Ron Paul: "The U.S. Government Must Admit It Is Bankrupt"

Is USA bankrupt?

  • Yes

    Votes: 93 66.9%

  • No

    Votes: 46 33.1%
  • Total voters
    139
I believe it was covered under the Tax Reform Act of 1986.

I believe that was also the legislation where The Great Communicator decided to mandate all children have social security numbers.
 
Random, your assertions are inaccurate; clearly driven by political ideology and not honesty.

The legislation was called the Social Security Reform Act of 1983; it went into effect in 1984.

Reagan campaigned on a policy of making SS voluntary and reducing benefits. After he becaem President, in 1982, he proposed through HHS to reduce benifits for those retiring before age 65. The Senate rejected that proposal by a vote of 96 t0 0. A large bipartisan majority in the House also rejected the proposal. It was clear that Reagan did not have support of his own party move SS to privatization or reduced benifts...this is the time when the ideal that SS was 'the third rail' of politics' was born.

In response to this defeat, Reagan made a deal with the Speaker of the Democratic majority House, Tip O'Neil. They agreed to appoint a bi-partisan committe to propose a plan to return SS to solvency. Reagan appointed Alan Greenspan to head the commission. On the report of the Commission a reform bill based on the recomendations of the Commission was passed with large bi-partisan support. The reform bill is oftern referred to as the Reagan-O'Neil reform and is held up as prime example of bi-partisan compromise.

The main reform of the 1983 legislation was to:

1. Raise the payroll tax
2. Raise he retirement age from 65 to 67; phased in by 2027
3. Provide a 6 mo. delay in making cost of living adjustments
4. Include all government employees in the SS program
5. Make 50% of SS benefits subject to Fed Income Tax

Your assertion that Reagan's reform took SS off budget is false and would not make any difference to how the Trust Fund operates whether it was 'on budget' or 'off budget.' The operation of the account would be the same but the ledger page woud be different.

The SS Trust Fund Account was created in 1939 in the original legislation and it has not changed. In 1969 Presiden Johnson re-organized the Federal Accounting System and put the SS Trust Fund account in a 'Unified Budget', along with a lot of other programs so that they would all be accounted on one balance sheet...this is what is called 'on budget.' In 1990, after Reagan's term, it was decided to account SS off budget, but that has noting to do with what really happens with the SS revenues and how they are spent...its just an account..and it can be written in a unified statemet or in a seperate page...it doesn't change how it works. It just changes where you go to look at the accounting.

In 1993 Clinton raised the tax on SS benefits from 50% to 85%.

Nothing that Reagan or Clinton did caused any of the effects that you inaccurately suggest, and it is a misrepresentation to say that the 1983 reform was Reagan's policy when it was actually more Tip O'Neils and the democratic House majority.

Random, this is what I mean when I ask for specificity with regard to a claim.
 
If you want discuss things, that's cool, if you want to psychoanalyst my motives, you can find another playmate.

Beyond that, here are the Reagan admin changes, from the SSA itself...
"The actual form of the 1983 change was somewhat complex. It provided:

1) That the Social Security and Medicare trust funds (and the income and outgo to these funds) be treated as separate budget functions, starting with the 1985 fiscal year and ending with fiscal year 1992.

...

3) Starting with fiscal year 1993, Social Security and the Medicare Part A trust funds were not only off-budget, but were exempted from any general budget reductions that might otherwise apply to the entire federal budget (such as an across-the-board cut). The Part B Medicare trust fund, while also to be shown as a separate budget function, was not protected from general budget limitations.

Thus, in this rather complicated fashion, the Social Security program was again off-budget by FY 1985. Perhaps the more important date here, however, was the 1993 date because that date exempted the Social Security program from the potential of generalized budget-cuts."
More...

Cheers.
 
Quote from Random.Capital:

I don't see how this would ever be allowed. The reality is that SS and Medicare are (or at least have been) a huge trash can into which the federal gov't could dump/hide all kinds of fiscal shenanigans. Allowing the funds to buy anything but Treasuries would obviate the point of this structure, set up by Reagan.

I also believe it may be too late with Medicare - hasn't it crossed the "surplus" threshold and become a net seller rather than a net buyer of Treasuries?
More...

I'm not sure about the rest of your assertions, but I can guarantee you Reagan was not the one to mandate that SS buy Treasuries.
SS has bought Treasuries from the moment of its inception to now. The reason is that if they buy private assets, they are injecting the gov't into the private economy, which is anathema.
 
The SS Trust Fund does not own a single 'Treasury.'

It only buys and only owns 'Special Government Securities.'

I don't know why I have to keep pointing this out. You can go to thier site and see it. A 'Special Government Security' is non marketable and subject to changes in its terms at the will of the Treasury. It is not a security. It is not a 'Treasury,' which is a seuctiry of the United States Government. The difference matters. Stop ignoring it. A 'Treasury is a legal contract between the government and a second pary, a secured marketable transaction that is cognizable and enforceable at law. 'Special Government Security' is not a contract, it is an accounting entry that denotes a debt owed by the Government, from its Treasury account, to the Government, in its SS Trust Fund account. It is not a legal contract. It is an internal accounting device. Its terms can be changed at will. It is not a 'Security'. It is not enforceable at law. It is only enforceable through political action.
 
Random, I apologize for taking the analytical leap that your comment was ideologically motivated. I did not meant to psychoanalyze you; I was just reading what you wrote. So, lets forget the ideological motivation. I stand by the rest of what I said.

Part of what I said applies again here, it does not matter if it is on budget or off budget...not to what you complain of. It is a different accounting page, it does not change what is in the faux 'Fund' or how it operates. By taking it off budget, then it would be exempt from broad budget reductions, like in the even of an across the board budget cut. Of course you cannot cut the benfit terms of SS or Medicare with out new legisaltion so I am not sure it makes any difference that it was removed for that protection anyway. Bottom line is that non of this has anything to do with mopping up Treausry bills to fund deficits.

The accrued debt owed to SS Trust Fund account by the U.S. Treasury has always been accounted in terms of 'Special Government Securities,' and this accumulated intergovernmental debt has always been included in calculation of the National Debt that are subject to the debt ceiling.

What you said about what Reagn did in the 1980 was obviously untrue.
 
Quote from Ed Breen:

The SS Trust Fund does not own a single 'Treasury.'

It only buys and only owns 'Special Government Securities.'

I don't know why I have to keep pointing this out. You can go to thier site and see it. A 'Special Government Security' is non marketable and subject to changes in its terms at the will of the Treasury. It is not a security. It is not a 'Treasury,' which is a seuctiry of the United States Government. The difference matters. Stop ignoring it. A 'Treasury is a legal contract between the government and a second pary, a secured marketable transaction that is cognizable and enforceable at law. 'Special Government Security' is not a contract, it is an accounting entry that denotes a debt owed by the Government, from its Treasury account, to the Government, in its SS Trust Fund account. It is not a legal contract. It is an internal accounting device. Its terms can be changed at will. It is not a 'Security'. It is not enforceable at law. It is only enforceable through political action.
More...

Yikes. I forgot you were arguing this nonsense.
Separate Federal agencies can and do sue each other all the time. If the Treasury defaults, on Aug 3 the SSA can go into court and sue as a creditor.
I've read the same thing as you did about those securities. Point out to me where they say it's not a legal obligation. In other words, prove it.
 
You give me a casual observation that you notice that sometimes agencies can sue the government and then you assert, incorrectly that SS can sue the government as a 'creditor.' Obviously you don't understand the law or anything that I have been talking about. What is this that you don't write anything specific, you don't cite to any case where the SS has sued the Gov't as a creditor or on the basis of a 'Special Government Security.' You don't even explain how such a 'default' of that faux security would occur and why and who would have standing to bring an action, and you demand that I 'prove' it? You have not even identified what 'it is.' It seems to me that you have burden of proof.

Yes, agencies sometime sue the government...so what?

What does that have to do with the distinction between a 'Treasury' and a 'Special Governmental Security'?

The difference is that the Treasury holder can sue as a 'creditor.' The cause of action will arise under contract law and the action will be a default under the Treasury Security contract.

No such cause of action can arise with regard to a 'Special Governmental Security,' because it is not a contract, it is an intergovernmental accounting entry that keeps track of what one part of the government owes to the other.

A suit from the Social Security would have to arise under administrative law or statute, and not under contract. The cause of action would arise with regard to the benefit, and only those denied a benefit under the then existing statutory scheme would have standing to bring a suit. The Trustees of the SS Trust Fund would not be able to bring suit against the Treasury under a contract ('Creditor') cause of action because there is no contract.

In addition it is not likely that any direct default under the political promise that is a 'Special Government Security' would ever take place. Because the Treasury can change the terms of the securities at will they will simply make changes, that under a contract would themselves be events of default, but that Treasury has license to do with these faux securities because the legislation allows them to. In addition the Congress will change the benefit structure so that there will be no 'benefit' default that will be actionable....they will simply reduce the benefits and change the term of the faux securities so that there is no 'default'. That is why I say the remedy is political.

Another thing you need to understand is that there is no current problem with performing SS benefits. There is enough revenue coming in every day to make current benefit payments. There is no direct reason why SS payments would not continue under a Debt Ceiling Impasse. In fact, the current procedure of the Treasury is to first pay current benefits with current SS revenue and then only apply the surplus to other government spending. The decision to stop paying SS benefits even when they are currently self funding, is a political decision that could lead to legal action...but not as a creditor...it would arise as default under the SS legislation as a failure to pay a benefit when due under the current law...it will not be a 'creditor' claim
.
 
You must log in or register to reply here.
Back
Top