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Thread: Social Security reserves forecast to run dry in 2022

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    Re: Social Security reserves forecast to run dry in 2022

    you really don't read at all what you are responding to, do you?

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    you really don't read at all what you are responding to, do you?
    Actually I do, which is why I wrote what I did.

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    Re: Social Security reserves forecast to run dry in 2022

    I keep forgetting. you haven't actually contributed anything to this discussion.


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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    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.
    SS was not designed to build an accumulation fund; such reform came about due to actuarial modeling of life tables and population demographics and it was found that liabilities to the baby boom generation could not be met without accumulating inflows. So what does a trust fund do with its cash? That's right... purchase risk free assets.

    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.
    The long end of the curve gives a glimpse of a different scenario, where real interest rates remain low for an extended period of time. Sovereign debt is the only game in town given the nature of modern finance in general. Where does the capital go??? Into private debt? Commodities? Get serious.

    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?
    You live in fantasy land. The dollar will continue to operate as the premier reserve currency until China develops a domestic economy that necessary requires trading partners to purchase their debt (via real income effects generating a persistent current account deficit). Until that time, all this talk about a move on the dollar is just a pipe dream by the Peter Schiffs of the world. Listen to me very closely; the dollar cannot be moved from reserve status until the majority of trade is no longer conducted in dollars. Do you seriously believe this will happen by way of an Iranian gold fiasco?

    If for some reason the dollar does lose dramatic value, it can only be a net negative for nations relying on exporting to finance government expenditure. China for one has far to much invested to allow such a reality. Asia will intervene to keep its exporting machine alive. The biggest risk that a weak dollar poses is in regards to domestic oil costs, but it is not as though the U.S. is a slouch in oil production (as opposed to say the EU).

    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.
    $1 trillion deficits are impossible to sustain. We agree on that.

    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.;
    Take a look at the scenarios described! The long end of the curve remains relatively flat in the event that interest rates remain low for an extended period.

    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.
    You seem to think that i am of the belief that budgets should not be cut. While i will argue against most cuts in the current environment, the long term risk of persistent budget deficits of this caliber is true crowding out. But this is a secondary risk to a Japanese style deflation/stagnation, because we cannot export our way out of an internal growth trap. With improvement in labor markets, stabilizing expenditures will shrink as will the need to subsidize the private sector fades away.

    Medicare/medicaid is a different animal. True cost containment strategies, more specifically a public option will be the only avenue whether we like it or not.

    static scoring of nominal rate increases? why don't we just buy lottery tickets?
    No need. As long as unemployment continues to move in a positive direction, income elasticity will not prove to be a negative for growth.

    according to the White House, the federal government will continue to spend about 23% of GDP for the foreseeable future, a number we have not collected in revenues under any tax schedule, to include Top Marginal Rates of 91%.
    I am not going to try and sugar coat it. Budgetary deficits will continue for the forseable future. The key however is to continue to provide an environment that allows us to compete on a global scale. At this point, a major skills mismatch exists in the U.S. which is weighing down employer demand for labor. Continue support in human capital development will be a necessary component in maintaining a competitive advantage. Even in the event that labor markets do reach potential, external investment will continue to be a necessary component of financing our deficit. But once the baby boomers are no longer receiving the majority of social expenditures, the fiscal path will look that much brighter.



    oh well yes. of course. we'll just press the magic "fix healthcare inflation button" that someone in the Senate appears to have misplaced.....


    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.
    The problem is elderly and disabled people are technically uninsurable. Putting the cost of the highest risk individuals onto the single largest risk pool in the country will allow insurance companies to operate in a manner better suited to provide insurance, and not subsidized high risk health cost care at the expense of healthy individuals.

    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.
    High unemployment is by far the least sustainable of all. You want growth??? Allow the labor markets to heal without forcing a hard bottom to unemployment. Whether you accept it or not, high unemployment is the single greatest threat to fiscal soundness in the U.S..

    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.
    Do not straw man me. I have never stated that such a deficit us sustainable. Hard choices are needed to be made; choices you seem reluctant to accept.

    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.
    Hard choices in the form of future budgetary cuts and effective tax increases are the only way out of a fiscal disaster. But if you would like such a reality to begin to materialize 20 years earlier, allow austerity to be enacted at a time when we have just barely dug ourselves out of this mess.
    Last edited by Kushinator; 02-21-12 at 01:52 AM.
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    Re: Social Security reserves forecast to run dry in 2022

    I'm curious, for those who know, where does the interest on the SS Trust Fund come from? It shows up as an asset on their books so it must come from somewhere else. Is it part of the interest on debt we have each year or?

    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.
    What makes your position suspect is, outside of making exceptions for it, you never mentioned Defense spending. Why is it we spend four times more money on Defense than Russia and China combined? And Defense, unlike SS, doesn't bring in any revenue at all - it's all outlay, $700 billion worth of outlay. By cutting Defense in half, which still leaves it double the combined spending of Russia and China, and letting the Bush Tax Cuts for the Rich expire - well, that's $550B right there, about 40% of our shortfall this year. Man, how tough was that to accomplish?

    And, no, I don't particularly present those as my choices. I like having a Big Stick. But it is interesting you would propose gutting SS while never mentioning other very viable alternatives - and that calls everything else you post into question.
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    Re: Social Security reserves forecast to run dry in 2022

    Budget Baloney (1): Why Social Security Isn’t a Problem for 26 Years, and the Best Way to Fix It Permanently

    "New Jersey Governor Chris Christie, a Republican presidential hopeful, says in order to “save” Social Security the retirement age should be raised. The media are congratulating him for his putative “courage.” Deficit hawks are proclaiming Social Security one of the big entitlements that has to be cut in order to reduce the budget deficit.

    This is all baloney.

    In a former life I was a trustee of the Social Security trust fund. So let me set the record straight.

    Social Security isn’t responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government."

    "Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission’s fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

    Today, though, the Social Security payroll tax hits only about 84 percent of total income.

    It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

    If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

    Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved."

    Robert Reich (Budget Baloney (1): Why Social Security Isn't a Problem for 26 Years, and the Best Way to Fix It Permanently)
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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    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
    And some wonder why the right-wing is often characterized by its hatreds. Imagine hating 75 million people simply on the basis of the year they were born in. It would be a new low point in ignorance if there weren't so many other equally impressive low points in ignorance.

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    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.
    Can you explain how an agency with a near $2.7 trillion surplus on hand can be forced to have anyone else at all make up anything? Many billions of dollars worth of SS-owned Treasury securities mature each month. SS is further paid billions worth of interest per the terms of the bonds it holds. SS is continuously balancing its cash-flow needs with its investment needs. If it needs more cash at the moment, it simply takes less of the return owed to it in the form of new securities.

    And maybe you should go read the law. SS is authorized to pay scheduled benefits only from the resources it has available for that purpose. Those would include current payroll tax receipts plus the accumulated investment of surplus prior payroll tax receipts. If it should run out of such available resources, it stops paying benefits. This is why you hear how SS could only afford to pay 75% of scheduled benefits once the Trust Fund balances were exhausted. That's the level that payroll tax receipts alone would fund at that time according to the Trustees. There is no General Fund in the picture anywhere. You are once again many city blocks wide of the mark.
    Last edited by Cardinal Fang; 02-21-12 at 06:59 AM.

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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by Cardinal Fang View Post
    SS is further paid billions worth of interest per the terms of the bonds it holds.
    And that interest on it's bonds come\s from the interest on debt (outflow) we see in the federal budget?
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    Re: Social Security reserves forecast to run dry in 2022

    Quote Originally Posted by cpwill View Post
    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.
    Hint: This is EXACTLY what is SUPPOSED to happen. The only reason that there is any noticeable cash in the Trust Funds at all is to save up for the baby-boomer retirements. It's like saving up for a new washing machine, and then actually using the savings to buy a new washing machine. There is no accounting gimmick involved at all. Some people are simply so unfamiliar with the landscape that they imagine it to be all sorts of things that it is actually not.

    Quote Originally Posted by cpwill View Post
    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.
    Right. Because if the major economies of the world stop producing real goods and services, there will be nothing left to back sovereign debt at all. And of course, there is a long list of alternative investments to turn to. As long as you don't mind the fact that ALL OF THEM come with substantially higher risk.

    Quote Originally Posted by cpwill View Post
    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).
    The window has never been shut on the right of partisan gloom-and-doom spewage by those wishing to broadcast their fact-free warnings and prognistications in hopes of seeing their own fumble-fingered versions of political and economic nirvana established right here on earth. All this tends to be a poorly manufactured load of greedy, self-serving crap, however.

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