Comments for Will a Partial Default on the National Debt be Necessary to Get the Deficit Under Control? at http://www.cepr.net , comment 1 to 12 out of 12 comments http://www.cepr.net Mon, 20 May 2013 04:34:48 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-936 Dean, Could you please name the offending Post writer. Lori Montgomery deserves to be singled out as the most egregious budget bs-er at the Post. She is pathologically incapable of writing an honest story about the budget and her incapacity to get her mind around the actuality of Social Security makes her deserving of special derogatory mention. It probably wouldn't change the Post's reporting, but it might bring her to the Fiscal Times in the next Post buy-out. Which would shrink her audience (I hope) and cluster all the budget hawk/ucksters at this Pete Peterson site. - grooft Sat, 12 Jun 2010 16:10:19 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-898 This reminds me of the advice investment experts tell us that we should not invest all our retirement savings in the company we work for, to prevent what happened to Enron and Worldcom employees. Our trust fund has invested all its funds in US Government bonds, and it looks as though we are going to get the same deal. - Richard Thu, 10 Jun 2010 17:59:05 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-895 Congress could pass a law tomorrow obliterating all of the $11B+ of US debt, but this would still be, by definition, default. The legality and even "practicality" of how SS is handled are not the important points, it is who is going to pay more in taxes and get more in benefits in the future. The attempt to repudiate the Trust Fund is a matter of shifting the burden of paying for present and future debt from income taxes on high-income people to payroll taxes on wages and salaries only (up to a limit of about $100K), and denying the benefits of SS to people who have already paid for them with payroll taxes. There is really no reason for low-and middle-income wage-earning people, who are the very great majority in the country, to put up with this, and they would not if they understood the issue. Privatization of SS would provide even more short-term benefits for Wall Street and owners of stock, so it is always lurking in the background. - skeptonomist Thu, 10 Jun 2010 04:14:46 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-893 It looks as if the "¡Smash Social Security!" folks win this round verbally. Dr. Baker wants to make the gentry feel ashamed of themselves for causing their Uncle Sam to be "in default." But what threat is that to Peterson People, who take for granted that the icky Fedguv can never do anythin' right anyway? Healthy days. - JHM Thu, 10 Jun 2010 00:42:32 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-891 Eric, your argument is well reasoned, but some of us may take issue with your use of the phrase "we are a democracy", upon which it hinges. In our view, the "specific enactment of new legislation re-directing these assets" would not be the result of a popular mandate but of well-funded, self-serving special interests, as others have stated. - diesel Wed, 09 Jun 2010 15:28:03 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-890 Default is not an accurate description of what potentially is afoot. The asset value of the redeemable debt is still going to exist, only it won't be available for the purpose that it was ostensibly bought for. Fraud is a better word here. But even fraud is not a useful description as we are a democracy and such a eventuality would be the result of specific enactment of new legislation re-directing these assets, at least partially, in other directions. It is a strong point that the nation accumulated these funds for the purpose of Social Security, but that does not compel any future Congress to respect the current arrangement. If other obligations are perceived to be more important, it will not matter what the purpose originally was. It is good to argue that applying the redeemed debt to SS is the only fair way to proceed, but supporters should also begin making the case that it is also the best use of these resources, because that is going to be a very big factor in what eventually happens. - Eric Wed, 09 Jun 2010 07:38:41 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-887 SS is old age insurance paid by the govt...originally sold as kind of an annuity to get past the folks who did not like its socialist underpinnings. But the taxes and "trust fund" are irrelevant, courts have already ruled this, though the tax is a sweet pro growth 13% flat rate that should be expanded to more income, and the rate raised, while reducing higher marginal rates. The choice of "lowering the return" on the annuity, or "defaulting on the bonds" is entirely up to congress, is not a "taking" or anything of the sort. It is entirely similar to deciding how much welfare payments or housing subsidies should be. Yes, in 1985 they lowered my "rate of return" on my SS annuity, by raising the tax and extending the retirement age. And they can do it again. Get over it. - romanticatheart Wed, 09 Jun 2010 06:18:11 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-884 I frequently use the word "default" when discussing plans to pare back Social Security benefits. I'm glad to see that Baker is getting the message out. - Quiddity Wed, 09 Jun 2010 05:30:40 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-883 SS bashers play a deceptive game with talk of "adjusting" payout rates. Projections 30 years into the future, to the time when the Trust Fund runs out (as was always intended), show that rates may have to be adjusted somewhat for a smooth transition. If the economy is currently doing poorly, as at present, the projections are that payouts will have to be reduced; if the economy is booming, the payouts might need to be increased, but we don't hear about it when this is the case. So yes, everyone agrees that there will have to be "adjustments", but there is no crisis about this and it can be handled by SS authorities. SS bashers want something else; they want SS benefits to be cut drastically to make up for the deficits which were run up in the rest of the Federal budget (the "on-budget" part). These deficits were largely the result of income-tax cuts for higher brackets, on income which was not subject to SS tax. The $11B+ debt which the US currently has is not due either to SS or health care expenses, and SS will not contribute to this in the future. Dean's last paragraph may be garbled, so it is worth restating the main point; any drastic decrease in payout of the Trust Fund means that the government would be defaulting on its debt to those people, mostly baby boomers (born 1945-1973), who have been paying their SS payroll taxes since 1983. If this is clearly understood by the public it is very unlikely that SS payouts would be cut. The WaPo and other SS opponents do their best to confuse the issue. They have several real self-interested motives, including preventing any increases in upper-bracket income taxes and capital-gains and dividend taxes (which do not go into the SS system). - skeptonomist Wed, 09 Jun 2010 05:11:55 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-881 You left out "to default" on the second last sentence. - Bloix Wed, 09 Jun 2010 04:52:01 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-880 You are right that the post should not have said "if" in "[b]If[/b] Treasury would repay billions of dollars in surplus Social Security taxes borrowed over the years,". The correct word is "[b]When[/b]". But if Congress adjusts the details of Social Security, either by raising more taxes, limiting benefit growth, or changing how disability claims are handled, that does not imply a default on those bonds. You claim ".. decision to cut benefits would effectively mean defaulting on these bonds " is false. The bonds can be paid off and also benefits cut. It would be equally absurd to claim that if we raise SS taxes that the Trust fund bonds are effectively defaulting. - AndrewDover Wed, 09 Jun 2010 04:40:47 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/will-a-partial-default-on-the-national-debt-be-necessary-to-get-the-deficit-under-control/#comment-879 By all means, it is more important for the federal government to keep the Trust Fund on its books as a liability forever rather than use it for its intended purpose. Cutting benefits reveals the 1980's 'reform' for what it was....a tax scam. - bobbyp Wed, 09 Jun 2010 04:26:40 +0100