Comments for The Social Security Trust Fund and the "Money Has Been Spent" Line at http://www.cepr.net , comment 1 to 35 out of 20 comments http://www.cepr.net Wed, 19 Jun 2013 11:58:34 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16225 Gong Ling happy laughing: "well, girls! Small children were registered, Adidas Porsche Design Bounce Shoes small King handsome reward you. " Being called for small children were registered by adidas porsche design bounce Adidas Porsche Design S2 shoes eunuch look cheerful: "Xie Zhuzi! adidas porsche design bounce shoes little slave too bold, do you want my people slap SB. on adidas porsche Adidas Porsche Design S3 design bounce shoes face under 30? " - Adidas Porsche Design Sun, 29 Apr 2012 14:58:23 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16198 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 - Don Levit Fri, 27 Apr 2012 05:11:23 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16180 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. - Roanman Thu, 26 Apr 2012 11:11:18 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16176 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. - Calgacus Thu, 26 Apr 2012 10:16:04 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16167 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. - mel in oregon Thu, 26 Apr 2012 06:30:47 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16163 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 - Don Levit Thu, 26 Apr 2012 05:09:16 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16159 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: [i]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.[/i] 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: [i]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. [/i] - Bosco Thu, 26 Apr 2012 03:35:24 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16148 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. - urban legend Wed, 25 Apr 2012 16:19:24 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16147 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. - Barkley Rosser Wed, 25 Apr 2012 13:18:34 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16146 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 - Don Levit Wed, 25 Apr 2012 12:27:47 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16145 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 - Don Levit Wed, 25 Apr 2012 12:23:21 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16144 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/joshbarro/2012/04/23/how-to-fix-the-social-security-solvency-crisis-for-just-49-99/ - joe Wed, 25 Apr 2012 12:19:33 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16142 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. - pete Wed, 25 Apr 2012 11:22:12 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16141 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. - Barkley Rosser Wed, 25 Apr 2012 11:01:55 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16140 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.[i][/i] 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?[i][/i] 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. - John L Wed, 25 Apr 2012 10:54:16 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16139 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. - skeptonomist Wed, 25 Apr 2012 10:27:58 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16138 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. - pete Wed, 25 Apr 2012 09:45:44 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16137 Wharton professor off the beam - this can't end well. - fuller schmidt Wed, 25 Apr 2012 09:41:55 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16135 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 - Don Levit Wed, 25 Apr 2012 09:30:32 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-social-security-trust-fund-and-the-qmoney-has-been-spentq-line#comment-16134 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. - mel in oregon Wed, 25 Apr 2012 08:09:51 +0100