Comments for Lesson for Reporters: Social Security Does NOT Add to the Budget Deficit at http://www.cepr.net , comment 1 to 18 out of 18 comments http://www.cepr.net Wed, 22 May 2013 13:48:52 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18193 Buy straw bags here you can find the newest style of hand Bags.hand Bags Sale are greatly designed and popular all over the world. Enjoy free shipping and fast delivery from straw bags Sale online save up to 80% off now. http://www.strawbagsale.com - xiaopin Fri, 17 Aug 2012 22:49:27 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18144 Wayne: You are correct regarding the math of the truth fund interest. This interest has no impact on the budget, immediately. The interest is paid with debt, so it increases intragovernmental debt. While it does lower the unified deficit, an immediate budget impact, it eventually raises the debt held by the public when it is redeemed to make up for any SS cash shortfall (as happened since 2010, and according to the latest trustees report, will continue being redeemed, including principal) until trust exhaustion). Don Levit - Don Levit Wed, 15 Aug 2012 03:14:39 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18140 Trust fund interest income reduces even the unified budget deficit. The deficit is expenditures plus net interest minus taxes. Trust fund interest reduces net interest and thereby reduces the unified budget deficit. - Dwayne from Dubuque Tue, 14 Aug 2012 15:17:00 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18116 The trust fund perspective considers the Treasury securities and interest in the SS trust fund as good as gold. Because we are the USA, respected by all, and the strongest country on earth, Treasury securities will be honored. The Budget (cash) Perspective considers the impact of cashing in trust fund interest and principal where there is a cash shortfall (as has occurred since 2010). To cash in the shortfall the last 2 years, bonds were not simply liquidated, as if they were pre-funded. New general revenues had to be raised (if a budget surplus) or increased debt held by the public (if a budget deficit). Guess which avenue we took? From the Trust Fund Perspective, the Treasury securities are seen as an asset, and the trust is loaded. From the broader (and more accurate, in my opinion) Budget Perspective, the trust fund is empty, for it takes either new general revenues or additional debt held by the public to redeem the principal and interest. This is the same way we pay all pay-as-you-go expenses like Medicaid. To indicate the ludicrousness of the Trust Fund Perspective, its adherents claim that Medicare Part D is fully funded! Don Levit - Don Levit Tue, 14 Aug 2012 06:45:34 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18115 Dear Dr Baker I would say that there is a logical flaw or disconnect in this piece - you don't say why the on budget deficit is preferred to the unified; one can sort of infer that this is because ss is a dedicated stream of funding, but that leaves the question as to why the unified budget is the headline number. (afaik, a trick by lbj to hide nam deficits) perhaps it is not a logical flaw but a, if you will forgive the expression, an emotional flaw: to a layperson like me, the attempt to distinguish between on and off budget deficit smacks of fancy footwork. If I may, y ou might try re writing this starting with the idea that ss is a dedicated stream, and that untill 1964 was not counted, and that this occcured due to lbj one thing that always confuses me is that (afaik) the us gov't has borrowed from ss, giving ss ious (treasury bills or equivalent) and that as the baby boomers age, ss will send those ious back to treasury for cash. I hve never understood why this doesn't add to the deficit - if ss says to treasury, here are 100 billion of ious, please give us 100 bn in cash, how is that accounted for ? - ezra abrams Tue, 14 Aug 2012 06:24:31 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18095 Fiona, FICA stands for "Federal Insurance Contributions Act," so it's a contribution to old age povertry insurance ([i]not[/i] welfare!!). Because workers are required to contribute if they wish to work, it's also called a tax. But FICA deductions are paid out to individuals and are not used for operating expenses of the federal government, so they are not income taxes and should [i]not[/i] be rolled into one ball with them. I don't understand why you (Fiona) say that all retirees should have the same monthly benefits, since some contributed more than others, so they get a (slightly) larger share, and that's fair. FICA contributions are not a tax, they're a premium. - David Mon, 13 Aug 2012 11:39:41 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18093 The custom in the US has been to talk about deficits in terms of the unified budget - even Dean does this when he mentions the "large surpluses" of the last Clinton years. If that is the frame of reference, then during the years when payroll taxes were building up the Trust Fund, SS was *reducing* the size of deficits (that's why politicians use the unified budget - I don't know why economists would). Starting in a few years, money will flow out of the Trust Fund (as has always been planned), and in the "unified" frame of reference it is accurate to say that SS is *increasing* the size of deficits. Of course as Dean says the budgets are not legally supposed to be unified, and it's grossly hypocritical to talk about the role of SS in increasing "unified" deficits in the future while ignoring the fact that SS reduced these deficits in the past. Those who do are effectively advocating a wealth transfer from the low-income people (boomers) who paid into the Trust Fund to the high-income people whose taxes were cut during the time the Trust Fund was built up. - skeptonomist Mon, 13 Aug 2012 11:04:04 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18090 Yeah but if FICA is a tax, then SS is a welfare program. If FICA is not a tax but a contribution to a retirement annuity then you cannot go around saying that people who do not pay income taxes still pay the payroll/FICA tax because it is not a tax but a contribution, just like what goes into a 401k. Now I believe that we should dispense with the fraud that it is a retirement plan call it what it is an old age welfare program. Then we can pay all retirees the same monthly benefit and merge the FICA tax into the income and make tax smoothly progressive. - Floccina Mon, 13 Aug 2012 10:52:19 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18089 Simon Johnson and James Kwak wrote the book "White House Burning" (2012). In the text, they claim that Social Security contributes to the deficit. To support this lie, they wrote footnote 82 on page 291: "Social Security currently contributes to the federal deficit even though the program is still running an annual surplus..." and then try to justify this nonsense with an "opinion". Just a couple more pundits jumping on the Pete Peterson bandwagon. May it turn into a tumbril, figuratively speaking. - George Fleming Mon, 13 Aug 2012 10:31:36 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18086 Suppose SS was an insurance company receiving premiums (ss taxes), holding interest paying assets ( US treasury bonds) and paying settlements (SS benefits). Suppose settlement payments exceeded premiums, the difference coming from interest on the US treasury bonds. Would we then claim that the insurance company cash flow is raising the US deficit? I don't think so. To me this is easier to understand than citing two government budgets that seem contrived to non accountants or is my analogy inadequate. - AlanInAZ Mon, 13 Aug 2012 08:32:50 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18084 The misstatement of fact is considered a symptom of delusions of grandeur. And the delusional always have a fetish aspect to their lives. So at best we are now having our lives affected by a cohort of Michael Scotts of Dunder-Mifflin Paper. - fuller schmidt Mon, 13 Aug 2012 07:18:28 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18081 Why a Steve Ohlemacher is allowed to publish such patently inaccurate and, in fact, misleading columns is one more sign that either AP has abandoned any editorial fact checking standards or has simply joined Fox "News" in eliminating any attempt at actual journalism. Covering their butts with "opinion" column lables nonetheless demands something of the editors of alleged journalism outlets. - RBShea Mon, 13 Aug 2012 06:11:10 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18077 Ohlemacher is just one more sign of the disappearance of journalistic standards at the AP (in particular) and the media (in general). Journalism got coopted by political advertizing. - David Mon, 13 Aug 2012 03:55:30 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18074 [quote]The federal government's annual deficit already exceeds $1 trillion, making any more borrowing tough to swallow.[/quote] This is such a bizarre statement. The real yield on Treasuries with maturities up to nearly 20 years is negative. Out to 30 years, real yields aren't over 0.5%. More borrowing is incredibly easy right now. In fact, I don't think it has ever been easier in modern history. - JSeydl Mon, 13 Aug 2012 03:22:45 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18073 You do realize that this is the same Stephen Ohlemacher series you've hit twice already, right? Yes, the same guy who hid the inflation + 2% adjustment is now making a big deal of interest payments on the trust fund. - Downpuppy Mon, 13 Aug 2012 03:09:19 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18072 [quote]In this measure [unified budget], Social Security will add to the deficit in any year in which its benefit payments exceed its tax collections. (This is the case, even if the fund still has a surplus due to the interest it collects on the government bonds it holds.)[/quote] This is like saying as soon as a car pulls away from the gas station it uses more gas than it takes in and adds to the "gas deficit" despite the full tank of gas just acquired. If AP was consistent it would be reporting dire warnings that this cannot continue and all traffic will eventually come to a full stop. For the on-budget deficit, AP should be delighted at such a tidy zero sum topic on which to report for SS completely severed from the general budget. Here, in the gasoline analogy, all AP need do is follow the SS cars around and fact check miles driven (benefits) compared to gas consumed (input cost). How much gasoline consumed compared to how much is in the tank is only relevant to how many effective tank fulls are stored in the SS investment inventory and the rate of draw down, none of which affects the on-budget deficit or surplus. This is more than just another careless mistake by willfully ignorant reporters. There's a hidden ideology behind it designed to characterize SS as welfare funded by all taxpayers rather than the self funded insurance it is. - Last Mover Mon, 13 Aug 2012 03:05:06 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18070 Another thing about this debate that I always find revealing, from the class perspective, is that rentiers like Judd Gregg and Pete Petersen, who would be aghast if the U.S. "hair cut" its bonds held in their investment accounts, or even by foreigners like the Bank of China or Japan, but are more than willing to "hair cut" the bonds held in the social security trust fund if means lower taxes for themselves. Notice that in all this social security "reform" there is no talk about permanently reducing the FICA tax on employees. So it is about stealing money from those who work and giving money to capital. It is also about establishing a neo-feudalism in the U.S. - sherparick Mon, 13 Aug 2012 01:54:11 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/lesson-for-reporters-social-security-does-not-add-to-the-budget-deficit#comment-18069 The U.S. government is currently selling Treasury notes for up to 20 years at interest rates so low that they don't keep up with projected inflation. In real terms, we are being paid to borrow money. How can we afford to not borrow more money at these rates with so many unemployed workers and so much work that needs to be done? - Robert Salzberg Mon, 13 Aug 2012 01:23:26 +0100