WashingtonPost: Social Security, the trust fund and funny money

[Larry]

But you imply (not a fact) that if you have $10 in your left pocket, move the $10 to your right pocket, you now have two pockets with $10 in them.

Quote me.

In fact, quote my post where I have in any way compared the social security trust fund to one person moving money between pockets.

(You can't. Because the only person pushing that completely false claim, is you.) (Well, I assume it's you. It could be some other person who thinks that if they draw untrue analogies, and throw in some insults, then nobody will notice that what they're saying isn't true.)

Who said they have no value?

Uh, the person comparing the trust fund to somebody moving money between his pockets?

Or, how about the original poster? I've quoted it probably 5-6 times. (Still, I'll point out, the only person in this thread to do so.)

In other words, the trust fund is of no economic value.

The half-dozen "imaginary posts" I quoted, above?

You?

Shifting money between pockets is what is unexplainable to Larry and JMS. They think that SS is a legitimate separate entity with it's own profit and loss statement and don't realize it's nothing more than a bookkeeping exercise.

If they can't understand that, you can't explain it to them.

We are just shoveling ****.

That said it doesn't alleviate the fact that social security is nothing more than an accounting shell game.

---------- Post added April-25th-2012 at 09:57 PM ----------

Borrow it? See my post above.

Were the words

The exact same place they get it for every single t-bill which has ever been issued, for our entire national history.

too complicated for you?

[twa]

Borrow it? See my post above.

It's not a Ponzi scheme as long as ya keep it going :evilg:

http://www.cnn.com/2011/POLITICS/09/12/truth.squad.social.security/index.html?hpt=po_bn1

It is true that benefits to current Social Security recipients are paid for in part by new members of the workforce. But Social Security is not a fraudulent criminal enterprise designed only to benefit current participants in the program. It is a legitimate government program meant to serve both current and future generations of retirees.

[chipwhich]

Larry. If you are the US Government, your left pocket is the general fund, your right pocket is the trust fund, well that is all you are doing.

It's just an accounting measure.

It's really worse than that because then your back pockets need money to operate so they borrow more money for survival.

If you did a financial statement for a bank, it might become clear for you.

You never answered. Where do they get the cash from

[Larry]

Larry. If you are the US Government, your left pocket is the general fund, your right pocket is the trust fund, well that is all you are doing.

Yes, I am well aware that if you combine the social security trust fund, the US government's general revenue fund, and all of the other things that the US government does, into a single entity, then those things become a single entity..

Unfortunately, that had not been done.

It's just an accounting measure.

Yes, I'm well aware that you would really like for it to be so.

It's really worse than that because then your back pockets need money to operate so they borrow more money for survival.

If you did a financial statement for a bank, it might become clear for you.

And yes, I'm well aware that your standard technique, ever since you first entered the thread, is to attempt to insult anybody who doesn't want to join you in imagination land.

You never answered. Where do they get the cash from

I have answered. You don't want to admit that the answer is correct.

All US treasury bills, when they are redeemed, are repaid from exactly the same source.

The fact that bonds (owned by SS) are repaid by borrowing is exactly the same as for every t-bill which has ever been sold.

In short, the fact that they are repaid by borrowing does not make them in any way different from any other t-bill.

And as such, it is completely irrelevant to your attempt to claim that these t-bills, over here, are different from all of the others.

They aren't.

No matter how many insults you want to throw at people.

[chipwhich]

Larry, you have stated as much in your own example.

You manage your moms estate. You also have your own accounts. So if your moms estate exists of $1,000,000 in cash and you take it out and spend it, but leave an iou what do you have?

It's your example and the same thing going on with the trust fund.

So your moms estate comes time for settlement. Your siblings say hey Larry I want my cash. So you say, well I promised it, see my larry t-bill. So you go out and borrow 1,000,000 to pay back the estate.

Well all you have done is transferred debt.

Not sure how trying to explain assets and liabilities is an insult.

The government is doing what is described above. That is a fact. That is not shoveling ****, or insulting peoples intelligence, or trying to claim there are unicorns with golden horns. It's simply explaining what is going on.

One poster even tried to compare this to what IBM does Sorry I forget who it was.

If you can tell me how this isn't transferring debt, please do.

[Larry]

We'll get back to going step by step.

We've now agreed that the author in the OP, made two statements to open his argument:

It says: , "Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public."

and

In other words, the trust fund is of no economic value.

But for some reason, you couldn't manage to answer this one:

It's true.

But I can't chase my tale and explain it to you over and over and over. You just don't get it. You have to understanding some basics of finance which I don't know why you struggle with.

The operative part of this post, is the words "it's true".

You can shovel insults to try to dodge facts that you don't want to admit all you want. I'm going to stick with pointing out facts.

Two:

The author's statement #1, . . .

It says: , "Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public."

. . . is equally true of all US treasury securities.

True of false?

[twa]

What Chipwhich is overlooking(or neglecting to say) is this accounting firm can force deposits and fees,as it has done thruout the history of these programs....till the peasants revolt ( but doing so will eliminate your future benefits,and cut off those enjoying them now)

http://www.nysscpa.org/cpajournal/2006/506/infocus/p15.htm

When Social Security was implemented in 1935, the amount of earnings subject to tax was $3,000. The tax rate was 1%. As the Exhibit indicates, in 1966 the Medicare tax rate was split from the Old Age, Survivor, and Disability (OASDI) rate. By 2005 the OASDI rate is 6.2% for both employer and employee on earnings up to $90,000; the Medicare rate is 1.45% with no cap on earnings. There have been 20 increases in the OASDI rate since the inception of the program. Historically, the majority of additional funds needed for Social Security were obtained by increasing the rate and the earnings subject to taxation.

welcome to servitude

http://econlog.econlib.org/archives/2011/06/is_social_secur_1.html

There are two main differences between Ponzi's original scam and the Social Security system. The first difference is that Social Security is run by government and, whatever its constitutionality and its questionable ethics, is legal. The second difference follows from the first: Whereas Ponzi had to rely on suckers, the government can and does use force.

[Larry]

Yes, twa, we know. You can call Social Security all kinds of names.

[chipwhich]

What Chipwhich is overlooking(or neglecting to say) is this accounting firm can force deposits and fees,as it has done thruout the history of these programs....till the peasants revolt ( but doing so will eliminate your future benefits,and cut off those enjoying them now)

http://www.nysscpa.org/cpajournal/2006/506/infocus/p15.htm

When Social Security was implemented in 1935, the amount of earnings subject to tax was $3,000. The tax rate was 1%. As the Exhibit indicates, in 1966 the Medicare tax rate was split from the Old Age, Survivor, and Disability (OASDI) rate. By 2005 the OASDI rate is 6.2% for both employer and employee on earnings up to $90,000; the Medicare rate is 1.45% with no cap on earnings. There have been 20 increases in the OASDI rate since the inception of the program. Historically, the majority of additional funds needed for Social Security were obtained by increasing the rate and the earnings subject to taxation.

welcome to servitude

http://econlog.econlib.org/archives/2011/06/is_social_secur_1.html

There are two main differences between Ponzi's original scam and the Social Security system. The first difference is that Social Security is run by government and, whatever its constitutionality and its questionable ethics, is legal. The second difference follows from the first: Whereas Ponzi had to rely on suckers, the government can and does use force.

You are right. So in my Larry Moms estate example, Larry can tell his siblings. The times, they are a changing and as such reduce his siblings benefits to lighten the load on the transfer of debt.

[Larry]

You are right. So in my Larry Moms estate example, Larry can tell his siblings. The times, they are a changing and as such reduce his siblings benefits to lighten the load on the transfer of debt.

Answer the question.

Or sit around and tell each other how clever you are for dodging reality.

I'm going to bed.

[chipwhich]

Answer the question.

Or sit around and tell each other how clever you are for dodging reality.

I'm going to bed.

Night.

Meanwhile you are missing the forest for the trees.

The conversation is not what is a t-bill. Please reread the article.

And answer my question

[twa]

Yes, twa, we know. You can call Social Security all kinds of names.

Name doesn't matter....same for T-bills or trust fund

The power to force does,as does the rules imposed...and the limits of that power

[Larry]

Night.

Meanwhile you are missing the forest for the trees.

The conversation is not what is a t-bill. Please reread the article.

And answer my question

Why should I?

You've been dodging mine for over a day, and replying with insults, instead.

But tell you what. We'll take turns.

Let's just assume that he answer to the question "where does the government get the money, when SS redeems a t-bill?" is "it borrows it from somebody else".

(we both know that he real answer is more complicated. But let's just say that we've agreed that this answer is good enough).

Now, my turn:

Where does the government get the money, when somebody other than SS redeems a t-bill?

[chipwhich]

Why should I?

You've been dodging mine for over a day, and replying with insults, instead.

But tell you what. We'll take turns.

Let's just assume that he answer to the question "where does the government get the money, when SS redeems a t-bill?" is "it borrows it from somebody else".

(we both know that he real answer is more complicated. But let's just say that we've agreed that this answer is good enough).

Now, my turn:

Where does the government get the money, when somebody other than SS redeems a t-bill?

I haven't been insulting you. I also answered it MULTIPLE times.

A t-bill is a t-bill is a t-bill.

T-bills exist.

But that isn't the point of the OP. Read the OP and understand the premise.

Chasing tail.

So lets get on the same page.

T-bills exist.

They are real.

They are debt owed by the US Government.

That isn't the question.

Now answer my question. I answer you over and over and over.

T-bills are real and they are real debts to the US Government.

If I am not clear, please explain. Now back to the OP

[Larry]

Now answer my question.

Repeat it.

[chipwhich]

Repeated.

Just answer the question

Larry, you have stated as much in your own example.

You manage your moms estate. You also have your own accounts. So if your moms estate exists of $1,000,000 in cash and you take it out and spend it, but leave an iou what do you have?

It's your example and the same thing going on with the trust fund.

So your moms estate comes time for settlement. Your siblings say hey Larry I want my cash. So you say, well I promised it, see my larry t-bill. So you go out and borrow 1,000,000 to pay back the estate.

Well all you have done is transferred debt.

Not sure how trying to explain assets and liabilities is an insult.

The government is doing what is described above. That is a fact. That is not shoveling ****, or insulting peoples intelligence, or trying to claim there are unicorns with golden horns. It's simply explaining what is going on.

One poster even tried to compare this to what IBM does Sorry I forget who it was.

If you can tell me how this isn't transferring debt, please do.

[Larry]

Repeated.

Just answer the question

You manage your moms estate. You also have your own accounts. So if your moms estate exists of $1,000,000 in cash and you take it out and spend it, but leave an iou what do you have?

This? This is your question?

Leaving aside that you can't even ask a question about SS, or the trust fund, but that you have to create an imaginary scenario, instead, that's the question?

[chipwhich]

This? This is your question?

Leaving aside that you can't even ask a question about SS, or the trust fund, but that you have to create an imaginary scenario, instead, that's the question?

Checkmate.

Really Larry?

When backed in a corner you always check out..

[Larry]

Checkmate.

Really Larry?

When backed in a corner you always check out..

Checkmate?

I asked you if I correctly identified the question you were asking?

Is your plan really to psee how many cutsey insults you can work in, how many ways you can try to compare US t-bills to "ious", just so that after 10-12 posts, you can finally point out that the US government, in order to redeem any t-bill, has to borrow the money from somewhere else?

Cause if that's your goal, I'm even willing to play along with it. I'm simply asking you to cut the insults, and to try to quickly get to your point. (So that I can demonstrate how I pointed out how invalid it is, in post #4 of this thread.)

[DCSaints_fan]

Its subjective ... .if the US Treasury was unable to pay all its debt obligations ... who do you think they would stiff first? I don't see how the SS fund is no different from any other debt, whether publically or privately held.

And BTW, military retirement funds are also invested in US T-bills, too. There's nothing special about them, any more than SS.

[Hubbs]

Seeing as the Larry-chipwhich spat exploded for something like 20 posts, I feel like I should repost this before it's lost:

Really? No one in this entire thread has tried to argue that tbills owned by the SS trust fund have no value? I could have sworn that the the entire purpose of the OP was to make that vary claim. That, in fact, the OP is all about some guy who has written an entire book, devoted to the purpose of making that claim.

And no one in this thread has tried to argue that "you can't owe money to yourself"? Or that the entire SS trust fund is "an accounting gimmick"?

I must have imagined all of those posts. I wonder if I can quote imaginary posts.

Did that imaginary post quote? Are you seeing that? Or am I just imagining it?

How about this one?

Or these?

None of this has anything to do with the part of my post you quoted right beforehand. I said that the two groups who you claim "care" about the fact that the trust fund's debt was "legitimately incurred"—those who don't want to pay back previous generations for paying in and those who think we should—weren't relevant to this conversation. And they're not. I absolutely think we have an obligation to those who have paid in. I just don't think that the obligation rests upon an accounting gimmick. (Those groups don't care, by the way. I'm sure you can find these people on the Internet, but I personally have never encountered someone who actually argues that people who have been paying 6% of their paycheck for decades don't deserve anything. The closest I've seen is probably Rick Perry calling SS unconstitutional, but even he talked about how to repay those who have put so much in.)

Anyway, to respond to me saying that this isn't about whether or not we should repay earlier generations with, "Really? No one in this entire thread has tried to argue that tbills owned by the SS trust fund have no value?" just… doesn't make any sense. I mean, I guess I can respond in kind, so here goes:

Oh yeah? Well, waffle toboggan elephant Luke Skywalker. :pfft:

1) I will point out that "the larger entity" isn't the only entity in the picture. The assertion that "they are irrelevant to the larger entity" does not in any way say "they are irrelevant, period".

But I've repeatedly made it abundantly clear that I'm talking about the federal government as a whole when I say the bonds are meaningless. Even if I wasn't, however… actually, more on that later.

2) Could you point out to me, in the imaginary posts I've quoted above, or in the probably 50 posts in this thread which have been making the repeated claims that the trust find does not exist, in which that phrase I've highlighted above was included?

There's no way you seriously expect me to explain in every single post something I've explained multiple times in this thread.

Cause what I'm seeing, here is an argument that "it is possible to find a place to stand in which 2.6 trillion dollars worth of t-bills don't exist, and dammit, I'm going to stand there, and demand that everybody else stand there, too, and insult them if they don't join me in standing there" (And I'm going to steadfastly refuse to actually admit that I'm intentionally, voluntarily, choosing to stand in that place.)

Okay, we've reached "later."

Like I said, I've been talking about the finances of the federal government as a whole, specifically debt held by the public. But now I'm wondering what exactly you believe the trust fund is accomplishing by holding its bonds on its books even when looking at other things. Does the interest income that comes from the general fund matter? Theoretically I believe it could to go toward the (comparatively) minor costs of keeping the SSA functioning. Otherwise it either goes back to the general fund when SS is in the black for that year, or is used to make up for a SS deficit that year. All of this would still occur if the trust fund didn't bother with its bond nonsense, except we'd use the label "transfers" rather than "interest payments." So, no, the interest income doesn't matter.

Do the bonds guarantee payments at a certain age? No, that's been changed before and will likely be changed again rather soon. Do the bonds guarantee certain benefits? No, they've been changed before and there's a decent chance they will change again soon (means testing). Do the bonds guarantee payments in the first place? No, the payments are guaranteed by law and would happen if the bonds didn't exist. Furthermore, SS payments and government debt payments are essentially of equal political importance. The only way either will ever fail to happen on anything other than a "we ran into the debt ceiling again, you'll get this next week" basis is if the Treasury is simply incapable of coming up with the money, and if that's the case then we'll actually have even bigger things to worry about (like the economic apocalypse).

Now, I'm sure that I could be unaware of some minor things that the trust fund accomplishes. Certainly it's managed to create quite a lengthy discussion. And if you're aware of some of those things, other than the potential for some random whacko on the Internet to believe that the only type of "legitimately incurred" debt takes the form of bonds he will never see on books he will never look at monitored by accountants he will never meet employed by an agency he will never interact with beyond the postal system, feel free to share. I would hope that you have a long list, given how much you seem to care about this. I find Predicto and JMS agreeing that SS would be more politically vulnerable without the trust fund interesting but unconvincing considering the fact that old people rule politics with a wrinkly iron fist and SS has its third rail reputation as something to be changed only when everyone seems to agree that we have to, all of which has absolutely nothing to do with the trust fund. But when it comes to the big things—retirement age, benefits, guaranteed payment, and most importantly, debt held by the public—the trust fund is irrelevant with a capital, well, IRRELEVANT.

---------- Post added April-25th-2012 at 09:01 PM ----------

I'm sorry for my own optuseness, but to frame a discussion as Hubbs has done, based upon fantasy that T-Bills are worthless, or social security is bankrupt, or accounting is somehow meaningless and use these incorrect premisses to suggest that actions are justified which we both agree would weaken social security does sound to me to be a self serving, political, side door, attack on the trust..

Oh, JMS, JMS....

Please, tell me what actions I've suggested in this thread. Other than calling the trust fund meaningless. That I highly endorse.

[Thiebear]

Social security reciepts dropping to 75% of benifits is supposed to occur in 2080 something about 70 years from now.

Just pointing out they said it would be 75% in 2034? down from 2037 last year.

[chipwhich]

Checkmate?

I asked you if I correctly identified the question you were asking?

Is your plan really to psee how many cutsey insults you can work in, how many ways you can try to compare US t-bills to "ious", just so that after 10-12 posts, you can finally point out that the US government, in order to redeem any t-bill, has to borrow the money from somewhere else?

Cause if that's your goal, I'm even willing to play along with it. I'm simply asking you to cut the insults, and to try to quickly get to your point. (So that I can demonstrate how I pointed out how invalid it is, in post #4 of this thread.)

The whole point is they are just transferring debt...hence the shell game.

When the obvious is put in front of your face, you say I am insulting you. I gave it in the simplest example possible, your mom's estate. Which I might add was YOUR idea.

It's transferring debt...that's why people call it a shell game.

I asked you to explain how it is not simply transferring debt. You refuse to answer.

I already agreed to you that a t-bill is a t-bill. I don't hide behind word games. Now because I used IOU in an EXAMPLE now you are quibbling over words.

It's transferring debt, please explain otherwise if you have a point.

[JMS]

Oh, JMS, JMS....

Please, tell me what actions I've suggested in this thread. Other than calling the trust fund meaningless. That I highly endorse.

You have said again and again in this thread that the debt owed to social security doesn't exist, is meaningless, that there is no reason to pay it back.

#45 You say "borrow that money for decades" and then say "not have to pay it back" as if there are two separate entities borrowing and paying. It's the same damn entity. Do you bother to tabulate how much money you shift between your left and right pockets, as if your left might "owe" your right? They're part of the same pants. They're worn by the same person. What on Earth is so important about the difference between your pockets that you're making all of this effort?

#56 There's no such thing as paying yourself back.

You said and I quote, "My position is that the bonds the trust fund holds are completely meaningless" You are saying the "full faith and credit of the United States government" is meaningless here because that is what backs up those bonds.....

That is a wildly untrue statement reflective not of reality but of your own opinion. It is also suggestive of an action. The action of making that opinion a reality by defaulting. Something you say you haven't said, while continously presenting it as irrelevant and just an accounting trick if we were to do it? How can you pay yourself back indeed!! Saying the federal debt is meaningless and our institutions are bankrupt. Since these things are not true, You are saying hey, wouldn't hurt anybody if sombody shot lincoln.. not like anybody will miss him; he didn't actually fight in the civil war... Your opionions are like those the Tea Party tried to make reality using the exact same justification just a few months ago when they took us within hours or days of defaulting on our debt.

All of your premises are wrong in this thread... you present them as given and they are just erronous beliefs on your part..

once you've acknowledged the fact that because the trust fund is both an asset and a debt to the federal government as a whole, and therefore cancels itself out completely to the federal government as a whole, and therefore is completely irrelevant to the federal government as a whole, what in the world are you arguing?

Hey man the defense department's budget cancels itself out too, and the defense dept didn't loan the Federal Treasury trillions over the last 70 years either... So is the DoD more "irrelivent" than Social Security, using your logic it is? Hell using your logic the entire government is "meaningless", which in fact is what I suspect you believe... Which is where your thinking goes off the rail, with your foundational ideas.

You say "borrow that money for decades" and then say "not have to pay it back" as if there are two separate entities borrowing and paying

Like the Social Security Administration doesn't exist? Like Laws, charters, legal entities don't exist. Like accounting doesn't have legal concequences resulting in people going to jail for decades, fortunes are made and destroyed in such legal matters you are dismissing. Social Security Administration (SSA)[ is an independent agency of the Federal Government. It was set up that way, and that's not just nuance you can dismiss.

---------- Post added April-26th-2012 at 09:50 AM ----------

Just pointing out they said it would be 75% in 2034? down from 2037 last year.

No, 2034 is when the trust will be out of money due to defict spending, when it's surplusses from previous years will be exhausted IF NO ACTION IS TAKEN. As if that's even likely... After that, ongoing Social Security reciepts are still expected to pay 75% of the funds benifits through 2086..

The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086

http://fdlaction.firedoglake.com/2012/04/23/social-security-trustee-report-bad-economy-hurting-payroll-collection/

[Thiebear]

No, 2034 is when the trust will be out of money due to deficit spending, when it's surpluses from previous years will be exhausted IF NO ACTION IS TAKEN. As if that's even likely... After that, ongoing Social Security receipts are still expected to pay 75% of the funds benefits through 2086..

I thought thats what i said: only receipt money will be available in 2034 (though the number shrinks every year). Causing 75% of benefits (causing money FROM general) As we are now with the reduction of 6% down to 4% in individual payments...

At that point there is no "Extra" money to steal from and use in the General fund as the Gov't likes to do?

What happens at that point?

And in 1 President from now it is going to be to be 2025

and in 2 Presidents from now it is going to be 'now'.

highlight and underlines are mine: (why would we not think thats likely)