I don’t think that would pass muster with the 5th, 6th, 8th, or 14th amendments to the constitution.
No its not. not in the way that you mean. The SSTF is part of the government in the same way that the federal employee pension fund is part of the government.
The government hasn’t dipped into the SSTF at all. They have borrowed money from the SSTF but the SSTF still has those government bonds. And those government bonds have value.
At this point we have all established that those SSTF bonds have value so the OP has been answered and now you are just quibbling as to why it doesn’t matter that those bonds have value because some of the people being paid by those bonds are also the people who are paying taxes to pay those bonds. Its silly.
If your point is that all they are doing is funding their obligation to SS beneficiaries with IOU’s so there is no balance sheet impact then you are addressing a question that noone has asked.
If the question is: do the bonds held by the SSTF change the federal government’s balance sheet, then the answer is no. No more than a company funding its self administered pension fund with its own debt.
If the question is: does the SSTF hold anything of value then the answer is yes
If the question is: does holding bonds make any sort of difference at all, then I defer to ravenman’s earlier post on the matter.
Jeeezus Christ. It takes a fucking act of congress for that to happen.
By that logic, the government could do just about anything.
Are you under the impression that the people who are paying taxes are exactly the same people who are receiving benefits?
You are assuming change in law. We could just as easily assume that Shodan 1 has legislative authority to get rid of the pension obligation altogether.
Its silly to look at the fact that laws can be changed and act as if they are changed.
Now you’re quibbling. The point is that if you are arguing that congress could use its legislative power to change the law when you are arguing about the current state of the law then you are making a bad argument.
Yes. And as I have stated over and over again, the bonds in the trust fund are assets because of the 14th Amendment.
Boy, you walked right into that one. I really didn’t think it would happen, but it did.
The government can legalize all drugs, change the age of consent to 12, and mandate that Lady Chatterley’s Lover be read in all 9th grade classes also. Ain’t going to happen.
Remember what happened to Bush when he tried to change Social Security at the height of his popularity?:
Now not reforming Social Security in order to keep it solvent longer is much more of a threat. But that is partially because of disinformation like this.
My 401K has some government bonds. The government has spent the proceeds of those bonds. Has the government dipped into my 401K?
The distinction here is that the federal government is simultaneously the trustor, the trustee, and the beneficiary of the SSTF.
Yes it is. Help yourself to a clue from petty cash.
If the SSTF isn’t part of the government, then it isn’t covered by the 14th Amendment and therefore has no value according to Ravenman’s definition. If it is covered by the 14th Amendment then it is part of the government because that’s what the 14th Amendment says.
Regards,
Shodan
Loaning money to someone else is different from borrowing money from yourself.
If you spend some of your own 401(k) then yes, you have dipped into your 401(k).
Regards,
Shodan
To you, personally, they do. If it’s trillions of dollars owed to hundreds of millions of people, absolutely not. It’s a promise to tax ourselves trillions of dollars. Nobody with any sense would call that valuable.
If the only way to pay for social security in the future is taxation to pay off bonds, how is that any different than taxation to pay for benefits directly? It isn’t any different. There has been no net savings. Nothing was put away. If we want to keep paying for social security we need to tax ourselves.
Not if you buy a $1000 bond. If you’re talking about an entitlement virtually all Americans get after a certain age, that costs trillions of dollars, then of course it extinguishes the distinction. If you can’t see that there’s definitely nothing else to be said. It’s crystal clear.
I take offense that you say I don’t have any sense. For that matter, you’re saying that anyone who reads the 14th Amendment and understands that the full faith and credit of the United States is guaranteed has no sense. It’s hard to say that people who read and understand the law have no sense on what the law means.
There is a difference, because the Social Security system uses a source of revenue that is entirely dedicated to paying for the benefits guaranteed by the system. Because of that, we know if the Social Security system is solvent or not, or for how long it is solvent. That’s because we know how much in taxes we have collected for the system, and roughly how much must be paid out in future years, and can judge whether the entitlement is paying for itself.
There is no concept of solvency for the vast majority of other government programs. If you asked for how long the Army is solvent, it is a nonsense question because the Army isn’t expected to pay for itself; while the Social Security system is. I view the self-financing aspect of Social Security to be a very good thing, and that simply cannot be accomplished without a trust fund. Same thing applies to civil service retirement and the use of the gas tax for highway improvements: if funds are collected for a particular purpose, we should know the financial health of those commitments, and the only practical way to do that is with a trust fund.
So we’re legally obligated to pay it. What does that have to do with whether the trust fund caused any actual savings? Being obligated to pay for something shouldn’t be anyone’s idea of a valuable trust fund.
But the only way to pay back the trust fund is by injecting another another source of revenue into social security, via paying off those bonds. It’s not clarifying anything, it’s obfuscating.
It’s not like we couldn’t have used the trillions of dollars in social security surplus to increase the country’s overall savings. We just, in reality, didn’t do that. Now when the surplus is gone completely and the trust fund begins tapping into its trust fund the only way we can pay it is by taxing ourselves more, albeit via some means other than the payroll tax.
If the U.S. government is legally obligated to repay the bonds, that makes the bonds a valuable asset. And since the trust fund is filled with a valuable asset, the trust fund is valuable.
[qyite]But the only way to pay back the trust fund is by injecting another another source of revenue into social security, via paying off those bonds. It’s not clarifying anything, it’s obfuscating.
[/quote]
You know what would have happened if Social Security surpluses were not converted into bonds? The Treasury would have sold more bonds to the public in the exact same amounts as were sold to the trust fund.
And since we can count up the value of the bonds in the trust fund, we know exactly how much money is in there. To the penny. That’s the exact opposite of obfuscation.
What are you talking about, “increasing the country’s overall savings?” What are you suggesting should have been done with FICA revenues that weren’t used immediately to pay benefits?
No it doesn’t.
The only value is in a commitment to tax ourselves at least that much money to the penny, plus interest. That taxation won’t be payroll tax. Every single penny we tax ourselves to pay off the trust fund and ultimately to pay social security benefits will not look like it’s a payroll tax. That’s pretty damn obfuscated. It’s the exact opposite of clarity.
National savings is a concept usually introduced in an introductory economics course. You can probably look it up on the Internet if you’re not familar with it.
Here’s a research report I linked to earlier by the National Bureau of Economic Research that looked at whether trust funds have a positive or negative effect on national savings: Has the Unified Budget Undermined the Federal Government Trust Funds? | NBER
It might be a little hard for you to follow but it’s really on point.
I was really just trying to figure out if you preferred that the Social Security system hold vast amounts of cash for the better part of a century (or more). If you’d like to answer the question, I’m still interested in the answer.
Of course not. Why would you even think that?
At the heart of it they are borrowing money from Social Security tax payers, who are putting money into the system. Where else do you think the money to buy the bonds comes from? If the SSTF was generating bonds out of nowhere, you’d have a point, but they are using money coming in to buy the bonds. (And rolling over bonds that have come due, not doubt, but we can neglect this.)
I’ve given several examples, all of which you’ve ignored.
If I purchase long term bonds for my 401K, and the issuers of those bonds for some arcane reason take the money and buy short term T-bills, it is the same thing as the SSTF purchasing bonds.
What if instead you had a self-directed 401(k) and you invested the money in a commercial note with a private company you personally owned? Nevermind the fact that you can’t actually do that.
As CEO, you directed the money be spent to repave the parking lot, repair the roof, and redo a product display. The company is obligated to pay back the note with interest, which it’s fine with doing because it trusts its ability to be a productive profitable business, and having a dry store and nice parking lot should help.
Now taking your CEO hat off, as the owner of the business and owner of the 401(k), do you still have any “money” in your note? Or did you spend it all and are now counting on your ability to make enough money in the future to pay it off?
The person in that hypothetical probably (hopefully) sincerely believes he’s going to be a successful business man and pay his 401(k) back, but if he thinks he didn’t actually spend the money he’s deluded.