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PhotobucketI have referenced this before, but there hasn't really been enough of a movement on the this issue, and it's an important one. It's specifically important right now when Washington DC is completely stuck on stupid in a self created crisis. This crisis started in 2010 when the debt ceiling was not secured in the Bush tax cut deal with Republicans by President Obama and Senate Majority Leader Harry Reid. Many of us predicted it would lead to the debt ceiling debacle in 2011 which in turn led to the fiscal cliff negotiations and the sequester that is now a reality.

However, it could end anytime with House Democratic Representative John Conyer's bill to just repeal the sequester; that is, if he got proper support. I think that needs to be a goal along with forever protecting Social Security from neoliberal economics and the politicians that support it. After all, this sequester was a conscious bipartisan decision on their part to put Social Security in danger now that a 130 billion net cut within the chained(superlative) CPI is now on the White House's website in its proposal to stand in place of the sequester.

What we are hearing to justify it are not only exaggerations and lies about Social Security being unsustainable, those lies are based on inaccurate accounting standards that have pervaded our entire government; the CBO, and yes, even the Social Security Trustees Board itself at times over the years. Let's face it; the Social Security Trustees Board has a broad history of being overly pessimistic.

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That pessimism doesn't politically help the program or protect it from its bipartisan attackers regardless of the 3 alternative scenarios in their latest report; one assuming the worst which has the trust fund being wiped out in about 14 years or so which is the high cost scenario; one in the middle called the intermediate scenario where the trust fund lasts 20 more years which they favor; and the most optimistic low cost scenario that doesn't have the fund being wiped out at all in this 75 year projection. Even assuming the worst projection of the trust fund being exhausted thus leading to funding by current payroll taxes leading to only 75% of current benefits paid out, it's important to know that in real dollar terms (purchasing power) those benefits are likely to become equal to or greater than what is being paid out now, even in that unlikely scenario.

Though I am glad there are multiple scenarios, they shouldn't play favorites, and this is still a really pessimistic report. Even the low cost scenario is pessimistic and flawed. It doesn't make up for the many errors found in stochastic models over the years and the neoclassical economics in general which they are based on; this methodology has multiple flaws with regards to Social Security, Medicare, and deficit economics in general.

It doesn't take into account how our fiscal and monetary system really works. Intergenerational accounting is pretty much inaccurate by design. This was exposed in 2009 by economists James K. Galbraith, L. Randall Wray, and Warren Mosler in this paper now revised and updated with a preface from the President of The Levy Economics Institute of Bard College.

THE CASE AGAINST INTERGENERATIONAL ACCOUNTING: The Accounting Campaign Against Social Security and Medicare (pdf)

In recent years we have been subjected to a rising cacophony of nonsense about a looming financial crisis. No, we are not referring to the current, very real, meltdown of private financial markets.  Rather, we are told, future unfunded entitlements will bankrupt our government as the baby boomers retire.  Social Security and Medicare are the main source of what former Comptroller General David Walker has called the “super subprime crisis.”

Social Security and Medicare have always had enemies, closely allied to private insurance companies who would like the business, and to fund managers and others who would profit from privatization of the associated revenue streams. But recently, these enemies have been given a boost, and a claim to respectability, by the creation of “intergenerational accounting,” an economic method that purports to calculate the debt burden our generation will leave for future generations.  This Policy Note assesses intergenerational accounting and related aspects of what we call “the accounting campaign against Social Security and Medicare.”

These enemies of Social Security now have more of a say than you or I now that their sequester is a reality. I have a bad feeling there will be more austerity to come, coming up in the latest episode of the continuing debt ceiling debacle continued from 2011. I and others here did predict it would happen, but not enough people listened to us. This is what happens when "New Democrats" accept memes on Social Security and Medicare from Peter Peterson as we see the President and many Democrats in Congress are doing.

This is true even with the caveat Democrats use stating, “Yeah, deficits are terrible, but don't cut them now!” Intergenerational accounting propaganda pervades not only most of academia as we know it among other myths like efficient market hypothesis seen in the documentary Inside Job, but intergenerational accounting propaganda has also, sadly, perverted accounting standards in general.

It’s important to understand that intergenerational accounting relies on budgetary myths and fables like any Democrat who uses it or refers to it as legitimate, well meaning or not. For them to reference it condescendingly while denying how we got into this political mess they created, is really a sad state of affairs. This is especially true when it comes to actual accounting reality and reality in general which real living standards rely on.

In intergenerational accounting, federal government revenue and expenditure streams are compared over very long periods—even over infinite time.  “Deficit gaps” are then used to measure the financial burden of these commitments, and therefore the alleged solvency or insolvency of the government.  Discounting the sum of the differences back to the present permits infinite sums to be translated into very large, but finite numbers.  The results, amounting to tens of trillions of dollars, are headline-grabbing and scary-looking.  Evidently this combination makes them irresistible.  Even the Board of Trustees of the Social Security Administration began ago to dabble in such arithmetic several years ago.

Now the Federal Accounting Standards Board (FASAB)1is proposing to subject the entire federal budget to such accounting.

This paper outlines rather well what I’ve written about numerous times. It is all based on misunderstanding how Social Security and our economy works, which we are all learning more about this week, as in treating Social Security as something else besides the transfer program it is from the production of the young to the old through wages and work. These bipartisan deficit fear mongering economic myths are being spread by Democrats as well as Republicans; they are both putting Social Security in danger now more than ever.

It also puts Social Security in danger when we as Democrats make excuses for what they are doing, in my view. Even the well meaning, but misguided, calls to hurry up and raise the cap support the myth that Social Security needs to be financed by payroll revenue and is in financial trouble. The latest Trustees report warns in dire terms about this being the largest actuarial deficit reported since prior to the 1983 Social Security amendments, and the largest single-year deterioration in the actuarial deficit since the 1994 Trustees Report. However, productivity has been rising for 35 years even though it has been stolen from retirees by the Greenspan Commission deal in 1983 pushing full retirement to 67. What does that tell you?

It should tell all of us that we need to read the words, "We must raise wages!" more than just a few times and with the same urgency as the so called "tough decisions" we need to make stated in these reports. As a start, raising the minimum wage to $12 an hour as James K. Galbraith proposes($9 doesn't cut it and not even in line with inflation from 1968) would begin to eliminate the shortfalls in Social Security and provide an economic boon to all. Any price increases from such a move would likely be small and worth it, demand wise. That is the one size fits all solution worth pursuing, because the truth is that we need to do it anyway.

Workers are not getting their fair share for what they produce which would make the minimum wage close to $21.72 an hour if they did. Democratic Senator Elizabeth Warren recently stated as such when she asked where the production went over the years since it didn't go to the workers. That being said, the trust fund is not really relevant in the grand scheme of things when it comes to funding Social Security. It would be refreshing to read a Trustees report that says as much.

The funny thing is that even Alan Greenspan himself admitted in 2005 that the pay-as-you-go-system and its shortfalls leading up to his commission's Social Security reforms were not really good enough reasons to implement those reforms.  That's right; because nothing stops the government from creating money to pay out as benefits and funding Social Security, there was essentially no real justification to build up the Social Security trust fund through higher FICA taxes on workers or raise their full retirement age to 67.

One has to wonder if politicians really believe in the lie that Social Security needs to get its finances in line like a family budget in a private household or if they think going after our safety net will somehow secure a Clintonian type of legacy that history will remember kindly. No. Especially not when the mid terms come up in 2014. Democrats will take a thumping assuming Social Security gets cut like Democratic Senator Dick Durbin wants in the guise of "saving it."

No, we must raise hell to protect Social Security from its "saviors" for good. To do so, I recommend reading the entire paper for the full info on all of these intergenerational budgetary myths prevalent everywhere and to spread the word.  Sadly, these myths are seen in even a lot of CBO projections that are heavily relied on even though they can be continually wrong a lot of the time, because laws affecting the economy, and in turn the program, change all the time in ways not measurable by the baselines.

Do the FASAB Exposure Drafts Recognize the General Principles of Federal Budget Accounting? The reporting proposed by the two exposure drafts does not appear to recognize the fundamental differences between public and private budgets. There are numerous problems in the drafts.   Some of the most basic principles of accounting are neglected.  Key terms are left ill-defined or undefined. Projections are misused.  Unjustified policy prescriptions are slipped into the drafts in the guise of accounting standards.  And revenues are matched to spending for parts of the federal budget, notably Social Security and Medicare, in ways that have no economic justification.

A Basic Principle: Liabilities and Assets.

The FASAB drafts are intended to be "statements of financial condition" for “the government” and for "the nation."  These two concepts – government and nation -- are not interchangeable. To use them interchangeably, as the exposure drafts do, is a source of confusion.

In our understanding, a statement of "financial condition" is, in general, a balance sheet. These are constructed with two columns: one for liabilities, and the other for assets. This very basic principle is no different for the public sector, and for the nation as a whole, than it is for private sector accounting.

The "nation's financial condition” – a term used repeatedly in the exposure drafts -- is a combination of the financial condition of the government and that of its citizens. Yet the proposed "federal financial reporting" contains no mention of the assets that correspond to the liabilities that would be reported when accounting for “the nation.”  For example, it would treat the obligations of the Social Security system as a liability.  That same Social Security benefit liability is, of course, an asset to the public. The Social Security wealth of the current population is just as real as the liabilities that support it.  Yet nowhere is this Social Security wealth reported or even remarked on.  Put another way, a transfer program, from one group of citizens to another, via the government or otherwise, merely transfers resources. It does not increase or diminish them.  This is an economic reality, and a financial statement for “the nation” should reflect it.

No, I’m afraid giving into these scary future projections based on these general accounting flaws in that these aforementioned liabilities and assets not accounted for with Social Security benefits (and that SS is a transfer program) or Medicare, is not “just common sense” as we are told dismissively by the "saviors" who will all certainly be financially rewarded for cutting it in the FIRE sector once they leave office. It actually makes no sense at all to give any real credibility to any of this if one understands real accounting standards and the federal budget like all federal programs transfer or not.

One cannot speak of finance, economics, or the ability to speak of solvency at all without reading into assets and liabilities and accepting a budgetary framework that identifies both of them. Here’s another fact in this paper many might not know, but must learn regarding the economic and budgetary history of this nation:

Ill-defined Terms:  What is a “Budgetary Resource”?

The proposed reporting speaks of “budgetary resources.”  The apparent concern is that the federal government operate within the “budgetary resources” available to it. Specifically the drafts are concerned that budgetary resources be sufficient to “sustain public services and meet obligations as they come due.”  But there is no clear definition of what “budgetary resources” means.

If what is meant is “tax revenue,” the definition is totally inappropriate. As we have stated and demonstrated above, the government does not need tax revenue sufficient to match spending in order to “sustain public services and meet obligations as they come due.” This is obvious: the government almost never has sufficient tax revenue for that purpose. (It has run significant surpluses for only seven very brief periods in the history of the nation, each of them producing a depression or a recession.) This is why we have a national debt to begin with. Yet the US federal government has never, in 233 years of operation, lacked for “budgetary resources” sufficient to “sustain public services and meet obligations as they come due.” This is also obvious, insofar as the federal  government has never defaulted on its obligations, including making all interest payments on its debt.

Spending is not revenue constrained. Historically when we’ve had a balanced budget(only 7 periods in our history), it led to a depression or recession or it generated the factors that led to one soon after. And yet, we still hear all sorts of deficit fetishist nonsense from this administration and a lot of other people in their defense, whether well meaning or not. They just don’t understand the federal budget or economic history and that is taking a human toll with the sequester as we speak.

So personally it’s a little hard to take such condescension on Social Security from Democrats claiming to want to save these programs(they only need saving from the saviors) who don’t understand this.

Here our point is a matter of accounting: the asset of payroll tax revenues to the government is just a liability to the working population, just as the liability of future benefits is an asset to the public.  In both cases, the books balance, between the public and the private sector – taken together, “the nation.”  And if the public's books taken alone don't balance, it merely means that the private sector's books, taken alone, don't balance either: the deficit of the one is the surplus of the other.  There is nothing alarming about this. Just as the public debt can be eternal, and need never be paid off, a net debt position for Social Security and Medicare can likewise be eternal as well, since the government’s net deficit is balanced by the nongovernment sector’s net surplus.  Spelling out the balance sheet in full for “the nation” would be good financial reporting practice.  And in this case, it would usefully reduce the scare-content of claims that focus on liabilities without acknowledging the corresponding assets.
Third way Democrats can get mad at accounting reality if they want to. After all, I know accounting fantasies can look good in a speech whether from former President Bill Clinton or President Barack Obama who idolizes him instead of FDR, but only this truly counts as actual accounting reality. Scare monger Social Security and Medicare claims of any type, especially the type I laid out for you above via 20 TRILLION are nothing to take seriously. These fantasy liabilities without assets, real accounting standards do not make and across the board too.
Arbitrary, Capricious and Misleading Time Horizons

The FASAB’s proposed time horizons are also problematic. They are so long, that they will involve making assumptions that are, in the nature of things, impossible. An example is the assumption of current Medicare forecasts that health care costs will continue to rise indefinitely more rapidly than nominal GDP, so that the share of health care in GDP rises without limit. While the focus of the exposure drafts is on implications for the federal budget, the effect on the private sector would be worse. In the limit, there would be few or no resources left to produce food, shelter, industrial goods or education, and the health care burden on households and firms would become intolerable.  This cannot happen, therefore it will not happen.  Stein’s Law applies: when a trend cannot continue, it will stop.

No understanding of the issues is gained by a procedure that necessarily incorporates unrealistic assumptions of this type. Since the time horizons are arbitrary, the present value of future “liabilities” can be blown up to any size, simply by changing time horizons and discount rates. Most readers of the proposed budgetary documents are unlikely to be aware that the exercise is purely arithmetic in this sense.

For Social Security and other permanent programs, what matters for long-range projections are demographics, technology and economic growth.7 Financing is virtually irrelevant. If by 2083 everyone is over age 67, no financing scheme will allow us to meet our commitment to let people retire at a decent living standard at age 67.  This, however, is most unlikely. Indeed, all plausible projections of demographic trends show only gradual and moderately rising real burdens on those of normal working age in terms of numbers of dependents (aged plus young) per worker. The OASDI part of Social Security currently moves less than 4.5 % of GDP to beneficiaries and that rises to about 6.5% over the next 75 years. On one hand, this is a significant increase, but on the other, similar shifts have occurred in the past without generating economic crisis or intolerable burdens. And it still leaves over 93% of GDP outside OASDI.

Basically this sums it all up, though you should all read the entire paper yourself as it is well worth it, even though it will take some time.
In short, it serves no useful purpose to project financial shortfalls for Social Security and Medicare into a far distant future, and no purpose whatever to revise those programs today on the basis of such projections.

snip

The notion that there is some “unfunded liability” amounting to tens of trillions of dollars is hogwash. There cannot be any “underfunding”. The US government always has the operational ability to make all payments as they come due, and, we note, could do so even if through some strange accounting mistake or trick one concluded that government liabilities exceed private assets.

This is where all the scary predictions regarding Medicare are coming from and they are all built on a shaky foundation of deficit fear mongering and budgetary ignorance involving intergenerational fantasies. Let's refuse to play that game. Let's call for this administration and Congress to just end the sequester and support the Conyers bill to do so.

No chained CPI period. No Superlative CPI with chained CPI either, because it lacks of any real world data(No real non experimental elderly or female index) showing it would take care of the most vulnerable in our society as claimed.The CPI-U and CPI-W does not overstate inflation as we now know from the work of CEPR economist Dean Baker; we will hear from him later this week. Therefore any promises built on a foundation of lies about the CPI and Social Security cuts are unacceptable. They are a betrayal!

Social Security benefits need to be raised and so do wages across the board. The full retirement age needs to be lowered to at least 55 as well. If any third way Democrats or Republicans go after our safety net, unleash Hell!

Tell President Obama, the GOP, and the Nation, No cuts to Social Security benefits, No Chained CPI, and no Superlative CPI will be tolerated.

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"HandsOffMySS" Blogathon: March 25th thru March 29th, 2013
Diary Schedule - All Times Eastern Standard



IT IS TIME TO TAKE A STAND

Social security is a concept enshrined in Article 22 of the Universal Declaration of Human Rights which states that Everyone, as a member of society, has the right to social security.

A limited form of the Social Security program began, during President Franklin D. Roosevelt's first term, as a measure to implement "social insurance" during the Great Depression of the 1930s, when poverty rates among senior citizens exceeded 50 percent.

Let your voice be heard.

Members of the Daily Kos group Social Security Defenders have organized this bogathon to promote the truth about the financial condition of the Social Security trust fund, and the impacts of various so called reforms and fixes.

Understanding how benefits are calculated, the History of Social Security, where the Wisconsin Idea came from, and how over the years changes have been made to Social Security, all increase awareness and hopefully improve the discussion.





  • Monday, March 25th

11:00am:Roger Fox
1:00 pm: Joan McCarter
3:00 pm: Roger Fox
5:00 pm: Jamess

  • Tuesday, March 26th

11:00am: joanneleon
1:00 pm: joe shikspack
3:00 pm: Arshad Hasan DFA
5:00 pm: Roger Fox

  • Wednesday, March 27th

11:00am: poopdogcomedy
1:00 pm: teacherken
3:00 pm: priceman
5:00 pm: Bruce Webb

  • Thursday, March 28th

11:00am: Jim Dean DFA
1:00 pm: BernardPliers
3:00 pm: One Pissed Off Liberal
5:00 pm: floridagal

  • Friday, March 29th

11:00 am: Economist Dean Baker
1:00 pm: VCLib
3:00 pm: Armando
5:00 pm: Liberal Thinking


Please remember to republish these diaries to your Daily Kos Groups.  You can also follow all postings by clicking this link for the Social Security Defenders Blogathon Group. Then, click 'Follow' and that will make all postings show up in 'My Stream' of your Daily Kos page.

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Originally posted to Social Security Defenders on Wed Mar 27, 2013 at 12:00 PM PDT.

Also republished by Money and Public Purpose.

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Comment Preferences

  •  Hey, priceman, (16+ / 0-)
    If any third way Democrats or Republicans go after our safety net, unleash Hell!
    HEAR, HEAR!  ;-)

    Mollie

    "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


    hiddennplainsight

    by musiccitymollie on Wed Mar 27, 2013 at 12:19:03 PM PDT

  •  And thanks for this tremendous diary. Had to be (17+ / 0-)

    a huge amount of work!

    Mollie

    "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


    hiddennplainsight

    by musiccitymollie on Wed Mar 27, 2013 at 12:20:42 PM PDT

  •  Lets find out where Hillary stands on this... (3+ / 0-)
    Recommended by:
    MT Spaces, elwior, greenbell

    before we all go gaga.

    Plato's " The Cave" taught me to question reality.

    by CTDemoFarmer on Wed Mar 27, 2013 at 12:40:46 PM PDT

  •  thanks for so much detail on the accounting and... (15+ / 0-)

    projections.  frankly, i've always thought that any projection that goes 75 years out can only be made with smoke and mirrors.  

    i'm part of the 99% - america's largest minority

    by joe shikspack on Wed Mar 27, 2013 at 12:41:19 PM PDT

    •  Thank you, Joe Shikspack! I appreciate that. (6+ / 0-)

      Exactly, and the way they use these projections is detrimental because the CBO and even the SS Trustee board have, at times, more respect than people that understand how Social Security works in tandem with our fiscal and monetary system and that must change.

      They need to give back the magic 8 crystal ball and peopel need to respect those that actually have a record of getting things right like Galbriath, Like Mosler and like L. Randall Wray.

      Intergenerational accounting is dangerous propaganda and everyone is using it in some fashion for the most cherished programs people rely on.

      I don't negotiate grand bargains with deficit terrorists!

      by priceman on Wed Mar 27, 2013 at 12:55:21 PM PDT

      [ Parent ]

  •  a part of the answer I rec from Rep. rep (11+ / 0-)

    last week, the only one who responded to my emails, as I am still waiting to hear from Bill Nelson and Marco Rubio both of whom must have given all of their staff time off, and closed down their offices.

    Broadly speaking, Social Security must remain fiscally solvent. However, Social Security has been operating at a deficit of over $40 billion a year since 2010. Unless Social Security is modernized and strengthened, these deficits may cause the annual cost-of-living adjustments to shrink or disappear entirely in the future. I strongly believe that we must make serious fiscal reforms to ensure our financial stability while still ensuring that we uphold the commitments we have made to our seniors. I am absolutely opposed to legislation that will cut Social Security for seniors in order to pay for overseas operations, health care for others or any other program. Any cuts to Social Security will be especially difficult for those seniors on fixed incomes who depend upon Social Security payments.

     The economy is another factor that impacts Social Security. Because Social Security is funded by taxes from an individual's paycheck, one way to bring about fiscal solvency to Social Security is to improve the tax base. To do this, we need a vibrant economy that allows Americans to get back to work. Burdensome regulations and outdated fiscal policies are holding back America's job creators and are keeping unemployment rates unacceptably high. With the national unemployment rate hovering at eight percent and budget deficits coming in at record highs, the American people are rightly concerned about the direction of our country. Washington must get out of the way of the forces behind economic growth and job creation in America if we want to continue to see our country at the forefront of the global marketplace. You can be assured that I will continue to work with my colleagues to ensure that Social Security is available for current seniors and generations to come.

    Finally, please know that I oppose the automatic cost-of-living adjustment (COLA), or pay raise, for members of Congress.

    "Who are these men who really run this land? And why do they run it with such a thoughtless hand?" David Crosby

    by allenjo on Wed Mar 27, 2013 at 12:52:09 PM PDT

  •  Great job, priceman (11+ / 0-)

    So glad that you addressed this issue. This could be the key to pushing back against cuts to Social Security, and to pushing back against Durbins zombie catfood commission.


    "Justice is a commodity"

    by joanneleon on Wed Mar 27, 2013 at 01:00:56 PM PDT

    •  Thank you, joanneleon! (6+ / 0-)

      And thank you for promoting it in WH. I had a feeling no one else would cover this angle quite like this and since this is important I decided to give it a shot.

      Yes, I hope everyone uses this diary in their letters to Congress and Durbin to fight his zombie cat-food commission. They are spreading dangerous propaganda to go after SS and steal even more production from the young to the old to enrich themselves.

      I don't negotiate grand bargains with deficit terrorists!

      by priceman on Wed Mar 27, 2013 at 01:19:47 PM PDT

      [ Parent ]

  •  I contacted my House Reps' office and discussed (9+ / 0-)

    the main points of what you've written with a staffer.  

    The response was that "the Congresswoman fully supports strengthening and preserving Social Security for our most vulnerable citizens."  

    I'm not sure how boilerplate that is, but it sounds like it to me.

    The main thing is that they know some of their constituents (thanks to you!) understand this stuff and don't want to hear any excuses about voting for cuts.   I hope it helps.

    "The law is meant to be my servant and not my master, still less my torturer and my murderer." -- James Baldwin. July 11, 1966.

    by YucatanMan on Wed Mar 27, 2013 at 01:11:39 PM PDT

    •  Thank you, YucatanMan (7+ / 0-)

      All you can do is try to get through despite the boilerplate admission that they are going after SS. Sounds like the Superlative CPI BS excuse.

      It does help though. Don't give up. I am humbled that you used these points because they are important, and not talked about as much as they should be or at all. Thank you!

      I don't negotiate grand bargains with deficit terrorists!

      by priceman on Wed Mar 27, 2013 at 01:29:14 PM PDT

      [ Parent ]

    •  wow! parse-o-rama! (11+ / 0-)
      "the Congresswoman fully supports strengthening and preserving Social Security for our most vulnerable citizens."
      ask her what she means by, "strengthening."  does she mean strengthening the program by diminishing its obligations, or strengthening the program by increasing its revenue base.

      also, ask her if she wants to preserve social security for all americans or just, "our most vulnerable citizens."

      it'd be good to nail her down on those points.

      i'm part of the 99% - america's largest minority

      by joe shikspack on Wed Mar 27, 2013 at 01:52:54 PM PDT

      [ Parent ]

      •  This is a Democratic Congresswoman, and I was only (7+ / 0-)

        able to talk with a staffer in the local office.

        From her record, I know she supports Social Security and the social safety net generally.  However, she tends to "vote with the president" on his backroom deals and on his initiatives.

        So, if I had to parse that statement myself, I'd say she would rather not change SS, but if the president makes the deal, she's going along with it.

        I'll call again tomorrow and see if I get someone else.  What I want to impress on the staffers, and thus the Congresswoman, is that the president's published plan (PDF on Whitehouse.gov) includes "Superlative CPI" and that means large cuts down the road.

        And there simply is no reason for that.  

        The rich should start to carry their own weight.  Major corporations with Zero Taxes due should carry their own weight.  No one is talking about resolving those issues and those are the real issues causing the deficit. (which is shrinking anyway).

        Social Security should just be left out of it.

        "The law is meant to be my servant and not my master, still less my torturer and my murderer." -- James Baldwin. July 11, 1966.

        by YucatanMan on Wed Mar 27, 2013 at 02:26:15 PM PDT

        [ Parent ]

      •  Hey, Joe--you nailed it. Get a load of these two (7+ / 0-)

        excerpts regarding our social safety net.

        I have to believe that Social Security (as a program) is going to be redesigned.  IOW, that the PtB intend to, and will, make it a welfare program.

        Here's an excerpt from the President's own Fiscal Commission, from the Chairman's Mark, The Moment Of Truth.

        This is on Page 12 of text [13 if counting the cover or title page] of The Moment Of Truth.  

        Our Guiding Principles And Values

        and reads,

        Protect the truly disadvantaged.  We must ensure that our nation has a robust, affordable, fair, and sustainable safety net.  Benefits should be focused on those who need them the most.

        And here are the exact words from a Pete Peterson Q&A, and a link to it.


        We also need to maintain a strong social safety net for those who need it, including Social Security and Medicare.
        I believe that this is in keeping with the neoliberal vision.  And one way or the other, it appears that this is exactly where the PtB are taking us.

        I hope that I'm wrong.  And I hope that we can stop this train wreck!

        Mollie

        "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


        hiddennplainsight

        by musiccitymollie on Wed Mar 27, 2013 at 02:42:18 PM PDT

        [ Parent ]

    •  That's code (4+ / 0-)

      for we're going to turn Social Security into a poverty program paid for by the middle class.  The middle class will then revolt and clamor for privatization (I mean why pay the payroll tax and have your money go to someone else?) and then Democrats will be able to be fully behind the Republican agenda.  Just where they love to be!

    •  Its simple demand this (4+ / 0-)

       photo SSDblogathon2.png

      Dont ask those people on the phone, YOU DEMAND

      ...... Social Security blogathon March 25th thru March 29th. #HandsOffmySS 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 Wed Mar 27, 2013 at 08:24:46 PM PDT

      [ Parent ]

  •  great stuff (8+ / 0-)

    reminds me of the often cited chart showing the curves of average income for a family of four and health care premiums crossing aroung 2025, that is, the family's entire income would go to health care. Clearly crazy and meant just to illustrate a point, no sane person actually believes that's going to happen!

  •  Actuary's Report (2+ / 0-)
    Recommended by:
    Clem Yeobright, elwior

    You conflate the actuary's report on social security with a lot of other things.
    It is a professionally, nonpolitical report that has been prepared for at least half a century.
    It does not involve "intergenerational accounting."
    Rather it just the best projection of what will happen over the next 75 years to Social Security finances if no changes are made to current law.
    (As you point out, actually three projections.)
    In spite of the inherent difficulty of projecting out many decades into the future, the actuary's report still contains very valuable information.
    As with all information it can be either ignored, used, or misused.

    •  It's also a Trustees Report (9+ / 0-)

      While the data tables and numeric analysis in the 200+ pages of the full Report are indeed the work product of the SSA Office of the Actuary, final approval of the Summary language and the crafting of the recommendations to Congress are firmly in the hands of the six Trustees, all political appointees and three actually from the Presidents cabinet. Worse the Summary also serves as the Introduction even as it exists as a standalone document and it is pretty clear that few MSM business and Econ reporters ever get beyond either.

      The Summary differs mainly from the Full Report in that the Alternative projections (Low Cost and High Cost) are effectively repressed and most of the careful probability language and uncertainty caveats found in the text and the footnotes to the data tables gets boiled out by the time it gets Summarized. That is the 'mights' and 'maybes' tend to turn to 'wills' as Intermediate Cost becomes less of a midpoint of a probabilistic model and more a certain prediction of the future. Including the God Help Us 'Infinite Future Horizon'. (BTW inserted with the 2003 Report at the suggestion/demand of two economists with the SSAB, the outside Social Security Advisory Board, who have clear policy biases, it was NOT an initiative of OACT).

      So "professionally, non-political" goes a little far when it comes to the Conclusion section of the Summary where you essentially have the political Trustees speaking in their own voices and not just passing through the opinions of the Chief Actuary and his staff.

      socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

      by Bruce Webb on Wed Mar 27, 2013 at 02:54:10 PM PDT

      [ Parent ]

      •  What the ...? (0+ / 0-)

        Bruce, you say that the infinite horizon was inserted  "at the suggestion/demand of two economists with the SSAB, the outside Social Security Advisory Board, who have clear policy biases, it was NOT an initiative of OACT."

        Since I know this to be false, I am interested in who you think it was that did that? Names please.

        Are you confusing this with the fact that the 2003 Technical Panel, sponsored by the SSAB recommended including the infinite horizon. (does it matter that the 2003 TR preceded the technical Panel's report). Subsequent panels, also sponsored by SSAB, rejected the IH.

        Are you confused by the fact that the official at Treasury who pushed the IH the hardest, later served on the SSAB?

        I assume the word "demand" was meant as a joke. At least I thought it was funny.

        Really this is a bizarre tall tale. Where did you hear it?

    •  I referenced the paper I did for a reason (5+ / 0-)

      I thought people would read it. Bruce Webb answered you quite well on the "non political" aspect of your comment which is not accurate, since it is also a Trustees report, but those 75 year projections are kind of obviously intergenerational, because 75 years is almost a lifetime and spans generations.

      It does not involve "intergenerational accounting." Rather it just the best projection of what will happen over the next 75 years to Social Security finances if no changes are made to current law.
      That statement is rather contradictory since that is precisely what intergenerational accounting involves with 75 year projections.

      I mean, to make the strong statements you did that I conflated the Trustees Report by referencing this paper, certainly you are aware of the Federal Accounting Standards Advisory Board and their mission?

      Certainly you are aware that the FASAB corresponds to all accounting practices by all trustees and actuaries of the federal government right?

      Certainly you are aware of the critique of the changes in these practices and the terms the actuaries and Trustees started using which 100% fits mine and the authors of this critique, right?

      In intergenerational accounting, federal government revenue and expenditure streams are
      compared over very long periods
      —even over infinite time. “Deficit gaps” are then used to measure the financial burden of these commitments, and therefore the alleged solvency or insolvency of the government. Discounting the sum of the differences back to the present permits infinite sums to be translated into very large, but finite numbers. The results, amounting to tens of trillions of dollars, are headline-grabbing and scary-looking. Evidently this combination makes them irresistible. Even the Board of Trustees of the Social Security Administration began ago to dabble in such arithmetic several years ago.

      Now the Federal Accounting Standards Board (FASAB)1
      is proposing to subject the entire federal budget to such accounting. It has issued two “exposure drafts” entitled “Comprehensive Long-Term Projections for the U.S. Government” (ED 1), and “Accounting for Social Insurance, Revised” (ED 2), and is soliciting comments on its
      recommendations. In this Policy Note, we argue that these proposals are not only wrongheaded, but dangerous. We examine the purpose of budgeting at the federal government
      level, and explain why government should not be subject to the same sort of accounting and financial constraints that apply to private households or business firms.

      Certainly you can explain why 3 widely cited economists who understand the federal budget better than your average actuary are wrong? It will be hard, because they aren't. I have read the report they cite and know the implications and errors within this report.

      Accounting for Social Insurance, Revised

      So certainly you would have read the widely cited economic paper that backs up my points on the subject right?

      I don't think you do or you did. In fact, I'm pretty sure of it.

      You see, the most important factors determining future real burdens are demographic and technological, not financial, yet little of this is taken into account. "Financial adequacy" is a term used in the latest Trustees report and basically meant to point out the financial troubles of the program with relating to financing. In fact it's pretty hard for you to deny the critique since you don't seem to have a grasp of it.

      For Social Security and other permanent programs, what matters for long-range projections are demographics, technology and economic growth. 7 Financing is virtually irrelevant. If by 2083 everyone is over age 67, no financing scheme will allow us to meet our commitment to let people retire at a decent living standard at age 67. This, however, is most unlikely. Indeed, all plausible projections of demographic trends show only gradual and moderately rising real burdens on those of normal working age in terms of financial adequacy
      This misinformation is being misused to scare the public into thinking SS is going to go broke when it's actually impossible, since as I also pointed out in the Alan Greenspan admission, there's nothing to stop the government from just funding Social Security. I also didn't really conflate anything. You just didn't take the time to understand my critique or the terminology and how it relates.

      I don't negotiate grand bargains with deficit terrorists!

      by priceman on Wed Mar 27, 2013 at 03:40:21 PM PDT

      [ Parent ]

      •  Questions (1+ / 0-)
        Recommended by:
        Clem Yeobright

        1. Does FASAB apply to the Trustees report or just the SOSI (Statement of Social Insurance)? Applying FASAB to the budget documents would have no affect on the TR since it is not part of the budget process.

        2. Long range actuarial projections have been part of the Trustees report going right back to 1941. Why only now have you decided it is part of a massive misinformation campaign? was FDR in on it?  I mean this is what pension actuary's do, is it not?

        3. When you say " there's nothing to stop the government from just funding Social Security" did you just mean Congress can legislatively change the benefit levels and revenue streams so they are equal? If so is this a major revelation. Or are you implying that OASDI has the authority to borrow? Or that the executive has the authority to allocate general revenue to Social Security without specific legislative authority?

        Has anyone ever made the argument that the Congress cannot legislate raising taxes by whatever amount it takes to insure that revenue meets the currently scheduled benefits. (I know people claim that we "can't afford" to fund it, but I are we pretending that they mean that literally? )

        •  Most of them are answered if you cared to read (0+ / 0-)

          1. You either know that the FASAB corresponds to advising how all accounting practices in all reports from all actuaries and anything relying on them or you don't. Maybe you don't think there is any accounting involved in all actuaries reports? There is or is supposed to be which was one of the main points in this diary you don't seem to have a grasp on or didn't take the time to read.

          If you don't and cannot pay attention to these simple facts which correspond to the paper I referenced than you have quite the skewed view when it comes to the budgetary process. The information about the FASAB is there for you to read. But fine, I'll answer your question which really says more about you.

          The Statements of Social Insurance provide estimates of the status of the most significant social insurance programs: Social Security, Medicare, Railroad Retirement, and Black Lung social insurance programs, which are administered by the Social Security Administration (SSA), HHS, the Railroad Retirement Board (RRB), and the Department of Labor (DOL), respectively. The estimates are actuarial present values 2 of the projections and are based on the economic and demographic assumptions representing the trustees’ reasonable estimates as set forth in the relevant Social Security and Medicare trustees’ reports and in the agency financial report of HHS and DOL (Black Lung) and in the relevant agency performance and accountability reports for the SSA and RRB. The projections are based on the continuation of program provisions contained in current law.
          2. Having long range projections existing and actually relying on them(specifically only one out of 3) with bad accounting principles and using them politically to cut the program or make pessimistic assumptions about the program that the trustees are doing are two different things. Again, if you just read the assignment, like the paper in the diary, you would know where my point is coming from instead of the pile of straw you are laying out here. When this type of intergenerational accounting is applied, like say in 2003(from the paper you didn't read but decided to jump in late and comment anyway on matters you know nothing about) national accounting is ignored as well as basic accounting principles like assets and liabilities in the future in those projections which I shant be going over again, because like I said, you didn't read the assignment.

          3. Perhaps you could take 5 minutes and watch the video I provided that answers this question. Too much? OK,how about taking a look at different trust funds between Social Security and Medicare?

          4 Trust Funds, 3 Problems: Why is the Other one so “Healthy”

          Part B of Supplemental Medical Insurance (SMI), which pays for doctors’ bills and other outpatient expenses, and Part D, which pays for access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year’s expected costs.
          Reality is quite a revelation, huh? Wait till you find out how our actual fiscal and monetary system works.

          You're welcome.

          I don't negotiate grand bargains with deficit terrorists!

          by priceman on Thu Mar 28, 2013 at 06:45:12 PM PDT

          [ Parent ]

          •  Wow, aren't you an arrogant prick (0+ / 0-)

            1. FASAB applies to the reporting in the consolidated financial statements of the Federal government, of which the  SOSI are one. The SOSI is NOT the Trustees Report, and FASAB rules have no material impact on the Trustees Report. If you have evidence to the contrary you should provide it. Tell me exactly what in the trustees report would change.

            The truth is that the Trustees decide what goes in the Report and how it is reported. End of story.

            Everyone uses the Trustees Report to evaluate the financial status of the OASDI trust funds. Some rely on CBO as well. No one uses the SOSI.

            2. Since when have trustees reports claimed to account for national assets and liabilities? Answer: never. Again your issue is with SOSI, which no one uses to evaluate Social Security. they use the TR, and the TR has used the same basic actuarial principles for a long time. the TR is a report on the actuarial status of the funds. Always has been.

            There is nothing in the Trustees Report which biases national policy toward cutting benefits. Even the introduction of the infinite horizon, as stupid as it is, just says the really long-run imbalance is a little bit larger than the 75 year imbalance. A perfectly reasonable response to both actuarial deficits is to increase revenues and maintain existing scheduled benefits. Big f'ing deal.  The fact that people use statistics to lie is not an indictment of statistics. it is an indictment of lying.

            3. Greenspan said the government can print as much money to pay whomever it wants. True. But they can't do that under the current Social Security law. If Greenspan had said to Ryan, "hey Paul, you little prick, all we have to do is raise the payroll tax rate like Bruce Webb says and everything is fine", would you have included the video?

            Again the MMT folks say we have no fiscal limits. This is an argument against saying we cannot afford to fund Social Security. Although people sometimes say this, it is a laughable claim when taken literally. What they means is we don't want to raise taxes one iota. You don't need MMT to prove that is a totally bogus claim.

            So we are back to the question of whether you think we should legally change the basis upon which we fund social security. SMI is a legally different mechanism. It is a philosophically different mechanism as well. OASDI benefits are closely tied to past wages.  Medicare insures against the cost of medical care, the need for which is not so closely correlated with past wages,  as it is to health.

            The article you linked to notes the truth that SMI trust funds are funded indefinitely. So what? That has not inured them against being the subject of cuts, or being politically undermined. What do you think the MMA was. What do you think Paul Ryan's voucherization BS is about?  Medicare has been subject to far more cost containment than Social Security ever has.

            Whatever. You aren't listening. you are already the smartest guy in the room. Well ast least the MMT guys are and you've read their articles. I'm impressed

            •  Fiscal limits: a logically absurd idea (1+ / 0-)
              Recommended by:
              priceman

              Again the MMT folks say we have no fiscal limits. This is an argument against saying we cannot afford to fund Social Security. Although people sometimes say this, it is a laughable claim when taken literally.

              No, what is laughable is that anybody can think that any sovereign government (or any issuer of liabilities) ever had or could have a fiscal limit on the amount of liabilities it could issue. What is limited is how meaningful these liabilities are, not their nominal amount. A fiscal limit is a preposterous delusion, that no state has ever held  when it came to war. Sovereign governments spend by simply printing the money. That's how we do it right now, with a lot of stupid tricks to pretend we don't.

              Nobody can change the basis on which we fund SS, because it is funded by issuing SS checks, printing money. We can only change the way we pretend to financially fund it. Perhaps the simplest and easiest one right now is Robert Eisner's suggestion of just having the bonds "in" the SS Trust Fund pay higher interest. Problem solved, horizon infinity and beyond. Get rid of FICA and then the trust fund altogether once people understand basic economics again, and then even better this time.

              For MMT is just genuine, Keynesian economics that everybody understood, though more and more vaguely, as Depression memories faded, from the 20s to until around 1970, when ancient superstitions dressed up in fake mathematics purged real economics. And in 1983, the dark age became dark enough that the destructive Greenspan, save-SS-by-destroying-it plan was passed. Before, everybody understood that SS taxes had nothing to do with SS payments, as FDR famously said.

  •  I just got a "donate" email from Messina ... (11+ / 0-)

    ... and I replied:

    What are you doing to preserve Social Security?
    NO deal on Chained CPI
    Ask me for money after you defend my income, please.

    Millions of us – the majority – must come together to insist that President Obama and the Democrats stand up and fight for the things we sent them there to do ... Michael Moore

    by MT Spaces on Wed Mar 27, 2013 at 01:49:16 PM PDT

  •  If Dems keep calling them Entitlements (5+ / 0-)

    I'll keep calling them Sell Outs -- in which case they have received their last vote from me. I'll write in Nader.

    Entitlement, my ass

    "It is the world that has been pulled over your eyes to blind you from the truth." - Morpheus

    by CitizenOfEarth on Wed Mar 27, 2013 at 02:25:00 PM PDT

  •  Late to comment (3+ / 0-)

    I was traveling all day yesterday and did not get a chance to read or comment on yesterday's SS diaries.  Over and over I am reading bioler plate responses and comments from our elected officials regarding proposed changes to SS.  Nearly every one of them wrongly assumes the purpose of SS.

    Words make a difference and the continued use of the word "entitlements" in a perjorative manner plus the now new meme of using SS changes to protect the neediest among us are already having a negative effect on the program. It makes SS appear to be a welfare program.  I will never forgive the President for offering up SS in his "grand giveaway" deals. This could end up being the most tragic thing that has ever happened to the American people.

    This particular diary contains so much valuable information that I will need to read it more than once.  Thank you for your amazing research for this diary.   Tipped and very much recommended.

    "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

    by gulfgal98 on Thu Mar 28, 2013 at 07:01:13 AM PDT

  •  The whole of the capitalist system is pervaded -- (1+ / 0-)
    Recommended by:
    priceman

    by insane modes of accounting.  The whole idea, for instance, of a $1.2 quadrillion notional economy of debt derivatives appears to me as a sort of blackmail -- the banksters are saying to the world "if you expose our trading game as a Ponzi scheme, we will ask the world's taxpayers to foot a $1.2 quadrillion bill or else we will crash the world economy."

    Perhaps much the same thing is going on here with Social Security -- maybe the Powers that Be imagine some sort of "unfunded liability" in the future so that, when they can marshal the political power to create that liability out of thin air, it can be funded by stealing from Social Security.  Possible?

    "Always in motion is the future." -Yoda

    by Cassiodorus on Fri Mar 29, 2013 at 03:28:46 PM PDT

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