Re: Understanding the Social Security scam
 

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The surplus is those contributions made in the past, that were not distributed as ssi benefits, and "loaned" to the general fund, plus the interest those surpluses have earned.

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This doesn't make sense. "Surplus" is assets greater than those needed to meet obligations. If I owe you $1,000 tomorrow, and I set aside $10 in my bank account today, I don't have $10 of "surplus", I have a $9,990 deficit.

Re: Understanding the Social Security scam
 

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The reason there is a surplus (I havent looked at the number for a while, 3 trillion sounds high) is because taxes + interest > benefit payments + expenses. Its that simple.

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Do you know the details of how the surplus is calculated? Is it the present value of all expected contributions plus the trust fund's current balance less the present value of all expected benefits and expenses? Does it take into account current Americans only or is it an open group projection with future births taken into account.

[/ QUOTE ]

The surplus is those contributions made in the past, that were not distributed as ssi benefits, and "loaned" to the general fund, plus the interest those surpluses have earned.

When I was doing research on ssi, berkley college had a website, which is now down, that showed all these calculations, and showed that by 2017 (I believe) ssi taxes would not be greater than than the ssi benefits that would need to be paid out.

Therefore, congress is going to have to start paying back the 3 trillion each year, to make up the difference.

That's a big difference between being able to tap a surplus of 300b to feed the deficit and now (in 2017) come up with 100b (or whatever it may be) to pay back.

Based on berkley's calculation, the 3 trillion surplus will be used up by 2038 I believe.

In any event, congress has no way to pay back the money, without cutting the general budget or raising taxes.

If you ck one of my earlier posts in this thread, you will find the link that verifies the surplus is in excess of 3 trillion.

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You dont need a Berkeley study, the trust fund actuarial studies are online at ssa.gov and the numbers you cited are consistent with the intermediate assumption projection.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
The surplus is those contributions made in the past, that were not distributed as ssi benefits, and "loaned" to the general fund, plus the interest those surpluses have earned.

[/ QUOTE ]

This doesn't make sense. "Surplus" is assets greater than those needed to meet obligations. If I owe you $1,000 tomorrow, and I set aside $10 in my bank account today, I don't have $10 of "surplus", I have a $9,990 deficit.

[/ QUOTE ]

First, be careful using "SSI", that is not Social Security it is a different program and has never run a surplus.

Re the surplus I think there is just confusion about the accumulated surplus (a prior cash flow calculation which is clearly positive) and an actuarial surplus (deficit) which takes into account future anticipated benefits vs future contributions plus current trust fund balance (which is a surplus under some assumptions and a deficit under others).

Re: Understanding the Social Security scam
 

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Nothing is "given" to the general fund. Treasuries are SOLD to SSA. The proceeds from the sale pay the deficit like any other borrowing pays the deficit.

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For anyone who is being misled by this, ask yourself: If you buy a bond from yourself, have you done anything?

The next time you want to spend a big chunk of money, write the amount down on a piece of paper first and call it a "bond". Then start making payments to yourself later to pay off the bond, and tell yourself you are doing anything more than playing around with some numbers that are irrelevent to your actual financial position.

That's the social security trust fund.

natedogg

Regarding the wage tax
 

If you believe that it is moral to have a graduated income tax (as I do), then it becomes obvious that the Social Security wage tax should be eliminated and income taxes increased to cover the amount necessary to fund SSA. (ignoring the issue of whether the SSA should exist)

If this needs further explaining I can provide it but it should be pretty obvious.

natedogg

Re: Understanding the Social Security scam
 

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[ QUOTE ]
Nothing is "given" to the general fund. Treasuries are SOLD to SSA. The proceeds from the sale pay the deficit like any other borrowing pays the deficit.

[/ QUOTE ]

For anyone who is being misled by this, ask yourself: If you buy a bond from yourself, have you done anything?

The next time you want to spend a big chunk of money, write the amount down on a piece of paper first and call it a "bond". Then start making payments to yourself later to pay off the bond, and tell yourself you are doing anything more than playing around with some numbers that are irrelevent to your actual financial position.

That's the social security trust fund.

natedogg

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Even if you think its appropriate to treat all government agencies as one big agency, your criticism still is only valid as a criticism of the spending. If the spending is justified (eg if you must have a new car to be able to produce an income) then you have two choices for that spending, reduce your assets or increase your liabilities. There is no difference on an accounting basis.

Buy that car from your savings ("borrow from your savings account", and pay your savings back with the cash flow that isnt tied up in repaying a finance company. Is that playing with numbers? No, its either a prudent or imprudent financial decision depending on your circumstances.

If you don't like the government to have the alternative of deficit financing then stop the spending, because even if borrowing from another agency = borrowing from themselves, its still a spending problem, not a financing problem and doesnt have a damn thing to do with Social Security.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Nothing is "given" to the general fund. Treasuries are SOLD to SSA. The proceeds from the sale pay the deficit like any other borrowing pays the deficit.

[/ QUOTE ]

For anyone who is being misled by this, ask yourself: If you buy a bond from yourself, have you done anything?

The next time you want to spend a big chunk of money, write the amount down on a piece of paper first and call it a "bond". Then start making payments to yourself later to pay off the bond, and tell yourself you are doing anything more than playing around with some numbers that are irrelevent to your actual financial position.

That's the social security trust fund.

natedogg

[/ QUOTE ]

Even if you think its appropriate to treat all government agencies as one big agency, your criticism still is only valid as a criticism of the spending. If the spending is justified (eg if you must have a new car to be able to produce an income) then you have two choices for that spending, reduce your assets or increase your liabilities. There is no difference on an accounting basis.

Buy that car from your savings ("borrow from your savings account", and pay your savings back with the cash flow that isnt tied up in repaying a finance company. Is that playing with numbers? No, its either a prudent or imprudent financial decision depending on your circumstances.

If you don't like the government to have the alternative of deficit financing then stop the spending, because even if borrowing from another agency = borrowing from themselves, its still a spending problem, not a financing problem and doesnt have a damn thing to do with Social Security.

[/ QUOTE ]

That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

Yet again, I must challenge you to actually articulate what it is you think Social Security's goals should be, what it should accomplish.

I understand that you might be confused about the trust fund because it's very easy to get confused about this, and that is part of the scam.

The issue is not deficit spending. It is that your Social Security Tax is just another tax and not in any way bound to your benefit. It is a just tax like any other, and your benefit is just an expenditure like any other, which you keep trying to refute but haven't. And this undermines much of what Social Security pretends to be, and serves to justify an onerous tax on the working class, which you have also failed to refute as you go off on tangents.

Try imagining that the "Social Security Tax" was to be renamed "Paying for the war" tax. All the money collected goes into the same communal general fund and all the allocations by congress are the same. And Social Security benefits remain unchanged, not to mention your (lack of any) right to the benefits.

Do you understand now?

natedogg

Re: Understanding the Social Security scam
 

[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

Thanks for the info about the nature of the debt owed to the trust fund. My main point though, after thinking about this some, is that given all the possible things that could be done with the trust fund, the safest and most prudent course would be to lend the money out to the borrower with a minimal amount of default risk. That borrower happens to be the Unitied States government. Hoarding cash is a dumb idea, lending it to less credit worthy borrowers is about as dumb, many problems with putting it in stock market(s), lending the money to the Eurozone doesn't seem like a good alternative, etc.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

Re: Understanding the Social Security scam
 

[ QUOTE ]
How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]


It's different because your fun money account isn't pledged as collateral to a 3rd party.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]

Ok what should happen to the surplus going into the trust fund? I don't think hoarding cash is a good idea. Any others?

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]

Ok what should happen to the surplus going into the trust fund? I don't think hoarding cash is a good idea. Any others?

[/ QUOTE ]

How about giving it back to the people you stole it from in the first place??

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]

Ok what should happen to the surplus going into the trust fund? I don't think hoarding cash is a good idea. Any others?

[/ QUOTE ]

How about giving it back to the people you stole it from in the first place??

[/ QUOTE ]

Doing away with SS is an alternative but not likely to happen anytime soon. Is that all you've got?

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]

Ok what should happen to the surplus going into the trust fund? I don't think hoarding cash is a good idea. Any others?

[/ QUOTE ]

I don't think hoarding cash is a good idea either. I think spending it all and making an IOU is even worse. Suppose I bring in more income than I am spending. Is it better to:

A) Hoard it as cash

or

B) Spend the excess on hookers and blow, but write myself an IOU for what I spent + some interest?

You are saying B is better. I am baffled.

Social Security is not a retirement plan or a welfare plan for poor seniors, it is a government entitlement program funded by revenue to the government. Getting rid of the payroll tax is better than the current system. I think individual accounts would be even better. An opt-out system would be best.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]


It's different because your fun money account isn't pledged as collateral to a 3rd party.

[/ QUOTE ]

If you aren't trolling (hard to tell with you), explain how that is different. The fun money account is empty (actually its negative) with the government. Do you mean that the money that will go into the fun money account in the future is being pledged? The income I make is the income I make no matter how I divide it up.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]

Ok what should happen to the surplus going into the trust fund? I don't think hoarding cash is a good idea. Any others?

[/ QUOTE ]

How about giving it back to the people you stole it from in the first place??

[/ QUOTE ]

Doing away with SS is an alternative but not likely to happen anytime soon. Is that all you've got?

[/ QUOTE ]

That's not enough? Also this isn't even doing away with SS it's just countering the "ooh we've taxed way too much money well we've got to spend it on some god damn ridiculous thing we can't go giving it back to the people it actually belongs too that would be crazy talk"

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]

Ok what should happen to the surplus going into the trust fund? I don't think hoarding cash is a good idea. Any others?

[/ QUOTE ]

How about giving it back to the people you stole it from in the first place??

[/ QUOTE ]

Doing away with SS is an alternative but not likely to happen anytime soon. Is that all you've got?

[/ QUOTE ]

That's not enough? Also this isn't even doing away with SS it's just countering the "ooh we've taxed way too much money well we've got to spend it on some god damn ridiculous thing we can't go giving it back to the people it actually belongs too that would be crazy talk"

[/ QUOTE ]

I see that the only thing you or TomCollins has as an alternative is to get rid of social security. I doubt that anyone else has any other ideas regarding what to do with the excess being paid to the trust fund either btw.

Question for you guys, what if the baby boomers started demanding SS benefits be doubled, would you consider that an immoral position? After all the reason a SS surplus exists is to accomodate the baby boomers since they represent a disproportionate number of the populace. I mean you guys want to eliminate it entirely. I think it's perfectly justifiable position to double the benefits. The baby boomers carry significant voting clout. You may have noticed that the people that want to eliminate SS don't carry any voting clout.

Re: Understanding the Social Security scam
 

[ QUOTE ]
A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

[/ QUOTE ]

The problem with it is that the ssi tax has a cap of 97.5k and it use to be less. Couple that with the fact that there have been years where the ss tax paid for 1/2 the deficit and you can see how the middle class bore the bulk of the general budget's deficit.

In fact, Clinton claimed to have balanced the budget one year, when it fact, it took about 300b of ssi taxes to make up the deficit spending from the general budget.

Now 1/2 of that 300b was paid by individuals and the other 1/2 by the employer.

Those who made less than 97.5k were taxed on 100% of their money for ss and had the excess given to the general fund in exchange for IOUs which cannot be repaid without raising taxes, or cutting spending dramatically.

A football player, making 2m a year, paid ss taxes on 5% of his income, and therefore paid a lot loss (as a percentage of his gross income) than a college grad working in the computer field, pulling in 97.5k a year.

In addition, taxes on gasoline are by law, to be used only for infrastructure. It is a regressive tax and it is also running a surplus that congress has to maintain the "books" for and "pay back."

Just another way to tax the middle class for the purpose of paying the deficit.

That's the problem.

Re: Understanding the Social Security scam
 

You know the money I took when I robbed you well I only needed half of it to buy the crack I wanted to smoke. What should I do with the rest?


Well you could give it back I mean none of it's yours in the first place


Look if you can't come up with anything better than me not mugging you I don't see why we're talking. You may have noticed you didn't stand up to me when I had a knife at your throat.

Re: Understanding the Social Security scam
 

[ QUOTE ]
.....after thinking about this some, is that given all the possible things that could be done with the trust fund, the safest and most prudent course would be to lend the money out to the borrower with a minimal amount of default risk. That borrower happens to be the Unitied States government.

[/ QUOTE ]

Really? They have never paid back any of the national debt. We are running a 800b deficit and about 300b is coming from ss tax.
How is the govt going to continue running a deficit, while also coming up with the 300b they will no longer be able to get from the ss tax?

They are probably going to do it by not adjusting the alternative minimum tax, which was created decades ago to tax the rich, but due to inflation will be hitting close to have the taxpayers in a few years.

Re: Understanding the Social Security scam
 

[ QUOTE ]

I see that the only thing you or TomCollins has as an alternative is to get rid of social security. I doubt that anyone else has any other ideas regarding what to do with the excess being paid to the trust fund either btw.

[/ QUOTE ]

Incorrect, as I clearly stated in another post. Of course, I would prefer that there was no social security. However, I think the following alternatives are better than the current system.

[ QUOTE ]
Social Security is not a retirement plan or a welfare plan for poor seniors, it is a government entitlement program funded by revenue to the government. Getting rid of the payroll tax is better than the current system. I think individual accounts would be even better. An opt-out system would be best.

[/ QUOTE ]

So in case that was too confusing, the following is what I would prefer, in order of best to worst. There are some ideas that could be combined, so I didn't make a full matrix.

1) Scrap social security entirely by buying out seniors with annuities.
2) Have social security as an opt-out system paid for by those in the program.
3) Individual accounts where individuals OWN their retirements, but they are controlled by the government.
4) Partial individual control.
5) Current system without payroll taxes.
6) Current system.


And you say I don't have alternatives?

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
.....after thinking about this some, is that given all the possible things that could be done with the trust fund, the safest and most prudent course would be to lend the money out to the borrower with a minimal amount of default risk. That borrower happens to be the Unitied States government.

[/ QUOTE ]

Really? They have never paid back any of the national debt.

[/ QUOTE ]

So you're saying that the U.S. has defaulted on it's bond payments? Wow that's news to me and here I thought that U.S. treasuries were viewed has having essentially no default risk.

[ QUOTE ]
We are running a 800b deficit and about 300b is coming from ss tax.

[/ QUOTE ]

So?

[ QUOTE ]
How is the govt going to continue running a deficit, while also coming up with the 300b they will no longer be able to get from the ss tax?

[/ QUOTE ]

You answered my question with a question which is a non answer, thanks for playing though.


[ QUOTE ]
They are probably going to do it by not adjusting the alternative minimum tax, which was created decades ago to tax the rich, but due to inflation will be hitting close to have the taxpayers in a few years.

[/ QUOTE ]

Whatever but it doesn't answer the question but I realize you have no answer because you don't like the question.

Re: Understanding the Social Security scam
 

[ QUOTE ]
How is this any different than the following?

I have two bank accounts, my savings and my "fun money" account. I spend half of my savings account on hookers and blow, but write an IOU from my fun money account to my savings account (plus a little interest).

[/ QUOTE ]

You are so silly.
We are talkin about two govt accounts: the general fund account, which we pay payroll taxes into. payroll taxes are progressive.

And we have a SS account: fueled by a flat tax and is only taxed on the first 97.5k you earn.

Now, if you stop and think for a minute, you should be able to conclude how taking money from the SS account and "loaning" it to the general fund, when you have no way to repay it without raising taxes, is unfair.

It should be a no brainer, if you consider the fact that congress is whining about the fact that come 2017, when the ss tax will be less than the benefits that have to be paid out, that they will have to come up with the difference to start paying back the 3 trillion the general fund owes to the SS Trust fund.

Re: Understanding the Social Security scam
 

[ QUOTE ]
You know the money I took when I robbed you well I only needed half of it to buy the crack I wanted to smoke. What should I do with the rest?


Well you could give it back I mean none of it's yours in the first place


Look if you can't come up with anything better than me not mugging you I don't see why we're talking. You may have noticed you didn't stand up to me when I had a knife at your throat.

[/ QUOTE ]

Standard rant by ACist.

Re: Understanding the Social Security scam
 

[ QUOTE ]
So you're saying that the U.S. has defaulted on it's bond payments? Wow that's news to me and here I thought that U.S. treasuries were viewed has having essentially no default risk.

[/ QUOTE ]

Of course not. They issue more bonds to retire the bonds outstanding and fuel the current deficit.

I know you're smart enough to realize that.

You are such a silly person, who must spend a lot of time trolling this site looking for fights.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]

I see that the only thing you or TomCollins has as an alternative is to get rid of social security. I doubt that anyone else has any other ideas regarding what to do with the excess being paid to the trust fund either btw.

[/ QUOTE ]

Incorrect, as I clearly stated in another post. Of course, I would prefer that there was no social security. However, I think the following alternatives are better than the current system.

[ QUOTE ]
Social Security is not a retirement plan or a welfare plan for poor seniors, it is a government entitlement program funded by revenue to the government. Getting rid of the payroll tax is better than the current system. I think individual accounts would be even better. An opt-out system would be best.

[/ QUOTE ]

So in case that was too confusing, the following is what I would prefer, in order of best to worst. There are some ideas that could be combined, so I didn't make a full matrix.

1) Scrap social security entirely by buying out seniors with annuities.
2) Have social security as an opt-out system paid for by those in the program.
3) Individual accounts where individuals OWN their retirements, but they are controlled by the government.
4) Partial individual control.
5) Current system without payroll taxes.
6) Current system.


And you say I don't have alternatives?

[/ QUOTE ]

Alternatives with what to do with the excess money being paid to the trust fund. I already realize that you'd like to change the system drastically. I would too but that's not what I was asking.

Edit: I'd be interested in knowing if you though SS would be significantly less of a scam if the excess money was lent to the European Economic Union. I realize that maintaining the current system is your least preferred alternative and this wouldn't change that.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
So you're saying that the U.S. has defaulted on it's bond payments? Wow that's news to me and here I thought that U.S. treasuries were viewed has having essentially no default risk.

[/ QUOTE ]

Of course not. They issue more bonds to retire the bonds outstanding and fuel the current deficit.

[/ QUOTE ]

Corporations do this all the time and have capital structures that are such they constantly have debt on their balance sheets. So what/

[ QUOTE ]
I know you're smart enough to realize that.

You are such a silly person, who must spend a lot of time trolling this site looking for fights.

[/ QUOTE ]

I'm trolling? You reponded to a post where I asked a specific question that you apparently don't want to answer. Why respond to my post then?

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

[/ QUOTE ]

The problem with it is that the ssi tax has a cap of 97.5k and it use to be less. Couple that with the fact that there have been years where the ss tax paid for 1/2 the deficit and you can see how the middle class bore the bulk of the general budget's deficit.

In fact, Clinton claimed to have balanced the budget one year, when it fact, it took about 300b of ssi taxes to make up the deficit spending from the general budget.

Now 1/2 of that 300b was paid by individuals and the other 1/2 by the employer.

Those who made less than 97.5k were taxed on 100% of their money for ss and had the excess given to the general fund in exchange for IOUs which cannot be repaid without raising taxes, or cutting spending dramatically.

A football player, making 2m a year, paid ss taxes on 5% of his income, and therefore paid a lot loss (as a percentage of his gross income) than a college grad working in the computer field, pulling in 97.5k a year.

In addition, taxes on gasoline are by law, to be used only for infrastructure. It is a regressive tax and it is also running a surplus that congress has to maintain the "books" for and "pay back."

Just another way to tax the middle class for the purpose of paying the deficit.

That's the problem.

[/ QUOTE ]

Which "that" are you referring to - that the SS accumulated taxes are allowed to pay for programs other than SS, or that the cap is $98K?

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
So you're saying that the U.S. has defaulted on it's bond payments? Wow that's news to me and here I thought that U.S. treasuries were viewed has having essentially no default risk.

[/ QUOTE ]

Of course not. They issue more bonds to retire the bonds outstanding and fuel the current deficit.

[/ QUOTE ]

Corporations do this all the time and have capital structures that are such they constantly have debt on their balance sheets. So what/

[ QUOTE ]
I know you're smart enough to realize that.

You are such a silly person, who must spend a lot of time trolling this site looking for fights.

[/ QUOTE ]

I'm trolling? You reponded to a post where I asked a specific question that you apparently don't want to answer. Why respond to my post then?

[/ QUOTE ]

Now I know you're out of touch. Corporations sell bonds for the purpose of leverage and increasing profits. Their goal is to increase profits by a sum that is much greater than the interest payments on the bonds.

The U.S. Govt can't do that. If they need 2 trillion dollars to run the fed govt in 2008, they need to come up with 2 trillion in taxes PLUS enough in taxes to pay the interest on the 10 trillion dollar deficit.

If they don't, which they won't, they have to go out and borrow more money, and in 2009 they will have to borrow more money.

Corporations do not work that way.

Now that I know what level of a playing field you are on, this will be my last response to you.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
So you're saying that the U.S. has defaulted on it's bond payments? Wow that's news to me and here I thought that U.S. treasuries were viewed has having essentially no default risk.

[/ QUOTE ]

Of course not. They issue more bonds to retire the bonds outstanding and fuel the current deficit.

[/ QUOTE ]

Corporations do this all the time and have capital structures that are such they constantly have debt on their balance sheets. So what/

[ QUOTE ]
I know you're smart enough to realize that.

You are such a silly person, who must spend a lot of time trolling this site looking for fights.

[/ QUOTE ]

I'm trolling? You reponded to a post where I asked a specific question that you apparently don't want to answer. Why respond to my post then?

[/ QUOTE ]

Now I know you're out of touch. Corporations sell bonds for the purpose of leverage and increasing profits. Their goal is to increase profits by a sum that is much greater than the interest payments on the bonds.

The U.S. Govt can't do that. If they need 2 trillion dollars to run the fed govt in 2008, they need to come up with 2 trillion in taxes PLUS enough in taxes to pay the interest on the 10 trillion dollar deficit.

If they don't, which they won't, they have to go out and borrow more money, and in 2009 they will have to borrow more money.

Corporations do not work that way.[/qutoe]

[/ QUOTE ]

Yes corporations do it for economic benefits. So does the United States, different economic benefits. Let's have a hijack on the economic benefits of government deficit spending.

[ QUOTE ]
Now that I know what level of a playing field you are on, this will be my last response to you.

[/ QUOTE ]

Great mucho appreciated.

Re: Understanding the Social Security scam
 

[ QUOTE ]
Yes corporations do it for economic benefits.

[/ QUOTE ]

What do you mean by this? A corporation with revenue less than the sum of it's operating expenses and interest on loans would have a hard time finding investors, unless it was a severe outlier with some hope of massive future revenues.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
Yes corporations do it for economic benefits.

[/ QUOTE ]

What do you mean by this? A corporation with revenue less than the sum of it's operating expenses and interest on loans would have a hard time finding investors, unless it was a severe outlier with some hope of massive future revenues.

[/ QUOTE ]

The favorable tax treatment of debt is why more or less. Why do they have to have revenue that is less than it's current operating expenses and interest on loans in order to hve corporate debt on the balance sheet?

I guess we'r now going to move towards a hijack of the economic benefits of government deficit spending. Why not just start a new thread on that topic?

I can't believe that with as much ranting and raving about the SS scam being perpetrated by the government in lending out the excess trust fund income that people don't have alternatives to that. It's amazing to me all the attempts at dodging the question simply because they don't like it. I guess I just have to conclude that the railing against the government lending money to itself is a smokescreen for just wanting to change the system entirely.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

Thanks for the info about the nature of the debt owed to the trust fund. My main point though, after thinking about this some, is that given all the possible things that could be done with the trust fund, the safest and most prudent course would be to lend the money out to the borrower with a minimal amount of default risk. That borrower happens to be the Unitied States government. Hoarding cash is a dumb idea, lending it to less credit worthy borrowers is about as dumb, many problems with putting it in stock market(s), lending the money to the Eurozone doesn't seem like a good alternative, etc.

[/ QUOTE ]

Absolutely. You sound like an actuary, or do I remember reading that somewhere? Jeremy Gold has written some interesting papers on the intergenerational transfer of risk when a Government retirement plan invests in risky (meaning non-risk free, not those that carry unusually high risk) asset classes. I think one of them was at a Wharton conference, should be able to Google it. i don't agree with him totally, because there are 4 elements of total return, the risk free rate, the inflation premium, the risk premium, and productivity (the extra return inherent in equities over and above the risk premium..Dcifrthis describes this better). Gold would strip everything down to the risk free rate, the inflation and risk premiums have the offsetting inflation and risk, but he forgoes the last element, which is costly for all generations.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Yes corporations do it for economic benefits.

[/ QUOTE ]

What do you mean by this? A corporation with revenue less than the sum of it's operating expenses and interest on loans would have a hard time finding investors, unless it was a severe outlier with some hope of massive future revenues.

[/ QUOTE ]

The favorable tax treatment of debt is why more or less.

[/ QUOTE ]

Even the favorable tax treatment of debt isn't enough for private enterprises to engage in a borrowing-on-top-of-borrowing practice with no hope of ultimately making a profit. Government on the other hand...

Re: Understanding the Social Security scam
 

I edited my reply. Instead of hijacking this thread about the evils/benefits of government deficit spending just make a separate one.

Re: Understanding the Social Security scam
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
...That is an impressive prevarication except that congress isn't borrowing money from a third party, they are borrowing it from their own revenues, which qualifies the excercise as nonsense.

[/ QUOTE ]

Looking at it another way, government (trust fund account) is lending money to itself (financing other government spending). Let's say the U.S. government decided that it didn't want to have the trust fund money being lent to finance other government spending so the government either borrows from bond investors, cuts spending in kind, raises taxes, whatever to make up for the shortfall. Now the SS surplus can go right into the trust fund. What you want it to sit there in cash wasting away due to inflation? Perhaps it would be better to lend the money to a worthy creditor(s) and get a return on the cash to beat the effects of inflation. If so you'd certainly want to lend the money out to creditors with low to non existent default risk. Probably would want to be careful in lending it to emerging market creditors since many blow up so often (default). Remember Clinton was talking about taking the surplus and putting it in the stock market but then the stock market blew up. U.S. treauries are viewed as having no default risk more or less, at least close to the safest creditor there is. I believe many countries in the Eurozone are running budget deficits so maybe those places would be better options. The government issues non marketable bonds to the trust fund so it's not clear to me the effects of the government defaulting on those. I'm kind of thinking the stock, bond, and the US $ might rally. I think if the government is going to lend money to itself the trust fund ought to receive marketable securities where the government has a vested interest in making those coupon payments and redeeming the bonds.

[/ QUOTE ]

A good explanation of why natedogg's so wrong about the government "lending to itself". Its done all the time at the personal level.

Im not sure why you think that special issues are less credit worthy or give the government less reason to "make those coupon payments and redeem the bonds" though. They are a higher priority debt than regular issues, with a guarantee of return of principal prior to maturity if interest rates rise and their value drops below $1. Default on any Treasury security will have the same effect whether its a special issue or marketable...economic chaos (actually the chaos would precede the default).

[/ QUOTE ]

Thanks for the info about the nature of the debt owed to the trust fund. My main point though, after thinking about this some, is that given all the possible things that could be done with the trust fund, the safest and most prudent course would be to lend the money out to the borrower with a minimal amount of default risk. That borrower happens to be the Unitied States government. Hoarding cash is a dumb idea, lending it to less credit worthy borrowers is about as dumb, many problems with putting it in stock market(s), lending the money to the Eurozone doesn't seem like a good alternative, etc.

[/ QUOTE ]

Absolutely. You sound like an actuary, or do I remember reading that somewhere? Jeremy Gold has written some interesting papers on the intergenerational transfer of risk when a Government retirement plan invests in risky (meaning non-risk free, not those that carry unusually high risk) asset classes. I think one of them was at a Wharton conference, should be able to Google it. i don't agree with him totally, because there are 4 elements of total return, the risk free rate, the inflation premium, the risk premium, and productivity (the extra return inherent in equities over and above the risk premium..Dcifrthis describes this better). Gold would strip everything down to the risk free rate, the inflation and risk premiums have the offsetting inflation and risk, but he forgoes the last element, which is costly for all generations.

[/ QUOTE ]

No I'm not an actuary but I take it as a complement that you believe I'm thinking like one. As I've read your posts on this subject I've gradually changed my viewpoint on SS as I did more thinking on it. I appreciate your efforts and thanks for the recommendations.

For the record, I'm a Computer Engineer and an active participant in the financial markets.

Re: Understanding the Social Security scam
 

[ QUOTE ]
I edited my reply. Instead of hijacking this thread about the evils/benefits of government deficit spending just make a separate one.

[/ QUOTE ]

I don't really want to start a separate debate about government spending, but you seem to be defending that the government does it by saying "Hey, private business does it too", which I don't really see as being accurate.

Re: Understanding the Social Security scam
 

[ QUOTE ]

In fact, Clinton claimed to have balanced the budget one year, when it fact, it took about 300b of ssi taxes to make up the deficit spending from the general budget.

[/ QUOTE ]

Do you have a link to this? Would be very interested in reading up on it.