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Home Publications Blogs Beat the Press The Social Security Trust Fund and the "Money Has Been Spent" Line

The Social Security Trust Fund and the "Money Has Been Spent" Line

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Wednesday, 25 April 2012 00:42

With the release of the latest Social Security trustees report the scare stories have been coming fast and furious. In this vein, Marketplace radio had an interview with Olivia Mitchell, the head of the Pension Research Council. In this interview, Mitchell commented on the bonds held by the Social Security trust fund:

"If you take a narrow view, what you understand is that there's a trust fund, which is supposed to be the piggy bank whereby if the funds run short, the Social Security Administration can go and claim these bonds. But if you take the broad view -- which I do take -- you have to understand that the money actually has been spent. And so what it means is we'll either have to raise taxes, or cut expenditures, or issue more debt to be able to pay the scheduled benefits."

Of course Professor Mitchell's "broad view" would apply to any bonds issued by the federal government. For example, if Peter Peterson were to decide to cash in $1 billion in U.S. government bonds on their due date, the government would have to "raise taxes, or cut expenditures, or issue more debt" to be able to pay off Mr. Peterson's bonds.

Ordinarily we would not say that this fact means that Peter Peterson does not actually have the $1 billion in wealth implied by his bonds. In fact, the government's financial situation would probably never enter a discussion of Peter Peterson's wealth. In the same vein, since Social Security has a separate account under the law, it is hard to see what relevance Professor Mitchell's broad view has to the system's finances.

Comments (35)Add Comment
It's Called Hypocrite
written by James, April 25, 2012 2:11
Gov't needs to honor their debts to creditors/investors bc if not paid Peterson, Money Mkt funds, etc., then that would ruin our credit rating and will increase our borrowing cost in the future.

But, who care about if the bondholders are our citizens who worked and paid into the funds. They are not the powerful and influential folks.

According to Fox News Hannity, the destitutes could live find rather easily with meager resources - eat beasn and throw in some cheap meats. There are your protein.
Words mean something ...
written by David, April 25, 2012 6:11
Commitments are to be honored. 'Bond' implies the commitment to pay. Obviously the wealthiest country on the planet has the means to meet these commitments when they come due, a temporary bump in the road, that's life. But the wealthiest in this country, giddy with the lowest tax rates in a century are willing to chuck the social commitment of their parents, whom they call the Greatest Generation. The trust fund babies of that greatest generation (specifically, the Koch brothers, Mr. Peterson etc.) seem to value convenience over generosity, and selfishness over the common good. They would cook the goose that lays the golden egg. Penny-wise and pound-foolish, these people of small imagination and small heart claim breadth of view, but in reality can't see past their own nose. But they are oh so clever in justifying their abdication of responsibility to the whole ("every man is an island, an island I can own"?).

I wonder who funds the "Pension Research Council"?
SS Bargain
written by bakho, April 25, 2012 7:05
Reagan cut taxes for the wealthy and raised payroll taxes on the Middle Class to boost the SSTF. IMPLICIT in that bargain is that the tax breaks that came from shifting Federal Taxes on the Wealthy to payroll taxes on the Middle Class would END and the wealthy would be picking up their fair share of the load sometime in the future.

The wealthy got their money. They are not grateful for that tax break. Instead they believe they are entitled. Now they are trying to squirm out of the bargain. Reagan structured the deal so the wealthy would have the potential to cheat the rest of us. We cannot allow the wealthy ingrates to cheat the rest of us out of their obligations. Of course taxes on the wealthy are supposed to go up. The tax break they got by shifting their taxes onto the Middle Class was always supposed to end.
Not Spent
written by Phil, April 25, 2012 7:13
Invested.

Does an insurance company "spend" your payments when it purchases stocks or land? No, it invests them for when you need it. Same with the government. It invested in education, infrastructure, military, etc.
What about growth? —and Mitt Math
written by William Berkson, April 25, 2012 7:33
The lady conveniently doesn't mention that economic growth can produce more revenues. It's a static view of the economy that a basic falsehood. The question is whether the economy will grow or not.

I'm now calling this dishonest accounting "Mitt Math", with the 92% being the prime example. Here's a detailed real account of women's employment with newly published numbers on labor flows: http://therepublicon.blogspot....omens.html
...
written by skeptonomist, April 25, 2012 8:55
Yes, the federal government has spent the $2.6T in the Trust Fund which was collected through payroll taxes, but it has also spent $11T additional, and what Mitchell said applies to all this. If all this were actually to be paid back, taxes would have to be raised (and there is no reason why they should not be). What has happened historically to large debts, however, it that they have become insignificant as the economy has grown. For example this happened to the debt of the British government from the Napoleonic wars and to that of the US government from WW II. When the economies of countries have not grown after the accumulation of large debt, they have been in trouble.

What Peter Peterson and other SS opponents are concerned with is not the return on their bonds, but whether they would have to pay more in income taxes as the obligations of the Trust Fund are redeemed to pay for the SS benefits of baby boomers. Basically, upper-income people pay most income tax, while lower-income people pay mostly payroll taxes. Of course Wall Street would like to abolish SS altogether, as they would like to earn commisions on the money which currently flows through the program. Actually, what they would like best is to have the money collected by the government and go into private investment accounts.
Preceding
written by Jeffrey Stewart, April 25, 2012 9:25
"What Peter Peterson and other SS opponents are concerned with is not the return on their bonds, but whether they would have to pay more in income taxes as the obligations of the Trust Fund are redeemed to pay for the SS benefits of baby boomers." -skeptonomist


How does it follow logically that redeeming SS special issue bonds will in any way cause income taxes on higher incomes to rise? Is there something missing here?
...
written by skeptonomist, April 25, 2012 9:56
In a few years money will start to flow out of the Trust Fund as boomers retire - this is exactly as planned by Alan Greenspan's commision back in 1983. This money will either come from current revenue or from selling more government bonds. It will not come from payroll tax revenue, the rates for which will remain reasonably constant (though they do have to increase gradually because of the increasing proportion of retirees). Payroll taxes do pay for all of current SS benefits, and will pay for most of them in the future, but because of the excess boomer population their retirement has to draw on the Trust Fund. Again, this is exactly as planned.

Since the money in the Trust Fund has actually been spent and is not sitting around as gold pieces in the SS vault, the outflow from the Trust Fund will have to come from current income tax revenue (or from rollover of the debt and issuance of bonds to the general public). This revenue is supplied mostly by upper-income people - remember a large fraction of earners in the US pay no income tax at all. In summary, working-class people built up the Trust Fund by payroll taxes while income-tax rates on higher brackets were being cut since 1981, and now it is time for the income-tax payers to pay their share. If the Trust Fund is not paid out and largely exhausted by the time all boomers are gone, around 2050, there will have been a transfer of income upwards and boomers will have been cheated.

As I have said before all this is not so complicated that it should not be understood by people who are reasonably sophisticated financially - for example businessmen who work with double-entry bookkeeping - but it is evidently too hard for the average voter (or even many pundits with columns in important newspapers), particularly as they are bombarded by completely false propaganda about how SS will be "bankrupt" in 2033.
Dean spouting Ricardian equivalence now?
written by pete, April 25, 2012 10:03
Yes the money has been spent on goods and services or transferred. That is the notion of credit is it not? Why is this coming up as news? Only because folks have been led to believe that there is some diversified SS pension fund relying on corporate earnings instead of taxes? That's due to the SS fraud again, framing it as a defined benefits fund when it is actually structured as a pay as you go system, with payouts entirely dependent on congress. SS payouts rely on future tax revenues, either the 12.5% flat payroll tax or the progressive portion, just as much as the Pentagon does, there is simply no difference.

Admitting these future taxes are an issue is the first step to recovery.
...
written by Jesse, April 25, 2012 10:06
The discussions around Social Security are at the epicenter of the corruption of reason by the monied interests and their enablers.

I have used the 'Bonds' argument to punch a gaping hole in the 'Trust Fund Bonds have been spent' argument.

It is amazing what is rolling out now. How about raising the deduction cap on SS to keep pace with inflation? Oh no, that would be a 'tax increase.'

They Get It !
written by coberly, April 25, 2012 10:11
Dean

I have never been so pleasantly surprised by a comment thread. Your readers essentially understand the scam.

What they need is leadership to find a way to counter the Big Lie in public media so that all the people can understand.

We don't need narrow technical discussions of this or that "little lie." We need to tell the people that Social Security has NOTHING to do wiht the deficits. Social Security is not going broke...ever.

And that if the next generation is going to live longer than the last and still want the same monthly replacement rate (promised benefit) all it needs to do is raise its own payroll tax about one half of one tenth of one percent per year... that's about forty cents per week while wages are rising eight dollars per week over the same time.

I know there are other "favorite ideas" out there, but people need to at least know the size of the problem... namely, so tiny you'd never notice it without all the Big Lies being screamed at you by the "press."
Right
written by Jeffrey Stewart, April 25, 2012 11:10
"...the outflow from the Trust Fund will have to come from current income tax revenue (or from rollover of the debt and issuance of bonds to the general public)." -skeptonomist


Right. That doesn't necessarily imply higher taxes on the highest incomes. Dr. Baker never tires of pointing out that the US would have long term budget surpluses if it wasn't for the broken capitalist, private health care system. Thus, it's far from certain high income recipients would have to pay higher taxes as the Trust Fund bonds are rolled over. Thus, they're fearful of something that isn't set in stone and that they have the political power to block anyway.
...
written by Eric 377, April 25, 2012 11:55
How does it follow logically that redeeming SS special issue bonds will in any way cause income taxes on higher incomes to rise? Is there something missing here?"

It does not guarantee that the net funds required for redemption will come from income tax increases on higher incomes, but it is probable. Easier I think to shove many hundreds of billions to the future by reducing benefits (increasing benefits age) than to leave the structure alone and force the funds out of other revenue streams. If you leave the structure alone, I think Peterson would correct to view increased income tax rates at higher incomes as the likely source of needed revenues.
...
written by Don Levit, April 25, 2012 12:09
We know the trust fund principal and interest have been spent on other government expenses over the years, lowering the deficits.
There is no store of wealth in the trust fund as there would be in private retirement plan trust funds.
In the private sector, you liquidate pre-paid investments to pay benefits.
Social Security was supposed to work that way for excess contributions.
They were supposed to be invested in special issue Treasuries, which were to be used only for Social Security beneficiaries. If that had been done, instead of spending the money on other expenses, these bonds could have been liquidated instead of having to come up with new general revenues to make up for the SS cash shortfall since 2010. Yes, government bonds are redeemed by new general revenus. But these special issue bonds were supposed to be left intact. They were not, and we are having to pay the price of new general revenues to redeem bond interest, and soon to be , bond principal. This is the very thing Roosevelt did not want Social Security to incur - the need for new general revenues. It was to be a self-supporting system.
Don Levit
it was too good to continue
written by coberly, April 25, 2012 12:45
Don Levit does not understand Social Security. But we have already told him that.

The United States is much like a corporation as far as getting paid for services and investing for better returns is concerned. Levit can't understand that so he confuses himself and anyone who listens.

The money borrowed FROM Social Security BY The United States of America is an ordinary loan, being repaid the ordinary way. While it was borrowed it was used, arguably, to make the country stronger and richer so the taxpayers can afford to repay what they borrowed (through their elected representatives) from the Baby Boomers, who lent it to help equalize the payroll tax burden that would otherwise have been created by their larger numbers. There is no mystery here.

Levit does not understand that "general revenues" are the way the country normally pays its bills. He is confused because Social Security is "government run," and does not understand that it is still a separate legal entity from "the general fund" and that in for the most part the taxpayers who pay the general taxes are not the same people as the taxpayers who pay the payroll tax.

The "new general revenues" do NOT pay for Social Security. They pay for the stuff "we" bought with the money we borrowed from Social Security. Paying BACK Social Security the money you borrowed from it is NOT paying "for" it.
the wealthy really are different from you & me
written by mel in oregon, April 25, 2012 1:09
ever go to a corporate meeting when a ceo, vice president or national manager tells you what you need to know? they invarably come from a wealthy priviledged background. unfortunately these people never learn from experience, their outlook was formed when they were children bossing the servents around. so they have this natural feeling of entitlement. looking down on workers & lower level employees is just as natural to them as breathing. that's why when someone asks a question, they are apt to question the motive of the questioner rather than give a meaningful answer. they control our corporations, military, politics, the media & the churches. and invariably these "leaders" don't have much sense. that's why the depression will go on for probably several decades, & also why these "leaders" will ruin such a good program as social security brought forth by the great fdr, & proceeding down the road to ruin by the pinhead ronald reagan.
It was too good to continue
written by Don Levit, April 25, 2012 2:30
Coberly:
As usual, you did not answer my statement about the special issue Treasuries to be reserved for Social Security beneficiaries.
Roosevelt did not want the system set up with ordinary loans to pay the ordinary way. It was originally envisioned to remain intact, and not be used as traditional bonds are used. That's why they are called special issue nonmarketable Treasuries.
The use of general revenues to redeem the Treasuries in the trust fund also was not in the original plan, as Roosevelt wanted the program to be self-sustaining, without the use of general revenues.
That means, in my opinion, without using general revenues to redeem bonds, as is normally done.
Since you fail to address these facts, I assume you do not have a legitimate response.
Don Levit
...
written by fuller schmidt, April 25, 2012 2:41
Wharton professor off the beam - this can't end well.
Trust fund illusion
written by pete, April 25, 2012 2:45
The easiest way to think of the trust fund is as treasury stock, that is shares of a company which are owned by the company. They sort of represent the claim on the future earnings of the firm, but that is really irrelevant since those claims would simply be given pro rata to nontreasury stockholders. I.e., treasury stock is not wealth, and the size of the treasury stock does not affect the value of equity. Analogously, the size of the trust fund does not affect the size of the SS liabilities, and the fact that they will be paid out of general revenues. The fraud of redeeming SS bonds, whereby the SS folks go to the Treasury for cash, which means the Treasury issues regular treasuries, to raise cash, to pay SS benefits, is simply mind numbingly silly. How can sophisticated folks think this makes any sense? The politics I understand, getting the system passed Roosevelt had to tell a little lie about it being a defined benefits package, even though legally it is a pay as you go system. The SEC would charge fraud for such a blatant scheme.
...
written by skeptonomist, April 25, 2012 3:27
The investment of the Trust Fund is covered in section 904 of the SS Act of 1935, as amended in 1939. Special Treasury issues are authorized with certain restrictions as to interest rate, but there is no restriction as to what particular revenue may be used to redeem those obligations; that is, there is nothing to distinguish them from normal Treasury bonds in that respect. The Trust Fund may also buy ordinary Treasuries if their interest rate is greater than the average value used for the special issues.
Don Don Don...
written by John L, April 25, 2012 3:54
Don, what did you think 'special issue nonmarketable Treasuries' were? Let's go over this slowly...
Payroll taxes exceeded benefits due. The SS trust fund needed to do something with this cash. It could have bundled it onto pallets, but instead, the SS trust fund lent the excess payroll tax revenue to the Treasury. In exchange, the Treasury issued the IOUs. The Treasury then spent the money. What else did you think Treasury would do with the cash it borrowed? (Alternatively, what other explanation exists for why they borrowed it in the first place?)
The day will come when the bonds will come due. At that point, the Treasury will pay what it owes.
The Treasury will need money to pay what it owes. Where does the Treasury get money? It sells bonds and collects tax revenue.
Concerned that politics will prevent it from collecting sufficient tax revenue? The Treasury can still sell bonds. In addition to the general market, it can also sell bonds to the Federal Reserve. The Federal Reserve controls our currency. That means, if they want to issue $10T in brand new US$ currency in order to buy bonds from the Treasury, the Fed pushes a button on a computer and PRESTO! the money exists.
The creation of new $$ is, everything else equal, inflationary, but so what? The public policy decision between potentially inflationary expansion of the monetary supply and potentially contractionary imposition of taxes is a political matter, but the SS trust fund will get paid back, either way. Reneging on the bonds is totally unnecessary under any circumstances for a country that has its own currency.
Fooling with the numbers
written by Barkley Rosser, April 25, 2012 4:01
Dean is right that Olivia is blowing wind about bonds that are not really different from any others. Something that those of us long objecting to the misrepresentations by SS critics have not really dealt with very well is the cut in fica implemented by Obama. I shall say that I made a negative comment about this on Econospeak when it was first done, and now after the House GOPsters showed themselves to be hypocritical fools by trying to undo that particular tax cut (only), it looks like this "temporary" tax cut will now be permanent. There are several points to note on this.

One is that we already know what will happen when the trusst fund "goes bankrupt." We'll just pay the promised benefits out of general revenues and that will be that. How do we know that? Because the current shortfall due to the slowed economy and this fica cut are already being duly covered out of general revenues with barely a scintilla of question, aside from this absurdly flawed effort by House GOPsters to undo it.

Second is that it really does raise underlying questions that are usually avoided. In the past I have often given people hassles who insisted that really there is only one budget and it should be looked at as such, that focusing on the balances of the trust fund and its expected inflows and outflows was misguided. This does send us back both to the origins of the system and to the changes made under Reagan, and I agree fully with bakho's remarks above on this matter.

So, the whole reason we have this setup is in some sense a political shell game that FDR borrowed from Bismarck, the cover game that people were "investing" in "social insurance" with their fica taxes rather than that current recipients are being paid by current taxpayers, pretty much irrespective of whatever balances there are or are not in the official trust fund.

Which brings us to the "reforms" of Reagan. Essentially what Reagan did from the perspective of the unified budget was to shift much of the tax burden from high income income taxpayers to lower and middle income fica taxpayers, using the rubric of "saving SS for the baby boomers" as the excuse for this regressive move in the entire system. Obama's cut in fica has somewhat exposed this sham, although until people realize what is going on, there is a danger that this could heighten the hysterical rhetoric of those calling for SS bennie cuts.

Really, we should probably go to the Australian system. Just get rid of the trust fund and the regressive fica and pay all "entitlements" directly out of general revenues. Certainly would simplify the accounting and might also get these hysterics to focus on what is really the problem (as Dean has long noted), the out of control increases in costs of our general health care system.
Barkeley
written by pete, April 25, 2012 4:22
I think you misspoke, you say misrepresentations by the critics, but it is the misrepresentations of the defenders which you acknowledge that are also a problem. Hence the solution, as you correctly point out, is to completely sever any (obviously fraudulent) rhetorical ties between the payroll taxes and the benefits...and create what FDR could not for political reasons old age insurance...a basic level of aid to folks with insufficient saving, phasing it out over wealth levels or something.
our own currency
written by joe, April 25, 2012 5:19
At some point Dean will realize what it really means to have your own non-convertible currency. It makes not a lick of difference how many bonds or gum wrappers or used tissues are in the SS trust fund, the federal govt can ALWAYS make the social security payments. The only things that matters at all are if we as a society are productive enough to support our retirees, and if we can all finally pull our heads out and realize how money works. Please see http://www.forbes.com/sites/jo...ust-49-99/
Special-issue treasuries
written by Don Levit, April 25, 2012 5:23
Skeptonomist:
According to a paper entitled Trust Fund Data, published by the Social Security Administration:
"All securities helld by the trust funds are 'special issues' of the U.S. Treasury. Such securities are available only to the trust funds."
http://www.ssa.gov/oact/ProgData/fundFAQ.html.
Hmm, I wonder how the trust fund got authorization to lend those securities to the treasury to pay for other expenses, if only the trust funds could use them?elkrj
Don Levit
What does the SS trust fund do with this cash?
written by Don Levit, April 25, 2012 5:27
John:
I did not set up Social Security. All I know is that those special treasuries are available only to the trust funds, which are available only to pay benefits and administrative expenses.
How are they able to do this and accrue interest?
Beats me. Either the law was not administered correctly, or the law was flawed from the start in that the trust fund execution could not meet its objectives.
Don Levit
Replly to Pete
written by Barkley Rosser, April 25, 2012 6:18
Your point is well taken. However, the cynical realist in me says that this will not happen. The Congress (particularly the Senate) is so tangled up it can barely pass a resolution praising the flag and apple pie without turning it into a humongous mess. I am not being critical of the critics of the critics. It is the critics who are totally full of it. But I do think it is worthwhile being fully aware of what is really going on with the sytem.
...
written by urban legend, April 25, 2012 9:19
All these "it's really this" and "it's really not that" about Social Security -- pay-as-you-go, investment, etc., etc., trying to find a frame of reference in other types of systems -- are really quite silly. It is what it is, and what it is is, like an investment but not exactly, established by law. It, like any investment, is real only to the extent the law makes it real. You make payments into the system and subject to modest progressivity adjustments designed to assure a minimum benefit to those who were only able to meet the minimum qualifications -- consistent with the purpose to prevent poverty among old people -- those payments establish what your benefits will be in accordance with law. All we have is the law. Saying the tie between the payroll taxes and benefits is merely rhetorical and fraudulent is, in both cases, wrong. The tie is legal, and, accordingly, compulsory to every bit the same extent as the interest and your right to principle in the money you lend to the government.
Special Issue Treasuries
written by Bosco, April 26, 2012 8:35
Don, the Trust Fund does not lend the special issue securities to the Treasury. The Treasury gives the special issue securities to the Trust Fund in exchange for cash. It is the Trust Fund that holds the securities, not the Treasury. As the link you provided states: Tax income is deposited on a daily basis and is invested in "special-issue" securities. The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.

Those special issue Treasuries are only available to the Trust Fund -- meaning the Treasury cannot sell those securities to other entities. Regular Treasury bonds can be sold to anyone. Again from the link you provided: In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash.
Special Issue Treasuries
written by Don Levit, April 26, 2012 10:09
Bosco:
You wrote from my excerpt: The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.
Exactly my point. The cash is used for all government expenses, not reserved for SS beneficiaries. It should never have gone into the genera; fund to be used like any other cash that resides in the Treasury's general fund.
Don Levit
social security
written by mel in oregon, April 26, 2012 11:30
the main point in all this arguing & showing some website that explains everything is this: the social security trust fund surplus has diverted more than $2 trillion from it to the general united states budget since 1987. look it up, end of discussion.
...
written by Calgacus, April 26, 2012 3:16
Don, Mel: What would have happened if the "trust fund surplus" had not "gone into" the general fund? (The correct way of saying this is "What if government spending had not at least matched the additonal, confiscatory SS overtaxation?") The destructive effect of the (utterly unnecessary & destructive) SS overtaxation & the Giant Teddy Bear Trust Fund Surplus it created, in our demand-constrained economy, would have wrecked the economy.

Government Surpluses - Destructive. Unsustainable. BAD
Government Deficits - Usually helpful. Always sustainable. GOOD

The government spending - the "borrowing" from SS (a gubmint exchanging gubmint currency for gubmint bonds ain't borrowing, but a performing a completely different transaction) was the necessary replenishment of blood that SS overtaxation drained out of the economy. Without this blood replenishment, the economy wouldn't have had enough blood in it to supply the trust fund tax drain. The spending enabled the Giant Trust Fund to be created - not vice versa! Modern standard econ gets everything, says everything backwards, unlike the more advanced science used when SS was designed, now called MMT.

Problem was the blood replenishment was directed to welfare-for-rich-leeches. Just rebating it back - effectively reducing SS taxes to the HIGHEST sane level, the FDR pay-as-you-go plan - would have been far better. The Greenspan-Reagan 1983 "Save SS" (meaning destroy SS) tax hike & the Giant Vampire Teddy Bear Trust Fund it created was the problem. There was no problem in the future baby boom retirement. It was all a Big Lie.
...
written by Roanman, April 26, 2012 4:11
The author states, "Ordinarily we would not say that this fact means that Peter Peterson does not actually have the $1 billion in wealth implied by his bonds. In fact, the government's financial situation would probably never enter a discussion of Peter Peterson's wealth. In the same vein, since Social Security has a separate account under the law, it is hard to see what relevance Professor Mitchell's broad view has to the system's finances."

I would think that the only relevance having to do with Prof. Mitchell's "broad view" revolves around whether or not people's claims on or to Social Security will actually be paid in full and if paid will it be paid in dollars that are even remotely comparable in purchasing power with the dollars that were paid in.

Of course the money was spent and continues to be spent on very little one can honestly call an investment. It has gone to multiple wars, the TSA, multiple federal police forces enforcing multiple nonsensical laws. Multiple frauds, scams and cons foisted on our incompetent federal employees and purchasing agents from ACORN shenanigans to six figure toilet seats.

You can pick any number of dumbass government programs each as the case may be, simultaneously beloved and reviled depending on one's political affiliation.

Only the bonds remain. The real question is, "Are they any good?"

Personally, I'm betting not.
The SS trust fund
written by Don Levit, April 27, 2012 10:11
Mel and Roanman are stating facts.
Calgacus' statement about the goodness and badness of surpluses and deficits is mere opinion.
"The spending enabled the giant trust fund to be created," written by Calgacus:
Incorrect. The trust fund, if left intact for Social Security beneficiaries, exclusively, would have built up with the same numbers.
How was that to be achieved?
Beats me. I didn't write the law.
The difference is that the trust fund would represent a store of wealth that could be liquidated, not a hollow artifact of its prior self, a mere accounting mechanism able to draw on the general revenues of the Treasury, without an appropriation - like all government expenditures, like Medicaid.
Don Levit
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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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