HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Forums & Groups » Main » General Discussion (Forum) » Switching to a Chained CP...

Tue Dec 18, 2012, 10:44 PM

Switching to a Chained CPI for Social Security reduces the general fund deficit by ...

Zero!

We could literally achieve greater deficit reduction by having Joe Biden wander around D.C. picking up aluminum cans.

Social Security is accounted separately from the general fund and does not contribute to general fund surpluses or deficits.

As for it's own finances, any potential shortfall in the long-term Social Security funding mechanism is twenty years or more down the line. For that matter, if the trust fund projections were to prove too conservative, there may not be a shortfall at all.

There is no reason at all for us to do this. It would be an unforced error of biblical proportions. (And we will deserve every last bit of the political fallout we will receive if we allow it to happen on our watch.)

49 replies, 2862 views

Reply to this thread

Back to top Alert abuse

Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
Arrow 49 replies Author Time Post
Reply Switching to a Chained CPI for Social Security reduces the general fund deficit by ... (Original post)
dawg Dec 2012 OP
BeyondGeography Dec 2012 #1
dawg Dec 2012 #2
BeyondGeography Dec 2012 #4
MotherPetrie Dec 2012 #7
newfie11 Dec 2012 #8
John2 Dec 2012 #43
dflprincess Dec 2012 #27
BlueStreak Dec 2012 #30
dflprincess Dec 2012 #36
kath Dec 2012 #3
Canuckistanian Dec 2012 #5
Jackpine Radical Dec 2012 #6
rhett o rick Dec 2012 #9
banned from Kos Dec 2012 #10
dawg Dec 2012 #11
banned from Kos Dec 2012 #14
dawg Dec 2012 #15
banned from Kos Dec 2012 #18
dawg Dec 2012 #21
banned from Kos Dec 2012 #23
dawg Dec 2012 #28
banned from Kos Dec 2012 #29
dawg Dec 2012 #34
reteachinwi Dec 2012 #35
dawg Dec 2012 #38
TheProgressive Dec 2012 #12
TheKentuckian Dec 2012 #20
banned from Kos Dec 2012 #26
JDPriestly Dec 2012 #13
dawg Dec 2012 #17
Teamster Jeff Dec 2012 #16
bluethruandthru Dec 2012 #19
dawg Dec 2012 #22
bluethruandthru Dec 2012 #25
John2 Dec 2012 #31
reteachinwi Dec 2012 #32
dawg Dec 2012 #37
reteachinwi Dec 2012 #39
dawg Dec 2012 #41
joeunderdog Dec 2012 #24
blkmusclmachine Dec 2012 #33
FreeBC Dec 2012 #40
dawg Dec 2012 #42
JEB Dec 2012 #44
dkf Dec 2012 #45
JEB Dec 2012 #46
dawg Dec 2012 #47
dkf Dec 2012 #48
dawg Dec 2012 #49

Response to dawg (Original post)

Tue Dec 18, 2012, 10:47 PM

1. Nancy Pelosi says you're out of your mind

In her MSNBC interview, Pelosi also noted that the president's plan -- which is not his final offer -- includes protections for low-income individuals from the Social Security changes, which could soften the blow.

"The details of this are not all ironed out, but they all mitigate for helping the poorest and neediest in our society, whether they're Supplemental Security Income recipients, whether they're 80 and older or whether they're truly needy in-between," said Pelosi, adding it was "worth making a compromise" to avoid going over the fiscal cliff.

http://www.huffingtonpost.com/2012/12/18/nancy-pelosi-fiscal-cliff_n_2324042.html

Reply to this post

Back to top Alert abuse Link here Permalink


Response to BeyondGeography (Reply #1)

Tue Dec 18, 2012, 10:51 PM

2. Oh sure, "soften" the blow. But that means there's a blow to soften, doesn't it?

Nancy will never need Social Security. Nor will the President.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #2)

Tue Dec 18, 2012, 10:57 PM

4. Under the bus with her!

Reply to this post

Back to top Alert abuse Link here Permalink


Response to BeyondGeography (Reply #1)

Tue Dec 18, 2012, 11:02 PM

7. Then why fuck with SS at all?

 

Reply to this post

Back to top Alert abuse Link here Permalink


Response to MotherPetrie (Reply #7)

Tue Dec 18, 2012, 11:04 PM

8. Exactly

Reply to this post

Back to top Alert abuse Link here Permalink


Response to MotherPetrie (Reply #7)

Wed Dec 19, 2012, 01:05 AM

43. Well we soon find out

 

what happens behind these close doors. The press spinned it also. The offer on Social Security came from Boehner and apparently Obama accepted it. Boehner also offered to raise the age of Medicare and Obama rejected it. So apparently Boehner got specific on what he wanted to cut. The only thing Boehner has done, is accept rates going up on incomes of one million dollars.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to BeyondGeography (Reply #1)

Wed Dec 19, 2012, 12:04 AM

27. Nancy Pelosi said Social Security was off the table

apparently she lied.

Going off the cliff would be preferable to this - at least Social Security and Medicare are excluded and there would be cuts to the defense budget.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dflprincess (Reply #27)

Wed Dec 19, 2012, 12:20 AM

30. Oh that was 24 hours ago. How long do you expect a person to keep their word?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to BlueStreak (Reply #30)

Wed Dec 19, 2012, 12:29 AM

36. We should probably be thankful she held out that long. n/t

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 10:52 PM

3. yep, ZERO - big fat fuckin' ZERO

zip, nada, zilch, etc....

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 10:59 PM

5. The frustating thing is

Joe Biden would pick up those cans.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Canuckistanian (Reply #5)

Tue Dec 18, 2012, 11:02 PM

6. That's the best remark I've seen here all day.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 11:06 PM

9. Any discussion about Social Security is a distraction. SS may go in the red in 20 years???? Fuck,

the Iraq war went in the red immediately. Collect for the wars to reduce the deficit. Raise fuckin taxes until we repay our children for the stupid wars that we are all guilty for allowing to occur. Dont dare even speak of SS.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 11:06 PM

10. Only because they keep two sets of books.

 

In reality the general fund pays the SS Trust Fund interest.

So technically you are wrong.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #10)

Tue Dec 18, 2012, 11:09 PM

11. No. You are wrong. The General Fund pays interest on it's own debts, some of which are owed to the

trust fund. Saying the General Fund pays part of Social Security is the same as saying it pays for my light bill because I'm invested in treasuries.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #11)

Tue Dec 18, 2012, 11:18 PM

14. No, the SS Trust Fund earns a coupon (interest) beyond its contributions collected.

 

That comes from the general fund just as China's coupon does.

Your light bill analogy is fine.

I am looking at it from a comprehensive inter-government perspective. The key is that the Treasuries are special issued discretely to the SS Trust Fund and are not available on the open T market.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #14)

Tue Dec 18, 2012, 11:23 PM

15. Let's do a little thought exercise here. Be paitient with me.

Let's image that we cut SS benefits so sharply that the trust fund had indefinite surpluses. The trust fund would start growing and would continue to grow forever. But ....

the general fund would still legally owe principal and interest on those notes to the trust fund. Those amounts would still have to be paid, regardless of the funding level within the system. To simply wipe that debt away would be an unconstitutional violation of contract law (as well as theft from the American workers).

So since that interest is due to the trust fund, regardless, cutting benefits does nothing to reduce the general fund deficit.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #15)

Tue Dec 18, 2012, 11:36 PM

18. OK, by that logic (and it is logical) the SS Trust Fund could obtain a

 

$30 trillion surplus.

Which would mean the General Fund had a $30 trillion cash deficit (With future interest accrued). That would choke the rest of us to death - the CDC, HUD, FDA, all operations, etc.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #18)

Tue Dec 18, 2012, 11:46 PM

21. Well, not unless the general fund also ran $30 trillion in deficits.

Otherwise, the huge SS surplus would just sit there, presumably invested in other assets or cash. (Because there wouldn't be enough treasuries to buy) The general fund wouldn't have to be affected at all. (Of course, it would be a stupid waste to build such a huge SS surplus, but I find extreme cases like that to be very instructive when discussing such matters)

The two funds are separate for a reason, and tinkering with one does nothing to directly help or harm the other.

Just as an aside: I think they are planning on applying the Chained CPI to our tax brackets as well. We will have tax bracket creep again, and lots of other sneaky little ways of picking our pockets over time.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #21)

Tue Dec 18, 2012, 11:53 PM

23. There will always be enough Treasuries to buy since SS HAS to buy Treasuries

 

by force of law and the Treasury must borrow to fund operations. The SS Trust Fund can legally buy nothing else.

And the circular dragon goes on and on since the Treasury MUST issue debt to feed the SS Trust Fund.

Your argument has weakened considerably in the last 15 minutes. Remember that although two sets of books exist consolidation must occur in the end.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #23)

Wed Dec 19, 2012, 12:06 AM

28. If the general fund did not run a deficit, no net new treasuries would ever be issued.

Therefore the SS trust fund would have to either invest in something else (change the law), accumulate cash, or (heh, heh) increase benefits so as to reduce the surplus. It could never *force* the general fund to issue new treasuries.

The point is that reducing Social Security benefits doesn't help the general fund at all. Everything else is just ridiculous academic speculation about a world with a $30 trillion SS surplus. (Which I enjoy, but it has no relevance to the real world or our current dilemma.)

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #28)

Wed Dec 19, 2012, 12:15 AM

29. That is not quite true. The general fund ran a surplus 1999-2000

 

and net new Treasuries were issued then.

http://www.ssa.gov/OACT/ProgData/fyOps.html (see right hand column).

Also http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

The reason why is that SS excess funds collected MUST buy Treasuries. We collected excess FICA in those years. So therefore NET Treasuries issued increased even during a surplus. And then the general fund increased -- albeit for only two years.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #29)

Wed Dec 19, 2012, 12:26 AM

34. I believe you're misunderstanding me slightly.

I specifically used the word "net" for a reason. Even when there is a general fund surplus, new treasuries will still be issued each year as old ones mature. If the general budget is balanced, total outstanding treasuries do not increase. (No "net" new treasuries) But old ones do mature, and new ones are issued to replace them and refinance that portion of the debt.

In times of general fund surplus, it is still possible to issue new treasuries to the SS fund. As privately-held treasuries mature, the general fund simply refinances with the SS fund rather than going back to issue new treasuries to the private sector at auction. There are no net new treasuries under this scenario, just more held by SS and less held by the public.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #29)

Wed Dec 19, 2012, 12:27 AM

35. debt reduction

 

Then other Treasuries were retired to obtain a reduction in National debt, right?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to reteachinwi (Reply #35)

Wed Dec 19, 2012, 12:39 AM

38. You just said in one line what I took paragraphs to say.

I really need an editor!

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #10)

Tue Dec 18, 2012, 11:10 PM

12. Our government borrows money and pays interest.

It is how it works. We rightly earn interest on *our* $2.7 T.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to banned from Kos (Reply #10)

Tue Dec 18, 2012, 11:42 PM

20. There are two sets of books because that is exactly how it is.

Just the same as if you buy treasury bonds and maintain separate books. Just like China keeps a separate book.

I guess I'm saying so the fuck what?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to TheKentuckian (Reply #20)

Wed Dec 19, 2012, 12:02 AM

26. Because of inter-dependency. See above.

 

You only care about the SS Trust Fund. I care about it and the general fund.

And there is a third set of books - the Federal Reserve. The Fed owned $1.6 trillion of US debt at last audit. The US Treasury is the peoples bank account.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 11:12 PM

13. Thank you. A voice of reason.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to JDPriestly (Reply #13)

Tue Dec 18, 2012, 11:26 PM

17. Well, I need to change my name to "John".

Because I'm pretty much a voice crying alone in the wilderness. Our political and pundit classes are largely innumerate. They form their opinions based on who they trust, and this administration still trusts people like Jeff Immelt and Tim Geithner.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 11:25 PM

16. Gouging senior citizens is price of getting a deal

It's just an offering to the god of bipartisanship which the president worships. What else could it be? As you posted its not effective deficit reduction.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 11:42 PM

19. Why does ANY deal with the republicans have to contain some form of cutting Social Security??

And why would the president and other 'democrats' go along with it?? If social security cuts don't do anything to shrink the deficit....why are they not being called out on in?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to bluethruandthru (Reply #19)

Tue Dec 18, 2012, 11:52 PM

22. The worse part is that we aren't even coming off as reluctant.

If this deal goes down, which it still may not, the general public isn't going to perceive this as being something the Republicans fought tooth and nail to get. They are just going to perceive that the Democrats sold them out.

Hell, the Republicans will probably run against us for cutting Social Security. They'll say we spent the money on welfare and food stamps instead.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #22)

Wed Dec 19, 2012, 12:01 AM

25. You're right. That's why I can't figure out why our so-called democratic leaders

haven't been shouting this from the rooftops. Every time a repub brings up cutting social security to cure the deficit ... democrats need to answer with "why do you want to cut social security since it has nothing to do with the deficit".

Reply to this post

Back to top Alert abuse Link here Permalink


Response to bluethruandthru (Reply #25)

Wed Dec 19, 2012, 12:21 AM

31. That is because

 

there are 250 millionaires in Congress. It is easier to cut yours than theirs. Boehner is worth four million dollars and Cantor five. Obama is worth seven and Pelosi is worth millions. The people doing the negotiations are the top percent.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #22)

Wed Dec 19, 2012, 12:22 AM

32. Long term

 

will the chained CPI extend the solvency of SS? From 20 years to 25 years for instance?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to reteachinwi (Reply #32)

Wed Dec 19, 2012, 12:31 AM

37. For all we know, the system may already be solvent now.

Projections based on 25 years from now are notoriously inaccurate, and the trustee is required to use some pretty conservative assumptions in making the projections.

But regardless of that, I have never found the idea of cutting benefits now because we *might* have to cut them later to be a compelling one.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #37)

Wed Dec 19, 2012, 12:48 AM

39. Raising the cap

 

is a better approach as well if long term solvency is the objective.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to reteachinwi (Reply #39)

Wed Dec 19, 2012, 12:55 AM

41. Agreed.

I've always thought that should be the first change made, if indeed a change proved necessary.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Tue Dec 18, 2012, 11:55 PM

24. There will actaully be a reduction in spending of descretionary spending.

People on fixed incomes with out nest eggs spend it all.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Wed Dec 19, 2012, 12:26 AM

33. What makes you think these "Democrats" want to preserve SS?

Austerity Now! Austerity Forever!

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Wed Dec 19, 2012, 12:53 AM

40. Well yeah.... it's a concession to republicans.

 

If it's something they want why would you expect it to be a good idea?!

C'mon now, use your heads people.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to FreeBC (Reply #40)

Wed Dec 19, 2012, 01:00 AM

42. Regular bad ideas we can tolerate.

This one is unacceptable.

We've already offered billions in spending cuts. That's enough "stupid" for now. No need to compound the stupid by cutting our already-shabby safety net and soiling our political brand in the process.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #42)

Wed Dec 19, 2012, 01:25 AM

44. Yep. Putting ss on the fiscal table

is taking food off the kitchen table for many. Sickening.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Wed Dec 19, 2012, 01:34 AM

45. They really should be looking at Medicare. That is a much bigger problem with direct impact on

 

The deficit and our budget.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dkf (Reply #45)

Wed Dec 19, 2012, 01:55 AM

46. They should be looking to make cuts to the bloated, corrupt, lardass Defense Dept.

instead of looking to do more harm to our elders, our vets, and our poor. Fuck these money grubbing rich fucks.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dkf (Reply #45)

Wed Dec 19, 2012, 01:55 AM

47. Medicare, Medicaid and Defense are the three budget-busters.

I oppose any reductions in benefits or eligibility, but men and women of good faith could still find other ways of reducing expenditures by many, many billions of dollars.

No one wants to talk about it, but we really need to take a long hard look at end-of-life expenses. And something must be done to discourage (or at least stop encouraging) excessive testing. People are right to fear lawsuits, but they often take their fears to irrational heights. I suspect many tests and consults are ordered primarily with liability considerations in mind. (And with little or no expectations of the tests yielding additional useful information)

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Reply #47)

Wed Dec 19, 2012, 07:53 AM

48. Exactly. No other health system is as expensive as ours.

 

It's out of control.

Defense spending is already projected to decrease...thank goodness.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dawg (Original post)

Wed Dec 19, 2012, 10:22 AM

49. Is it considered self-abuse ...

to kick your own thread?

Reply to this post

Back to top Alert abuse Link here Permalink

Reply to this thread