I suppose then you’ll have no problem finding six quotes from the past wherein China says: “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option”
Or
"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,”
I guess these six times in the past also coincide with a downgrade to the rating of the US from AAA to AA plus, so it’s just the same old news all over again. Have I got that right?
Your flaw is that, just like debt incurred from borrowing from China, that money has to be paid back at some point. When that debt comes due, just like when our other debts come due, it must be paid. But the money is not there anymore…it has been spent. So, that money was borrowed and a debt was incurred. Whether that debt is to China or to our own trust fund the result is identical. This is the equivalent of getting a paycheck but putting all your expenses on a credit card and calling your paycheck a surplus.
The difference is that when we borrow from China, we’re borrowing from Chinese revenue streams. The money borrowed isn’t income for us, its debt. When we borrow from SS, we’re borrowing from one gov’t revenue stream and putting it in another account. The money was still part of gov’t revenues, people paid payroll taxes, it just went to the General Fund instead of the SS payouts for that year. In the future, the General Fund has an obligation to reverse this and pay into the SS fund, but in that case, again, the money that people pay in income tax but that in turn is used to pay for SS will still be gov’t revenue. It won’t go to some third party.
My wife and I put open seperate accounts to put our pay-checks, and agree that I pay our utilities and she pays the rent. The first month there’s a big connection fee for starting the utilities so I come up short, so I take the money out of her account to make up the difference, and tell her I’ll put the money back after my next paycheck. Our family isn’t “in debt”, our total revenues from our paychecks still exceeded our outlays for paying rent/utilites. We’re still running a “surplus”, even if we now have some “intrafamilial debt”
Again, this is just arithmetic. My previous example (post #59) had a case where revenue exceeded outlays, but the total debt increased. You claim this is impossible. But then there must be a mistake with my example. So where exactly is that mistake? Address the example specifically, where did I screw up my math, because to me it appears that what you claim is impossible is in fact pretty easy to do.
The third party is the retired person who is collecting social security. Any surplus the SS fund has is converted into government securities. When the fund can no longer pay out it will need to cash in those securities. Unless the government is running a surplus in the general fund it will have to borrow money from China to repay that debt. So, in the long run, intragovernmental debt becomes sovereign debt. Just like money owed to China the income will have to come from taxpayers. Hence, it is very much a real debt.
Your example is flawed. A better example is that your wife pays the rent and any additional money in her account is transferred to your account. You give her an IOU for the borrowed amount. She fully expects to be paid back so, on her books, she claims that the IOUs are money. You, on the other hand, claim that you are running a surplus because your wife’s money is now in your account.
Of course it is impossible. As I have explained, the flaw in your logic is that you actually consider intragovernmental debt and public debt to be two separate things. If you add them together you get the national debt. In your example, the general fund now owes the SS fund 200 billion yet pays down 100 billion of public debt. In your mind the 200 billion owed back to the SS fund doesn’t count, but the 100 billion paid to reduce public debt does count. I think you are twisting yourself like a pretzel to find a surplus when it is clear from the national debt figures that the exact opposite is true.
It makes a solution theoretically possible. Instead of the Obama strategy of pretending that people who hate you and want you to fail at any cost have some sort of interest in compromise or in the nation’s welfare. The first step to solving the problem is acknowledging that the Republicans are a central part of it. Any solution is going to require working around or overcoming the Republicans; if the rest of us won’t or can’t do so, then there’s no solution at all and we’re all screwed. We’ll just have to watch as they drive the country to economic disaster.
You could make that point for pretty much any future obligation of the government. Even if the SS fund didn’t exist, we’d still need to meet future SS obligations with future tax revenue or borrowing. Deciding that 1999 is they year we’re going to count some fraction of that as “debt” is silly, it will be debt when and if we need to borrow to actually raise the money to pay for Social Security (or whatever other program).
But in anycase, thats tangential to my main point, which is that revenues exceeded outlays in 1999.
But again, the point of my example is that while I may be in debt, our family revenues exceeded our outlays. Our total family debt remained zero.
But again, the revenues exceed outlays. We can debate what “counts”, but my point is just the arithmetic. It is possible for revenues exceed outlays and yet for the total debt to increase, as my example shows.
Correct me if I’m wrong but I think you are trying to say that revenues exceeded outlays. The general fund ran a deficit and SS as well as other trust funds ran a surplus. The surplus from the trust funds was transferred to the general fund and spent.
If this money borrowed from the trust funds was all being used to pay down public debt we would call that a balanced budget. The intragovernmental debt increase was greater than the public debt decrease. So, the money was spent elsewhere. Combine this with the fact that the national debt increased and there is no credible way you can claim a surplus existed. This is an accounting gimmick created by moving money around.
Note that this is not a criticism of the Clinton administration. The government has been doing this for quite some time in order to hide the true cost of government. There is no question that the years we are arguing about are the closest we’ve come to a balanced budget in recent history.
So, pointing out there are more fundamental underlying problems that need fixing is valueless unless I include a detailed plan that fixes all the county’s woes based on that? :rolleyes:
Well, yes, as a plan to address the needs of Federal entitlement programs in order to help eradicate the debt problem, it’s virtually valueless. Don’t change how you framed your response. I commented on the lack of a strategy and you asserted you had provided one. You are now acting as if you just made an offhand comment about fundamentals.
No biggie–no one has these details as far as I can discern. So I reiterate:
“Reduce unemployment and fix healthcare” isn’t a terribly helpful answer to this. It’s one notch better than saying, “we’ll fix the economy and then the tax base will grow.” Um, okay.
So you agree then that revenues exceeded outlays? I stress it over and over again because again, I think thats pretty much what most people would define as a “surplus”. Regardless of intragovernmental debt, if you totaled up all the money the gov’t collected in 1999 in taxes and subtracted all the money the gov’t spent, you end up with a positive number.
We are debating what counts, that’s the point. Social Security is a seperate, self contained, self-sufficient system which has nothing to do with the general fund. When we’re discussing how well the government balances the budget, SS has no part in that. So SS should be considered a third party when discussing money that is borrowed from the fund.
But in any case, Clinton did a great job reducing the defecit to almost nothing. His last year in office, the deficit was only around $26 billion, which rounds to 0 when you measure it in 100s of billions.
But in anycase, if SS is a third party, then if SS runs a deficit, are those not “real” government deficits? Cause if we can do that, and the same applies to Medicare (whcih also has a dedicated tax and a Trust Fund) then you just “solved” the longterm deficit problem. Hooray!
But otherwise, it seems silly to say that SS surpluses don’t “count” in the governments favor, but SS deficits count against it.
SS deficits don’t count either. When it starts running a deficit, SS will cash in those IOUs it’s been giving the general fund all these years. It will always be a seperate system from the general fund.
When the fund runs out, will it still be separate? Much of projected future deficits come from Medicare running out its trust fund and then being obligated to spend far in excess to what its pay-roll tax takes in a few years. If you say those deficits aren’t “real” gov’t deficits, then the US is in pretty good financial shape.
I actually think the idea of giving safety net programs dedicated taxes and funding sources is a good one. But pretending that they’re then somehow not government programs and shouldn’t be counted in government revenue/expenditures is silly, and leads to obviously false conclusions.
When the alternative being given here is “cut spending” (which I note is thin on details as well…what spending and how much?) is given it is fine to point out that such an approach does not address the underlying problems. The real fix is to sort out the jobs problem and to reign in spiraling medical costs.
There is nothing wrong with pointing that out and a detailed plan for doing it is not necessary to make that observation.
Nor do I think this thread is the place for laying out a detailed plan. No question such a fix is not easy and certainly the best way to go about it is highly debatable. If you want to start another thread that explores such details then go for it.
The general fund ran a deficit and SS as well as other trust funds ran a surplus. The surplus from the trust funds was transferred to the general fund and spent.