Far from being broke, the Social Security program is one of the richest entities in the country

[ProfessorPlum]

I just don't understand how the Democrats are losing the spin on this one.

In the 1980s, the cries about the impending retirement of the baby boomers became loud and hard to ignore. SS really was going to face a shortfall, unless it changed its formula.

Enter Greenspan, Reagan, and Tip O'Neill. They figured out and passed an adjustment to SS in the early 80s that would increase the payments that everyone would enter in to the system, in order to get ready for the baby boom. It pleased the Democrats, because it strengthened Social Security. It pleased the GOP, because it was a regressive tax that took money disproportionately from working class people. And it SOLVED the SS/baby boom problem, which is about the only problem with SS that its designers didn't (really couldn't) forsee.

The GOP continued to fall on the fainting couch about SS being or going broke after that, but it just wasn't true at all.

SS, which had been set up as a system that paid what it took in, began to take in more than it paid out. And what did it do with all of that extra money? It began to put it in one of the safest, most conservative investments, US Treasury bonds. It has since amassed one of the biggest fortunes in T bonds ever - something like $2.5 trillion.

Think about that. When Goopers talk about SS being broke, they are talking about an entity that is sitting on top of a $2.5 trillion war chest full of bonds. If you had $2.5 trillion in bonds and someone told you that you were broke, what would be your response?

The catfood commission is somehow going to try to talk us out of demanding that those bonds be honored the way any other bond would be honored. WTH? How can we be losing this argument? Will Americans really stand for this theft? Amazing.

[madmax]

1. Hello Professor

Is there a link that I could use to send to a few nitwits I know. ;)

[ProfessorPlum]

19. Hmmmm. That's a good one

maybe try this link to start?

http://www.cjr.org/the_audit/what_is_social_security_trust_fund.php

[madmax]

39. Yes, good place to start

Like most people, just guessing - I don't really know how SS works beyond we pay in and if you don't die before retirement you get enough to buy cat food and survive ;) All I hear is how it's bankrupting the country. Well, excuse me but, does the Military-Industrial Complex save us money? Do we really need to spend Trillions on defense and all that hardware?

Ten years at war in two countries, that can't be bombed back into the stone age since they're still there and all our military might hasn't seemed to get the job done. :shrug:

Thanks for the link. :hi:

[madmax]

44. The comments section offers a lot

of clues as to other venues to research.

So much to learn, so little time. :dilemma:

[A HERETIC I AM]

2. Well said. Now cue the folks that will tell you Treasury bonds aren't worth the paper they're...

printed on in ....


1.....




2.....




3,,,,,

[annabanana]

3. If it wasn't so "rich" it wouldn't be such a juicy target for the wolves.

There will be the popping of very expensive Champagne corks if they get their hands on this prize.

[DirkGently]

Bingo.

[ProfessorPlum]

21. You are no doubt right. and all it will take for them to rob us is for us to let them

depressing.

[Dyedinthewoolliberal]

4. There must be money there,

why else would the Republicans be trying so hard to pick the lock? :bounce:

[leftstreet]

5. The Democrats aren't losing the spin on this. They're complicit

The Catfood Commission is NOT being set up on the Republicans' watch

[BrklynLiberal]

12. They are STILL letting the repukes manage the message....it is pathetic.

GEORGE LAKOFF GEORGE LAKOFF GEORGE LAKOFF

[slipslidingaway]

34. Bingo - "The Catfood Commission is NOT being set up on the Republicans' watch" n/t

[Tierra_y_Libertad]

6. Oh, shush, and eat your catfood for the good of the capitalists.

[COLGATE4]

7. Yeah - nothing to see here. Just move along...

[Uncle Joe]

8. Kicked and recommended.

Thanks for the thread, Professor Plum.

[pa28]

9. When a false narrative becomes conventional wisdom it's hard to overcome.

The "worthless IOU" canard is going to be around until the SS trust fund is privatized. When the time comes for financial institutions to run their fingers through 2.5T for the purpose of collecting fees I believe the government will have no problem making good on that particular obligation.

[BrklynLiberal]

13. The Dems have allowed the Repukes to make the conventional wisdom be one of SS

being danger.

WTF don't the Dems speak up and correct the mistaken impression that the repukes are intentionally allowing to become "reality"?????????

[xchrom]

10. Recommend

[BrklynLiberal]

11. Great discussion with Nobel Prize winning economist Peter Diamond on NPR yesterday

Listen to entire interview here:

http://www.wnyc.org/articles/its-free-country/2010/oct/22/peter-diamond-social-security-easy-fix-not-quick/

Peter Diamond: Social Security an Easy Fix, Not Quick
Friday, October 22, 2010

By Stephen Reader

*
This is a moment to: a) do good policy, b) not harm the recovery, and c) reassure people that the U.S. has the ability to get things on track for the long run.
— Peter Diamond

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from political conversations on WNYC. On this morning's Brian Lehrer Show, Nobel Prize-winning economist Peter Diamond discussed the need to save Social Security.

When asked if Social Security is easy to fix, Peter Diamond didn’t hesitate with his answer.

True—easy to fix and in the current economic climate the perfect thing for Congress to be addressing…This is a moment to: a) do good policy, b) not harm the recovery, and c) reassure people that the U.S. has the ability to get things on track for the long run.

Diamond is equally sure of the solution: bring more money into the program, but spend less of it.

If we get a proposal that is a balanced combination of benefit decreases and tax increases, and it’s all phased in slowly enough, I would look forward to supporting it.

"Benefit decreases and tax increases" is a potentially toxic phrase one could use this election year. However, Diamond insisted that this kind of plan would do almost nothing to hobble economic recovery in the short run, while making significant progress toward bringing down the deficit in the long run.

He made similar comments about extending unemployment benefits as more and more Americans take longer to find work. The cost may seem high now, he said, but it’s a pittance compared to the long-term benefits of keeping the unemployed afloat.

I think it’s a mistake to think of the negatives right now as being particularly large. We are in a very rough patch in the economy—the economy has been growing but not very fast, and there’s a vulnerability here because of the limited scope for more government actions. So I think it’s important to keep whatever supports we have going and going.

[ProudDad]

41. And which fucking freeway culvert does this asshole

recommend we move into?

Benefit decreases are NOT FUCKING BALANCED!!!

Dumb FUCK -- Typical dismal economist...


By the way mr. dumbfuck Diamond, did you realize there is NOT an infinite amount of resources to exploit for "growth" on a finite planet? Fucking capitalist economists -- constantly ignoring the laws of Thermodynamics!

[BootinUp]

14. Its a pot of gold just waiting to be looted! nt

[doc03]

15. SS has $2.5 trillion in T bonds (IOUs), China and other

countries have ? trillions in Bonds(IOUs). Now when they come due do you really think they are going to reduce the payments to China when they can cut SS instead?

[johnaries]

16. Not exactly. Although there was a Trust Fund etablished it has

no tangible assests, but is backed "by the full faith and credit of the government". That basically means that if the securities held by the Trust Fund are redeemed, the Federal Government has to come up with a way to pay for them. Not exaactly "worthless pieces of paper" but not backed by any tangible assests that the Government can "cash in", either.

The important thing to remember is that SS is primarily a "pay as you go" program and the Trust Fund is only to be used if the tax receipts are less than SS payouts. This has been predicted to occur in 2017. If so, then the SSA predicts the Trust Fund will be depleted in 2042, while the CBO predicts 2052.

HOWEVER, these predictions are based on current economic models. If we can boost the economy enough and/or raise the cap to increase SS revenues to continue to meet or exceed payouts, then we never have to draw upon these securities.

But, if we do have to draw upon these securities, we have to find a way to pay for them since they are not backed by any real economic assests.

[ProfessorPlum]

18. A Federal Treasury Bond is a tangible fucking asset

[johnaries]

27. There is no "physical" asset backing it. No actual cash or

commodity. As I said, there is nothing there for the government to "cash in" in order to pay it. The government has to find a way to pay for it.

[ProfessorPlum]

28. your point is?

my point is that the US government has never defaulted on its bonds. And I don't expect it to. And I don't expect it to just default on THESE bonds.

[johnaries]

29. Remeber Al Gore's "lockbox"? This is what he was talking about.

NO, the government isn't going to default on it's bonds. Legally, it can't. But, how is it going to pay for those bonds? Where is the money going to come from to pay them? Even though Social Security is "off budget", it still affects the budget indirectly in that Congress has to pay back those bonds. I suspect that the whole purpose of having SS "off budget" was an earlier version of Gore's "lockbox" but Congress didn't use it that way.

Technically, the bonds are as good as money since it, too, is backed by the full faith and credit of the US Government. Technically, the Fed could just print more money. But doing so would lower the value of the dollar to the point that we could very well see run-away inflation.

Privatization is certainly NOT the answer, although Wall Street would love to get it's grubby hands on that money. But it would deplete the trust fund even faster and leave retirees open to the vagaries of the market.

I support cuts ONLY to the highest tiers, who really don't need it anyway. Otherwise, I would like to see SS expanded for those who rely on it. In the long run, putting more money in the hands of those who spend it helps the economy.

Also, I would like to see revenues increased by raising the cap.

Lastly, the estimates are based on the economic models that the SSA and CBO had available at the time. If the economy is sufficiently boosted, we would not ever need to even touch the Trust Fund eliminating the need to pay for it. And the best way to boost the economy? A redistribution of wealth. Take some of that money away from the top 1% and put it in the hands of the average Consumer who will spend it and increase demand which will create more jobs will in turn put more money in the hands of consumers who will spend more increasing demand ... etc, etc.

[eShirl]

30. "But, how is it going to pay for those bonds?" How about restoring the taxes on the rich to what

they used to be?

[ProfessorPlum]

31. Exactly. the poster you are responding to acts like there isn't any

money to be found around here anywhere. We know where it is.

[johnaries]

35. Did you even read my last post? I said I supported raising the cap

and boosting the economy so revenues would increase. I also said I wanted to EXPAND SS, and only cut it for the top tier.

[ProfessorPlum]

38. my apologies, I didn't read it carefully enough.

[johnaries]

36. I support raising taxes on the rich, as I stated in my post.

As I said, a "redistribution of wealth" would boost the economy and increase revenues. I also said I supported raising the cap on SS taxes.

[ProudDad]

43. Cut the war budget

we don't need to spend twice the rest of the ENTIRE WORLD on war toys...!

[Generic Other]

17. Also a baby boomlet now underway equal to the end of the last baby boom

we got fed rot about not enough young workers to keep benefits funded. BS

[ProfessorPlum]

20. Yep, that's a canard

and also something that the designers of SS took into account. They accounted for that and also for longer life spans.

[elocs]

22. Really, there seems to be this attitude that the Boomers will live forever and destroy SS.

My guess is that in 30 years the Boomers will really be dying off. I'm 58 now and will be 88 in 30 years and I don't expect to live forever.

[TBF]

23. Exactly why the assholes on Wall Street are trying to snatch it. nt

[Yo_Mama]

24. Yeah, well by that logic a bunch of defunct banks are wealthy critters

"Assets" that are payment streams from other entities are valued on the basis of repayment ability and then discounted based on comparative returns to other assets. Believe me, a bunch of AA rated debt obligations have gone to junk over the last few years as push came to shove.

Treasury bills aren't the safest investment ever if US public debt rises to the point that investors doubt repayment and are unwilling to buy it. That point will occur this decade as US government debt held by the public will go to over 95% of GDP.

We're close to that point. Take a look at treasury yield moves over the last month.
http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml
Short term yields are going down while long term yields are rising. That is because the demand for short term T-bills is very high in comparison to the demand for long term debt. The bid/cover ratio is running in the 4-5 range for the short bills but hanging in the 2- range for longer term debt.

Your logic in this post was exactly that used by banks and non-bank financials to justify rating risky mortgages as safe instruments, and it is going to meet the same crushing rebuttal from reality.

Nor will any investor be able to ignore the intervening steps - 2015 to 2018 is when a lot of local governments start to default.

[Name removed]

26. Deleted message

Message removed by moderator. Click here to review the message board rules.

[cutlassmama]

25. Simple solution, raise the cap

[felix_numinous]

32. The people's retirement fund

does not belong to anyone else.

[slipslidingaway]

33. knr nt

[McCamy Taylor]

37. That's why foreigners in Saudia Arabia, China and Switz. want to get their hands on it

via multinational banks.

[ProudDad]

40. Raise the cap, tell the Chinese, Japanese and Brits to

go fuck themselves concerning the "national debt" run up to buy the fucking war machine...

And pay us old folks what you fucking owe us...

Oh, and we need a FUCKING C.O.L.A. NOW!!!

[ProudDad]

42. $Trillions for fucking wars ... but let old folks eat dog food

if they can afford it...dog food's getting damn expensive!

[madmax]

45. I may not know how SS works, is funded and the

how the money is suppose to grow but, I feel the same way. War - no problem the sky is the limit. Social Programs -no way.

I'm telling my grands to prepare their lives to move to another country in about 25 - 30 years (mabye sooner) if this country doesn't make some serious changes in a new economy, education and health care. Plus a host of other but, I'd settle to see some damn improvement in those three. They're so screwed up that I can't even assign them priority numbers. They're all equally and intricately entwined.

But, hey USA USA USA We're #1 Rah, Rah. :argh:

[ProudDad]

46. I read that we've slipped down to #42 when it comes to Health Care...

#1 in war spending though...

Hell, we finance or subsidize and USAmerican arms makers profit from most of the wars on Earth now...

[madmax]

47. Has the US received any money at all

from Iraq oil that was suppose to pay for this bullshit?

[ProudDad]

48. AFAIK - not a dime...

And "WE" won't...

Exxon, Chevron, Shell and their employees in the various Congresses and Parliaments will -- but we won't...

[madmax]

49. Just so

fucking wonderful. Thanks again idiot son of a former President. Fucking Twilight Zone.