"The claim is a breathtaking fraud" - Don't know how I missed this one but Charles Krauthammer had an article the other day about how the White House is embracing the fiction that Social Security is fiscally sound.
"It's nice that Mr. Krauthammer thinks that government bonds are worthless. (I have a standing request that he, or anyone else, pass along any government bonds that he considers worthless...)
While he is welcome to believe anything he wants, the bonds held by the Social Security trust fund are backed by the full faith and credit of the U.S. government. Krauthammer may want to default on bonds that belong to the nation's workers, but his desires are not the same as reality.
Selling these bonds to fund Social Security no more raises the deficit than the decision of a rich person to sell bonds to finance their consumption raises the deficit. The deficit was incurred when the money was lent to the Social Security trust fund in the first place."
"Krauthammer is correct when he writes that there is no “lockbox” that keeps the money sent in by workers for until they retire. By design, when more taxes are collected than are needed to pay benefits, funds are invested in Treasury bonds and are held in reserve for when revenue collected is not enough to pay the benefits due. Yet these Treasury bonds are backed by the full faith and credit of the U.S. government in the same way that all other U.S. Treasury bonds are, making them anything but ”worthless IOUs” as Krauthammer suggests. The government has just as much obligation to pay back the bonds in the Social Security trust fund as we do to any other bondholders.
...Working people had payroll taxes taken from their salaries to pay for future benefits, and instead the money was used to pay for tax cuts and other initiatives. It is hardly fair now to say that those working people caused the problem just when they are ready to collect benefits."
Three things: is this the same Jack Lew who said that the Trust Fund does not consist of "real economic assets" when he was in the Clinton Administration? Hope and change indeed.
Second, there's a lot of clapping-for-Tinkerbell hope in that "full faith and credit." What happens when the U.S. credit runs out? Historically, interest rates have run at 6% but they've been at an abnormally low 2% for a while now. Can we afford to borrow at rates that will instantly add a trillion in just interest payments? Will China even lend money to us knowing there's little chance we can pay it back? Our "full credit" hinges on being seen as a good credit risk and our creditors are starting to edge away.
Lastly, if we so concerned about making sure workers get their fair share, should we tell workers under 35 that they'll see an automatic 28% benefit cut in 2037? No, we won't, because we want to maintain this fiction that SS is a retirement plan and not a Ponzi scheme.
I doubt that those bonds will be "defaulted on." More than likely, they will just turn the presses on and pay them all off. Of course, those SS payments will be able to buy very little, but who cares?
5 comments:
You missed this one, too.
http://www.cepr.net/index.php/blogs/beat-the-press/charles-krauthammer-doesnt-understand-how-bonds-work
"It's nice that Mr. Krauthammer thinks that government bonds are worthless. (I have a standing request that he, or anyone else, pass along any government bonds that he considers worthless...)
While he is welcome to believe anything he wants, the bonds held by the Social Security trust fund are backed by the full faith and credit of the U.S. government. Krauthammer may want to default on bonds that belong to the nation's workers, but his desires are not the same as reality.
Selling these bonds to fund Social Security no more raises the deficit than the decision of a rich person to sell bonds to finance their consumption raises the deficit. The deficit was incurred when the money was lent to the Social Security trust fund in the first place."
And this one, from Director of OMB Jack Lew:
http://www.whitehouse.gov/blog/2011/03/11/hammer-misses-mark
"Krauthammer is correct when he writes that there is no “lockbox” that keeps the money sent in by workers for until they retire. By design, when more taxes are collected than are needed to pay benefits, funds are invested in Treasury bonds and are held in reserve for when revenue collected is not enough to pay the benefits due. Yet these Treasury bonds are backed by the full faith and credit of the U.S. government in the same way that all other U.S. Treasury bonds are, making them anything but ”worthless IOUs” as Krauthammer suggests. The government has just as much obligation to pay back the bonds in the Social Security trust fund as we do to any other bondholders.
...Working people had payroll taxes taken from their salaries to pay for future benefits, and instead the money was used to pay for tax cuts and other initiatives. It is hardly fair now to say that those working people caused the problem just when they are ready to collect benefits."
Three things: is this the same Jack Lew who said that the Trust Fund does not consist of "real economic assets" when he was in the Clinton Administration? Hope and change indeed.
Second, there's a lot of clapping-for-Tinkerbell hope in that "full faith and credit." What happens when the U.S. credit runs out? Historically, interest rates have run at 6% but they've been at an abnormally low 2% for a while now. Can we afford to borrow at rates that will instantly add a trillion in just interest payments? Will China even lend money to us knowing there's little chance we can pay it back? Our "full credit" hinges on being seen as a good credit risk and our creditors are starting to edge away.
Lastly, if we so concerned about making sure workers get their fair share, should we tell workers under 35 that they'll see an automatic 28% benefit cut in 2037? No, we won't, because we want to maintain this fiction that SS is a retirement plan and not a Ponzi scheme.
Wow, poiuytrewq, that logic is excellent.
I doubt that those bonds will be "defaulted on." More than likely, they will just turn the presses on and pay them all off. Of course, those SS payments will be able to buy very little, but who cares?
It's not merely an insidious 80-year Ponzi scheme. It's also a death panel, it's just like Hitler, it's class warfare, and it wants America to fail!
Truth doesn't matter, math doesn't matter, budgets don't matter.....BUYING VOTES FOR THE DEMOCRATIC PARTY IS WHAT MATTERS!!!!
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