“All media exist to invest our lives with artificial perceptions and arbitrary values”
explained so even a two year old can understand it:
Does not get much simpler than that.
I personally find it interesting and saddening that the so called "conservatives" today that praise Reagan and hold him such high esteem haven't really heard a word he said. Not that I necessarily agreed with him on all things, and his actual policies and "words of wisdom" didn't always match the actions of his administration. However, on at least this subjects he was quite correct. Social Security is NOT the problem with our current deficit, it's military spending, which accounts for over 50% of the Discretionary budget. Reducing that spending to a level which is necessary to accomplish their true mission, protecting the nation from invaders both foreign and domestic (true in my opinion, but also perhaps in the constitutional sense) would go a long way to bring the deficit down, or, even better, to direct funds to more productive and meaningful projects.
Social Security DOES NOT add to the deficit, Ronnie was right.Social Security DOES add to the DEBT of the country.Both statements are true. Which one is the one to focus on?In 2013 the answer is that it is the debt that matters, not the deficit, and SS is adding to the debt.Liberals trying to defend SS on the deficit issue are missing the point (deliberately). It's the debt that matters. 2010 SS deficit = $47B, 2011 SS deficit =$48B, 2012 SS deficit = $60B. 2013- 2023 SS deficit ~$1T, 2013- 2031 deficit ~$5T.Sing all you want about deficits, it's the debt that will kill SS, and the country with it. Don't listen to those who talk deficits, they don't know what they are talking about.
The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.The basic rule put in place was that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer's total income exceeded certain thresholds.The taxation of benefits was a proposal which came from the Greenspan Commission appointed by President Reagan and chaired by Alan Greenspan.http://www.ssa.gov/history/reaganstmts.htmlhttp://www.ssa.gov/history/1983amend2.htmlSince the 1980s, we have given the rich a bigger slice of our pie in the belief that they would create more wealth, making the pie bigger than otherwise possible in the long run. The rich got the bigger slice of the pie all right, but they have actually reduced the pace at which the pie is growing. Ha-Joon Chang
well, for starters, Bruce, the debt is not a problem....the world economy is suffering from a shortage of safe assets, and the only way to alleviate the shortfall is to increase the debt; we've dealt with that issue in an earlier post on this blog; see the last two paragraphs here...second, although you're correct that social security spent $47 billion dollars more in benefits than it received from payroll tax revenues in 2010, you've conveniently omitted the fact that it also earned more than $117 billion in interest on the government bonds in the trust fund..a similar net surplus exists today...so take your ranting back to angry bear, or back to zero hedge, where you might find some other chicken little types who'll buy into your theories...
Careful where you go with that interest income line. Interest is a NON CASH ITEM. SS needs cash to make benefit payments. So SS has to hock its bonds with Treasury to come up with the CASH needed. Treasury, in turn, must borrow from the public to fund the SS shortfall.Do you doubt this? Do you think it is not relevant? Wait a few years until the SS deficits top 100B a year.The country is about to kill itself (again) over the debt limit. Things that drive the debt are going to come under review. SS (and the other government retirement funds) are a big part of the debt problem.
stop the bus an let my brother jack off cause he has NO HARD MONEY
It's very difficult to discuss this issue with those who resort to insults. You accuse me of ranting, you poke fun that I comment on Angry Bear and publish at Zero Hedge.Well, would it make a difference if the Wall Street Journal was quoting me? A lead story in today's edition:http://online.wsj.com/article/SB10001424127887323689604578221470075341686.html?mod=WSJ_hp_LEFTWhatsNewsCollection
it wouldnt matter an iota to me that yourre quoted by the WSJ; i repeatedly find errors in their economics blog....& actually, i consider both ZH and angry bear better sources...i dismissed you because i see no point in discussing this if we disagree on something as fundamental as whether the debt is important or not; we have a fifth of our people mostly unemployed and another fifth working at tasks below their capability, and that roughly 20% of our industrial base is idle at any given time; we clearly have the human and other physical resources to insure that all of our citizens have their basic needs met, and that to abandon the elderly or those less fortunate because of the belief that your spending in a fiat currency is limited by the amount of that fiat currency that the government collects from it citizens is a fallacy...economists concern over debt is a barbaric relic from the time when monetary resources were fixed by the gold standard..if we could print 16 trillion to keep the banks from failing during the crisis, we can print a tenth of that to insure that all our citizens have their basic needs met...
We need more "safe assets" so create more DEBT LOLOLOLOL - make sure the LSD buzz never wears off. I want Trillion Dollar Platimum coins issued by barry the choom master in my defined benefit plan.
There are no bonds in the trust fund. This is very basic stuff, rjs. http://www.ssa.gov/OACT/ProgData/specialissues.html
BAHAAAHAAHAHAHAHAAAA rj suggested you'd be entertainment for the 2yr olds
popcorn's all gone suckers all suckednothin mo to see here
Bruce, you might be correct that SS does add to the debt in that the Treasury is required to take the money that is deposited into the trust fund and purchase “special Treasuries”, which are of course a debt instrument. I think that this is illusory though since there is actual money being transferred from the trust fund to buy that debt, in effect being a zero net sum in that regard. Where the trust fund adds to the national debt is that interest must be paid on it, money that will have to come from the Discretionary budget to service it, money that has to come from income taxes and other taxes the government assesses. And as we all know, there is less income than is needed to pay all the bills, so Congress has to authorize more debt to cover it. In my mind this is a great disservice to the taxpayer since what is happening is that we pay income taxes to cover the debt service, and then in some cases we will have to pay income taxes again when we receive it. It’s one big Ponzi scheme in my opinion, adding insult to injury. There might be an argument made here that the trust fund should be investing its money somewhere other than with the US government, make some other entity pay the interest, like other sovereign debt or corporate debt, or perhaps allow the dollars to be invested in a self-directed type of fund that puts the onus of the performance on those deposits in the hands of those who paid into it (which is problematic since most people don’t have the skills needed to choose their investments wisely, and most can’t afford to hire an advisor to manage it for them). Of course the mandate is that the funds be invested in the safest possible instruments, and historically that just happens to be the US Government, although I might argue that’s not exactly true anymore.The point being made here is that it’s a false argument being made that payments to recipients need to be reduced to save the nation from its debt problem. What the cuts really need to be made is in the other items in the discretionary budget that are unnecessary and out of control, like the enormous amount being spent on the military, which accounts for over 50% of that portion of the budget. (see my comments on the NEWS CONFERENCE FOR A PARADIGM SHIFT). We should also reduce the amount allocated to the so called national security agencies that have sprung up over the years in the name of making us more secure from terrorists since they are all duplications of effort, money being spent unnecessarily considering that we already have and agency that can do the job with less expenditure, and that’s the FBI. We could simply increase their funds enough to get the same reults, and for far less than what the rest of the spreading bureaucracy, which is nothing more than collective spying, decreasing the civil liberites of the people of this nation and does not increase any security. There is a Congressional report on the subject out there that indicates just that. But of course there's money to be made for their "friends", so it will be tough to change it, maybe even tougher than regiening in military spending.
well that was worth hunting down some GMOless popcornHT burhcer
Hmmm. Think cash. That is all that matters when it comes to looking at SS today. They need cash to pay benefits, they take in cash from a variety of sources, at the end of the year more cash goes out then goes in. It will be that way for the nest 75 years, so strap your seat belts on, we are just getting rolling.The following link takes you to SSA, the data base for SS. Go to the bottom line. In 2011, the CASH FLOW DEFICIT as SS was $45.379 Billion. It will be $60B in 2012 (when reported) it will be $75B in 2013. What more do you need?http://www.ssa.gov/cgi-bin/ops_period.cgi
Well, if they need cash, they sell bonds. Pretty simple really.But even if it's a problem, I want you to look at those dollar amounts there, $45B, $60B and $75. Peanuts. Pocket change. The US govt and the Fed have spent more than $27 TRILLION on attempting to save a handful of banksters and clean up their mess. Should I really worry about a few billion? Want to know where to find the money if it's such a big problem? Cut the military budget. In half. That freed up $300B will go a long way toward cutting the deficit. And don't argue that it can't be done because it certainly can. Before this fiasco called the "War on Terror" the defense budget was less than 1/2 of what it is today. Even with inflation the 2000 budget would probably just be barely over 1/2 of todays budget. I'll bet that it could be pared even 1/2 again if we get rid of all those military bases overseas that are really just occupying forces (don't forget the Black Budget off-the-record stuff too. Plenty omre money falling down that rat hole). We could easily implement a less costlier strategy to accomplish any justified need to strike at a target somewhere else on the globe besides within our own borders. Jerry Pournelle came up with such a system back in the early '80s, but of course it was ignored because it didn't make the MIC money.As I noted yesterday, resource wars and wars of conquest benefit only a few and in the end are nothing more than a waster of assets and lives. It involves the funding of an industry that makes things that are not only intended to destroy things and people, but also to be destroyed in the process. It may be good for those few companies that are involved in making those things, but not for society as a whole. And in the end those assets are depleted, become scarce or unavailable, eventually impoverishing all, even those that profit from it today.http://comptroller.defense.gov/defbudget/fy2013/FY2013_Budget_Request_Overview_Book.pdfhttp://www.defense.gov/releases/release.aspx?releaseid=1967
Bruce:Thanks for providing that link.It shows that while the "assets" Of the trust fund has increased, its cash flow is negative, adding to the deficits and the debt held by the public.The interest rate earned in the trust fund is irrelevant, for it is credited wirh debt, not cash. The higher the interest rate, the more the deficits can increase (as well as debt held by the public) when the interest and principal is redeemed - as has happened since 2010 - to make up for the cash shortfall. The trust fund is exhausted toady, for there are no cash equivalents remaining - they have all been spent by the Treasury for battleships, etc.I understand that Spain has looted its Social Security fund, due to lack of liquidity. How come it took thgem so long? We have been doing so since 1983.Don Levit
if you think bonds are not the equivalent of cash, you better hurry & tell the banks to convert all theirs to greenbacks...they're holding Treasury bonds as part of their Tier 1 capital...
A special issue, non-marketable, non-transferable IOU is the equivalent of cash? Are you mad?
here's $2.73 trillion in Treasury bonds held by SS at year end...http://www.ssa.gov/cgi-bin/investheld.cgiif they're worthless "cause the money has been spent", then so are the bonds held by the banks, mutual funds, japan, china, et al
Don't be silly. The debt held by the trust fund is non-marketable, special issue debt of the US government. It's a bookkeeping entry. It doesn't trade, so there is no price. These special issues represent $2.73 trillion of cash (kind of like how a model airplane represents an airplane) but under no circumstances can the issues be converted to cash without some intervening issuance of marketable debt (you can't turn a model airplane into an actual airplane without building an actual airplane). To understand this, think of the trust fund as an accounting fiction designed by the Treasury to facilitate the use of payroll tax (cash) receipts to pay the bills. They're taking the cash and depositing IOUs. These IOUs read as follows "USG promises to repay USG $2.73 trillion". These IOUs could be completely and irrevocably extinguished by Congress at any time without causing the slightest hiccup in the market pricing of marketable US debt. Why? Because when the same guy is on both sides of the same transaction as lender and borrower there will never be a valid debt contract in the first place. Failure to pay doesn't matter. There can be no credit event; no breach of covenant, no default. It's incoherent to even discuss the 'worth' or 'worthlessness' of these IOUs. Only USG owns them, and only USG owes them. But the truth is that Congress would never extinguish these IOUs. Why bother? They have no impact, they have no convertibility, they're not transferable, and they take up no space, plus tjhye make a whole shitload of people feel quite a bit better that their social security is fully funded (hint: it's not).So, to come the long way around, your point that all govvies are worthless if these IOUs are worthless is incoherent and belies a misunderstanding of what this so-called trust fund really is.
"here's $2.73 trillion in Treasury bonds held by SS at year end..."Dude, you need to read that page you linked a little closer. There are no Treasury bonds in the social security trust fund anymore. They've all been cannibalized. All that's left are the special issues. You shouldn't be spreading this misinformation. Or maybe you're just an amateur, who knows anymore...
geez, at the top of the itemized list it says "bonds" http://www.ssa.gov/cgi-bin/investheld.cgimust be a misprint, huh?
>geez, at the top of the itemized list it says "bonds" http://www.ssa.gov/cgi-bin/investheld.cgi>must be a misprint, huh?Sigh. The government can call a bailout a 'stabilization' but it' still a bailout. The government calls these 'bonds', but they're nothing more than accounting entries in a file somewhere. They are debt owed by the government to the government. They are not convertible to cash at any price, they carry no enforceable obligation to pay interest, they carry no enforceable obligation to be redeemed. They are not bonds. They're called bonds so people like you can believe the silly things you do.
When Social Security loans the government $1, that's $1 less that the government has to borrow from the public. Thus, Social Security does not add to the national (aka public) debt. As a general rule, it makes no sense to listen to anybody who blames a lender for the debt, or for the interest payments on that debt. (Unless, of course, the subject is predatory or otherwise shady lending practices.)
Social security is not lending the government anything. Social security *is* the government. As I said above, when the promissory note reads "USG promises to repay USG $2.73 trillion" there is no promise. There is no debt. They could have just taken the cash and not deposited a special issue IOU in its place and everything would be exactly the same. It has all been arranged to help us all feel better that social security is fully funded, but it's not. Not by a long shot. We pay as we go.
david koch issued his doorman a christmas gratuity of $50.00 (CHECK)can one imagine what he pays his shills, Bruce n Don
RJS why pay taxes at all? Why pay interest on the debt? Why not just create/create/create debt to fund all of the goodie bags? It would be ok if we made most of the stuff we consume, and eat. If you can prove that is true, then we wont care when the world rejects the USD 'safe haven' currency.You moral compass is continually pegged to 'North' to 'help' people. there are lots of jobs out there. youve got the 99 week rabble that turn down jobs because they pay less than govt unemployment(just check out any retail/hotel job board that goes begging)? What is missing boundaries of common sense on govt charity at all levels...along with boundaries of moral decency of crushing the currency making the poor even more vulnerable.
Lots of jobs out there? Like what exactly, the ones that pay minimum wage? Yes, lots of those. The argument is lame none the less since there are currently 4 people seeking a job for every job available. The jobs that are open and high paying aren't receiving applications not because people would rather sit at home on their asses collecting a measly unemployment check that won't even pay their mortgages, it's because they're in fields that there are not enough people whe were actually trained or educated for. Want to solve that problem? Oh, yeah, go back to school and learn it, right? Paid with what? Their unemployment check? Hmmm, food, clothing and housing or buy an education. Tough call there.I would question just exactly which way your moral compass is pointing. You whine about government "charity", but I wonder how much you would be willing to take out of your own pocket to donate to charity if the government were to lower your taxes by the amount that is suppoesdly spent on social programs in this country and then suddenly say "everyone's cut off". Probably not a dime. By the way, that amount going to "welfare" is miniscule in comparison to the biggest welfare queen of them all; Corporate America.As I just commented on ZeroHedge, there is more than just one kind of elitist in the world, and despite conventional wisdom, most of them are NOT "liberals".
good question, Fred...at this point in time, we could forgo taxes...economist karl smith showed that with interest rates as low as they have been, we could eliminate all federal taxes today & borrow 30 years out, & make a profit on that borrowing if the economy grows just 1.1% annually or more over that 30 year stretch...
In lieu of Lew for Sec. of The Treasury.I nominate rjs.
I did not say that the government bonds are worthless. I said that to redeem them so the cash shortfall can be filled, it takes new general revenues - the same way we pay for all expenses, like battleships.If you think that debt=cash, you are defying logic of thousands of years.Debt has 2 parties - a debtor and a creditor. Trying to narrow that down to one party is foolish and dangerous.While it is true that borrowing from the SS trust fund is one less dollar we have to borrow from the public, it still adds to our total debt. It is known as intragovernmental debt.In addition, one government agency borrowing from another government agency, i.e., the Treasury borrowing from 29 different trust funds, is an inaapprioproiate use of the trust funds.Those monies were supposed to be colleted from dedicated revenues, and left in the trust fund for the purpose they were intended. Instead, the funds are used as a back-door way of paying other general expenses, without raising taxes, or having to use general revenues. It is a short-term strategy, which requires long-term repayments and obligations.Don Levit
Don, you hit on something there...the 'logic of thousands of years' was based on a monetary system where spending was constrained by availability of a physical metal...we're now in a new ballgame with a totally fiat currency that most economists have not yet begun to understand...
Don, cash IS debt. Creating Debt is exactly how it comes into being. Congress approves a budget, sends in to the White House. When the Pres approves it, he then authorizes the Treasury to issue Bonds (debt) in the amount needed to fund the budget and sells that debt to the Federal Reserve, who "prints" up an equal amount of cash to give to the Treasury in return. A simplfied explanation for sure, but essentially it is how it works. I wish it were as simple as 'create a bduget and take in the tax dollars to pay for it', but that isn't how it works. Not any more anyway, and that's really why this whole argument came into being, isn't it? The major disagreement is not that something needs to be done, but in how to bring the balance of payments back into line. There is no way you will ever convince me that by cutting Social Security that will ever happen or that it is even remotely responsible for how we got to where we are today. It's simply is a drop in the bucket to the problem. There are much bigger items to cut, but they're pretty much off limits because we really need to be the biggest bully on the block. Sell that battleship instead. The US is pretty good at arms dealing we'll get a good price for it.
A lot of military spending also involves paychecks for the people who work there.
So true, but the payroll isn't the problem really, it's the cost of building and maintaining hardware, plus the cost of engaging in wars. Prior to 2001 the budget was 1/2 what it is now. There's no reason why it can't be returned to that level. But that being said, the current budget is asking for $135B for personell, 24% of the total budget. (see table 8-1 http://comptroller.defense.gov/defbudget/fy2013/FY2013_Budget_Request_Overview_Book.pdf )In any business I've ever been in if my total labor costs exceeded 15% I would have been canned. I'll concede that it's a bit of a different situation here, and I truly would not want to see people in the military underpaid for the sacrifices that they make. So let them keep their jobs, but put them to work here, in the US. Hell, everyone complains about the leakage of immigrants over the border, send them there. Or put them to work doing other things that actually will produce something that in the long run will have a better long-range impact on creating a productive society. Building things to destroy things is not a sound business model. It's actually a negative return on investment.
Though I do not question your good intentions, your fundamental misunderstanding of basic market principles undermines your argument.Whether it is the financing of (questionably justified) wars overseas, the financing of welfare entitlement programs for the poor, or welfare entitlement programs for Wall Street, this reckless spending is unsustainable in the long run.We need only to look across the Atlantic at our Club Med friends to see the most recent example of social security spending gone wild.The U.S. can postpone this fate due to its global reserve currency status by issuing more debt. BUT, this economic hegemony exists due in large part to the U.S. global military force projection.Using any type of metric, dollars, euros, ounces of gold, etc., if the amount of non-productive spending outweighs the amount of productive spending for too long, economic turmoil ensues. Which is exactly what we are seeing right now!The laws of supply and demand exert their influence, and the higher this fiat bubble gets blown, the bigger the pop will be when it finally bursts... The pages of history are filled with numerous examples (but never on such a massive scale).It would be naive of me to expect that my words would change anybody's opinion on the matter... So I'll let the unfolding reality take care of that!
Tburcher:You say debt is cash.Do you believe, as Bruce Webb, on Angry Bear, that the Treasuries in the SS trust fund are better than cash, for the Treasuries pay interest?Don Levit
Treasuries in general are considered the "safest" investment since they have the expressed guarantee by the US government to pay when due, and are traded as such on the world's markets. So if that's true my answer is yes. If it's not true, then it matters very little since we would also have to assume that the dollar isn't backed by the full faith and credit of the US government either. Even with the lousy returns Treasuries pay at this point they are still better than cash, since after you factor in inflation and the lost opportunity cost involved with holding it will have a negative rate of return, worse than even Tresuries.
Of course the reason they are "safe" isn't necessarily that implied 'full faith and credit'. Sometimes it's more insidious....http://solari.com/blog/the-military-holds-the-dollar-up/