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Social Security reserves forecast to run dry in 2022

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.
 
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.
 
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 :mrgreen:
 
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.
 
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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.

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.

not really - Treasury Bonds are publicly trade-able.
You mean marketable, I suppose, and some are while some are not.

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"?

...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.

...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.

...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.

you must not spend much time looking at the explosion in our entitlements and interest payments.
Right. I do that for a living.

...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.

...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.

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.

...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.

...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.

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.

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.
 
oh look - the sock puppet! read the post above, sock puppet. :)
 
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.
 
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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.
 
you really don't read at all what you are responding to, do you?
 
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. :lol:
 
:) I keep forgetting. you haven't actually contributed anything to this discussion.

171521.jpg
 
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? :lamo 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.

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

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.
 
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)
 
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 :mrgreen:
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.
 
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.
 
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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?
 
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.

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.

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.
 
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.
LOL! We are already effectively "monetizing the debt". Nobody cares. Meanwhile, you cannot "stop using" the currency that represents 23% of world output. And obviously, the market for 77% of world GDP is already moving quite substantially in terms of "local currencies". The US dollar can of course be converted into ANY of them, the reverse being a big maybe, especially at the level of national and global volumes.

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?
Half to two-thirds of US currency is held abroad. If these physical dollars all suddenly started to "flow home", there would be a surge in US exports and in US jobs. Not to mention a rather substantial decline in foreign official reserves. All this would of course serve to strengthen the market value of the dollar.

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.
The moron economics of right-wingers have put the US economy is its worst shape in quite a long time, and yet the yield on 10-year Treasuries closed at 2.01% on Friday with the 30-year number at 3.16%. The notion of the Fed as the only buyer comes from some free-form place that has no actual connection to reality.

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.
LOL! You cannot "stop using" the currency that represents 23% of world output. And obviously, the market for 77% of world GDP is already moving quite substantially in terms of "local currencies". The US dollar can of course be converted into ANY of them, the reverse being a big maybe, especially at the level of national and global volumes.

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?
Half to two-thirds of US currency is held abroad. If these physical overseas dollars all suddenly started to "flow home", there would be a surge in US exports and in US jobs. This of course would serve to strengthen the market value of the dollar.
 
Half to two-thirds of US currency is held abroad. If these physical overseas dollars all suddenly started to "flow home", there would be a surge in US exports and in US jobs. This of course would serve to strengthen the market value of the dollar.

I'll respond to the rest later. but this - you know this is ludicrous, right?
 
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.
This guarantee is of course based solely on the extraordinarily inadept say-so of yourself and nothing more. You are not able to think in terms of Social Security numbers, so you believe it is a problem when it is not. You insist that lower interest rates on a debt that is and will continue to be a declining percent of GDP is a problem. Other developed countries (almost all of them, actually) provide better overall health care at significantly lower per capita costs, but you believe that Americans are simply too stupid to do the same. You are some combination of Chicken Little and The Boy Who Cried Wolf. Someone to pay any actual attention to, you are not.

according to the White House, the federal government will continue to spend about 23% of GDP for the forseeable future.
That's what we were spending during the Reagan administration as well, and that figure is still among the very lowest in the developed world. There isn't any ACTUAL reason at all not to be at that level or even much, much higher as most of our friends and allies are.

...a number we have not collected in revenues under any tax schedule, to include Top Marginal Rates of 91%.
Top marginal rates have nothing to do with it. Reagan was trying (albeit failing) to create a revenue-neutral tax bill in 1986 when he slashed the top marginal rates. But he got rid of so many deductions, credits, and loopholes at the same time that the bill ended up as a two-year tax increase. The precise means for it might be an interesting technical discussion, but a suggestion that no tax structure exists that could provide revenues equal to 23% of GDP is simply air-headed foolishness.

oh well yes. of course. we'll just press the magic "fix healthcare inflation button" that someone in the Senate appears to have misplaced.....
Grow up. Just as it has been in virtually every other country, HCR is a long-term, evolutionary process. You cannot simply pull 16-18% of the economy into dry-dock while you effect repairs, especially since 310 million people need to depend continuously on that system for their current health care. For someone who prattles on as if he understood the differences between static and dynamic scoring, you sure don't seem to have much grasp over the difference between an mp3 and a jpg.

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.
LOL! It only exists at this point because of Gingrich and some Republicans, and then because of some more Republicans. The House passed a bill in 2009 to resolve the SGR and so-called Doc-Fix problems permanently, but Senate Republicans were opposed to its even being put on the calendar.

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).
This is ultra-right corporatist pandering of a notion to re-unleash the engine of American capitalism so that the robber-barons can do again what they did under Bush-43. Pollution controls, worker and consumer protection standards, financial transparency and accountability requirements -- these are all damaging and repressive socialist ideals that drag down the economy and slow our growth. Capitalist Americans after all should have the very same right to choke on the air they breathe and gag on the water they drink as any communist anywhere is Asia!!!
 
The moron economics of right-wingers have put the US economy is its worst shape in quite a long time, and yet the yield on 10-year Treasuries closed at 2.01% on Friday with the 30-year number at 3.16%. The notion of the Fed as the only buyer comes from some free-form place that has no actual connection to reality.

chart
 
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).
The recoverable costs of all this imagined "complexity" are unfortunately minimal. The 70,000-page or so tax code is as complex as it is because the economy is as complex as it is. There are no pages written to explain the proper tax treatment of stocks and flows that do not at least potentially exist within the economy. The typical taxpayer is meanwhile affected by perhaps 50 pages, and can either fill out the necessary forms in under an hour or, if that's too much, simply have the IRS do it instead. The so-called embedded costs of taxation that people like the Fair Tax bunch ramble on about don't actually exist.

The effective rates on somebody meanwhile most definitely do need to increase. As the top 1% for instance saw their effective rates drop by nearly 24% between 1996 and 2007, we might simply put them back where they were by passing a 28% surcharge on their bottom lines. That would have brought in $122.5 billion just in 2007. And that's just the top 1%.

But simply "let the Bush tax cuts end" isn't even going to come close.
A journey of a thousand miles begins with a single step. Is there some rule that says we can't do anything unelss whatever it is solves all of our problems by next Tuesday? The Bush tax cuts have been a major economic injustice and boondoggle for more than a decade. Scrapping them for the top two tax brackets is long, long, long, long, long overdue.

Our deficit for this last year was... $1.4 Trillion?
$1.3 trillion, but what's $100 billion among friends. It's projected to hit about half that in the 2014/2015 range as income support payments decline and revenues once again rise. That's if we do nothing.

repealing the "Bush Tax Cuts For The Wealthy" would have netted us $80 Billion. Statically (which is to say, ridiculously optimistically) scored.
LOL! Dynamic scoring would make them look better, not worse.
 
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