We don’t know with certainty what would have happened without it. But that doesn’t mean we have no idea. Models aren’t facts, but they’re not nothing.
Did he give it as a metric for success? Did he say that no matter what happens or how much worse the underlying problems are than the predictions, the Stimulus would keep unemployment below 8%? Of course not. The only reasonable way to see his prediction is as a contingent one based on what they were predicting overall unemployment to be without the Stimulus.
Septimus, could you please knock off the condesending remarks? I assure you that nothing you’ve posted was too difficult for me to understand.
Here was your question: “Where would you want the SocSec Trust Fund to invest its surplus?”
Here was my answer: “The best realistic plan would be to stop pretending there’s a social security surplus that’s being set aside and invested. The money that is being collected this year is being spent this year.”
So you can stop claiming I haven’t answered your question.
And now let me explain - once again - why you are wrong. You could follow the numbers I laid out in a post above, which illustrate step by step how the system breaks down. Or, if you want to skip the math, you can reread the illustration I also made above:
That’s it right there. Making a loan to yourself does not count as an investment. Giving yourself your own money does not count as income.
Except there isn’t just one model. This is not something that economists are going to reach consensus on.
That’s what he sold us, so yes he did. If I sell you a car saying it will go 100mph, you’d be justified in saying the car doesn’t work if it only goes 80, especially when I’m buying the car specifically for its speed.
You can say it’s the only reasonable way, but that doesn’t make it so. He never said word one to us about how uncertain the numbers were. Had he done that, he probably wouldn’t have been able to sell the package. Perhaps we could be more generous in the assessment if the unemployment rate didn’t go higher with the stimulus than he said it would be without the stimulus.
Do you not see the difference between that analogy and what happened? Your analogy would only make sense if the friction coefficient of asphalt was merely a loose prediction rather than a known constant.
I think for most people, he didn’t need to say that the prediction was based on models, which are subject to change. But I guess we’ll have to agree to disagree over whether it was reasonable to think that he was making some kind of guarantee or metric by which the stimulus would ultimately be judged. What I recall the centerpiece of his advocacy being was that he would save or create X number of jobs.
I agree with John Mace. The Obama administration set a benchmark for what they would consider success for the stimulus program and they failed to reach it. Claiming that the program succeeded anyway is blatently moving the goalposts. Plenty of people on this board were all over the Bush administration when it did the same thing with the benchmark for success in Iraq. It’s only fair to hold the Obama administration to the same standard.
This isn’t saying the stimulus program was worthless or that it shouldn’t have been tried at all. But we have to acknowlege it did not live up to predictions and by that standard it was a failure.
You’re overstating your case. They didn’t “set a benchmark for what they would consider success for the stimulus program.” They made one prediction (among others) that was contingent upon their view of the underlying unemployment rate. And it wasn’t even the chief argument made by the President; he wisely made an argument that did not depend on the model of the underlying unemployment rate which focused on the number of jobs created or saved.
So let’s consider a hypothetical. Let’s say the Republicans had won the vote over the stimulus package and it had not been enacted. And the unemployment rate was 9.6% now.
Do you think the Obama administration wouldn’t be calling the Republican plan a failure because of that rate? They’d be saying that the Republicans had failed even worse than they had predicted they would.
So if the Republican plan would have been a failure for having a 9.6% rate how can the Democrats claim their plan is a success for achieving that same rate?
Okay. It was sold as a promise to boost private sector jobs, yet the majority of new jobs have been government jobs. Private sector jobs took a huge hit and the recovery so far has been weak. And the infrastructure component from a jobs perspective has been a failure - President. Obama recently belatedly realized that there is no such thing as a shovel-ready job.
Okay. It was sold as a promise to boost private sector jobs, yet the majority of new jobs have been government jobs. Private sector jobs took a huge hit and the recovery so far has been weak. And the infrastructure component from a jobs perspective has been a failure - President Obama recently belatedly realized that there is no such thing as a shovel-ready job.
My introduction to Little Nemo was a thread where you apparently spent much of an hour with a pocket calculater regarding a simple question about roulette betting. I was right and you were wrong. You were happy to waste the calculater hour, and posted several times defending your incorrect position, but couldn’t waste a minute to bring closure with a “Aha! I see. Neat theorem.”
Or do you still you think you were correct about that roulette riddle?
There is more than one “correct” way to imagine Soc Sec accounting; the important thing is consistency. You seem to insist that the Soc Sec Trust Fund wasn’t running a surplus during the epoch when it was … er … running a surplus. Fine. Are you going to be consistent and not speak of its deficit during the epoch when it’s running a deficit?
The Soc Sec buys Denmark bonds, Denmark buys U.S.A. bonds … but that example didn’t work for you. Maybe pondering a simple two-earner household where hubby borrows some of wife’s salary would help your thinking. The main thing is to have a consistent and correct model and stick to it. Saying that Soc Sec should “buy real assets instead of U.S. Treasury debt” shows strangely confused thinking.
It’s worse than you think, septimus. When Social Security was in surplus the government got billions of dollars of additional revenue. This went right to the General Fund and supported current spending. We have lost that support to current spending already and when the bonds are cashed in to support retirees the budget takes an additional hit.
You’re conflating politics and policy. I have no doubt the Democrats would do whatever is good politics (well, some doubt, but not because of scruples). That doesn’t make it an intelligent policy argument.
It’s very simple: they had a model with certain inputs. Those inputs were wrong. GDP shrank by about double what the current estimate was saying in the two months before the Stimulus. Consequently, the prediction was wrong. The only way that becomes an argument that the policy was a failure is if you arbitrarily choose to measure it by the explicitly contingent prediction of some of Obama’s economic advisors, rather than based on how the plan was actually sold or even by plugging in the newer GDP numbers into that predictive model.
Could you give me a link? I don’t remember that thread. Based on this one I suspect you weren’t as right there as you’re claiming.
Have you come up for an answer for my question yet? Where will the United States government acquire the money it uses to pay off the treasury bonds it’ll use to fund social security in 2030?
Well, of course it would have a distorting effect on the economy: That’s the whole point. The reason the stimulus is needed is that what the economy is doing “naturally” isn’t good, so we need to distort it into something that is good (or at least, less bad). If the stimulus didn’t distort the economy, it would be a terrible waste of money.
Right. So if I borrow $5000 from my wife, I have $5000 and she has an IOW from me for $5000. We have increased our family wealth by $5000 so I go out and spend it. It seems that you would argue that we still have the $5000 because of my wife’s IOW that she holds. But I have an outstanding obligation for $5000, so we are back at square one.
Unless your argument is that we would be much further in debt were it not for the Social Security trust fund, I can’t agree with what you are saying. There is no money there; it has been spent already.
Would you feel better if the social security fund was invested in Canadian treasuries instead?
Do you have a 401K? You know you can borrow from some 401Ks right? Just like any other loan, you are legally obligated to repay that loan from your 401K, if you don’t, a lot of bad tax things happen. Is that obligation to repay your own retirement account a worthless asset to your 401K? That is an IOU to yourself isn’t it? In the end, whether you repay your 401K or you find some other way to fund your retirement, you are in fact going to fund your retirement aren’t you? Now assume that you print your own goddam money.
To once again use my repeated example, it’s the difference between me giving you a check for $5000 and you giving yourself a check for $5000. If Canada owes the United States a billion dollars, that’s a genuine asset. If the United States owes the United States a billion dollars, then it isn’t an asset.
I’ve answered your question twice, even using a larger font in one case, thinking that might help. I’ll repeat the answer now: The U.S. will acquire that money in one of its usual ways: taxing, borrowing, or creating fiat money. Is there insolvency risk? Of course there is, as I emphasized earlier in a larger font. Does that have anything to do with our debate? Obviously not! I don’t think you’re a right-winger, but you seem to have been letting some of them confuse you.
I’m not even sure what you think we’re debating here. I’ll start with an easy clarifying question. You think the Soc Sec Trust Fund should invest in “real assets” rather than U.S. Treasury bonds. Kingdom of Denmark bonds are a real asset; suppose the Trust Fund buys those instead of U.S. bonds; the Treasury’s total borrowing doesn’t depend on the Trust Fund decision so it will need that much more; suppose (to complete a tight circle) it borrows as needed from the Kingdom of Denmark.
Now two questions: (1) are the Denmark bonds a “real asset”? (2) Is the situation I’ve described different in an important way from the status quo?
I think these are easy questions, and apologize if it’s “condescending” to suggest you might not know the answers. But do you?
