Re: Pelosi on SS from "This Week"
Topics: Welfare
02 May 2005
From: Ervan Darnell
> heiland@saxonwarlord.com wrote:
>
>> Ervan, I'm not following your line of reasoning on this at all. The
>
>
There are two separate arguments, solvency and who pays. Maybe they are
getting confused.
First, Solvency: Currently, the annual SS budget is [1]:
$667G - income
$535G - outlay
$132G - added to trust fund in the form of buying T-Bills
In 15 years or so, SS will start redeeming those T-Bills instead of
buying them as outlay exceeds income. Unless you believe the federal
government will fail to pay its debt obligation (very unlikely), those
T-Bills are solid. There is the addtional political risk that Congress
might declare SS trust fund T-Bills to not be T-Bills, the same way they
declared the budget to be "off budget" to avoid the Gramm-Rudman
balanced budget bill (BTW, where are those activist judges when you need
one to decide that Congress cannot ex post facto change the meaning of
words to evade the law? I suppose "it all depends on what 'is' is").
Pelosi and the Democrats are arguing that Bush's deficit spending (which
they agreed to in the interest of more welfare for seniors) is somehow
spending those trust fund T-Bills and thus Bush is sabotaging SS. The
Bush budget is doing no such thing. It is racking up more T-Bill debt
to pay for deficits, but that doesn't have any direct impact on the SS
trust fund.
Even if Bush were spending that $132G, restoring it would not save SS.
Here is the point I was trying to make: the looming SS bankruptcy is
based on the assumption that that $132G in T-Bills will be redeemed, and
is a solid investment. Were it the case, as the Democrats imply, that
Bush were spending that money, the Democrats' plan to stop spending the
trust fund would not save SS, it would merely return it to the broken
status quo. Thus, the Democrats are lying twice, offering a non-fix to
a non-problem.
Second, Who pays: Bush's main point of last week was that the 20% or so
of payroll taxes paid into the trust fund do not cover future
obligations for the worker currently making that payment. Instead, that
future obligation will be met with more SS payroll taxes. That's
obviously true. The secondary point, which is controversial, is that
even the small fraction which is paid from the trust fund, i.e. the
T-Bills, is also paid with (income) taxes and not real assets. So, the
trust fund is there in the financial sense but it is not there in the
sense of being a real asset. Regardless, this second point is not the
one Pelosi was arguing, and even putting it in the argument does not
rescue the absurdity of the Democrats' position.
[1] http://www.ssa.gov/budget/2004bud.html#Summary
heiland@saxonwarlord.com wrote:
>Ervan, I'm not following your line of reasoning on this at all. The
>money is either there or it isn't. Everybody agrees the money isn't
>there. Why is it a bad idea to change that?
>I am putting three thousand bucks a month into a savings account. When
>I have enough, I'm going to build my dream house. If I keep pulling
>money out to take a trip to Bermuda or buy a new motorcycle, I'll not
>be able to build my dream house. Maybe that's ok, but I need to be
>honest about it. Stop calling it a dream house account and start
>calling it a disposable income account. That, in my opinion, is
>exactly the problem with social security.
>
>h
>
>
>
>>-------- Original Message --------
>>Subject: [Ragnar] Pelosi on SS from "This Week"
>>From: Ervan Darnell
>>Date: Sun, May 01, 2005 1:42 pm
>>To: ragnar@ragnar.kelvinist.com
>>
>>I use double quotes for an exact quote and single quotes for my best memory of the sense of the quote.
>>
>>5/1/05:
>>
>>George Stephenopolous: 'What is the Democrats' plan?'
>>Nancy Pelosi: 'Bush's plan is an attack on the middle class [...]'
>>
>>George Stephenopolous: 'But what is the Democrats' plan?'
>>Nancy Pelosi: '....Pay back the trust fund...'
>>
>>George Stephenopolous: "Why should Americans trust Democrats on social security when they have no specific plan?"
>>Nancy Pelosi: "Americans should trust Democrats because Democrats invented social security."
>>
>>I'm still laughing.
>>
>>It's worth repeating that the argument about 'borrowing from the trust fund' is a total canard. The SS trust fund is in T-Bills, and as safe as any other T-Bill. Deficit spending does not deplete the trust fund in any way. Deficit spending does (probably) require future tax increases, but that's true regardless of whether T-Bills are held by the SS trust fund or private individuals. Even were it the case that Bush were spending the trust fund, fully restoring it would not solve the problem, not even close. The current shortfall is all based on the assumption that the trust fund is safe. So, Pelosi is so far off the tracks with this, that I have to think this is an intentional deceit on her part rather than just simple stupidity.
>>====================================================
>>Ervan Darnell
>>ervan@kelvinist.com http://www.kelvinist.com
>>
>>
>>
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