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)
:lamo static scoring of nominal rate increases? :lol: 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.