Once again, I asked what you proposed to do with the surpluses. I’m not sure why that question causes such an emotional reaction.
I told you we should have done but you didn’t seem to understand it, so I linked to a research paper by a respected non-partisan economics research group that explained it better. I have no idea why you’re talking about cash all of a sudden.
To recap - The excess payroll tax should have been used to increase national saving, but it wasn’t.
For the fourth time, HOW???
To put a finer point on it: there’s a $1 surplus in FICA collections this year. What happens to that dollar? Where does it go? Who gets it? What is done with it?
I have to ask these specific questions because you are not being specific in your answers, and the conclusion of the paper you linked to (pg 18-19) doesn’t have a policy prescription beyond “we should have balanced the budget years ago.”
(And as an aside, it also concludes: “There is considerable debate as to whether the crisis in the financing of Social Security occurs in roughly 2017 when payroll tax receipts are insufficient to finance benefits or in the 2040s when the Social Security trust funds are projected to be exhausted. From the perspective of Social Security, the trust fund does represent real claims on the rest of the government. Thus, the presence of the trust fund may prolong the life of Social Security beyond the date at which tax receipts fall short of benefits payments.” Which is a more staid and boring way of saying what I’ve said many times in this thread, and some vehemently deny.)
Oh, wait, I think I found the policy prescription you are dancing around. It is on page 17: "To the extent that the resulting trust funds surpluses are used to finance income or other tax cuts, which disproportionately affect non-liquidity higher-income individuals, they will tend to raise personal saving. "
You want to use the surpluses in the trust fund to cut income tax rates for high earners, which will result in more personal savings.
Is this what your suggestion is? I can see why that’s an embarrassing thing to say out loud: that Social Security collections should be used to cut taxes on the rich.
People are prone to saying, “If we didn’t borrow the money from the trust fund, we would have just borrowed exactly the same amount from China or someone else.” That’s not true. It’s possible and it’s very likely what would’ve happened but it’s not necessarily true.
We could have used those excess dollars to borrow less. There isn’t a simple answer for how exactly to do that. Instead of treating that excess money each year as extra income we get to spend, treat it as a way to avoid borrowing money we would’ve had to from other sources. Being financially responsible doesn’t have a flashy simple answer. Spend less? Raise taxes in 1980 instead of putting it off until 2040? All good options.
That paper I linked to suggests it could be as simple as accounting for it differently, which I think is unrealistically simplistic. In reality, we’re not very good at being financially responsible and making difficult decisions. But the fact that it would’ve been difficult and complicated doesn’t mean it wasn’t possible.
On the other hand, what’s not complicated is the reality that we did not increase our national savings. A thread about how we could go back several decades and use our excess FICA revenue more prudently would be interesting, but that’s not the topic of this thread. According to that paper I linked to and many others, every dollar saved in the trust fund resulted in nearly an extra dollar in the federal deficit. So the short answer to “is there money in the trust fund” is, nope, not in any meaningful sense.
It’s a more staid and boring way of saying what everyone is saying. The trust fund may help politically in keeping social security going for a while longer, but that doesn’t mean there’s “money” in it. It just means you and I probably will have to pay higher taxes to keep it solvent.
No that’s got nothing to do with it.
Unless they buy the T-bills from themselves, no it isn’t.
Regards,
Shodan
So, am I supposed to keep guessing what you’re driving at?
In another question, why did you say we should increase national savings, then link to a paper that says we could increase national savings by cutting taxes on the rich? That’s a pretty fast back-pedal.
The paper says that a unified budget leads to trust funds increasing federal deficit spending. I answered your other question yet again in post 245.
And so you plop a 25 page pile of crap in front of me and expect me to read it and also determine which parts of the paper you agree with and which parts you disagree with? That’s incredibly lazy debating. Not to mention that what you just wrote here still doesn’t answer the question I’ve asked you six times.
I thought you would have read the abstract. Or even the title, which is “Has the Unified Budget Undermined the Federal Government Trust Funds?”
I answered you 6 times. I’m really sorry for how obnoxious this must sound but you don’t seem to have any idea what you’re talking about. Why you thought a paper called “Has the Unified Budget Undermined the Federal Government Trust Funds?” is about lowering taxes for rich people instead of whether or not the unified budget has undermined trust funds is beyond me.
I asked, what would you do with additional FICA revenues, and your answers are, “Unified budgets undermine trust funds,” and “we should have borrowed less, but I’m not sure how.” Those aren’t real answers.
Real answers are things like, “We should buy bonds,” or “We should create private accounts,” or “We should send refund checks to taxpayers,” or “We should treat FICA like any other income tax,” or “We should gather all the money in a big pile and burn it.” Whether one agrees or disagrees, those are real answers – “increase national savings” is not.
It’s like asking what we should do about ISIS. “Invade Iraq” or “let them be” are responsive answers. “Defend our national security” isn’t.
ETA: And by the way, I’m not sure that the economists who wrote that paper understand that Social Security has been off-budget since 1990. There is not a unified budget today.
Both the issuers of the bonds I bought and the issuers of the bonds they bought are branches of government. Which branches obviously doesn’t matter.
So, how is it different?
Because the term “FICA revenues” are part of the same accounting fiction. If I get a gross pay of $1000, and a net pay of $814, then I know that $186 is missing from my paycheck. You can call $1 of it income tax and $185 FICA, or $2 Medicare; or $100 income tax, and $84 FICA, or whatever you want. The government has still taken $186 from me and promised to give me social security, medicare, and all other stuff.
Pretending that FICA is a separate revenue source is simply a matter of semantics. One done solely to support the idea that social security is different and cannot be touched. You acknowledged that several posts ago and stated that was one of the reasons that you liked this idea.
But ultimately total spending and total expenditures is what matters. Say my weekly paycheck is divided as such:
Rent $500
Food $100
Utilities $300
Liquor $100
At the end of the year, my wife complains that I have spent $5,200 on liquor and need to cut back. I reluctantly agree.
But next year, smarter me takes the same budget, but employs the FICA trick. At the end of every week my liquor trust fund buys bonds from the food trust fund. At the end of the week, it now looks like this:
Rent $500
Food $200 ($100 in food + $100 liability to liquor fund)
Utilities: $300
Liquor: $0 ($100 in liquor - $100 food bond asset)
At the end of the year when my wife complains about my liquor habit, I can point out to her that it is fully self funded and not costing us a cent. What we really need to do is to quit buying so much junk food.
See how my trick worked just like social security?*
*and don’t tell me it makes a difference because the government can print money. Pretend I can print money. I am still a devious bastard.
We could have 1) spent less money or 2) raised more tax revenue or 3) some combination of the two that resulted in a net savings.
I told you the first time you asked it was a simple economic concept. You can ask the same question a thousand times and it’s still going to be just as simple.
It’s also not relevant because we already didn’t save any money. All those excess revenue were spent as they were collected and there’s no “money” in the trust fund, just a $3 trillion IOU payable by present and future tax payers.
Yes, you have stated it over and over again. Yet your argument does not make logical sense, you have provided no support for it, and it has been refuted by multiple people in this thread and others. Repeating it does not make it any more factual. There’s nothing that supports your argument. And even if there were, the only thing that would change is that the treasury would have to go through the fiction of paying itself the proceeds of the bond.
We’re arguing whether or not the SSTF holds anything of real value. My entire argument is, and always has been, that the SSTF is an accounting fiction that the government can do away with at any point. You’re 6 pages late in making this odd argument.
No, it isn’t. Semantics basically means there’s no substantive difference between things, but they are portrayed differently; but FICA really is different than the income tax. It’s different in purpose, it’s different in application, it’s different in economic effect, it’s different in other respects as well. If you really want to insist that FICA is just like any other tax, then I put it to you that Ding Dongs are only semantically different from kale, in that they are both food.
It depends what you’re talking about. If you’re talking about deficits, sure. If you’re talking about the health of a government program that is supposed to run like an insurance program, no.
Well, no, it didn’t. If you held two different jobs and created two legally separated and incorporated entities, one of which was responsible for a long-term obligation (like maybe your mortgage or child’s college account), and created a legally binding regime in which that expense could only be satisfied by one of your jobs but not the other, that would be a fairly decent analogy.
This is utter nonsense. The literal text of the 14th Amendment is the thing that matters here.
Are the bonds in the SSTF authorized by law to be issued on the credit of the United States? Yes, Congress directed so. Therefore, that debt cannot be questioned. It’s as simple as that.
If you asked me if murder is illegal, and I posted the murder statute, you don’t get to say that the statute doesn’t make sense and that I must support the statute somehow. These are legal questions and the law is totally unambiguous. You may not like the law, but tough titties – I think daylight saving time is bullshit but I don’t try to argue that it doesn’t exist.
It isn’t an accounting fiction, it is the law. Law dictates reality on issues like this, because the law is authoritative and your opinion is not. It’s like saying the government can do away with the First Amendment: yes, it can, but that doesn’t mean that freedom of speech doesn’t exist. Is there a fallacy which describes thinking that argues, “If things were different, they would be different?” Well, that’s the tautology you’re embracing here.
Go ahead. Argue that the bonds should be worthless, in your view. But it is factually incorrect to argue that they are actually worthless.
How is the government the beneficiary of the SSTF. For that matter, how is it the grantor of the trust? All the money going into the trust is coming from beneficiaries (and their employers) and all the money coming out of the trust is going to beneficiaries. The government only seems to serve as the trustee. Does the government draw SS benefits? Or are you saying that because the trust is discharging the government’s obligations to pay social security benefits that this somehow makes them the beneficiaries of the trust?
WTH are you talking about? What does the status of the SSTF have to do with the validity of debt issued by the treasury? Why do you think that the SSTF is issuing debt? Or are you talking about some other part of the 14th amendment? I don’t think you know what you’re talking about and have just picked up some argument that seemed to make sense to you (and may have comported with your preconceived notions) when you heard it because you didn’t know enough to see the flaws in the argument.
The SSTF could very well be part of the government in the same way that a business trust is part of state street bank (the trustees of the business trust) it still doesn’t mean that the contents of that trust belong to state street bank no more than saying that the contents of the SSTF belongs to the government.
They’re not loaning money to themselves. I think you need to try to construct your argument without this assumption because it is wrong. The government does not own the contents of the trust and cannot reach in and take those bonds and make them go away (under current law).