Or it could cut spending in order to remain good on the debts it made, no matter to whom or what. Or or or. There is no real mystery how a government can reduce its outlays here.
This is pure semantics. The government owes itself money. It is spending irresponsibly and has been for some time. After just hooting and hollering about how great it is to make people more responsible for the debt they incur (see bankruptcy thread), now you’re undergoing Humpty Dumpty-styled semantic contortions to avoid responsibility for debt. Insane. Yes, something will have to change to repay the debt. So repay it. This is not some mysterious hidden flaw in the system. You borrow surplus funds, you pay them back.
It’s hilarious that Bush is now pushing the “no trust fund” meme, considering he owns several million dollars worth of U.S. Treasury bonds. Or rather, it would be hilarious if it weren’t so sad.
Note that if SSS had invested in private bonds instead of government bonds, the problem of losing a buyer would still be there, and even bigger, since the market cannot absorb the loss of a buyer as easily as the government. Yet another argument against privatization.
In addition, the problem of benefit cuts of tax increases will hit in 2042 anyhow. If we want to prevent that, we need to do something now, which would also reduce the problem(?) of SSS selling bonds. But we can also ask if it makes sense for SS to maintain an ever-increasing surplus. Even if went to a break even point, for a static situation, there would be no seller but also no buyer of debt.
The real problem is that the Bush tax cuts made the deficit so large that I’m not surprised they’re worried about being able to finance it. The runaway Bush spending hasn’t helped either. If we had maintained the Clinton surplus, or at least had a smaller deficit, this would not be a big issue. The elephant in the parlor here is that raising taxes to the level of the late '90s (despite the massive recession that high level of taxation caused then :rolleyes: ) would fix a lot of the problem. But they’d rather screw over a working system than raise taxes on their buddies.
BTW, I wonder if any conservatives with a fat trust fund from their daddies made up of T-bills would diss them quite so much as their dissing the SS fund. I doubt they’d suddenly consider themselves poor since their portfolio consists only of IOUs.
Huh? I’ve endorsed none of what I laid out as a good idea. I’m merely explaining the options which are available to future Congresses and Presidents.
Of course you do. But as I stated, no one wants the funds paid back on the current amortization schedule, including Social Security – they don’t need or want the money now or when the current package of securities is scheduled to mature. Among the powers Congress and the President have is to fiddle with benefits and to adjust the amortization schedule in such a way that for all practical purposes the debt is permanent. And a debt which never monetizes is essentially worthless.
Let me try it another way. The characterization by Nancy Reid and Henry Pelosi is false. The President is not suggesting defaulting on the debt. He’s merely pointing out, correctly, that the debt is an internal accounting tool and can be manipulated any number of ways such that it’s meaningless to call it a “trust fund” in the sense of how real trust funds are configured. That wasn’t the intent, I’m sure, of the panel and the bipartisan Congress which did the 1983 fix with President Reagan, but of course it’s an inevitable consequence of the government’s inability to bind itself without a Constitutional amendment (which no one wants in this case).
So. The trust fund? Both sides of the question (and there are people on each side from either side of the traditional aisle) are “correct”. There is, legally, something which is called a trust fund. It contains interest-bearing securities backed by the full faith and credit of the US government, which will not default on them. So that side is “correct.” But there are so many non-default ways to fiddle with the assets of the trust and with the liabilities it will have to meet that it is meaningless to call it a trust fund in the usual sense of the term and equally meaningless to call its assets bonds in the same sense that an IOU to a non-affiliated buyer is a bond. So that side is also “correct.”
I think many people are deliberately confusing the parts of the program. Those who dishonestly call Social Security a Ponzi Scheme stress that much of the current income is directly going to pay benefits. That part is nothing like a trust fund. But the surplus is. Trust funds can have restrictions on them. My family trust has language in it restricting payout to my kids - they don’t get the whole thing when we die. I could easily have the adminstrator of the trust modify it based on the economy. If I owned a family business, and the trust was in it, I might have language restricting payout depending on cash flow, stock price, whatever. True, it probably wouldn’t be as arbitrary as what Congress could do.
Some of the current proposals do cut benefits. Discussing things in those terns would seem a lot more honest than waving around “IOUs” - but as we all know, the intention is to cast the decision as a lose all your benefits which are backed by these suspicious IOUs vs. lose some of them.
Anyhoo, I don’t think that fidiling around with the trust is as easy as manny suggests. True congress could severely cut benefits or raise payroll taxes instead, but as we’ve seen, the US population is pretty hostile to either of these options, while raising taxes/cutting spending to pay back the deficit is no where near as controversial.
Also, the fund was created to be spent during the decades between the time when the baby boomers retire and the time that they die off. Having a large, self perpetuating fund that lasts 300 years and doesn’t do us any good is kind of silly, which I think is another reason that it will be paid off by the general fund.
Finally, anyone who tries to change SS will need cash to do so, and the SS fund is a big chunk of change earmarked for keeping SS solvent, so it will be in Bush’s interest to factor in a fund that will be paid back in full in whatever SS plan that he ends up offering (presuming he offers an actual plan at some point). The numbers will look a lot better if he has an extra 3 trillion in cash coming into the system.
I really think this is a straw man. I doubt that there is a large number of people who think that their individual contributions go into an individual trust and if they do, so what? In fact, your contributions are kept account of and your eventual payback is computed based on those contributions and that payback is backed by the full faith and credit of the US. If that isn’t equivalent to an individual trust fund I don’t know what is.
There is nothing new in this argument. In fact in my OP I wrote, "GW said that the US bonds owned by the Social Security Administration are really just IOU’s. Speaking to an audience of supporters (is there any other kind of audience that GW will address?) he said, “There is no trust fund. Just IOUs that I saw first-hand, that future generations will pay … either in higher taxes or reduced benefits or cuts to other critical government programs.”
"This, from a President who is selling bonds hand over fist to pay for current Federal deficits. Those bonds will also have to be repaid, or refinanced and the interest on thim will untimately result ‘either in higher taxes or reduced benefits or cuts to other critical government programs’ unless deficits are somehow reduced. Or else, perhaps, the economic surge from the famous tax cuts finally kick in and let us “grow our way out of the deficits.”
I simply can’t imagine the President of the US going before of bunch of international bankers who hold millions, or billions, in US government bonds and saying, “I was just down and saw your so-called investment which is nothing but a bunch of IOU’s.” Well, come to think of it, maybe I could imagine this President doing so.
I quoted GW in the OP and linked to the LA Times story in my second post. This is an ad hominum argument about Reid and Pelosi. The real gist of the matter is in their statements. Do you or do you not agree that the President shouldn’t be bad mouthing the ability and the willingness of the US government to honor its obligations?
That’s it? That’s casting doubts on US bonds? I don’t see it. All he is saying is that the bonds will have to be paid, and that money will have to be raised for that purpose. Is that incorrect?
Nope. It’s not ad hominem to note that they represent the other party and are likely to have a partisan reason for what they are doing. Their statements, in as much as you quoted them, offer no proof of their assertion.
Not the willingness, just the necessity. In fact, if he really thought we could default, then that would counter his argument. In point of fact, we cannot default. So, to answer you question: I don’t accept your premise that he is badmouthing the willingness of the US gov’t to pay. To the extent that he is “badmouthing” the ability (I’d say “pointing out the difficulty”), then no I do not agree.
All US bonds have to be redeemed sooner or later and we are selling them now at the rate of 300 billion/year. Social Security bonds won’t have to be redeemed until some time about 12 to 15 years from now (The date keeps changing and so far has kept moving further into the future). Which is the more urgent problem?
Yes in that it goes after the people and not their argument.
I think calling US bonds “just IOU’s” a long way from a strong endorsement of their value.
I agree that Social Security will need adjustments in the future. I think it’s a rather frar from urgent and would rather the fix be delayed until someone who isn’t trying to kill it comes along.
They didn’t have an argument, just an unsupported opinion. Which is exactly what you’d expect from a partisan. I don’t mean to imply that they’re doing anything the Republicans wouldn’t do also. Both parties participate in partisan sniping. I can’t see any reason to see this as anything else.
And GW’s statement that the Social Security bonds are “just IOU’s” is a cogent argument? You can spiel all you want that he was just explaining that bonds have to be redeemed. However, unless he was trying to denigrate the Social Security bonds why did he dismiss them as “just IOU’s?” He is a con man all the way.
I just can’t understand the support for this man. He went to war in Iraq based on phantom WMD and a faked connection to Al Qaeda. He sold a Medicare Drug program on the basis of fake estimates of cost as X dollars and the latest estimates are in the neighborhood of 2X. He proposes a plan to save Social Security based on taking money out of the system and replacing it now with borrowing estimated in the high hundreds of billions if not trillions. And allowing private investments vice Social Security deductions does not in any way address the underfunding problem that will begin in an estimated 15 years and not become dire before 35 years or so.
He’s for God and guns and against gays, of course. And, so far as we know, any blowjobs he’s received have been in the confines of the marital bedroom with his lawful and heterosexual spouse.
If they - social security bonds are “just IOU’s”, then so are treasury bonds, savings bonds, and all the other things. Does “just IOU’s” mean he plans to not pay up when they mature or come due? Is he saying they aren’t worth the paper they are printed on? Just what is he saying? Maybe Vito, Guido, Big Bruno and Benny da Fish should explain to him the risks of not paying yout debts (snap crunch pow). Hell, if they are so worthless, why keep “selling” them?
It is amusing to watch the ads on TV too. They are slamming the Democrats for not coming up with a plan to “do something” Do what? Where is the Republican plan, other than to do away with Social Security? Why do anything? Why is it such an earth shaking emergency all of a sudden? An “imminent disaster” is hinted, but not a single damn fact at all is brought up in the ads. Just like all the “them godless hatin’ towel headed devils is gonn git us” nonsense of the recent past.
I’m a pretty fair bullshit artist. I think I can recognize the smell of other people’s bullshit too.