Reply #44: Unfortunately this is untrue

[Yo_Mama]

Earlier, SS ran a surplus. Had we actually invested that in regular Treasury bonds, we would not now be facing the same problem we are.

But we didn't. Therefore, all the amounts in the Trust funds are, in effect, future debt. (If we had just had the Trustees for Medicare and SS go out and buy regular Treasury bonds, this would not be a problem!).

Therefore, as soon as SS & Medicare stop running a surplus, these programs do add to the yearly deficit, because as the Trustees turn in their special obligations, Treasury has to run out and issue NEW debt (not replacement debt), i.e. borrow new amounts.

The "deficit" is defined as the amount by which our yearly income exceeds our yearly outgo. Since both SS & Medicare are paying out more in benefits than they receive in allocated revenue now (Medicare for years, SS beginning last year), they ARE contributing to the deficit. The deficit is the measure of yearly borrowing.

I claim that the debt is legitimate (these amounts were paid in by future retirees and are owed future retirees) and should be paid to future retirees, but I refuse to assent to the myth that they do not contribute to the deficit. They do.

Originally, when SS was set up, the Trustees actually did go out and buy Treasury bonds or bills just like any other investor. That was changed to allow us to run a higher real deficit but mask it with the excess revenues. We are facing the results of that error now.