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Thread: Social Security reserves forecast to run dry in 2022

  1. #201
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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    yeah. it's the "current policy" v "current law".

    about the 2:30 mark:





    not really - Treasury Bonds are publicly trade-able. The Special Promissory Notes given to the SSTF are not. they are, instead, an accounting gimmick; which attempt to put a better face on the fact that an increasing percentage of SSI payouts will come from the General Fund rather than FICA tax revenues. however, the General Fund is already running a Trillion-Plus deficit on an annual basis, and is unlikely to be able to pick up the slack.



    you must not spend much time looking at the explosion in our entitlements and interest payments.

    as of 2010, federal revenues were only able to cover for Defense, Social Security, Medicare, and Medicaid/CHIP. We had to borrow to make half of our interest payments.

    and with the exception of Defense, all of those costs are set to explode, meaning that our annual deficit is going to get far worse, meaning that the interest payment problem is going to get worse, and we are caught in an ugly downward spiral. If we return to normal interest rates, by 2020 we will be dependent upon the rest of the world turning over 20% of it's GDP into feeding our debt. They are unlikely to be terribly interested in doing so for a nation being forced to borrow to cover operating costs on the level that we are already doing, much less than we will be doing.

    that is why the President's own Bi-Partisan Debt Reduction Commission all said that drastic change is needed now in order to stave off fiscal collapse. there is good reason why we were downgraded, and it wasn't because of squabbling in Washington, it was because squabbling in Washington kept us from addressing the fiscal anvil falling on our heads. It's why the IMF says we need to cut transfers by 35% and raise taxes by 35% in order to survive. Except that raising more taxes is no where near as simple as raising rates, effectively closing that venue off to us to the extent needed.
    Great post, sadly probably wasted effort though. There are those that want to believe that we aren't spending ENOUGH and nothing will change their minds till it all falls apart.
    Climate, changes. It takes a particularly uneducated population to buy into the idea that it's their fault climate is changing and further political solutions can fix it.



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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    they are, instead, an accounting gimmick; which attempt to put a better face on the fact that an increasing percentage of SSI payouts will come from the General Fund rather than FICA tax revenues. however, the General Fund is already running a Trillion-Plus deficit on an annual basis, and is unlikely to be able to pick up the slack.
    Talk about distorting reality. Special-issue securities, as mentioned by Cardinal, are in fact laddered securities that mature (and excess funds are subsequently reinvested) in a controlled manner. But an accounting gimmick they certainly are not.

    you must not spend much time looking at the explosion in our entitlements and interest payments.
    Projected explosion has been subject to constant revision as real interest rates have continued to diverged from baseline projections. Interest payments as a percentage of revenue, economic output, etc.... are at historic lows no matter how you try and slice it.


    and with the exception of Defense, all of those costs are set to explode, meaning that our annual deficit is going to get far worse, meaning that the interest payment problem is going to get worse, and we are caught in an ugly downward spiral. If we return to normal interest rates, by 2020 we will be dependent upon the rest of the world turning over 20% of it's GDP into feeding our debt. They are unlikely to be terribly interested in doing so for a nation being forced to borrow to cover operating costs on the level that we are already doing, much less than we will be doing.
    That is under the assumption of the baseline. A far more likely scenario (explained as alternative 2) involves the Federal Reserve to continue to purchase longer issue denominations to keep their holdings at high levels, which will allow nominal interest rates to remain low. I notice you had no interest in fully disclosing the various projections.

    that is why the President's own Bi-Partisan Debt Reduction Commission all said that drastic change is needed now in order to stave off fiscal collapse. there is good reason why we were downgraded, and it wasn't because of squabbling in Washington, it was because squabbling in Washington kept us from addressing the fiscal anvil falling on our heads. It's why the IMF says we need to cut transfers by 35% and raise taxes by 35% in order to survive. Except that raising more taxes is no where near as simple as raising rates, effectively closing that venue off to us to the extent needed.
    The majority of our fiscal challenges can be overcome by allowing the Bush tax cuts to expire (at the proper time of course), as well as reforming health care so that cost trajectories are not off the charts. IMO, a public option is the only way we can effectively squash health care inflation because it allows private risk pools the freedom to operate as insurers instead of health care management companies.

    A 3-space Laffer Curve has multiple relative maxima, and there is nothing to suggest that effective rates of taxation cannot approach a more suitable position.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by Kushinator View Post
    I was thinking about this one - but yours is also very good. I just figured the anti-SS (read "pro-banker") crowd would understand the parallel to insurance companies better.

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by MrVicchio View Post
    Great post, sadly probably wasted effort though. There are those that want to believe that we aren't spending ENOUGH and nothing will change their minds till it all falls apart.
    well the great silver lining there is that at least if we go down that path it will happen soon enough that I will be able to be part of the rebuilding. sucks to be old or "about to retire", though. HAH - it couldn't happen to a nicer generation than the Boomers, too

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by Kushinator View Post
    Talk about distorting reality. Special-issue securities, as mentioned by Cardinal, are in fact laddered securities that mature (and excess funds are subsequently reinvested) in a controlled manner. But an accounting gimmick they certainly are not.
    it certainly is. any disparity between what SS has promised and what it has on hand will be made up by the General Fund - as it already has been doing. nor is it going to be "subsequently reinvested in a controlled manner", because now it has to be cashed out. That means that all that money is coming out of the General Fund. When your savings account "loans" money to your checking account... that's an accounting gimmick.

    Projected explosion has been subject to constant revision as real interest rates have continued to diverged from baseline projections. Interest payments as a percentage of revenue, economic output, etc.... are at historic lows no matter how you try and slice it.
    absolutely. currently. and they will probably stay this way or even get lower as money flee's Europe and then flee's Japan. At that point, however, the market will have internalized that - just like houses - Sovereign debt is no longer as safe and as guaranteed as everyone thought it was.

    we have a very narrow window to demonstrate that we will actually avoid a fiscal crises by reforming our entitlement system to reduce outlays, and reforming our tax and regulatory structure to encourage growth (and the higher revenues that accompany it). If we can do that, then the money will flow here and stay here. If we can't, then some of the capital will flow here, and then alot of the capital will flow right back out. Threats to the dollar (any indications we are looking to monetize part of the debt) means that there will be a move to cease using that as an international currency, and goods (say, for example, oil) will start trading in local currencies. India, for example, is getting ready to start buying oil with gold. I mean - what - roughly half to two thirds of US Dollars are currently held overseas? You know the numbers better than I do - what's the end result of - say - even half of the dollars currently used just in the international oil trade flowing home, all in the space of about 3 months as everyone jostles to not be the last one out?

    That is under the assumption of the baseline
    varying degrees of things that are impossible to sustain remain impossible to sustain. it doesn't really matter if you get shot in the face with a 9mm v a .40 cal.

    A far more likely scenario (explained as alternative 2) involves the Federal Reserve to continue to purchase longer issue denominations to keep their holdings at high levels, which will allow nominal interest rates to remain low.
    at which point we get caught in an inflationary trap thanks to reasons described above as demand drops forcing the Fed to become the virtual sole purchaser of government treasuries effectively monetizing the debt. yeah. that will do us much better. The Fed is neither Omniscient nor is it Omnipotent. And it still doesn't save us.

    Because the problem isn't that one or more of these things will sink us - it is that all of them together are guaranteed to. If it was just social security it would be fairly easy to solve. If it was just the interest it would be difficult, but merely require some long term discipline. If it was just Medicare, it would be exceedingly difficult, and require deep cuts to everything else, but would be doable. But All Three Together (and SS and Medicare guarantee spikes in interest payments) means there is no avoidance absent LARGE alterations to the two expenditure programs in that triad.

    The majority of our fiscal challenges can be overcome by allowing the Bush tax cuts to expire (at the proper time of course)
    static scoring of nominal rate increases? why don't we just buy lottery tickets?

    according to the White House, the federal government will continue to spend about 23% of GDP for the forseeable future, a number we have not collected in revenues under any tax schedule, to include Top Marginal Rates of 91%.

    as well as reforming health care so that cost trajectories are not off the charts
    oh well yes. of course. we'll just press the magic "fix healthcare inflation button" that someone in the Senate appears to have misplaced.....

    IMO, a public option is the only way we can effectively squash health care inflation because it allows private risk pools the freedom to operate as insurers instead of health care management companies.
    ah yes. we'll take one of the most damaging functions of Medicare (an arbitrary reimbursement schedule tied to a fee for service model that offputs costs onto providers and private plans) and make its' effects worse. yes. that will do wonderfully.

    A 3-space Laffer Curve has multiple relative maxima, and there is nothing to suggest that effective rates of taxation cannot approach a more suitable position.
    you want more revenues, you need more growth. you want more growth, you need to strip out the massive compliance and complexity costs (allowing unrestricted domestic energy production and a regime of regulatory simplification would do wonders as well, but we are talking taxes). an increase in effective rates inside of a simplification program that stripped out complexity and reduced nominal rates in such a way that the net savings were greater than the net increases in taxation would give you the result of both higher growth and higher direct revenues (even scored statically, and especially dynamically). But simply "let the Bush tax cuts end" isn't even going to come close. Our deficit for this last year was... $1.4 Trillion? repealing the "Bush Tax Cuts For The Wealthy" would have netted us $80 Billion. Statically (which is to say, ridiculously optimistically) scored. If we got rid of them for the middle class as well that gets' us up to almost (again, statically scored, in real life we would have seen nothing like this) $400 Billion. Which is to say, after we repeal the Bush Tax Cuts we have only a $1 Trillion deficit. Yeah. That's sustainable.

    oh. wait. the President's Own bi-Partisan Debt Reduction Committee, the CBO, the Social Security and Medicare Actuaries, the IMF, the GAO, and the National Bureau of Economic Research all say that it's not sustainable. huh. imagine that.


    even the much-aligned Ryan Plan doesn't avoid this train wreck - we avoid it in his figures only thanks to some pretty optimistic projections on growth and long term interest rates.

    until we are willing to look the baby boomers in the eye and say "F You", we are F'd ourselves.
    Last edited by cpwill; 02-21-12 at 12:11 AM.

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    yeah. it's the "current policy" v "current law".
    Plays no role at all. CBO officially uses current law, but appends current policy analysis as well. In neither case is there any projection of the economy shutting down in 2027. Period.

    Quote Originally Posted by cpwill View Post
    about the 2:30 mark:
    LOL! That's where we have an outclassed Paul Ryan claiming that his own CBO-based extrapolation of a single year's budget leads to ugly numbers. Geithner is meanwhile laughing at him, asking why he didn't run the graph out to the year 3000 or 4000. Neither one of them of course works or speaks for CBO, which still has not projected the economy shutting down in 2027. Period.

    Quote Originally Posted by cpwill View Post
    not really - Treasury Bonds are publicly trade-able.
    You mean marketable, I suppose, and some are while some are not.

    Quote Originally Posted by cpwill View Post
    The Special Promissory Notes given to the SSTF are not.
    Correct. SSTF has neither a need nor intention of ever being active in secondary markets, and non-marketability shields the value of their holdings from interest-rate risk without any sort of hedging whatsoever. So that's zero credit-risk, and zero interest-rate risk. Starting to see why people call these things "safe"?

    Quote Originally Posted by cpwill View Post
    ...they are, instead, an accounting gimmick...
    LOL! They are long-term bonds whose performance is backed by the full faith and credit of the United States to the exact same extent as any other Treasury security in existence.

    Quote Originally Posted by cpwill View Post
    ...which attempt to put a better face on the fact that an increasing percentage of SSI payouts will come from the General Fund rather than FICA tax revenues.
    No SSI payments have ever come out of FICA tax revenues. SSI is 100% funded out of general revenues. You're just such a neophyte as to be easily misled by acronyms with a lot of S's in them. It is meanwhile ILLEGAL for SS to pay benefits from any source not owned by SSA or the SSTF for that purpose.

    Quote Originally Posted by cpwill View Post
    ...however, the General Fund is already running a Trillion-Plus deficit on an annual basis, and is unlikely to be able to pick up the slack.
    That's not what CBO actually says.

    Quote Originally Posted by cpwill View Post
    you must not spend much time looking at the explosion in our entitlements and interest payments.
    Right. I do that for a living.

    Quote Originally Posted by cpwill View Post
    ...as of 2010, federal revenues were only able to cover for Defense, Social Security, Medicare, and Medicaid/CHIP. We had to borrow to make half of our interest payments.
    There is no dollar-to-dollar connection between receipts and outlays. Most receipts are simply plopped into the General Fund as one big pot. Treasury then finances outlays as checks are received for payment, either from cash otherwise on hand or from the proceeds of borrowing. Everyone knows that we currently have a substantial on-budget deficit as the result of the Great Bush Recession undermining revenue while accelerating expenditures.

    Quote Originally Posted by cpwill View Post
    ...and with the exception of Defense, all of those costs are set to explode, meaning that our annual deficit is going to get far worse, meaning that the interest payment problem is going to get worse, and we are caught in an ugly downward spiral.
    No sane person agrees with your analysis. Your two biggest "exploders" -- SS and Medicare -- are already fully paid for, even according to ridiculously pessimistic projections. Interest rates applying to public debt continue to decline as old high-rate debt is swapped for new low-rate debt. People are lined up around the block to give us their money. That leaves you with Medicaid and S-CHIP (?) as somehow being enough to bring about the end of civilization as we know it. In fact, the strengthening recovery changes the equations nearly as quickly as the original Bushian collapse did, and as your Treasury sources go to some lengths to point out, re-establishment of stable tax and spending policies mitigate concerns over management of a debt that is already falling as a share of GDP and has always been considerably smaller on that basis than it was at the end of WWII.

    Quote Originally Posted by cpwill View Post
    If we return to normal interest rates, by 2020 we will be dependent upon the rest of the world turning over 20% of it's GDP into feeding our debt[/url]. They are unlikely to be terribly interested in doing so for a nation being forced to borrow to cover operating costs on the level that we are already doing, much less than we will be doing.
    Clueless. The worst of our deficits during this needless calamity has been less than 10% of our own GDP. Our own GDP is 23% of the world's GDP. That means 77% of all GDP belongs to rest-of-world. If they were lending us 20% of that total, it would be some 15% of world GDP or some 67% of our own GDP, some eight to nine times what we would at worst have any actual need for.

    Quote Originally Posted by cpwill View Post
    ...that is why the President's own Bi-Partisan Debt Reduction Commission all said that drastic change is needed now in order to stave off fiscal collapse.
    Fiscal collapse? You'd have thought a thing like that might have been taken seriously enough to prompt a majority of the commission to vote for something or other.

    Quote Originally Posted by cpwill View Post
    ...there is good reason why we were downgraded, and it wasn't because of squabbling in Washington, it was because squabbling in Washington kept us from addressing the fiscal anvil falling on our heads.
    The anvil was merely the need for tax increases. The downgrade was intended to awaken those ideologically/theologically dug in against such tax increases and was completely ignored by the markets. US Treasury securities are the safest, most secure investment vehicle in the world, and no tarnished division of McGraw-Hill can say differently.

    Quote Originally Posted by cpwill View Post
    It's why the IMF says we need to cut transfers by 35% and raise taxes by 35% in order to survive
    Actually the article says that it should not be reported as representing the views of the IMF, yet you do exactly that. Are you some sort of hack? It also says that taxes and transfers will have to be reduced 35% as against future projected values, not from current values. You didn't do much of a job of making that clear.

    Quote Originally Posted by cpwill View Post
    Except that raising more taxes is no where near as simple as raising rates, effectively closing that venue off to us to the extent needed
    LOL! Those WSJ editorial writers have been spewing this same mindless garbage for years. It's supply-side mumbo-jumbo without a shred of evidence behind it. How does the WSJ explain virtually every other prosperous nation in the world? Virtually all of them flat out shatter the supposed law that constrains revenues to 19% or whatever of GDP. How do they do it? And when has a US administration so much as sought to set rates that would reach such a level? Ever? Revenues under Reagan of course did exceed 19% of GDP, but he didn't mean to do it.

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    Re: Social Security reserves forecast to run dry in 2022

    oh look - the sock puppet! read the post above, sock puppet.

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    oh look - the sock puppet! read the post above, sock puppet.
    Delirious from yet another drubbing?

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    Re: Social Security reserves forecast to run dry in 2022

    most of his arguments were already dispelled. for example his "no sane person agrees with your analysis" claim is answered by the fact that I linked the CBO, the IMF, the Social Security and Medicare Actuaries, the President's own Bi-Partisan Debt Reduction Commission, the GAO, and the National Bureau of Economic Research... all of whom were agreeing with that analysis. Of course Social Security can survive just fine.... so long as there is no such thing as Medicare. Which itself can survive just fine.... so long as there is no such thing as Social Security or Interest on the Debt. Each of these problems individually may be about as much as our system could handle.... but the three of them together are not.

    Given the individual I'm responding to, he can read - no reason to simply copy/paste my post.
    Last edited by cpwill; 02-21-12 at 01:01 AM.

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    most of his arguments were already dispelled. for example his "no sane person agrees with your analysis" claim is answered by the fact that I linked the CBO, the IMF, the Social Security and Medicare Actuaries, the President's own Bi-Partisan Debt Reduction Commission, the GAO, and the National Bureau of Economic Research... all of whom were agreeing with that analysis. Of course Social Security can survive just fine.... so long as there is no such thing as Medicare. Which itself can survive just fine.... so long as there is no such thing as Social Security or Interest on the Debt. Each of these problems individually may be about as much as our system could handle.... but the three of them together are not.

    Given the individual I'm responding to, he can read - no reason to simply copy/paste my post.
    He knocked down each and every one of your claims. Ouchie.

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