Austerity problem or something else?
- Thread starter TimtheEnchanter
- Start date
Piezoe, you are just wrong. A treasury bill is a contract that can be enforced at law. The Special Government Securities are not a contract that can be enforced at law. They are a political promise to borrow money in the future. They assume a political will to do so, and they assume a market that will allow borrowing at an affordable level. You want to minimize the difference between a leagal contract marketable security and a political promise IOU; I point out the difference and you say I am going bonkers.
There is plenty of precent to show how easy it is to go back on a political promise. The Treasury can change the terms of the Speical Government 'Securities' at will, they have done it to extend the debt ceiling. There is no contract. The congress can change the terms of the promise at any time...they have done it already repeatedly; that is how the SS revenue got into the general account in the first place. You lie when you say that it is not easy to reneg on; not easier than defaulting on Treasury Bill...that is just a garbage lie.
The truth is that there is almost no chance that the political promise will be kept. Beyond the inflation in the matter, the terms will be changed so that the retirement age will be extended and there will be means testing so that many who were pomised will not be paid..and that is the best case scenerio.
When you promote garbage like there are real securities in the trust fund you are just a liar; because you know the difference and you choose to disregard it.
You understand that the cost of borrowing to fund future SS benefits will compete with all other parts of the budget. You understand that the SS revenues have been reducing the borrowing in the current budget and that just as the surplus from those revenues decrease the benefits that need to be paid will accelerate. Where the current government annula budget is now funded by more than 40% borrowing, you know that the borrowing for SS that has be less than 1% of the budget will start to grow dramatically, and it will have to be funded by increased borrowing...the funds you talk about, the Special Government Securities are merely pledges to borrow from the private sector...the debt service on the existing debt acocunts for about 7% of the budget...the CBO has it climbing to 15% of the budget before 2017...where is the 7% of the budget we are not using for something else. SS tax is already at 13% of payrolls...if we collect all of it...what do you propose to raise it to?
You talk about the situation like we have money that we can just put back to SS...you lie to everyone who reads these pages because you don't tell them there is no money, the pledges are promises to borrow from the private market....what if the private market doesn't like the credit equation?
There is plenty of precent to show how easy it is to go back on a political promise. The Treasury can change the terms of the Speical Government 'Securities' at will, they have done it to extend the debt ceiling. There is no contract. The congress can change the terms of the promise at any time...they have done it already repeatedly; that is how the SS revenue got into the general account in the first place. You lie when you say that it is not easy to reneg on; not easier than defaulting on Treasury Bill...that is just a garbage lie.
The truth is that there is almost no chance that the political promise will be kept. Beyond the inflation in the matter, the terms will be changed so that the retirement age will be extended and there will be means testing so that many who were pomised will not be paid..and that is the best case scenerio.
When you promote garbage like there are real securities in the trust fund you are just a liar; because you know the difference and you choose to disregard it.
You understand that the cost of borrowing to fund future SS benefits will compete with all other parts of the budget. You understand that the SS revenues have been reducing the borrowing in the current budget and that just as the surplus from those revenues decrease the benefits that need to be paid will accelerate. Where the current government annula budget is now funded by more than 40% borrowing, you know that the borrowing for SS that has be less than 1% of the budget will start to grow dramatically, and it will have to be funded by increased borrowing...the funds you talk about, the Special Government Securities are merely pledges to borrow from the private sector...the debt service on the existing debt acocunts for about 7% of the budget...the CBO has it climbing to 15% of the budget before 2017...where is the 7% of the budget we are not using for something else. SS tax is already at 13% of payrolls...if we collect all of it...what do you propose to raise it to?
You talk about the situation like we have money that we can just put back to SS...you lie to everyone who reads these pages because you don't tell them there is no money, the pledges are promises to borrow from the private market....what if the private market doesn't like the credit equation?
There is only about ~900 billion paper and coin dollars.
There is about ~14 trillion dollars worth of credit supplied by banks.
There is about ~55 trillion dollars in total debt, again, supplied by banks.
What backs the dollar is the faith that the 14 trillion dollars will some day pay the 55 trillion dollars off.
There is about ~14 trillion dollars worth of credit supplied by banks.
There is about ~55 trillion dollars in total debt, again, supplied by banks.
What backs the dollar is the faith that the 14 trillion dollars will some day pay the 55 trillion dollars off.
Now back to reality. There will be no "borrowing to pay Social Security benefits," as Social Security is self-financed by Social Security contributions. That, of course is why it is called an "entitlement." You are entitled to your own money plus interest. (It's been running about 5%).
Borrowing by the government will be used to pay for deficit spending in the discretionary budget and to pay on debt obligations of the Treasury, which includes, by the way, money owed to the Social Security Trust Fund.
There will be some inflation, possibly a considerable amount.
Piezoe, you admit that the deficit of SS benefits due agains SS revenue will be paid by borrowing money from private investors. The amount of borrowing will accelerate dramatically for demographic reasons from here forward. You minimize this problem and dismiss the truth that the Special Government Securities are not real securities; they have no priority, they are a political promise that can will be massaged. The rest of you deflection and deception is the real blah, blah, blah.
Ed, I don't know why I keep responding to your nonsense, I must be a glutton for punishment, but this little statement of yours caught my eye:
says Ed:
"The congress can change the terms of the promise at any time...they have done it already repeatedly; that is how the SS revenue got into the general account in the first place."
Ed, I thought you knew that Congress can't take money directly from from Social Security and spend it in the discretionary budget! That's illegal, Ed.
Who passed the law making it illegal? Why, Congress of course, with concurrence of the President!
Ed, the only way Congress can legally tap into Social Security for other than Social Security purposes is indirectly via actual inflation that exceeds the Social Security COLA. Inflation may result from Congress having to borrow to pay its bills, including the bill from the S.S. Trust.
says Ed:
"The congress can change the terms of the promise at any time...they have done it already repeatedly; that is how the SS revenue got into the general account in the first place."
Ed, I thought you knew that Congress can't take money directly from from Social Security and spend it in the discretionary budget! That's illegal, Ed.
Who passed the law making it illegal? Why, Congress of course, with concurrence of the President! Ed, the only way Congress can legally tap into Social Security for other than Social Security purposes is indirectly via actual inflation that exceeds the Social Security COLA. Inflation may result from Congress having to borrow to pay its bills, including the bill from the S.S. Trust.
The first sentence, yes, sorta. Not a deficit in benefits, however, due against Social Security revenue, unless Congress fails to act on the actuaries' adjustment recommendation, but instead, indirect, stealth benefit cuts could --almost certainly will-- arise via actual inflation exceeding official inflation, or via an act of Congress made necessary because Congress fucked up and did not follow the actuaries' recommendations --let's hope not!)
The second sentence. yes sorta. Not so much for demographic reasons however, but maybe because of increasing interest on the debt and out of control spending in the discretionary budget. It is unwise to extrapolate too far out, because dramatic acceleration in borrowing would be met, in all likelihood, with as yet to be determined "dramatic" counteraction.
The third sentence: Blah, blah blah.
The only thing wrong with Social Security is an ineffective Director who's been in the job far too long and has remained silent in the face of a mountain of Wall Street lies. Tell a lie often enough, and eventually it starts to sound like truth.
I say, get rid of this fellow and put someone in who will be an active advocate of the truth.
Piezoe, you must know that all the SS payrol tax funds paid to the U.S. Treasury are credited to the SS Trust Fund account. At the same time all the benefit expenses paid by the U.S. Treasury are deducted from the SS Trust fund account. In the event that there is a surplus, the U.S. treasury credits that surplus to the General Account and issues Special Government Oblication 'Securities' (an accounting notation, an non marketable intergovernmental IOU) as an asset of the SS Trust Fund in the amount of the surplus of revenue and benefit expense. As that surplus turns into a deficit, the Treasury will borrow money in the private market and credit the deficit funds to the SS Trust Fund as it extinguishes the Special Government Obligation notations in the like amount.
All of this is accounting. The money goes into the General Account...the Treasury pays the benefits...it spends the surplus on other general government expenses...and it issues accounting IOUs to the SS Fund. When the Fund goes into deficit it will pay the benefits out of the General Account and borrow privately to do so...then it will start to write down the IOUs.
That is how it obviously works...its not illegal and both the Trasury and the Congress has the ablility to change it.
All of this is accounting. The money goes into the General Account...the Treasury pays the benefits...it spends the surplus on other general government expenses...and it issues accounting IOUs to the SS Fund. When the Fund goes into deficit it will pay the benefits out of the General Account and borrow privately to do so...then it will start to write down the IOUs.
That is how it obviously works...its not illegal and both the Trasury and the Congress has the ablility to change it.
The point is Ed, they can't take the money and spend it without issuing an IOU at interest. They have to borrow the money Ed. The can't just steal it! BORROW, Ed! The specific mechanism for doing this is of no interest and not germane here. And yes, Ed, the Social Security Trust does loan its excess funds to your government. LOAN, Ed, not steal.