social Security were singing a different tune last year during the debt ceiling debacle.  At that time, they took issue with a statement made by the President warning that Social Security payments could be impacted by a failure to raise the ceiling.  Conservative writers were asserting that he caused alarm needlessly because there are other options available using the holdings in the trust fund.  

      When it suits them they say the holdings are as good as cash.  When they have a different agenda they cast doubt on them.  They throw up a cloud of dust and smoke and it seems no one can see through it.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 11:05:44 AM PST

      [ Parent ]

  •  We can render this whole issue moot... (1+ / 0-)
    Recommended by:
    Miata Blue

    To me, the simple solution to SS is to make it self-funded so it doesn't ever have to touch that trust fund. Right now, the trustees report projects (using the intermediate scenario) that they won't have to dip into the trust fund until 2021 - 8 years.

    If we allow the cap on contributions (currently somewhere around $110,000 of income) to rise faster than it does, we can keep pushing the 'cross-over' date into the future. Bernie Sanders has a proposal to exempt income between $110,000 and 250,000 that would lighten the load on the people in that 'upper-upper-middle class' segment.

    And every year we push the 'cross-over' date into the future is a year in which the entire SS trust fund doesn't impact our country's fiscal situation at all, except for the interest paid, which isn't substantial (maybe $100 billion).

    Yes, I know that's OUR money in the Trust Fund, but the hard truth is that it's spent, wisely or not.

    So if we can just tweak the revenue side of the equation, we can keep SS self-sustaining for a whole lot longer than 2021.

    And as long as SS isn't draining its trust fund, it truly isn't a problem.

    Cheers.

    Against stupidity the gods themselves contend in vain. Friedrich Schiller

    by databob on Mon Dec 03, 2012 at 08:06:07 AM PST

    •  But the SS Trust Fund was *meant* to be drained! (3+ / 0-)
      Recommended by:
      JeffW, blue muon, leevank
      And as long as SS isn't draining its trust fund, it truly isn't a problem.
      It was built up to much higher than historic levels starting in the early '80s to have extra money available when the Baby Boomers retired.  Now we are retiring, and the Trust Fund should be drawn down slowly to pay us.  

      Renewable energy brings national global security.     

      by Calamity Jean on Mon Dec 03, 2012 at 09:08:18 AM PST

      [ Parent ]

      •  Boomers are dead by 2062 (0+ / 0-)

        Once SS gets past 2062 , assets grow. Quickly.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Tue Dec 04, 2012 at 07:43:10 AM PST

        [ Parent ]

        •  Yep, if climate change doesn't wreck everything. (1+ / 0-)
          Recommended by:
          JeffW
          Boomers are dead by 2062.
          Once SS gets past 2062 , assets grow. Quickly.
          The state of the trust fund will be irrelevant if the nation can't raise enough food to feed everyone.  Assuming our population isn't dropping dead from heat stroke, starvation, and dehydration, the SS tax rates will have to be cut to prevent the SS trust fund from ballooning to ridiculous size.  

          Renewable energy brings national global security.     

          by Calamity Jean on Thu Dec 06, 2012 at 10:27:37 AM PST

          [ Parent ]

    •  Tweak the revenue side, by creating jobs? (0+ / 0-)

      maybe raising the min wage?

      When the Trustees tells us, in the low cost scenario, that the Trust Fund will not be depleted thru 2090..... those are the 2 biggies.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Tue Dec 04, 2012 at 07:45:57 AM PST

      [ Parent ]

  •  Wait a minute (1+ / 0-)
    Recommended by:
    leftreborn

    S0cial Security seems to be the US's biggest holder of its debt.  Why don't we just demand a little higher interest rate for our loans?  Banks (lenders) are the ones who typically set the rates at which they'll grant their loans, why doesn't Social Security demand 1% more?

    Seems like this should solve the Social Security funding problem.

    Even Democrats can be asses. Look at Rahm Emanuel.

    by Helpless on Mon Dec 03, 2012 at 09:23:09 AM PST

  •  real numbers, real effects (1+ / 0-)
    Recommended by:
    leftreborn

    Thanks for a great diary. I am ssending it on to others. You pierced the fog.

  •  The concept of a trust fund/insurance is sound (0+ / 0-)

    It's just that few seem to believe in it or trust it.  It could really be run by an actual technically competent board (not politicians).  If it is going broke it's because small adjustments in premiums (payroll taxes), benefits and eligibility have not been made as needed.  Best solution lies not with politicians but with some independent board which could make gradual changes as needed.  One of worst things Obama has done has been to partially suspend payroll taxes -- a further move to make SS just another transfer payment program.   SS is too important to leave to partisan politicians!

  •  Couple of things (2+ / 0-)
    Recommended by:
    leftreborn, TacoPie

    1) SS is not part of the federal budget except as the part of the federal debt that is not reported as such due to Gramm-Rudman. It is a separate trust fund that by law is required to invest excess funds in T-bills, which are backed by the full faith and credit of the federal government. As several posters noted above if there was any default by T-bills the SS trust fund would be the least of our worries.

    2) Although we hear repeatedly that the trust fund started being drawn down in 2011 (I've even seen this in the another SS document that also shows the numbers I will refer to) according to the charts for 2011 and 2012 the trust fund is continuing to increase its net position. See http://www.ssa.gov/... Page 38. In 2010 the net position increased $80.8 billion, in 2011 it increased $66.1B, and in 2012 $59.3B

    As a third aside, as I was listening to Diahn Rehm interview Grover Norquist this morning Mr. Norquist very forcefully stated that Repubs made the Pledge to the American people, not himself. That is one of the most arrogant statements I've heard in a long time, especially from someone who has never held an elective office with a constituency and whose Pledge was so soundly rejected in the recent elections. Another thing we need to push back on is reminding Mr. Norquist and his minions of these simple facts whenever possible.

    "I have no special talents. I am only passionately curious." A. Einstein

    by bewert on Mon Dec 03, 2012 at 11:35:35 AM PST

    •  When it comes to anything connected with fiscal (1+ / 0-)
      Recommended by:
      bewert

      matters and the federal government, I've found that there are very often two stories, both true.  It can be maddening especially when politicans use one or the other while allowing the public to assume that one story refutes the other.  Details are used to create narratives that fit an agenda.  Other details could be selected to create another narrative.  Fact-checking gets slippery.  

      I try to avoid all that but it's almost inevitable and it makes communication cumbersome.  

      When I look at the budget President Obama submitted to Congress last February, and the CBO scoring of it, Social Security is on it and it's a source of endless arguing.  All I'll say is that the debt created from the use of of SSTF revenue by the government is kept separate from other debt that the government incurs.  That's why the US has a "Debt Held by the Public" and "Intragovernmental Holdings."  It gets even more confusing when the total is referred to as Public Debt and sometimes Public Debt subject to the statutory limit.  The key is in the word "Held."  The SSTF debt is held by its owner, the SSTF, not the public.  Minutia.

      When I examined SSTF data versus various assertions, including Ryan's, that the program is already running at a deficit, what I found is that the SSTF tracks data with and without the interest that its holdinig earn.  When the interest is omitted from the total revenue paid into the fund, there's a shortfall.   That doesn't seem a valid measure to me but it works for those who want to create a sense of imminent doom.

      On Norquist, don't get me started.  He's been covering his tracks with that excuse for years and the pledge is written to each signer's constituents.  Nobody disputes that. What needs to be investigated is the money trail.  Who funds his activities?  How are members selected for primary challenges and who funds their campaigns?  It's understood that violators of the pledge and those who displease the gods in any other way are primaried with the pretense that challengers come up from the grass roots.
      That's what needs to be exposed.  These challengers are proxies for an interest group and Norquist may be in the middle of it.  

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 12:15:25 PM PST

      [ Parent ]

  •  A nicely done diary indeed (0+ / 0-)

    Makes it quite clear that borrowing for at least a portion of the Social Security IOU is not only feasible but probably a good idea.  After all, anything less than 100 percent borrowing for the shortfall is a net reduction in our national debt.  And it raises the question of whether some deficit scolds are double-counting liabilities.

  •  solutions? (0+ / 0-)

    I have read the post and all the comments.  You smart guys are really...........ah.........smart.

    But the bottom line and the solution to our quandry can only be rectified if we go back to square one:

    The progressives are going to have figure out a way to take down the limpuglicants at the grass roots level.
    That means investing big money and loads of time
    finding progressive candidates for every local and state
    office in every state.  That means reframing every issue
    from the progressive point of view and couching it in whatever lingo necessary - be it religious or economic.
    Basically re-fighting the civil war with the confederacy.
    Going head to head - locking horns with the kochroaches
    and alec in every state legislature. re: money writ large.

    Only then when the locals are free from their brainwashing will we be able to take back the media, and the talking points.

    Until we have accomplished that herculean task all the talk about debt and taxes and paid-for benefits, trust funds and
    futures is moot.  we can whine about which tack is more beneficial to which side until our brains leak out our ears.
    Until we undo 40 years of limpuglicant water torture, nothing is going to change.  One presidency even with 2 terms is not enough time as long as that map is red, those state legislatures are mostly red, as long as robbie and 3premes sit, and congress is ruled by mindless donor- sucking bobbleheads.

    •  You make it sound so "uphill" and you left out one (1+ / 0-)
      Recommended by:
      bluezen

      important thing.  Sometimes the best strategy for dealing with conservative Republicans is to just stand back and give them plenty of room to do themselves in.  I wouldn't rely on it solely.  But their public policies are so unappealing that people reject them if they can see them clearly for what they are.

      I live in Arizona.  Before November 6, we had 8 representatives in Congress, 3 Democrats and 5 Republicans.  In the new session, Arizona will have 5 Democrats and 4 Republicans.  Don't forget the state's reputation and the effect of redistricting which was done under a Republican governor and a 70% Republican state house.  

      There's no media reporting on it, but the biggest story may be the voter suppression that took place.  We may have had a Democratic Senator too without that.  It just means people will know better next time.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 12:30:11 PM PST

      [ Parent ]

  •  So the GOP (2+ / 0-)
    Recommended by:
    leftreborn, bluezen

    ...fundamentally are deadbeats that want not to pay their debts for their stupid wars.  Maybe Wall Street should forgive it portion of the holdings of the national debt.  All those T-bills could be returned to the Treasury marked "Paid".  After all, Wall Street has the money to pay, and most seniors do not.

    Even an internal obligation is still and obligation.  Where else is the Social Security Trust Fund going to put its money than in the most conservative investment around.

    This is a stupid idea right up with legalizing the ability to contract for employment for life (formerly known as "slavery") because it's just selling what you are currently renting.

    50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts

    by TarheelDem on Mon Dec 03, 2012 at 12:33:19 PM PST

    •  Fortunately it isn't Paul Ryan or the GOP who gets (1+ / 0-)
      Recommended by:
      bluezen

      to decide whether the US is capable of paying its obligations.  They may think that it's their decision the next time that the debt ceiling needs to be raised and maybe they'll finally see their true place in the scheme of things.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 12:52:39 PM PST

      [ Parent ]

  •  14th Amendment, Section 4. (1+ / 0-)
    Recommended by:
    leftreborn
    The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.
    Compare and contrast with:
    “First, any value in the balances in the Social Security Trust Fund is derived from dubious government accounting. The trust fund is not a real savings account. From 1983 to 2011, it collected more Social Security taxes than it paid out in Social Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing.”
    Concurrent Resolution on the Budget— Fiscal Year 2013 (aka The Ryan Budget)
    It is a real savings account. That the government borrowed from the Social Security Trust Fund doesn't in any way mean it isn't a real savings account. The Constitution is clear - the validity of the debt shall not be questioned. It doesn't matter that the government would have to raise money to pay back the money borrowed from the Social Security Trust fund.

    But we can't presume that Ryan knows anything about the Constitution.

    The wolfpack eats venison. The lone wolf eats mice.

    by A Citizen on Mon Dec 03, 2012 at 05:17:32 PM PST

    •  That's the GOP's budget wizard (0+ / 0-)

      Ryan refers to the government and to events that took place in Congress without a hint of acknowledgment that he's talking about himself.  He was there 14 years.  For six of those years the Republicans were in the White House and had majorities in both houses of Congress.  He makes it sound like he had no involvement.  He did it during the campaign a lot.

      In the speech he gave at the Republican convention, here's how he talked about Simpson Bowles Commission, without ever hinting that he was a member of it.

      He [Obama] created a new bipartisan debt commission. They came back with an urgent report. He thanked them, sent them on their way, and then did exactly nothing.  Republicans stepped up with good-faith reforms and solutions equal to the problems. How did the president respond? By doing nothing.
      The deal was for the 18 commission members to write a plan and take a vote when they were done.  14 out of 18 votes would send the plan to the rest of Congress for a hearing.  Ryan, and his two buddies, Jeb Hensarling and Dave Camp all voted "No" which pretty much doomed its chances.  The version he tells is total fiction.  

      The disturbing question is, "Why did he vote against the plan if it had 'good-faith reforms and solutions equal to the problems'?  

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 07:01:28 PM PST

      [ Parent ]

  •  i wonder where the neocon kossack cheer squad is. (2+ / 0-)
    Recommended by:
    leftreborn, Roger Fox

    they're usually on diaries like this like white-on-rice, flogging their austrian economics/fox noise talking points ad nauseum.

    guess your diary, leftreborn, made too much sense & they're having a group sad.

    great diary.  thanks for posting.  tip'd & rec'd.

    •  Does Kos really have that anymore? (1+ / 0-)
      Recommended by:
      bluezen

      Maybe they were here and I didn't recognize them.   There were a few people around in the morning who blitzed through with their fiat money.  

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 03, 2012 at 06:43:01 PM PST

      [ Parent ]

      •  oh, hell yeah. there's a group of 'em that usually (0+ / 0-)

        hijack threads in diaries like this, especially if they have anything to do with "threatening" the 1%.

        didn't see any of their names in yours.

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