I agree with the first part of what you said. As I’ve been pointing out, social security is not only solvent it’s being used as a cash cow for other programs. The government is collecting more money in social security taxes than it’s paying out in social security and it’s diverting the excess into the general fund.
I also agree with the last part. If the government started pouring the surplus into the private economy by buying up stocks or some other assets, it would create a huge opportunity for shenanigans. That’s why I oppose the idea of privatizing social security even though it looks good in theory.
Not sure about the part in the middle where you said it doesn’t take tax dollars to fund the payments.
So you think if SS buys bonds, they should not make a profit like any other investor would? The government uses the SS money and pays a premium for it. Why is that wrong? And the premium is earned income, not a tax payer gift.
How much interest you charge on a loan to yourself is a moot point. The United States could buy zero interest treasury bonds, ten percent interest treasury bonds, or hundred percent interest treasury bonds and it would make no difference. Because the amount of interest they collect is literally identical to the amount of interest they pay.
Nope, they don’t have to do shit in 2030. With the bonds they MUST collect those taxes.
The money that is collected in 2010 is being invested in treasuries to provide even more money in 2030.
We’re going around in circles, you basically don’t believe that treasuries are assets in the hands of a government agency while I think treasuries are assets no matter who owns them.
Well, in theory the government could repeal social security and shut down the United States Social Security Administration. If that happened the assets of the now defunct agency, including the treasury bonds it’s purchased, would revert back to the general fund.
I agree we seem to be going in circles. But I maintain that we are not investing any money or acquiring any assets. All the government is doing is building up a set of promises to collect taxes in the future.
No, if the United States government becomes a wash then the social security fund has no assets. Its assets are bonds that are dependant on the existence of the United States government’s ability to collect taxes to pay off those bonds.
Let’s say that Grover Norquist becomes President in 2020 and a Constitutional Amendment is passed which forbids the United States government from collecting any form of taxes. But it doesn’t abolish social security. So the Social Security Administration still has all of the assets it has now - billions of dollars worth of treasury bonds. But those bonds are now worthless - the government has lost the ability to collect the funds to pay them off.
One of my avocations (though it does pay money ) is to compose mathematical puzzles. The ones I do are different from (and much more difficult than) the Missing dollar riddle:
(If it’s not too rude, I’d ask the people claiming Treasury paper is worthless when sold to a government agency to solve the above riddle without peeking at the answer.)
Nemo’s Missing $300 million dollar riddle is much easier to debunk, but the underlying problem is the same: faulty accounting. In Nemo’s case, he includes Soc Sec as part of “Government”, but assumes that when Soc Sec turns over all those dollars collected from employers and employees to the Treasury, the Treasury burns them up and forgets about them! :smack:
I think that Stratocaster’s underlying point may be that if the Treasury gets $300 million in “easy” borrowing from the Soc Sec Trust Fund, then the U.S. Government might buy a $300 million naval vessel it wouldn’t have otherwise; assuming that ship has zero value, the easy borrowing has cost us $300 million. But if that’s their point why didn’t they come out and explain it that way? (I’m sorry, Stratocaster if I’ve misunderstood your point. I tried to map your comment to the closest thing I could think of that made any sense.)
Unless I’ve missed a recent change, Soc Sec surplus is off-budget for the purpose of official government deficit calculations; similarly Treasury debt held by the Trust Fund is included in the federal debt. Thus in theory Congress isn’t supposed to think of the SocSec surplus as a revenue source with which to buy another ship for the navy.
In practice, politicians of all ilks will mentally move the Trust Fund on- and off-budget as convenient to support their argument of the moment. But we don’t need to behave that way here. Leave it on-budget or off-budget as you wish; either way you get a meaningful answer if you’re consistent. Just please don’t do what Little Nemo does: putting SocSec revenues off-budget and payouts on-budget within the same paragraph hoping to confuse someone with an accounting riddle.
And that’s the point. From what I’m reading, that’s what makes buying the bonds more secure. They can stop social security. They can’t stop paying back their bonds.
You’re right that, if they want to get the money, they have to tax for it either way. The difference is that, if they didn’t invest it, they could just call off the program and never pay it back.
This makes the bonds worth more.
To use your examples, let’s say you wrote yourself an IOU for $5000. But, let’s add that there’s someone watching you who will force you to pay that $5000, but only if you write that IOU. When the IOU comes due, you are broke, and have to go out and make the $5000. But if you didn’t have that IOU (and the person forcing you), you could just decide you didn’t need it and stay broke.
One way gets you $5000. The other gets you nothing.
I’m not sure what your point is. Are you saying that the government has to fund social security in the future because these bonds exist? I don’t see that as being true. The government could shut down social security and reclaim its assets into the general fund.
In such a case the payoff of the bonds would just be another paper transfer. The treasury department would be holding the bonds. It would debit itself $300,000,000 from the general fund to pay out to the bond holders. Then as the bond holders it would credit itself with $300,000,000 which it would palce into the general fund. Nothing would really be accomplished.
I’m also not seeing how your IOU argument holds up. You do seem to be acknowledging that the money will need to be collected in the future. But I don’t see how it makes any difference between the government collecting taxes to fund social security and the government collecting the same amount of taxes to pay off treasury bonds it owns and then using the money it collected from the treasury bonds to fund social security. Either way the government is collecting taxes in and spending social security out - the only difference is an intermediate step of channeling the money through the treasury department. To use my tired example, if you give me $5000 I can deposit it directly into my savings account or I can deposit it into my checking account and then deposit a check from myself for $5000 into my savings account.
I understand the point you’re making about a bond supposeldy being a more obligatory debt than the social security budget. But I don’t see how it makes any real difference. If the government wants to fund social secuirty in 2030 then it will - and we’ve already agreed that will have to be funded by taxes collected in 2030. If the government decides to cut off social security for 2030 then it can do that also - the taxes collected to pay off the bonds will just go into the general budget rather than the social security budget. If the government wants to fund social security in 2030 but is somehow unable to due to some national emergency, then it won’t matter whether the bonds exist or not - if the government can’t collect taxes then it’s a moot point what it wanted those taxes for.
Sorry, but you are wrong again. It isn’t a question of whether the surplus goes into the general fund. This happens by definition when the bonds are purchased. The revenue from the sale of the bonds is treated no differently than any other revenue stream.
You don’t see the difference between congress failing to fund something and congress repealing a law? Social ASecurity is not dependent on congressional funding (for the time being)
And I maintain that you are wrong.
Wait a minute, did’t you say taht my 401K has an asset? Doesn’t the social security fund similarly have an asset? Sure from the holistic point of view, its a wash but taht fails to recognize that the taxes used to apy the social security bonds would be imposed anyways.
Going back to my somewhat imperfect 401K example, if my borrowing from my 401K didn’t change my overal level of borrowing at all, then I would have either borrowed money from my own 401K and repaid from future earnings or I wold have borrowed money from Citibank and repaid it from my future earnings. Unless you can make the case that absent the social secuirty trust fund, we would never have borrowed that money to begin with, your argument entirely fails.
I could concoct a plausible argument that there might be some marginally higher level of expenditures because of the ready access to the social secuirty money but its a fraction of the entire amount.
That would be the case for every holder of US treasuries. The social security trust fund is in no different position.
Social Security takes in a lot of money. They have to park it somewhere. So what they do is buy T bills. The theory is that Treasury Bills are the safest investment. They pay a small amount of interest.
Why is that a bad idea?
They didn’t “park” the money anywhere, gonzo - they spent it, and replaced it with a promise to collect taxes in the future to repay it with interest.
I’ve used this analogy before - if you send me $1000 this year, I will pay you $1200 next year, if you send me $1500 next year. Would you agree that you have an asset worth $1000 under such a system?
Think carefully before you answer, gonzo - it is nearly as complicated as the notion of paying interest on a mortgage, and I am not sure you ever mastered that one.
Investments held at end of month And here it is. You must read something other than right wing rags in the future. During Reagans rule they doubled the payroll tax to cover the upcoming baby boom. It is sunsetted. Social Security can not add to the deficit. they can not take tax money.Is this where I should toss in an insult, Shodan? It seems to be how right wingers, devoid of manners comport themselves.I suppose righties think that adds to their arguments. They are not too bright.
As Shodan said, the money wasn’t parked or saved or invested. It was spent.
The government collected $1,000,000,000 on social security taxes and spent $800,000,000 on social security (again these are hypothetical figures). The Social Security Administration transferred the remaining $200,000,000 to the Treasury Department and the Treasury Department spent it on something like a new aircraft carrier. And the Treasury Department gave the Social Security Administration a promise in writing that it would collect $300,000,000 in taxes in 2030 and give it to the Social Security Administration.
That’s what happened. Again, there was no money set aside or invested.
What exactly did you intend to prove with this cite, if anything?
I won’t trouble to repeat what Little Nemo has posted. I will repeat my offer, though.
If you send me $1000 this year, I will send you $1200 next year if you send me $1500 next year. Do you think that such a system constitutes a $1200 asset?
You don’t typically use citations, so I am thankful that you are taking baby steps here. Too bad you didn’t slide over to the FAQ’s of the SSA website, or you would have found this gem:
) is to compose mathematical puzzles. The ones I do are different from (and much more difficult than) the 
Leave it on-budget or off-budget as you wish; either way you get a meaningful answer if you’re consistent. Just please don’t do what Little Nemo does: putting SocSec revenues off-budget and payouts on-budget within the same paragraph hoping to confuse someone with an accounting riddle.