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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (14368)	4/2/2012 2:40:28 PM
From: Brian Sullivan	1 Recommendation Read Replies (1) \| Respond to of 85487

Then there is no hope to ever address any of our separate items. If you can't plan for when expense will be higher because of something like retirement of the baby boom - then budgeting is nothing but a joke. You're right. It is a massive joke to rely upon the government to provide for your future. It can't really work, it only works until is doesn't; like over in Greece. Wouldn't it be better it instead of promising everyone that they'll be taken care of in their golden years by a benevolent government we tell people that they better plan and save for themselves and that only a very minimal sustenance is all that is "guaranteed" by the government.

To: Steve Lokness who wrote (14368)	4/2/2012 3:20:22 PM
From: TimF	Respond to of 85487

You can plan for future expenses being higher, but loaning money to yourself isnt't an effective plan. To cover future higher expenses you can spend less now, and so borrow less. Or you could take those excess revenues and lend them to someone else who will pay you back with interest. But lending them to yourself doesn't help. The SSA loaning to the treasury might help the SSA, but it doesn't create any balance for the government as a whole, the positive for the SSA equals the negative for the treasury, net total result is zero. The only way it would help the government as a whole is if every dollar of treasury to SSA debt, reduced the treasury to everyone else debt. In other words if all the excess social security money, didn't cause spending to go up at all. But 1 - It didn't happen that way, spending was unrestrained. (Which isn't a partisan point BTW, yes I know Bush and other Republicans where part of that, acknowledging that point doesn't make the problem go away). and 2 - The way it helps is not by having a current fund, some real source of wealth that we can now tap, but rather by reducing net interest payments since the government pays no net interest when it loans to itself. sure the treasury pays interest, but the SSA gains the same amount so there is no net interest cost for that debt. Also to the extent the SSA is buying treasury debt it increases the net demand for that debt (if not necessarily on a one for one basis), and so increases the price at the treasury auction, decreasing slightly the interest the government pays on debt to everyone else other than the SSA. If on the other hand every excess dollar of SSA income results in an extra dollar of treasury spending (in other words if non-SSA treasury debt is not reduced by the SSA funds going to the treasury). Than you don't get this benefit. I don't think every additional dollar of extra SSA money was "spent" in the sense that spending what up by one dollar more with this source of funds than it would have without it. I think its less than that. But I think its closer to having every single dollar represent a dollar of additional treasury spending than it is to having every single dollar represent zero additional spending. Also to the extent that the "trust fund" increased confidence in Social Security and thus reduced efforts to reform it it ways that would lower future costs, then the "trust fund" would (at least when your measuring this impact in isolation) have a negative effect. Overall I think it reasonably likely that there was some positive budgetary effect from this plan, but really that positive effect on the budget was just a tax increase, not a matter of having a trust fund. If the tax increase went straight to the treasury, rather than going to the SSA to lend to the treasury, the effect would have been exactly the same. * * Except for the fact that current Social Security law calls for payments to be cut when SS taxes can't cover them and there is no money in the nominal trust fund. But such a law could easily be changed to continue payments anyway. And if it isn't the fiscal benefit is from a cut in SS spending.