patrick.net

lol .. when you say lie .... do you mean a Clinton type lie or an Arab Terrorist type lie? I was just asking man, geeeze

Bap33 says

tatupu, when the gov sets money in account “A” from taxes, with a promis of returning that money plus interest at a time in the future …. and then allows non-workers to tap that fund …. and taps that fund to pay for other cash-short handout programs .. and just keeps putting “IOU” in account “A” instead of the promised money that the taxes are supposed to be for .. while still taking out the taxes for account “A” …. wouldn’t that be called a debt? Serious question, not starting crap. Thanks

The IOUs from the government to the SS fund are debt. Not sure why you include the BS about illegals in there though.

Troy says

the front half of the baby boom wave is aged 55-65 now.

Yes. And the kind of super expensive life extending procedures are likely to be done between age 75 and 85. Sure, many die younger than that. Bypass and expensive preventative stuff isn't what I was talking about, although that might change some too. But you're right that the impact of the baby boom on health care will start to be felt in 5 or 10 years(much more than it already is). In 30 years many changes will have been made, the reforms will be complete, which was my point.

Bap33 says

Clinton type lie

How does one compare a lie about a politicians personal life (which in some cultures is none of our business), to a lie say about why we should go to war, or about how tax cuts for the rich, when taxes are already extremely low are good for the economy ?

tatupu70 says

Bap33 says

tatupu, when the gov sets money in account “A” from taxes, with a promis of returning that money plus interest at a time in the future …. and then allows non-workers to tap that fund …. and taps that fund to pay for other cash-short handout programs .. and just keeps putting “IOU” in account “A” instead of the promised money that the taxes are supposed to be for .. while still taking out the taxes for account “A” …. wouldn’t that be called a debt? Serious question, not starting crap. Thanks

The IOUs from the government to the SS fund are debt. Not sure why you include the BS about illegals in there though.

I did no such thing!! cmon now, no reason to get jumpy, I really am just asking for info!! I did not mention anything about invaders. Good 'ol lazy Americans get to tap that fund too, wheather they put in a dime or not. Even if it's not THAT EXACT fund, the program used to hand out the cash are funded from the money taken from the SSI account .. there by they accessed the fund.

Bap33 says

Good ‘ol lazy Americans get to tap that fund too

But why didn't you cite these "tapping the fund ?"

1) All the corporate welfare recievers
2) All of those who directly or indirectly receive money from the defense budget (eg Hliburton)
3) The rich whose low taxes are a direct subsidy from uncle sam (that is borrowed from everyone in the future)

I would argue that without the social security surplus that existed for a while, we would be spending just as much on welfare, but we would not have been able to justify the tax cuts for the rich. Remember, the tax cuts were initiated at a time of a "balanced budget" that would not have been balanced if we weren't counting the SS surplus.

Do you see the logic ? Do you see who really was tapping the SS Trust fund ?

marcus says

but we would not have been able to justify the tax cuts for the rich.

they would have found a way. Note that they are fully justified now even though the government has gone $1.8T in further debt over the past 12 months.

The point is to defund the government by any means available.

Wish I spoke German and/or Norwegian. I don't feel particularly drawn back to Japan again though I suppose their weather is better than Norway's.

marcus says

But why didn’t you cite these “tapping the fund ?”

marcus says

All of those who directly or indirectly receive money from the defense budget (eg Hliburton)

Why bring Halliburton into the discussion? Halliburton (or “Hliburton” as you spell it) is past tense. Surely Obama got rid of Halliburton ... it was all part of his "change" pogrom. LOL

marcus says

The trust fund is invested in debt securities. So the government owes itself money that will be paid out in the future to SS recipients. But the amount it owes itself (the fund) is only equal to what had been paid in to it.

So, the "Trust Fund" purchases debt securities (Treasuries) on the open market? Can anyone purchase these Treasuries?

If you lend money to your kids, Doe that mean you have purchased a debt security that they have sold to you?

Paralithodes says

So, the “Trust Fund” purchases debt securities (Treasuries) on the open market? Can anyone purchase these Treasuries?

Completely Irrelevant. The trust funds overtaxed to build up those reserves. How the general fund pays them back is none of their concern.

It is OUR concern though, since FICA payers are owed that $2.6T and the bottom 90% of the country only pays 30% of the income taxes and shoulders much less of the total tax burden when capital gains and corporate taxes are added.

If you lend money to your kids,

FICA payers essentially lent $1.5T + accrued interest to the top 10% of the country, 1992-now. This is pretty simple to understand so by this point anyone arguing that the trust fund is funny money is arguing for the greatest theft in US history.

I really hope you guys pull this off, btw. I've only got ~$50K paid into the system so far. I don't expect to have my contributions returned to me, not because the system is insolvent or a ponzi, but because this nation is a nation of idiots and taking this money will be like taking candy from a baby.

The actual analogue would be for a baby boom family to lend money to a rich uncle -- call him Uncle Fu, 1990-2010. Uncle Fu dies leaving estate to Cousin Fu. Cousin Fu says since we all owe the money to ourselves it's all good and don't expect to have him repay us.

Troy says

The money was already “debased” by the PREVIOUS decade-plus monetary expansion.

Correct. But please explain how adding $trillions more in paper money helps the situation.

shrekgrinch says

Uh….I thought we were already in a deflationary depression. Your pal, Ben Bernanke keeps saying so. So does Obama Bankster Crony Tim Geithner.

Do you have some quotes to back that up?

@Ray America, great line of posts on this thread.

shrekgrinch says

Please tell us why you think the Icelandic people should pay for that at all?

Ditto for why Irish people should pay for what private banks were up to in Ireland and Germany, etc..

THE IRISH AND ICELANDIC PEOPLES WERE LIVING THE BUBBLE LIFE by SPENDING THAT MONEY!

"Lewis wrote that, “By 2006 the average Icelandic family was three times as wealthy as it had been in 2003, and virtually all of this new wealth was in one way or another tied to the new investment-banking industry.”

http://www.suite101.com/content/icelands-financial-collapse-a128856

The stories of Iceland's profligate ways towards the end of their bubble are quite impressive.

All the overbuilding in Ireland was chasing Irish nationals flush with bubble cash too.

There are up to 300,000 surplus houses in Ireland now, 1 in 6 houses -- and prices there have crashed 50%.

The proles don't deserve to carry the entire cost, but they were complicit in the run-up.

Bap .... thanks. Coming from you (someone I respect) is a real compliment.

Bap33 says

@Ray America, great line of posts on this thread.

RayAmerica says

Bap …. thanks. Coming from you (someone I respect) is a real compliment.

Awww. Could it be,... another bromance blossoming on Patrick.net ?

Don't worry Bap, I mean that in a COMPLETELY hetero way.

marcus spelled backwards is suc ram .... suprized? me either.

Bap, I'm sure you want to keep Ray's respect, so keep in mind, to him there is nothing more important than proper spelling and syntax in your post. That's why you might want to change that to "me neither." There are some logic issues with some other recent posts of yours, but don't worry about those. Ray won't even notice that.

I still say you're a good guy Bap, and I think if it weren't for the whole Guns, Gays and God thing, you would be a "liberal."

Without Guns or God there would be nobody in America able/willing and charged with the duty to protect the rights of deviants to enjoy a safe life, free of illegal prosecution from such persons as found in the Iranian Gov.

Marcus ... thanks for keeping the discussion on track with the topic. I realize my points don't resonate with yours, but yours don't with mine either. You may or may not agree with my positions, but at least most people probably understand what I'm saying. However, I'm often confused by yours as illustrated by the following:

marcus says

The trust fund is invested in US debt, which is why some might think of it as debt. There is a debt there, and assets offsetting it.

Try to give a detailed, specific explanation as to what this actually means. If you can't explain it, I'll understand why. I'll bet everyone else that reads this twisted post is scratching their heads too.

Ray--

Do you understand the difference between an unfunded liability and debt now at least?

tatupu-

Can you explain the following at least?:

marcus says

The trust fund is invested in US debt, which is why some might think of it as debt. There is a debt there, and assets offsetting it.

RayAmerica says

Can you explain the following at least?:

Since the 1980s, the SS and Medicare programs have overtaxed SS and medicare contributors by almost $2T and bought special US Treasury debt issues with the excess revenue. They also have another $1T in accrued interest, dating back to 1983.

From the perspective of these programs, they own US treasury debt as an asset, just as the Alaska Permanent Fund has part of its portfolio invested in US Treasury debt and counts it as part of their assets.

From the perspective of the US taxpayers, we are on the hook for the full debt owed to all holders of Treasury bills & bonds (minus the Treasuries held by the Fed because they just give the interest the Treasury pays back to the Treasury).

Debt is backward-looking and unfunded liability is future-looking. Social security and Medicare are not in debt, they are net creditors and are in fact the largest sovereign wealth funds on the planet with their $3T in holdings.

Looking forward, to keep SSI revenues above expenses we need to raise FICA contributions up to 2%, but since SSI has built up its $2.3T in Treasury holdings we really don't have to do anything with SSI right now. In 10-15 years the drawdown on SSI's treasury holdings will be such that we should start thinking about phasing in raises to the FICA contribution (and perhaps other program changes) to avoid falling under the 100% statutory requirement (that SSI have 1 year's worth of payouts saved up).

Here's a graph that demonstrates how the SSI trust fund will be depleted over the next 30 years:

RayAmerica says

tatupu-

Can you explain the following at least?:

marcus says

The trust fund is invested in US debt, which is why some might think of it as debt. There is a debt there, and assets offsetting it.

There I was talking about what is debt albeit one that the government owes itself (what could be called funded liabilities).Funded because we know how they will pay the SS recipients, by redeeming bonds. If you had read my later post you might understand Ray. Here it is again.

marcus says

The trust fund is invested in debt securities. So the government owes itself money that will be paid out in the future to SS recipients. But the amount it owes itself (the fund) is only equal to what had been paid in to it.

Unfunded liabilities refer the amount that will be needed which exceeds what is in the fund (what the government owes itself) plus future incoming payroll taxes. That is, the total of the debt to future SS recipients plus future payroll taxes at some point will be less than enough to cover pay to recipients. The unfunded liabilities refers only to this shortfall.

The debt part of it, the ious so to speak, are part of the funded liabilities.

Maybe Troy's later explanation of the same thing is more concise:

Troy says

Yes, the general fund owes social security $2.6T as of now, $1.5T in FICA over-taxation and another $1.1T in accrued interest.

This is not an unfunded liability, which is the gap between scheduled benefits and what resources the program is expected to have to pay them.

Troy says

Social security and Medicare are not in debt, they are net creditors and are in fact the largest sovereign wealth funds on the planet with their $3T in holdings.

So what you are saying, in effect, is that the money that was removed from the SS & Medicare surplus, which was then spent through the General Fund, and then replaced with special IOU bonds that cannot be sold on the open market magically becomes a "wealth" fund ... right?

Nobody ever said that debt isn't debt. Only that unfunded liabilities are not debt. You're like a politician (are you one ?).

You change the subject around making an argument where one doesn't even exist, and don't even know it.

Wouldn't it be easier to just be corrected (FOR ONCE!!).

RayAmerica says

So what you are saying, in effect, is that the money that was removed from the SS & Medicare surplus, which was then spent through the General Fund

The surplus was invested in bonds right away. The sort of theft from the future occurs though when the budget figures (which represent spending minus taxes) include that surplus. It's an accounting issue. The surplus didn't have to be accounted within our yearly budget. That made it easier to cut taxes for the rich.

Had Al Gore been elected, not only would have have done everything else differently, he would have accounted for the surplus differently (or tried), which is what he meant by a "lock box."

marcus says

The surplus was invested in bonds right away.

LOL !!! The surplus money was removed and applied to the General Fund in every administration since LBJ. You can call it an investment if you want. In my world, I call it what it is, a THEFT.

marcus says

That made it easier to cut taxes for the rich.

I'll try asking you again; what exactly do you mean by the term "rich?" Be specific. Thanks in advance for your non-answer. LOL

RayAmerica says

marcus says

The surplus was invested in bonds right away.

LOL !!! The surplus money was removed and applied to the General Fund in every administration since LBJ. You can call it an investment if you want. In my world, I call it what it is, a THEFT.

If I buy a 30 year treasury, then is the US stealing my money too?

tatupu70 says

If I buy a 30 year treasury, then is the US stealing my money too?

First, the treasuries are special IOU Bonds that CANNOT be sold. They are basically promisory notes. Second, why was the surplus money taken in the first place and used in the General Fund? Why didn't the General Fund just utilize the IOUs, being that they represent "money?"

Zlxr says

is that it’s more like if you borrowed your 401K and put an IOU in it’s place

The four generations of taxpayers paying into the system between 1985 and 2035 is nothing like 401Ks and IOUs.

FICA payers have been overtaxed $1.5T and have another $1T of accrued interest from this forced savings.

Now that it's time for the general fund to pay back FICA payers there's all this talk about IOUs and the money being spent already.

But that's just smoke. The money was supposed to be spent, that's how debt works.

Then you take the money and just spend it on things you don’t need or at least you don’t spend it in a way that will take care of you in the future.

that's not Social Security's problem, that's our government's problem. But this country is far from broke, the problem is simply that the top 10% has 90% of the wealth in this country, and they're getting pretty good about 'playing poor' by simply buying the media and telling it what to say.

Zlxr says

I think what Ray is saying - is that it’s more like if you borrowed your 401K and put an IOU in it’s place. Then you take the money and just spend it on things you don’t need or at least you don’t spend it in a way that will take care of you in the future.
What good is the IOU when you retire in the future? Now you’ll have to borrow to cover the IOU and it will be debt you cannot pay for.

Very good illustration. There is a difference; government can do what all good counterfeiters do in the future; replace the IOUs with more printed (counterfeit) money. We don't have that option if we remove funds from our 401K.

RayAmerica says

First, the treasuries are special IOU Bonds that CANNOT be sold. They are basically promisory notes. Second, why was the surplus money taken in the first place and used in the General Fund? Why didn’t the General Fund just utilize the IOUs, being that they represent “money?”

So it's the fact that it can't be sold in the bond market that makes it stealing?

Because your second point makes no sense. All treasury notes go towards funding the general business of the US. What exactly does "utilize the IOUs" mean?

Zlxr says

What makes it stealing is that they didn’t ask our permission to take our money - they just took it.

You're one of those that thinks all taxes are stealing then?Zlxr says

So when it comes time to cash in the bonds to pay for SS and Medicare - and nobody steps forward with any money - where do you think it will come from?

Probably the way they do it now. Via taxes and cuts to benefits. Raise the retirement age and eliminate the cap on SS. Medicare will take a little more work.

Zlxr says

purchase worthless treasuries

lol--you're in the extreme minority there.

RayAmerica says

First, the treasuries are special IOU Bonds that CANNOT be sold.

This makes my head hurt. As long as SS's treasuries can be redeemed for cash they are money good. Just because SSA can't sell the bonds to somebody else doesn't mean they lose their value to SSA.

The SSA gets real benefits from having these special bonds -- a bit higher interest rate and greater flexibility in rolling them over.

They are basically promisory notes.

Well, if they were promissory notes issued by the US Treasury then they would in fact be negotiable and money-good.

Second, why was the surplus money taken in the first place and used in the General Fund?

This is an interesting question. To earn interest the FICA surplus had to be invested somewhere. We could have made a more diversified portfolio, like Norway's Permanent Fund that has $500B in the market. Problem with that though is that SS is just so damn big -- it'd be 5%+ of the total global equity, almost.

The US Gov likes to borrow money so investing FICA payers' money in US Gov't debt is the safest and sanest place.

Unless you have any better suggestions.

Why didn’t the General Fund just utilize the IOUs, being that they represent “money?”

Well, for one, you might need to understand that IOUs ARE NOT NEGOTIABLE INSTRUMENTS.

A paper saying "I owe you $500" is NOT the same as having a piece of paper saying "I agree to pay the bearer $500 on demand anytime after January 1, 201X.". THAT is a "promissory note".

This isn't that complicated, Ray.

Since 1992 SSA has been collecting more money via FICA taxes than it has been paying out in SSI benefits. This is by design, such that SSI will have the resources to pay out future benefits when the baby boom hits retirement age.

It could have just sat on this cash and have it earn nothing, a loss of $1T to the program. Instead it bought government debt with it.

A promissory note is only issued upon EXCHANGE OF CONSIDERATION. SSA gave the US Treasury $1.5T, and the US Treasury gave SSA $1.5T in Treasury bonds.

The US Treasury cannot print money willy-nilly. It has had some authority to do so, but only $300M of total issue.

^ that's what US Notes looked like, btw.

tatupu70 says

Raise the retirement age and eliminate the cap on SS.

I disagree with this. Since people exceeding the cap are the ones who are living longer, just raising the cap will solve much of the future shortfall. We should be LOWERING the retirement age not raising it for FFS (and raising the FICA contribution to pay for this added retirement cost).

Whatever happened to the idea of fucking progress in this country?

Medicare will take a little more work.

Understatement of the epoch.

Troy says

I disagree with this. Since people exceeding the cap are the ones who are living longer, just raising the cap will solve much of the future shortfall. We should be LOWERING the retirement age not raising it for FFS (and raising the FICA contribution to pay for this added retirement cost).

I actually agree. It makes no sense to me to force seniors to keep working longer and longer, taking jobs away from younger people. That can't be maximizing effiiciency of the US workforce. I'm just not sure this idea can get passed in Washington.

That was Bush's argument for cuts that went mostly to the rich. (you know what I mean by rich Ray).

from CBS article on Bush in 2001

President Bush said Saturday that the most important number in the budget he sends to Congress next week is the $5.6 trillion
surplus it projects over the next 10 years.

That huge projected surplus provides the underpinning of all the administration's tax-cut and spending plans, Mr. Bush said in his
recorded weekly radio address.

"A surplus in tax revenue, after all, means that taxpayers have been overcharged," the president said. "And usually when you've
been overcharged, you expect to get something back." The surplus figure "counts more than any other" in the budget, he said.

Democrats cautioned that surpluses projected over so long a period can turn into elusive fool's gold. And they continued to insist
that as it stands the Bush tax-cut plan unfairly favors the wealthy over those of more modest means.

http://www.cbsnews.com/stories/2001/02/24/national/main274334.shtml

This is what I mean when I observe that the SS security surplus, in part was justification for the Bush tax cuts.

Mission accomplished.

Bush said

“A surplus in tax revenue, after all, means that taxpayers have been overcharged,” the president said.

So, the excess payroll taxes, that should have been somehow accounted for differently, Bush decided should be given to the people, mostly the high income people. Guess that was the ultimate way to flip off Al Gore and his "lock box" idea. Oh, but it gets better. Bush turns around right after basically giving this (our) SS money to the rich, and says he's worried about SS and wants it to be privatized, ie invested in the stock market.

AND EVEN NOW the republicans still give us the BS argument that raising the highest bracket back to Clinton Era levels would hurt the economy, when everyone knows it costs us 700 billion.