Neolib, You are confusing spending priorities with accounting.
Actually, you're the one getting confused. I already agreed that the problem is accounting. Yet the false accounting is exactly what creates the illusion of the SS "trust fund." There is no "fund" to speak of, only IOUs to be paid off in the future.
If Tim spent his 401k money on his father's health care, that's his decision. But he better not fool himself into thinking that there is any money in his 401k left for his retirement.
Same thing with the SS "trust fund." People are fooling themselves into thinking that the "trust fund" is a big pool of money to draw upon when SS benefits start exceeding the taxes. But as you and I know, that's not the case.
As for your example, I'll highlight the one statement that makes my point:
2) The government issues $100B of special treasuries to a SS account, thus borrowing $100B. It then borrows an addition $400 from T-bills sold to investors. It now has $500B to cover the annual deficit. At some point in the future when $100B is needed to cover the current SS payouts, $100B of special treasuries must be redeemed from some source. Again, the source is entirely irrelevant to the discussion at hand. It may be taxes or more T-bills sold to new investors. The government must also redeem the $400B as well.
You are exactly right, that $100B must come from somewhere. However, that source is very relevant to the discussion at hand. Increased taxes? But that defeats the purpose of having a "trust fund" in the first place. More T-bills? Well, the multi-trillion dollar debt already reflects the IOUs that represent the SS "trust fund," but you'd NEVER know if all you saw was the federal deficit figures, which INCLUDES SS taxes as part of revenue and SS benefits as part of expenses.
People aren't doing the simple math, and it's not because they're stoopid. It's because no one in government is willing to tell the truth. Remember when Clinton supposedly ran a "surplus"? That surplus never existed. Members of both parties in Congress were literally chanting "Oh happy day!" and were giddy over the prospects of spending the so-called "surplus." No one bothered to check that the debt was still increasing. (Even the debt counter billboard in Manhattan was turned off for a while.)
Bottom line: No matter how we account for this money, we better not call it a "trust fund." Instead, we better call it like it is: a debt.
Tenchusatsu |
