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To: ChanceIs who wrote (241208)	3/17/2010 11:36:23 AM
From: benwood	Respond to of 306849

Those SS bonds are "real" debt -- borrowed money with a promise to pay (ditto Medicare). Medicare is already being augmented by the repayment of those bonds, which will run out within a very few years as I recall. The theory of those plans is not unlike saving for our own retirement -- save more now in preparation for a drawdown later. Of course, there would be others paying in while we are retired, etc. The political problem is that the SS plan is malformed based on demographics etc. That is, unsustainable. So for the past 20 years while there was moderate inflation, the CPI could be fudged downward by 1-2+ % per year and thus erode SS and take care of the political problem of the promise being TOO BIG, but alas, the disconnect is even greater and so the gap remains around 30% (going out ~50 years). The problem that perhaps was never really thought about is that as the SS bonds are repaid out of the general tax receipts, the result is simply to jack up the true deficit (external debt). Borrowing those trillions from SS a hundred billion at a time was like being addicted to crack -- run a deficit at the Treasury but not have to go to the open market to find lenders. The day of reckoning would always have been way off in the future, so somebody else's problem. Now that the SS "take" is less than the outflow, the gov't is in a serious mess. But that should have been expected. When the overall strategy seems like it was created out of an alcoholic think tank, it's highly likely that it will all unravel abruptly. The reality that Medicare will exhaust its "bond supply" very soon makes the expansion of that programme under Bush all the more alcoholic in nature, doesn't it? And it doesn't even help seniors as prescription drug companies jacked up their prices in anticipation of the plan. Just like they (and the rest of the "medical" profession are doing again in anticipation of the "health" plan.