Tuesday, July 19, 2011

Boskin and Kennedy on Lowering Tax Rates


"The lower marginal tax rates in the 1980s led to the best quarter-century of economic performance in American history. Large increases in tax rates are a recipe for economic stagnation, socioeconomic ossification, and the loss of American global competitiveness and leadership. 

There is only one solution to this growth-destroying, confiscatory tax-rate future: Control spending growth, especially of entitlements. Meaningful tax reform—not with higher rates as Mr. Obama proposes, but with lower rates on a broader base of economic activity and people—can be an especially effective complement to spending control. But without increased spending discipline, even the best tax reforms are doomed to be undone."


a. "It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now ... Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."

~ Nov. 20, 1962, president's news conference

b. "Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government."

~ Jan. 17, 1963, annual budget message to the Congress

c. "In today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.  It is no contradiction – the most important single thing we can do to stimulate investment in today's economy is to raise consumption by major reduction of individual income tax rates."

~Jan. 21, 1963, annual message to the Congress: "The Economic Report Of The President"

d. "Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate."

~ Jan. 24, 1963, message to Congress on tax reduction and reform

e. "A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues."  

~Sept. 18, 1963, radio and television address to the nation on tax-reduction bill

154 Comments:

At 7/19/2011 4:54 PM, Blogger Benjamin said...

I am all for lower tax rates.

Just once, I would like someone to say if we tax workers less, they will work harder.

Or someone to say that a progressive consumption tax would beat even a flat income tax, by the light of classic economics.

When JFK gave those speeches, the top federal income marginal tax rate in the USA was 90 percent. But the economy boomed in the 1950s and 1960s.

Life has a funny way of trumping theories.

 
At 7/19/2011 5:04 PM, Blogger Michael Hoff said...

What a radical right winger. Probably a homophobe, too. And a bigot. Who dumps his used oil in storm drains. The fascist.

 
At 7/19/2011 5:24 PM, Blogger Craig said...

But the economy boomed in the 1950s and 1960s.

It was a most unusual time. For most of the 50s, Europe and Asia were hollowed out shells whose citizens depended on America's industry to supply them. And we shouldn't forget that the Federal Reserve started inflating the money supply in the early 50s to fund the Korean war and never stopped.

Inflation does work. For a while.

 
At 7/19/2011 5:47 PM, Blogger Benjamin said...

Michael HoFF:

Just for fun.

1. JFK came from very wealthy family, and was a fierce anti-commie. On many issues, he was in fact a right-winger. He abstained on the vote to censure Joe MaCarthy, and wanted to cut taxes on the wealthiest.

2. Everyone disliked homosexuals in those days.

3. Everyone was something of a bigot in those days.

4. Well, his manservants changed the oil. Who knows where it went.

5. "Ask not what your country can do for you; Ask what you can do for your country." Just a little fascist there?

 
At 7/19/2011 8:08 PM, Blogger Che is dead said...

"He abstained on the vote to censure Joe MaCarthy ..."

Maybe that's because his brother "Bobby" was helping to run the House Un-American Activities Committee responsible for most of the abuses of the investigation into American communists. Of course, with the release of the Venona transcripts we now know that almost everyone brought before Congress was in fact guilty of conspiring with the Russian communists. So, in hindsight, the abstention was more than warranted.

 
At 7/19/2011 8:19 PM, Blogger Che is dead said...

"Everyone disliked homosexuals in those days ... Everyone was something of a bigot in those days."

Mostly Democrats. That's precisely why he picked Lyndon Johnson, the Senator who filibustered the first Civil Rights Act, as his running mate. The Democrat Party was the pro-slavery party. It was the party of the KKK, segregation and "Jim Crow". Northern progressives and their southern counterparts controlled the federal government for generations by feeding racism and bigotry. The Democrats always looked for a southern progressive to put on the ticket in order to appeal to what they referred to as the "solid south".

Everyone was "anti-commie", but the Democrats had the racism and bigotry fields almost all to themselves.

 
At 7/19/2011 9:06 PM, Blogger Gregory (Greg) P Turco said...

Looks like Perry has sold out. How can a real economist post this? Today, marginal rates now are low, and the economy is dismal. Everyone knows this.

When America needs leadership, we get political bull.

 
At 7/19/2011 10:10 PM, Blogger VangelV said...

Or someone to say that a progressive consumption tax would beat even a flat income tax, by the light of classic economics.

Your ignorance is showing again.

 
At 7/19/2011 10:26 PM, Blogger VangelV said...

It was a most unusual time. For most of the 50s, Europe and Asia were hollowed out shells whose citizens depended on America's industry to supply them. And we shouldn't forget that the Federal Reserve started inflating the money supply in the early 50s to fund the Korean war and never stopped.

Let us not forget something else. In the late 1960s the accounting rules and practices were changed. SS contributions that were not used to pay out benefits were counted as revenues by the government. And they were spent for general purposes just as all other revenues. The government gave the SS trust fund an IOU in the form of a non-marketable security that promised to pay market interest rates to the fund. The problem was that the government did not recognize the accrued liabilities so the budget deficits always looked better than they were.

The problem that we have today is that the SS fund is running in the red and the non-marketable securities cannot be sold to raise the revenue needed to pay recipients. This is why Obama is promising to cut off SS payments to grandma if the debt ceiling was not passed; contrary to claims made by the administration not very long ago that there was plenty in the trust fund to meet obligations.

The US economy has underperformed in real terms for a long time. Yes, some very clever people have made huge progress and made our lives much easier by producing great products cheaply. But as that was happening the foundation that made the economy so strong was undermined. As government grew, it kept passing rules and laws that forced companies to look elsewhere. And the expansion was not paid for out of actual tax revenues. It was paid for by the expansion of the money supply and by borrowing from abroad. Sadly, by using cash based accounting the government was able to hide the fact that many of the promises that it made were not funded at all. As we look around we see more than $100 trillion in unfunded liabilities being 'supported' by promises to tax a $14 trillion economy that is on the ropes.

No matter how much we try the math does not work. Default is inevitable. That means that the best approach is to tax as little as possible and to encourage the productive class to work as hard as possible so that we can all be better off after the inevitable correction comes.

 
At 7/20/2011 12:22 AM, Blogger Larry G said...

the folks who say we need to cut, not raise taxes - have not provided a list of cuts sufficient to deal with the 1.5 trillion ANNUAL structural deficit.

Not a one of them.

Not Paul Ryan, Not Eric Cantor, Not McConnell nor Boehmer.

none.

the whole ground oozes hypocrisy.

If they think we have a spending problem and not a revenue problem then show us their proposed cuts.

otherwise.. the supply-siders are basic idiots.

They insisted for the 8 years that Bush was Prez that supply-side "should work" because it "worked before".. and now they say the same thing... but that we have to cut.

There is something congenitally wrong with these folks.

they refuse to accept the realities that we do have a 1.5 annual deficit .. refuse to deal with it.. and continue to insist that supply-side policies should "fix" it.

In the mean time.. the 1.5 trillion deficit is an ANNUAL problem that CONTINUES to ADD to the 14+ trillion debt.

these guys are living on another planet - totally detached from the real world.

 
At 7/20/2011 2:13 AM, Blogger juandos said...

"Today, marginal rates now are low, and the economy is dismal. Everyone knows this"...

Marginal rates low?!?!

Consider the following from National Taxpayers Union: History of Federal Individual Income Bottom and Top Bracket Rates

From the same site: Who Pays Income Taxes and how much?

History of taxes from 2008 back to 1999...

 
At 7/20/2011 8:47 AM, Blogger Larry G said...

here's the chart showing the history of marginal tax rates:

http://ntu.org/tax-basics/history-of-federal-individual-1.html

 
At 7/20/2011 9:47 AM, Blogger Ourobourbon said...

Sure, cutting taxes will increase growth in a full employment economy.

But right now I don't think the problem is that tax rates are too high. That's like if I get a compound fracture in my leg, the doctor just hands me crutches and says "it's worked in the past. trust me."

Instead of, you know, resetting the bone, stitching up the fracture, putting me in a cast, and then temporarily giving me crutches to tide me over.

 
At 7/20/2011 9:58 AM, Blogger Steve said...

(1) Boskin: "The lower marginal tax rates in the 1980s led to the best quarter-century of economic performance in American history."

Boskin is completely wrong about his facts. Other than that, I have no concerns.

http://krugman.blogs.nytimes.com/2011/07/18/reaganite-delusions/


(2) Kennedy: when he talked about high tax rates, top marginal rates were 90% (from a link in these comments). That was quite a different spot on the Laffer Curve than now, which if one recalls, is shaped like a convex dome. Which side of the curve are we on now?

 
At 7/20/2011 10:22 AM, Blogger Larry G said...

"David Stockman ridicules GOP on budget"

...

"When asked if Pence's proposals for deficit cutting were a good start, Stockman responded:

“Well, no, not nearly enough. The point is, we're now in real-world governance. And you don't get 100 times at bat. The Republicans have been at bat for 30 years, and they've whiffed on everything."

http://www.politico.com/news/stories/1110/44798.html

we KNOW the Dems. Except for the Blue Dogs, they never met a govt program they did not like.

But we always depended on the Republicans to be the fiscal adults.

No more.

These guys have drifted into ideological la la land...

we have a 1.5 trillion deficit and their tongues on tied on what to cut (other than entitlements which won't come near to fixing the shortfall).

We take in about 1.3 trillion in individual and corporate income taxes.

We HAVE a 1.5 trillion shortfall.

How can we fix this with cuts alone?

If there is a way - then the folks who are making that case - have yet to provide any evidence of how to accomplish it.

I'm not in favor of higher taxes but if the folks who say we have a spending problem cannot or will not show us a credible list of cuts - what do we do?

Argue for another 8 years and in the meantime double the debt from 14 trillion to 28 trillion?

 
At 7/20/2011 11:38 AM, Blogger VangelV said...

But right now I don't think the problem is that tax rates are too high. That's like if I get a compound fracture in my leg, the doctor just hands me crutches and says "it's worked in the past. trust me."

Of course they are way too high. US corporate rates are the highest in the OECD. Double taxation prevents repatriation of capital and keeps unemployment rates higher than they should be. High personal income tax rates prevents capital formation and encourages reckless (as opposed to prudent) speculation.

Add to that the huge regulatory compliance and tax reporting burden and we can see why the economy is as weak as it is. If you want to fix what is wrong fire 85% of the federal workers and get rid of all those departments not authorized by the Constitution. And if you like taxes legalize drugs and tax their sales just as FDR did with alcohol.

 
At 7/20/2011 11:40 AM, Blogger VangelV said...

Boskin is completely wrong about his facts. Other than that, I have no concerns.

http://krugman.blogs.nytimes.com/2011/07/18/reaganite-delusions/


Krugman is the basis of your argument? The only person who has been more clueless than him over the past decade has been Bernake.

 
At 7/20/2011 11:49 AM, Blogger Larry G said...

" Of course they are way too high. US corporate rates are the highest in the OECD"

youse guys are as dishonest as you are comical...

" Fact: World Bank study found U.S. effective corporate lower than those of several industrialized nations, including China"

see fig 2.7

http://mediamatters.org/research/201002020005

I AGREE about the drugs but wish folks could be more honest about the difference between the statutory tax rate and the EFFECTIVE tax rate.

and in terms of onerous regulations - how about giving the top 5 countries that beat the US economically as a result of LESS regulation?

batter up....

 
At 7/20/2011 12:25 PM, Blogger Steve said...

@ VangelV:

Krugman's post is simply a chart of Real GDP data from St. Louis Fed, which shows that real GDP growth after 1981 was not the best quarter-century of economic performance in American history.

Boskin's claim is refuted by Federal Reserve data about historical U.S. GDP over 25-year periods.

If Boskin or you have another defnition of "American economic performance", then show some data supporting that point. But real GDP growth is widely-used to represent such "economic performance".

 
At 7/20/2011 12:40 PM, Blogger juandos said...

"Boskin is completely wrong about his facts. Other than that, I have no concerns.

Reaganite Delusions
"...

Speaking of delusional, Steve goes Krugman!

ROFLMAO!

Try a dose of Nile Gardiner instead: Paul Krugman and America’s delusional Left-wing elites remain stuck in the Twilight Zone

 
At 7/20/2011 3:43 PM, Blogger VangelV said...

But we always depended on the Republicans to be the fiscal adults.

Since when? After Reagan and the two Bush fools there should be little illusion that Republicans are any better than the donkeys on the other side. Take a look at all of the 'plans' being put out by the Republican leadership and you see nothing but illusion. The only person who has provided a serious plan is Rand Paul but the party ran hard away from it.

This is why Americans are doomed; they are stuck in a mindset that sees the two staist parties as offering alternatives when those parties are two sides of the same anti-liberty coin. If you want to fix the economy both parties have to go.

 
At 7/20/2011 4:10 PM, Blogger VangelV said...

youse guys are as dishonest as you are comical...

" Fact: World Bank study found U.S. effective corporate lower than those of several industrialized nations, including China"...


I believe that you are the person who is being dishonest. I said that the US has the highest corporate tax rates in the OECD, not that American companies were stupid enough to incur the highest effective corporate tax rates. Actually, Japan had a slightly higher tax rate but is cutting that rate to stimulate corporate investment.

I AGREE about the drugs but wish folks could be more honest about the difference between the statutory tax rate and the EFFECTIVE tax rate.

Why can't you understand that the companies reduce their effective tax rate by keeping their investments in lower tax jurisdictions? That means that the American job seeker loses because of the high statutory tax rate.

 
At 7/20/2011 4:16 PM, Blogger VangelV said...

Krugman's post is simply a chart of Real GDP data from St. Louis Fed, which shows that real GDP growth after 1981 was not the best quarter-century of economic performance in American history.

Boskin's claim is refuted by Federal Reserve data about historical U.S. GDP over 25-year periods.

If Boskin or you have another defnition of "American economic performance", then show some data supporting that point. But real GDP growth is widely-used to represent such "economic performance".


Both Boskin and Krugman are unprincipled liars and thieves. They are pushing political agendas and have little regard for principle.

As I have written before, much of the reported progress made in the real economy has been an illusion aided by faulty accounting and inadequate statistical analysis. And as I write this I note that the US has more than 100 trillion of debt and unfunded liabilities with a shaky $14 trillion economy that is on the edge of collapse. Both Krugman and Boskin have failed to notice the trend and both have chosen to play politics rather than tell the truth.

 
At 7/20/2011 9:24 PM, Blogger Larry G said...

well, we agree... at least on the current Republican leadership... but Rand Paul is so far out in la la land that only about 5% of Americans would support it.

that's a real problem when you're part of a minority that is that small.

The plan that best appeals to the middle plus the near-middle fringes of the Dems/Republicans is not one that is going to satisfy libertarians.

 
At 7/21/2011 7:52 AM, Blogger VangelV said...

well, we agree... at least on the current Republican leadership... but Rand Paul is so far out in la la land that only about 5% of Americans would support it.

The fact that you think that he is, "so far out in la la land", tells us what we need to know. There will not be a solution because those who are rational are considered cooks while those that advocate destroying the real economy and the nation are considered acceptable.

What exactly makes Rand Paul, "so far out in la la land"?

 
At 7/21/2011 9:24 AM, Blogger Larry G said...

re: Paul Rand and La La Land.

not me necessarily but the majority of people who vote.

That's the essential problem with Rand and Ron in that they both make some really excellent points but then they go overboard - in the minds of whom they'd have to convince to go forward.

In a representative (elected) govt, the name of the game is to 1. educate and 2. propose something that a majority will sign on to.

I like Ron Paul. I like him running for President. I like him pointing out the stupidity of our approach to budgeting.

but I do not, for instance, think that a majority of people will agree to, for instance, not have social security or Medicare, in part because it is the de facto standard in ALL industrialized countries in the world and if we are going to do it differently then people want the full plan and be willing to accept the full consequences.

I do not think a majority of people in this country would even agree to kill the EMTALA law.

Remember - most all of these laws - that Paul and probably you dislike were passed because people wanted them and advocated for them - and a majority of Congress and a President agreed with them.

taking those same laws away would require the reverse process - a majority of people want the law removed, Congress and the President agree....

 
At 7/21/2011 9:43 AM, Blogger VangelV said...

That's the essential problem with Rand and Ron in that they both make some really excellent points but then they go overboard - in the minds of whom they'd have to convince to go forward.

I don't see what they are going overboard on.

Most Americans have come around to their view of the Bush/Obama wars.

Most Americans have come around to their view of the economy.

Most Americans have come around to their view of Wall Street.

Most Americans have come around to their view of the Fed.

Most Americans have come around to their view on taxes.

Most Americans have come around to their view on spending.

Most Americans have come around to their view on marriage.

So where exactly do they go off the reservation and fail to be reasonable? Is it the fact that they claim that the leadership of both parties are the problem? Or the fact that they don't play well with lobbyists and the media hired guns? Or are you claiming that Americans are too stupid to be rational?

 
At 7/21/2011 10:07 AM, Blogger Larry G said...

IF what you say is TRUE then Paul is a shoo-in.

what are the facts?

Is Paul challenging for the lead in the Republican candidacy?

I don't think so.

If Paul cannot even mount an effect challenge for the REPUBLICAN BASE - you KNOW he's going NO WHERE in either the Republican primaries nor the general election.

So what you say about most Americans seems to be not the case.

It's what you'd like to believe.

But you need to be able to separate out what you believe and what to believe - with the simple realities like the ones I point out.

 
At 7/21/2011 10:10 AM, Blogger Larry G said...

and here's the other, more important, problem.

It's NOT that people are NOT hugely dissatisfied with the current status quo.

They AGREE that it's a horrible mess but the question is - what/where are the specific proposals to deal with it?

What is Ron Paul's "plan"?

this is what people sign on to - not a laundry list of what is wrong - and no proposal for dealing with it.

 
At 7/21/2011 10:17 AM, Blogger VangelV said...

In a representative (elected) govt, the name of the game is to 1. educate and 2. propose something that a majority will sign on to.

There is a very fine line between educate and indoctrinate. And we all know that a majority should not have the ability to trample on the rights of individuals, particularly in a country that still claims to be a republic.

like Ron Paul. I like him running for President. I like him pointing out the stupidity of our approach to budgeting.

So do I.

but I do not, for instance, think that a majority of people will agree to, for instance, not have social security or Medicare, in part because it is the de facto standard in ALL industrialized countries in the world and if we are going to do it differently then people want the full plan and be willing to accept the full consequences.

Ron Paul has only proposed that people be given the chance to opt out of SS if they wish. He has already said that he would not change the benefits for those already on SS, and would only look to change the age of eligibility for those that are more than ten years away from retirement, something that even Obama has agreed would be necessary.

I do not think a majority of people in this country would even agree to kill the EMTALA law.

That does not matter. The markets will adjust to mitigate the damage caused by the law and many hospitals will agree to some type of relationship with the state, which will cover the costs, even as others close down emergency departments as a way to reduce the burden on shareholders.

Ron Paul is right to stand on principle. Theft is wrong no matter what the intentions behind it.

Remember - most all of these laws - that Paul and probably you dislike were passed because people wanted them and advocated for them - and a majority of Congress and a President agreed with them.

I do not believe that this is true. Nobody asked the 'people' or engaged in any serious debate before the laws were passed. Instead of actual debate what we often see is a promise of a free lunch by both parties, who try to buy votes with money that they do not have. Why do you think that the unfunded liabilities are as bad as they are?

taking those same laws away would require the reverse process - a majority of people want the law removed, Congress and the President agree....

I do not think that is what Dr. Paul is counting on. For one, he still considers himself a very long shot as he should given the dysfunctional nature of American politics. But he is counting on being right as he was during the last election, when the idiot Republicans and the media were laughing at him for suggesting that the real economy was in big trouble, that housing was in a bubble, that the brokers were technically insolvent, and that the GSEs would cost the taxpayers trillions of dollars. He was also right about TARP and the negative multiplier. (Which is why most of the candidates have switched and now claim to take very similar positions to the one that Dr. Paul has held for decades.)

If the economy collapses before the next election he may be able to get in as an independent, or save the Republican party by ensuring that Obama wins the next election so that the left cannot use false narratives such as those Reagan gave them by pretending to be a small-government politician.

 
At 7/21/2011 10:38 AM, Blogger VangelV said...

Is Paul challenging for the lead in the Republican candidacy?

I don't think so.


I agree. The social conservatives, the media, and the party leadership keep trying to marginalize him. They will continue to do so unless he has a victory or comes in the top three in Iowa or NH.

If Paul cannot even mount an effect challenge for the REPUBLICAN BASE - you KNOW he's going NO WHERE in either the Republican primaries nor the general election.

I disagree. Of all of the Republican candidates he is most likely to win support from independents and disillusioned Democrats who feel betrayed on the war, bailouts, and taxes.

So what you say about most Americans seems to be not the case.

It's what you'd like to believe.


What did I say about 'most Americans' other than they are not as stupid as you make them out to be?

And I am not under any illusion about human nature. I see the world as it is, warts and all, not as some potential utopia as the left and the right usually do.

But you need to be able to separate out what you believe and what to believe - with the simple realities like the ones I point out.

I have already said that he is a long shot for the Republican primary. I said that if there is a crisis, which he predicted but most of the field has ignored, he has a shot as an independent. If he loses and allows for Obama to win he could save what is left of the corrupt GOP. If he loses but takes enough independent votes from Obama he will help the corrupt GOP to destroy itself by drowning in its own hypocrisy. A collapse would destroy the Democrats so freedom loving voters do not have to worry about them. The real threat to individual freedom comes from the national socialists on the right. For a glimpse into your future look at the TSA, swat teams used to collect student loans, and park rangers arresting people for taking pictures as a first start.

 
At 7/21/2011 10:44 AM, Blogger Larry G said...

In a representative (elected) govt, the name of the game is to 1. educate and 2. propose something that a majority will sign on to.

There is a very fine line between educate and indoctrinate. And we all know that a majority should not have the ability to trample on the rights of individuals, particularly in a country that still claims to be a republic.

there might be - but that's a primary way that you would convince a MAJORITY to support or oppose something.



like Ron Paul. I like him running for President. I like him pointing out the stupidity of our approach to budgeting.

So do I.


but I do not, for instance, think that a majority of people will agree to, for instance, not have social security or Medicare, in part because it is the de facto standard in ALL industrialized countries in the world and if we are going to do it differently then people want the full plan and be willing to accept the full consequences.

Ron Paul has only proposed that people be given the chance to opt out of SS if they wish. He has already said that he would not change the benefits for those already on SS, and would only look to change the age of eligibility for those that are more than ten years away from retirement, something that even Obama has agreed would be necessary.

if Ron Pauls "only" proposal would effectively end up killing SS - then it would fail.

Remember - RIGHT NOW - the 1.5 trillion deficit has NOTHING to do with SS. SS is an ADDITIONAL problem looming but currently has little to do with the CURRENT 1.5 trillion deficit.

I want to see THAT address BEFORE we start moving to ideology. Practicality first.

I do not think a majority of people in this country would even agree to kill the EMTALA law.

That does not matter. The markets will adjust to mitigate the damage caused by the law and many hospitals will agree to some type of relationship with the state, which will cover the costs, even as others close down emergency departments as a way to reduce the burden on shareholders.

the basics of EMTALA are that anyone can get treatment without paying. "Adjusting" to that causes serious distortions in the market

 
At 7/21/2011 10:44 AM, Blogger Larry G said...

Ron Paul is right to stand on principle. Theft is wrong no matter what the intentions behind it.

he's "wrong" if he cannot make change happen ..... do you want practical changes or intransigent ideology?


Remember - most all of these laws - that Paul and probably you dislike were passed because people wanted them and advocated for them - and a majority of Congress and a President agreed with them.

I do not believe that this is true. Nobody asked the 'people' or engaged in any serious debate before the laws were passed. Instead of actual debate what we often see is a promise of a free lunch by both parties, who try to buy votes with money that they do not have. Why do you think that the unfunded liabilities are as bad as they are?

unfunded liabilities are what happen to ANY entity - private or public that is charging less than what it ultimately costs to provide a service - over the longer run.

If a private company sold annuities for less than it would cost to pay them later on - they also would be said to have "unfunded liabilities".

The difference is that private companies can and do adapt and adjust to those conditions by raising their premiums or reducing the benefits.

The govt cannot do that - without changes in the laws.


People DID want the laws and their Representatives DID write and vote in favor of those laws - and stayed in office and the President DID sign the laws.

If people are vociferously opposed to a new law - there will be consequences at election times.

For EMTALA, for instance, people were totally opposed to seeing people die after being turned away from the ERs - especially young pregnant women.

people DEMANDED that SOMETHING be done about it - and something was done.


taking those same laws away would require the reverse process - a majority of people want the law removed, Congress and the President agree....

I do not think that is what Dr. Paul is counting on. For one, he still considers himself a very long shot as he should given the dysfunctional nature of American politics. But he is counting on being right as he was during the last election, when the idiot Republicans and the media were laughing at him for suggesting that the real economy was in big trouble, that housing was in a bubble, that the brokers were technically insolvent, and that the GSEs would cost the taxpayers trillions of dollars. He was also right about TARP and the negative multiplier. (Which is why most of the candidates have switched and now claim to take very similar positions to the one that Dr. Paul has held for decades.)

If the economy collapses before the next election he may be able to get in as an independent, or save the Republican party by ensuring that Obama wins the next election so that the left cannot use false narratives such as those Reagan gave them by pretending to be a small-government politician.

It's not what Paul "thinks" or "has been proven" right on though.

It's the specific things that Paul would do to change the current trajectory.

That's how you convince anyone but the hard core libertarians to vote for you.

I do not think Paul is serious about running for President.

I think he wants to have a particular view represented that gets addressed in the debates....

If he was serious - he would have a "PLAN" that would attract votes from people who are not self-avowed libertarians.

 
At 7/21/2011 11:08 AM, Blogger VangelV said...

What is Ron Paul's "plan"?

He has already made many of his positions clear.

End the wars and stop defending Korea, Japan, Germany, and other countries.

Get rid of the departments of Energy, Commerce, Housing, Transportation, Education, etc., and free the states and the markets from the regulatory nightmare that prevents productive economic activities. End all activities that are not permitted by the Constitution as written.

End the War on Drugs. Collect taxes on the sale of drugs just as FDR collected taxes on the sale of alcohol.

Get rid of all corporate subsidies.

Tear down tariff barriers so that American consumers can enjoy lower prices for sugar, food, ethanol, clothing, and other products.

Sell off federal lands and exploration leases. Sell off military bases, federal parks, building, monuments, and all similar assets controlled by the federal bureaucracy.

Generate billions in mineral exploration and development royalties.

Ending the ethanol mandates. End mandates that hamper the utilities. Let refineries and utilities choose the best and lowest-cost production methods.

End all foreign aid. Remove the barriers to individual giving.

Stop funding government facilities that compete with charity organizations and churches.

Get rid of the defensive medicine by removing liabilities when unnecessary tests are not done. Allow individuals to get testing on the private markets.

End the monopolies in the professions. Do not prohibit nurses from doing procedures that they are fully qualified to perform.

Get rid of the regulations that hamper drug research and reform the patent office so that it cannot stifle progress.

Gut the trial lawyers that use bad IP laws and fraud to attack productive companies.

Make prosecutorial and judicial misconduct felonies. Eliminate all laws that make criminals out of people engaging in voluntary activities that do not involve the use of fraud or the initiation of force.

Leave people alone and have them accountable for their actions. Let them opt out of current programs and have the users of those programs pay their own way.

 
At 7/21/2011 11:33 AM, Blogger VangelV said...

if Ron Pauls "only" proposal would effectively end up killing SS - then it would fail.

You are not paying attention.

For example, he has pointed out that the wars have cost trillions and that they need to be ended. So do military procurement programs that make no economic or operational sense.

On this issue he has a lot of support from independents, Democrats that feel betrayed by Obama, and many republicans.

He would also stop paying to defend Europe, Korea, Japan, and other nations and would save money by concentrating on defense and commerce rather than foreign adventurism.

He would save a bundle by ending the War on Drugs and getting rid of most of the regulatory agencies. (Who needs inspectors to check how much water flows through shower heads?) He would stop giving aid to dictators. He would get rid of most of the federal employees and would hand back responsibility for various activities to states that are already dealing with most of them.

He would end corporate welfare. He would sell off assets and generate a lot of royalty revenue by allowing mineral exploration on federal lands.

 
At 7/21/2011 11:35 AM, Blogger VangelV said...

the basics of EMTALA are that anyone can get treatment without paying. "Adjusting" to that causes serious distortions in the market

Not really. Many hospitals have simply stopped running emergency departments. The adjustment is fairly simple.

 
At 7/21/2011 11:35 AM, Blogger Larry G said...

" What did I say about 'most Americans' other than they are not as stupid as you make them out to be?"

I don't think Americans are "stupid" but I do think most don't have a real firm idea about govt.

For instance, if you asked a 100 people anywhere who their elected officials are - local, state and Federal - most do not know.

They know even less about specific issues.

Most do not know, for instance that Medicare Part A is funded from FICA and Part B from tax-payer subsidized premiums.

but most Americans know someone whose sole income is social security and they know that without it that taxpayers would then be paying for their home and food so they support the idea of setting aside money from your work so that you have SOMETHING in your retirement even if you did not have a 401 or lost it or lost their pension when the company went broke.

Most folks support this concept.

So most folks want to do a specific plan if that concept is to be replaced.

It's like the Republicans REPEAL & REPLACE.

We got the "repeal" part but where is the "replace" part? It's AWOL.

so in that regard Americans are SMART.

They want to know what the PLAN is if we are going to get rid of the current programs.

and "no plan" or "you're on your own" is going to fly IMHO.

If that idea would fly - then Ron Paul would have a significant percentage of independents supporting him and I don't see it. I think he's down in the low single digits - across the board.

If Ron Paul is not actually running for President, what is he actually trying to accomplish?

I do not think he is really advocating specifics but rather trying to inform and educate as to our current situation which is not good.

 
At 7/21/2011 11:38 AM, Blogger Larry G said...

re: Ron Paul's "Plans".

if those are his "plans" in totality, he has absolutely no chance of getting elected from anyone including independents.

What is his "plan" to actually get elected and implement?

I think his "plan" is so extreme that even he knows it's no good.

why "no good".

because ANY "plan" that has no chance of being enacted is not really a serious plan.

The country has to change and move.. incrementally/evolutionary not revolutionary.

 
At 7/21/2011 11:43 AM, Blogger Larry G said...

" You are not paying attention. "

oh I am. I differentiate between "serious" ideas that have some chance of being implemented and ideas that have no chance beyond single digit number support from any sector including independents.

re: closing ERs.

If you close the ER, you cannot get certified as a fully accredited hospital which in turn means major insurance will not cover including Medicare ....

again - practical, feasible changes and solutions.. that can actually be implemented....

A "hospital" that does not have an ER becomes something other than a hospital.

 
At 7/21/2011 11:56 AM, Blogger Ron H. said...

Anyone seriously interested in Ron Paul's positions and recommendations on 50 different issues need only read This book.

 
At 7/21/2011 2:06 PM, Blogger Larry G said...

the main positions that I would be interested in - Ron Paul or otherwise, are the ones that have a chance to be accepted by a majority of voters and implemented.

The ones that are more related to ideological "purity" but absolutely no chance to be implemented - not so much.

It's called getting a "half a loaf"

 
At 7/21/2011 4:10 PM, Blogger VangelV said...

I don't think Americans are "stupid" but I do think most don't have a real firm idea about govt.

For instance, if you asked a 100 people anywhere who their elected officials are - local, state and Federal - most do not know.


I think that they don't pay attention because they do have a firm idea about government. They know that governments are run by thugs and thieves and that they have had little control over what is done in the name of the voters by those thugs and thieves.

Most do not know, for instance that Medicare Part A is funded from FICA and Part B from tax-payer subsidized premiums.

Many voters know that Medicare is a Ponzi scheme that is bleeding red ink and in danger of bankrupting the country. Which is something that you seem to ignore.

but most Americans know someone whose sole income is social security and they know that without it that taxpayers would then be paying for their home and food so they support the idea of setting aside money from your work so that you have SOMETHING in your retirement even if you did not have a 401 or lost it or lost their pension when the company went broke.

SS was never supposed to be the sole source of income for workers. Most of their retirement was supposed to be funded privately. Now that it is broke I do not see how things improve without gutting the program.

So most folks want to do a specific plan if that concept is to be replaced.

What part of unfunded gives you trouble? There is no money in the SS or Medicare trust funds. It is easy to replace a nothing.

It's like the Republicans REPEAL & REPLACE.

We got the "repeal" part but where is the "replace" part? It's AWOL.

so in that regard Americans are SMART.


Doesn't sound very SMART to me. Defaulting on $100 trillion of unfunded liabilities seems a better option than becoming the Land of the Free and the Home of the Slaves.

 
At 7/21/2011 4:16 PM, Blogger VangelV said...

They want to know what the PLAN is if we are going to get rid of the current programs.

and "no plan" or "you're on your own" is going to fly IMHO.


Let me get this straight. You have programs that are $100 trillion in the hole. And you expect them to suddenly become solvent? Just how stupid do you think that everyone is?

If that idea would fly - then Ron Paul would have a significant percentage of independents supporting him and I don't see it. I think he's down in the low single digits - across the board.

First, he is getting more donations than everyone except for Obama and Romney. Second, he keeps winning the straw polls so far. While he is still a long shot, if there is a crisis that takes the system down you will likely see him run as an independent/libertarian and take huge amounts of votes from the two idiots running for the parties or corruption.

If Ron Paul is not actually running for President, what is he actually trying to accomplish?

Look around. The last time he ran everyone laughed at his ideas. Now everyone claims to have them as part of their own platform. In the real world ideas matter far more than armies because they get to shape reality.

I do not think he is really advocating specifics but rather trying to inform and educate as to our current situation which is not good.

Unlike the corrupt idiots he is running against, Dr. Paul has been educating people and stood on principle for years. He has been ahead of the pack as true leaders should. It seems that the electorate is catching up. Sadly, he is the only hope for the United States of America. It cannot afford many more errors like Bush, Clinton, and Obama.

 
At 7/21/2011 4:37 PM, Blogger Larry G said...

well, one again, you've shown you do not understand that Medicare is two parts and Part B is NOT mandatory and NOT paid for with FICA taxes but IS a much bigger problem that Medicare Part A that IS funded from FICA but only pays for hospitalization.

Without seriously understanding the difference, your "solutions" are the same - kill the programs.

Part B and MedicAID are MUCH BIGGER issues and neither of them are "Ponzi Schemes" in the traditional sense.

MedicAid is totally taxpayer-funded just like the military and other functions of govt are funded.

Medicare Part B is 75% funded from taxes - each year and 25% from premiums.

You are not "forced" to join Medicare Part B (C or D).

It is offered as health insurance much like private health insurance is also offered - for a fee - with certain coverages.

Part B only covers 80%.

The difference is that private insurance can and does adjust premiums and coverage to keep it solvent and the govt - though it can and should operate the same way - has chosen to require an act of Congress - literally to change the premiums.

What the govt should do is REQUIRE that Medicare Part B CANNOT run a deficit - that EACH YEAR it must take whatever steps that are necessary - just like private insurance - to keep it solvent.

MedicAID should REQUIRE any person with a house and other assets - to hand then over in return for nursing home care and not let those folks find dishonest ways to transfer their assets before they go into the nursing home.

these are the kinds of common-sense changes that most people WILL ACCEPT rather than having the programs wiped out.

these are things that do have a chance of happening whereas what you are advocating has a ZERO chance of happening.

 
At 7/21/2011 8:07 PM, Blogger VangelV said...

if those are his "plans" in totality, he has absolutely no chance of getting elected from anyone including independents.

What specifically do you have a problem with?

Ending the Bush/Obama wars? Pulling the troops out of Europe, Korea, Japan, etc.,? Cutting off foreign aid to dictators? Allowing companies to drill for oil on federal lands? Cutting departments that limit economic activities? Cutting subsidies to businesses? Ending the Drug War? Replacing the TSA with private security run by the airlines and airports?

 
At 7/21/2011 8:18 PM, Blogger Larry G said...

I actually have no problem with the specified changes and I suspect many others including independents do - either - but those proposals cannot be part of a larger libertarian agenda to do things that people do not support and that's why people are circumspect of Ron Paul.

His "plan" is a melange of some things that people support and some things so extreme that less than 5% would support.

If he was more clear and specific about the things that are perceived as "extreme" he might garner substantially more support but it appears that he will not do that, in part, because he is, as you say, a "principled" ... read..uncompromising ... libertarian... who won't pull it back so he can gain more votes.

that's not a campaign for the Presidency.... right?

 
At 7/21/2011 8:24 PM, Blogger VangelV said...

I differentiate between "serious" ideas that have some chance of being implemented and ideas that have no chance beyond single digit number support from any sector including independents.

Your country is broke. Even Obama admitted that SS is broke when he said that a debt extension would mean that SS payments would be cut off. (If there were marketable assets in the SS 'trust fund' there would be no problem with making payments.) Medicare is a bigger problem than SS. Dr. Paul believes that eventually the reality will prevail over the lies being told by your 'serious' candidates, who are either too stupid, too dishonest, or too incompetent to understand what is going on.

As for the independents, they have already abandoned the mainstream parties and are looking for alternatives. Dr. Paul is as good as any alternative that they have. He will attract more votes and make more converts and will advance the ideas that will eventually prevail. In the past two years Dr. Paul has been very successful in setting the debate as we have seen the party move towards many of his positions after failing to see the economic contraction that he successfully predicted. The left has become disillusioned about Obama's failure on the war front and the right has seen the futility of the GWB actions regarding Wall Street, prescription coverage, DHS, TSA, etc.

If you close the ER, you cannot get certified as a fully accredited hospital which in turn means major insurance will not cover including Medicare ....

Many private hospitals will want nothing to do with Medicare because they waste too much money on paperwork and do not get paid enough.

again - practical, feasible changes and solutions.. that can actually be implemented....

A "hospital" that does not have an ER becomes something other than a hospital.


It becomes a profitable health care business, which is the point if you are an investor.

 
At 7/21/2011 8:29 PM, Blogger VangelV said...

Anyone seriously interested in Ron Paul's positions and recommendations on 50 different issues need only read This book.

It is a wonderful book which shows a clarity of thought, sound logic, and dedication to principle. I bought the hard cover. Too bad there is no Kindle version.

Of course, our friends on the left and right believe that a position that defends individual liberty is far too radical for the Land of the Free and the Home of the Slave and will look for a corrupt politician that will promise a free lunch and tell them things that they want to hear.

 
At 7/21/2011 9:09 PM, Blogger Larry G said...

"Even Obama admitted that SS is broke when he said that a debt extension would mean that SS payments would be cut off."

oh horse manure.

SS is not broke.

ss takes in almost a trillion a year in FICA taxes. The worse thing that will happen to SS is that if nothing is done, in a dozens years or so it will ONLY pay off at about 75% of "scheduled" benefits.

this is the problem.

we are being dishonest/ignorant about the problems and the solutions.

SS will become a problem at the point where it pays out only at 75% but that's no problem at all compared to a annual 1.5 trillion deficit that has nothing at all to do with SS.

" Many private hospitals will want nothing to do with Medicare because they waste too much money on paperwork and do not get paid enough. "

not from what I understand.

the reimbursements from Medicare Part A are highly sought after by the hospitals because they are guaranteed - unlike EMTALA.

It's also interesting to me how we characterize this as an "American only" issue when there are at least 40 other countries in the world that provide universal health care including 100% access to ERs.

why are we different?

 
At 7/21/2011 10:06 PM, Blogger Ron H. said...

VangelV: "What part of unfunded gives you trouble? There is no money in the SS or Medicare trust funds. It is easy to replace a nothing."

You must have had a momentary memory lapse. As I recall it, he has trouble with all of it.

 
At 7/21/2011 10:24 PM, Blogger Larry G said...

well the trouble is youse guys don't understand the concept when it comes to the Federal Budget.

"unfunded liabilities" refers to any fund where money is set aside for a future pay-out.

that does not describe 99% of the Federal Budget which is an ANNUAL - pay-as-you-go budget.

How do you calculate, for instance, the "unfunded liabilities" of DOD - over a 75-year horizon?

How would you, for instance, calculate the unfunded liabilities for Anthem over a 75 year horizon?

It's clear that you don't understand the concept.

 
At 7/21/2011 11:14 PM, Blogger Ron H. said...

"the main positions that I would be interested in - Ron Paul or otherwise, are the ones that have a chance to be accepted by a majority of voters and implemented."

OK, suit yourself. If you were actually interested in Ron Paul's positions on issues, that book would be the go-to source. It's evident you have little understanding of his positions, based on your characterization of them as 'la la land'.

Do yourself a favor. Learn something about the positions you are criticizing.

You might be surprised at the amount of discontent there is among voters. And, you may recall that those voters sent a large number of representatives to Washington in 2010 based on their promise to work for smaller government, less spending, and lower taxes. They replaced both Republicans and Democrats.

These libertarian leaning Representatives have had a strong influence in the House since their arrival. The longer voters perceive that government is broken, and doesn't work in their best interest, the better candidates such as Ron Paul and Gary Johnson are going to look.

Recall that Obama promised "Change", and rode to victory on a wave of dissatisfaction with the status quo, but has since shown himself to be incompetent, out of touch, and just more of the same unsatisfactory policies on steroids.

Perhaps the even greater dissatisfaction now, will attract voters to a different kind of change.

 
At 7/21/2011 11:27 PM, Blogger Ron H. said...

"...a "principled" ... read..uncompromising ... libertarian... who won't pull it back so he can gain more votes."

So you have a low regard for principles? A candidate should do and say whatever is necessary to get elected?

That's exactly what we have now. How is that working for you? Someone with principles would be a refreshing change.

 
At 7/21/2011 11:31 PM, Blogger Ron H. said...

"If he was more clear and specific about the things that are perceived as "extreme" he might garner substantially more support but it appears that he will not do that"

What Paul positions do you consider extreme, and what positions would you prefer?

 
At 7/21/2011 11:34 PM, Blogger VangelV said...

Part B and MedicAID are MUCH BIGGER issues and neither of them are "Ponzi Schemes" in the traditional sense.

They are Ponzi schemes. The trust funds do not have any money in them and the treasury owes them trillions that it does not have.

 
At 7/21/2011 11:58 PM, Blogger VangelV said...

If he was more clear and specific about the things that are perceived as "extreme" he might garner substantially more support but it appears that he will not do that, in part, because he is, as you say, a "principled" ... read..uncompromising ... libertarian... who won't pull it back so he can gain more votes.

that's not a campaign for the Presidency.... right?


Actually, he has been very clear. You have not paid attention to what he has said but have relied on interpretations from those that he has exposed as corrupt and cowardly hypocrites.

 
At 7/21/2011 11:58 PM, Blogger Ron H. said...

"oh horse manure.

SS is not broke.
"

Well, perhaps something fresh from the horse's ass would convince you.

Now, he is either lying to scare people, which is completely in character, or he is admitting that SS is broke AND lying to scare people.

If there is money in the trust fund, there would be no reason do suggest that checks wouldn't go out on Aug 3rd. After all, that's what the trust fund is for, right?

You claim there is plenty of money for a dozen years or so. Why doesn't our dear leader understand that? You should probably let him know that all is well, so he will stop worrying about the old folks.

 
At 7/22/2011 12:03 AM, Blogger Ron H. said...

"How do you calculate, for instance, the "unfunded liabilities" of DOD - over a 75-year horizon?"

Are you just pasting these comments from your earlier work? this has all been explained to you in great detail in the past. You will have to search the Carpe Diem archives for the answers.

 
At 7/22/2011 12:10 AM, Blogger Ron H. said...

VangelV: "Of course, our friends on the left and right believe that a position that defends individual liberty is far too radical for the Land of the Free and the Home of the Slave and will look for a corrupt politician that will promise a free lunch and tell them things that they want to hear."

That's exactly what happened in 2008, and corrupt is exactly what we got by the bucketful.

I'm hoping people will demand something better in 2012.

 
At 7/22/2011 12:11 AM, Blogger VangelV said...

oh horse manure.

SS is not broke.

ss takes in almost a trillion a year in FICA taxes. The worse thing that will happen to SS is that if nothing is done, in a dozens years or so it will ONLY pay off at about 75% of "scheduled" benefits.



That is not what Obma has said. The fact is that there is nothing in the trust funds and the programs are already paying out more than they take in. What part of 'you are broke' do you have trouble understanding?

 
At 7/22/2011 12:12 AM, Blogger VangelV said...

this is the problem.

we are being dishonest/ignorant about the problems and the solutions.


You certainly are dishonest/ignorant about the problems and the solutions.

 
At 7/22/2011 12:31 AM, Blogger VangelV said...

the reimbursements from Medicare Part A are highly sought after by the hospitals because they are guaranteed - unlike EMTALA.

You are broke.

It's also interesting to me how we characterize this as an "American only" issue when there are at least 40 other countries in the world that provide universal health care including 100% access to ERs.

why are we different?


They are also bankrupt and need to print money to pay benefits out of revenues that they do not have. There is no free lunch in any nation.

 
At 7/22/2011 10:09 AM, Blogger Larry G said...

re: Ron Paul's "extreme" positions.

I've listened to the man in the debates and on TV many times.

I know his basic positions and I admire his consistency to his avowed positions but they are too much right now for too many people and politics IS the ART of compromise.

otherwise, you don't get the votes, you don't get elected, and you don't get to implement ANY of your positions.

you have to choose if you really want to get elected or not.

 
At 7/22/2011 10:15 AM, Blogger VangelV said...

I know his basic positions and I admire his consistency to his avowed positions but they are too much right now for too many people and politics IS the ART of compromise.

Compromising on principle has created the mess that the US finds itself in. Dr. Paul is running against such corruption and I do not see how he benefits by abandoning his principles and becoming the typical Washington insider who cares more about power than about truth.

 
At 7/22/2011 10:17 AM, Blogger Larry G said...

re: trust funds

there are more than 10 trust funds and you clearly don't understand how they function.

there is NO RESERVE FUND for ANY of Medicare or SS.

Those accounts are merely temporary parking places for monies collected until they are spent - much like your check book.

They were never intended to function as large-multi-year reserve funds.

Take Medicare Part B - which is VOLUNTARY and NOT A PENNEY is collected ahead of time.

The only monies they get are from monthly premiums that start when you join - and revenues from the treasury - like other Federal agencies get - ever week - to pay the bills.

You guys are total idiots on this and it goes to show abject ignorance of basic facts and realities.

this is NO TRUST FUND like you think it is.

it is little more that a place to put money coming in - temporarily until it gets spent.

The Flood Insurance fund works the same way as does the Highway fund and about 6 others.

MedicAid is totally paid for with tax revenues just like DOD and EPA and the Department of Interior and other agencies.

they are ALL funded from the General revenue fund.

To think about "unfunded liabilities" with regard to MedicAid would be no different than talking about "unfunded liabilities" for ANY govt agency INCLUDING DOD.

but you're so bunged up over the ideology of it that you can't see simple things.

 
At 7/22/2011 10:23 AM, Blogger VangelV said...

there is NO RESERVE FUND for ANY of Medicare or SS.

Those accounts are merely temporary parking places for monies collected until they are spent - much like your check book.


We went over this already. There is an accounting fiction called the SS trust fund. It contains no money because everything has been spent on general operations. Of course, not that long ago, the Obama Administration was suing that "According to the most recent report of the independent Social Security Trustees, the trust fund is currently in surplus and growing. Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years."

 
At 7/22/2011 10:25 AM, Blogger Larry G said...

" If there is money in the trust fund, there would be no reason do suggest that checks wouldn't go out on Aug 3rd. "

you don't get it.

the money from SS comes from the FICA tax - which CONTINUES to be collected and paid out.

What the President was doing was a little bit of good old fashioned demagoguery since he say how effective it was with the Paul Ryan horse manure "plan".

the only other possibility is that in some years FICA does not collect enough for the payouts - usually years when the economy is depressed and it is those years where it makes up the difference from the trust fund (which is really just a small rainy day fund for these kinds of events).

since the trust fund itself is not really a fund but an accounting of what the value of it is and money used comes from the treasury - then SS could ALSO be affected by the debt limit - in an ancillary way.

 
At 7/22/2011 10:31 AM, Blogger Larry G said...

"broke" means you cannot pay your bills.

FICA brings in about a trillion dollars a year - and it pays out about a trillion dollars a year.

It has done this for 60 years and unless they do away with FICA, it will continue indefinitely ....

what changes is - as demographics change and more baby-boomers retire, there won't be enough (without changes) to pay them 100% of SCHEDULED benefits but only 75%.

That's not broke but it is a serious problem that needs to be addressed - the same way it has been over a dozen times since FICA was instituted.

The SAME WAY this problem is handled WORLDWIDE INCLUDING in places like Singapore and Chile!

ya'll are so whacked out on the ideology and the FAUX news propaganda that you can't even think straight about basic facts and realities.

According to you guys - DOD funding if looked at over a 75 year horizon is "broke".....

or.. any other Federal agency that is funded by taxes - "broke" over a 75 year horizon..

what a triple load - boys.

 
At 7/22/2011 11:05 AM, Blogger Larry G said...

" We went over this already. There is an accounting fiction called the SS trust fund"

yes we have and you STILL don't understand because you are so wedded to ideology that you cannot see simple realities.

SS is - like ALL FEDERAL EXPENDITURES and ALL Private Insurance - a pay-as-you-go operation.

FICA taxes are collected every day and every day those same monies are spend on SS benefits.

In years where a little more FICA tax is accumulated it goes into a trust fund - which is just a simple accounting because it really goes into the general revenues.

But that money is only about 2 trillion dollars - and the program pays out almost a trillion every year - and it was EXPLICITLY DESIGNED to function that way from the beginning and always has.

The trust fund is where the excess is stored until it is needed - usually in recessions and other down economic periods.

you simple do not understand or refuse to understand that this is the way the program was designed and ALWAYS intended to work this way.

It works exactly the same way that private insurance does.

No insurance company has enough reserve for a 75-year horizon to pay for ALL anticipated claims.

It has enough to pay one or two years worth and depends on the incoming premiums to keep the fund level.

If claims exceeds projections, they either increase the premiums or reduce the coverage but keep the money the same.

They can and do - do this ALL THE TIME to address their future "unfunded liabilities".

The difference is with SS, that they cannot administratively do the same thing.

It literally takes an act of Congress to do it - and it HAS been done - more than a dozen times in the history of the program.

just as private insurance has - over 60 years had countless increases in premiums to keep up with their payouts.

this is simple stuff but apparently beyond your ability to comprehend.

 
At 7/22/2011 11:14 AM, Blogger Larry G said...

.... and when you talk about the CURRENT 14+ trillion debt and CURRENT 1.5 trillion ANNUAL deficit, Social Security has nothing to do with ANY of it RIGHT NOW.

SS is a near-term future issue that will ADD to the EXISTING deficit if it is not addressed but killing SS won't fix the CURRENT 1.5 annual deficit.

and yet, the zealots say that our deficit problems are because of SS and we can fix our deficit by killing SS which is totally and utterly false and ignorant but it does not stop the claims coming from the zealots.

 
At 7/22/2011 11:37 AM, Blogger VangelV said...

"broke" means you cannot pay your bills.

FICA brings in about a trillion dollars a year - and it pays out about a trillion dollars a year.


It takes in less in taxes than it pays in benefits. A broke country can't make up the difference unless it cuts elsewhere. It is as simple as that.

As more and more people retire and the ratio of workers to beneficiaries falls the fund will go more and more into the red using cash based accounting. Given the accrued liabilities and the fact that the nation is broke that means that there is serious trouble ahead.

Buy silver and gold. Don't bet on more than a year or two of recovery. Hope for the best and expect the worst.

 
At 7/22/2011 12:42 PM, Blogger Larry G said...

" It takes in less in taxes than it pays in benefits. A broke country can't make up the difference unless it cuts elsewhere. It is as simple as that"

it has taken in more than enough to pay benefits AND accumulate a rainy-day trust fund for recession years - until now.

and it has NOTHING WHAT-SO-EVER to do with the CURRENT 14+ trillion debt and 1.5 annual structural deficit so even if you did away with it today - neither the debt or deficit would benefit from it.

Claiming that SS is the reason for the debt and deficit and thus should be done away with is - ignorant, dishonest and/or purposeful disinformation.

There is no question that we need to deal with the debt and deficit but in order to do that effectively, we have to be intelligent and honest enough to identify the REAL causes of the CURRENT deficit - as well as deal with SS so that in the future it does not ADD to the EXISTING unrelated debt and deficit issues.

Social Security works like any private insurance annuity.

The trust fund functions mostly as a working fund to make up any temporary shortfalls in the premiums/benefits balance - JUST LIKE most ANY private annuity and/or insurance does.

No Insurance company retains a fund sufficient to cover 75 years of payouts.

they do their payouts with their premiums.. that in any year - is sufficient to cover all payouts, and retain a bit for the rainy day/contingency fund ...and profits.

If payouts start to exceed the premiums, they WILL CAUSE a future unfunded liability but private insurance takes care of this fairly quickly by increasing premiums and/or reducing coverages and no one claims that this means that they are "bankrupt" or "ponzi schemes" unless they are either ignorant are up to no good with ideological propaganda.

 
At 7/22/2011 1:12 PM, Blogger Ron H. said...

"What the President was doing was a little bit of good old fashioned demagoguery since he say how effective it was with the Paul Ryan horse manure "plan"."

Wait. Does that mean he is lying? Is that what you think a president should do? Is that what a candidate should do to get elected?

Was he lying about money in the trust fund or about no money to pay SS benefits? You can't have it both ways.

Do you believe the purpose of getting elected is only to serve your own ambitions?

That's really a sad worldview Larry.

 
At 7/22/2011 1:24 PM, Blogger Ron H. said...

Also, you might want to reread what the SS chief actuaryof says about the subject before you continue making a fool of yourself.

It's hard to understand why your astounding level of ignorance doesn't embarrass you in the least. Most people would make an effort to understand what it is they are talking about before commenting, but not you, Larry. I know this has all been covered before, but it's still an amazing display.

Perhaps morganovich is right. Maybe this is a school project for you.

 
At 7/22/2011 1:38 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 7/22/2011 1:53 PM, Blogger Ron H. said...

Larry, have you read the "Investment Transactions" link I provided you?

A quick perusal show that the SS chief Actuary believes there is almost $2.5 trillion in what he or she is calling a Trust Fund.

Of course this is in the form of "Special Issue Bonds", sold by, and redeemable by the Treasury, only to the SS Trust Fund. They are not marketable. The common term for this type of security is IOU.

So, are there funds in the SS trust fund or not?

Treasury thinks there is money owed to the SS Trust Fund, as interest is being paid on money that's been borrowed from it. You can see it shown as income in the Trustees report you have previously cited.

You, yourself, have claimed that when SS receipts don't equal benefits paid out, there are funds from SOME place to make up the difference. Is this SS Trust Fund that place, or is it something different?

The important question is, can SS checks go out on Aug 3rd?

Is the Liar in Chief lying about this or is he just trying to scare old folks into calling their representatives and demanding they vote to raise the debt limit?

 
At 7/22/2011 2:00 PM, Blogger Ron H. said...

Larry G. Says: "it has taken in more than enough to pay benefits AND accumulate a rainy-day trust fund for recession years - until now."

Does that mean checks can go out on Aug 3rd, or doesn't it?

Is the "rainy day trust fund" - as opposed to the SS Trust fund - broke?

You need to clear this up, Larry, you have written in circles about this. First there is a trust fund, and then there isn't. Pick one explanation and stick with it.

 
At 7/22/2011 2:40 PM, Blogger Ron H. said...

"There is no question that we need to deal with the debt and deficit but in order to do that effectively, we have to be intelligent and honest enough to identify the REAL causes of the CURRENT deficit - as well as deal with SS so that in the future it does not ADD to the EXISTING unrelated debt and deficit issues."

What do YOU think are the real causes of the current federal budget deficit? is it possible that the deficit results from spending more than income?

Using your numbers, an income of $1.3T and spending of $2.8T creates a deficit of $1.5T. OK so far?

Do you think that spending more than twice your income on an ongoing basis is possible? Should spending be drastically reduced? Where do YOU see possible cuts? Is that amount of spending essential?

OK, how about income? You understand that borrowing $2T, the current request, can't continue year after year, so more income must be needed.

Where should it come from? The only source of government income is taxes. Is that the answer - higher taxes?

You know that "the rich" can't be squeezed hard enough to come up with it, nor can "greedy corporations". They have the amazing ability to structure their income so as to avoid onerous levels of taxation, including operating offshore. And, in any case, just isn't enough from those sources to cover it.

Raise individual income taxes? That would require more than doubling current collections. The economy would collapse.

What's YOUR solution, Larry? You have criticized the ideas of others as being to extreme, what would YOU do?

Neither continued borrowing nor inflating the money supply are acceptable answers, so don't even bother to go there.

 
At 7/22/2011 3:23 PM, Blogger VangelV said...

The trust fund is where the excess is stored until it is needed - usually in recessions and other down economic periods.

The trust fund is an accounting fiction. The money is gone and all there is in the 'fund' is a promise for the federal government to make good on its IOUs. But we all know that an IOU from an institution that is broke is simply not worth very much.

It works exactly the same way that private insurance does.

Hell no. Insurance executives who did what Congress does would have been in jail. Nobody but the federal government and a few fishermen and hunters use cash based accounting. Everyone else has to keep track of accrued liabilities.

No insurance company has enough reserve for a 75-year horizon to pay for ALL anticipated claims.

Actually, they do. Insurance companies 'invest' their premiums. Congress spend the SS premiums. Insurance companies have to keep a float that ensures that payments will be made. Congress raises the debt ceiling so that the shortage can be made up. The fact that you think that private insurance plans and SS are the same shows just how ignorant and ideologically damaged you really are.

 
At 7/22/2011 3:28 PM, Blogger VangelV said...

it has taken in more than enough to pay benefits AND accumulate a rainy-day trust fund for recession years - until now.

There is no money in your "rainy-day trust fund." I guess that Obama can send out IOUs but I don't think that SS recipients will be pleased. You really should go back to the other thread, where you showed just how ignorant you were of finance. You can't be as stupid as you try to appear.

 
At 7/22/2011 3:34 PM, Blogger VangelV said...

Wait. Does that mean he is lying? Is that what you think a president should do? Is that what a candidate should do to get elected?

Was he lying about money in the trust fund or about no money to pay SS benefits? You can't have it both ways.

Do you believe the purpose of getting elected is only to serve your own ambitions?

That's really a sad worldview Larry.


Our friend is in a bind. He wants to believe that there is money in the trust fund AND that Congress has spent that money. But both can't be true at the same time.

He thinks that the $100 trillion shortfall can simply be made up by additional taxes on the $14 trillion economy that is ready to fall over a cliff. But not even someone as ignorant of economics as he is can believe that could be true.

He also refuses to see Obama as the corrupt empty suit that he appears to be even though Obama is contradicting his other beliefs. Again, both positions can't coexist.

Which is why our friend is so conflicted and appears to be so stupid; his ideology is getting in the way of his brain and will not allow him to resolve the contradictions.

 
At 7/22/2011 3:36 PM, Blogger VangelV said...

It's hard to understand why your astounding level of ignorance doesn't embarrass you in the least. Most people would make an effort to understand what it is they are talking about before commenting, but not you, Larry. I know this has all been covered before, but it's still an amazing display.

It is not hard at all. Our friend is either trying to play a game or is so blinded by ideology that he can't resolve the conflicting positions. Of course, he could simply be one of the dumbest people you have ever encountered.

 
At 7/22/2011 4:31 PM, Blogger Ron H. said...

"It is not hard at all. Our friend is either trying to play a game or is so blinded by ideology that he can't resolve the conflicting positions. Of course, he could simply be one of the dumbest people you have ever encountered."

I'm inclined to believe that it's some of each, with the largest contributing factor being the last one.

Actually, when I have the time for it, it's kind good exercise dealing with someone so persistently obtuse. And, as you have said, maybe someone else reading this thread can benefit.

 
At 7/22/2011 4:43 PM, Blogger VangelV said...

.... and when you talk about the CURRENT 14+ trillion debt and CURRENT 1.5 trillion ANNUAL deficit, Social Security has nothing to do with ANY of it RIGHT NOW.

SS has a funding problem. Between SS and Medicare you are looking at a NPV shortfall of more than $100 trillion in a $14 trillion economy.

SS is a near-term future issue that will ADD to the EXISTING deficit if it is not addressed but killing SS won't fix the CURRENT 1.5 annual deficit.

Other than you, I have no idea who is mixing up the debt with the funding liabilities. But it is apparent that you are clueless about both.

 
At 7/23/2011 6:38 PM, Blogger Larry G said...

youse guys are comical. Do you not know the President is a politician like Bush and Clinton and certainly will use the bully pulpit to "encourage" people to consider his view.

If not mistaken, he never said anything about the trust fund which you guys clearly do not understand and are basically ignorant of.

The highway gas tax money is put into a "trust" fund as well as the subsidized FLOOD program - as well as Medicare Part B - all 3 are funded from taxes and premiums and the money is put into a "trust fund" that functions essentially like a dedicated checking account - NOT a big 75-year horizon fund.

you boys are so pitifully ignorant, it's sad.

re: deficits and spending.

first, the truth.

SS is not the deficit.

second, I do not claim that we can find enough to cut to balance but I respect and expect those that say we can - to provide evidence of it and so far no one has.

the only folks who have provided a plan that "works" is the two deficit commissions.

I'm fine with either one of them AND I am fine with ANY OTHER proposal that effectively balances the budget - no matter who it comes from.

but so far, we have ZERO from all the folks who say we can do it with cuts alone.

re: "investing" funds. All of them do including SS but in different ways.

but you cannot invest what you do not have and that requires premiums from customers or lump-sump payments.... to invest.

no insurance company has a 75-year "fund".

The work essentially the same way that SS does.

they "invest" the premiums - sure enough .. and if the market dumps they have problems with their 75-year "horizons" also.

But you guys have never answered what the 75-year horizon is for DOD or the gas tax or the flood insurance program or even Medicare Part B.

How does a 75-year unfunded liability "work" with DOD for instance - which is totally tax funded - much like Medicare Part B and MedicAid is funded?

I don't think you boys have a clue about how these things really work.

You're just parroting the same old, same old, right wing/libertarian blather... without ever really thinking about what you saying....

 
At 7/23/2011 6:38 PM, Blogger Larry G said...

youse guys are comical. Do you not know the President is a politician like Bush and Clinton and certainly will use the bully pulpit to "encourage" people to consider his view.

If not mistaken, he never said anything about the trust fund which you guys clearly do not understand and are basically ignorant of.

The highway gas tax money is put into a "trust" fund as well as the subsidized FLOOD program - as well as Medicare Part B - all 3 are funded from taxes and premiums and the money is put into a "trust fund" that functions essentially like a dedicated checking account - NOT a big 75-year horizon fund.

you boys are so pitifully ignorant, it's sad.

re: deficits and spending.

first, the truth.

SS is not the deficit.

second, I do not claim that we can find enough to cut to balance but I respect and expect those that say we can - to provide evidence of it and so far no one has.

the only folks who have provided a plan that "works" is the two deficit commissions.

I'm fine with either one of them AND I am fine with ANY OTHER proposal that effectively balances the budget - no matter who it comes from.

but so far, we have ZERO from all the folks who say we can do it with cuts alone.

re: "investing" funds. All of them do including SS but in different ways.

but you cannot invest what you do not have and that requires premiums from customers or lump-sump payments.... to invest.

no insurance company has a 75-year "fund".

The work essentially the same way that SS does.

they "invest" the premiums - sure enough .. and if the market dumps they have problems with their 75-year "horizons" also.

But you guys have never answered what the 75-year horizon is for DOD or the gas tax or the flood insurance program or even Medicare Part B.

How does a 75-year unfunded liability "work" with DOD for instance - which is totally tax funded - much like Medicare Part B and MedicAid is funded?

I don't think you boys have a clue about how these things really work.

You're just parroting the same old, same old, right wing/libertarian blather... without ever really thinking about what you saying....

 
At 7/23/2011 7:12 PM, Blogger VangelV said...

youse guys are comical. Do you not know the President is a politician like Bush and Clinton and certainly will use the bully pulpit to "encourage" people to consider his view.

This is a given.

If not mistaken, he never said anything about the trust fund which you guys clearly do not understand and are basically ignorant of.

You are mistaken. He said that if the debt ceiling is not increased SS recipients may not get their money. He knows that there is no real 'trust fund' and without the ability to borrow the federal government cannot make good on its promise to make good on its IOUs.

The fact that you are ignorant of the reality is your problem, not anyone else's.

 
At 7/23/2011 8:00 PM, Blogger Larry G said...

"he never said anything about the trust fund"......" You are mistaken. He said that if the debt ceiling is not increased SS recipients may not get their money. "

it has NOTHING TO DO with the trust fund guy.

any/all Federal agencies may not get 100% of funding .... and they don't have trust funds...

you don't understand how the trust funds work.

there are at least 10 trust funds.

The Federal Gas Tax, underground fuel tanks remediation, and another half dozen different "trust funds" exist but their main purpose is to account for dedicated funding and to function essentially as checking accounts....

SS was NEVER SET UP to OPERATE off of a 75-year FUND.

It was set up to operate on a pay-as-you-go basis with the TRUST FUND to hold any excess that would be disbursed when FICA failed to generate enough monies to cover payouts.

The "trust fund" is a contingency fund... that's all.....

Medicare Part B ALSO has a Trust Fund.... and there is NO FICA taxes associated with it.

It's merely an account that hold the $100 premiums and federal revenues ... so they can be paid out....

are you totally ignorant of this?

 
At 7/23/2011 8:37 PM, Blogger Ron H. said...

Larry! Don't make me slap you. Pay attention.

The SS chief actuary says the following about Investment transactions of the OASI and DI Trust Funds, for calendar year 2010:

"The trust funds hold special issues (SI) sold only to the trust funds. These SI securities are of two types: short-term certificates of indebtedness and long-term bonds."

The balance shown as of the end of 2010 is $2.5Trillion.

Everyone knows there is no actual money in the trust fund, but can these SI bonds be redeemed for money to pay benefits? After all that is their purpose, right?

Is there another trust fund, or special account of some type associated with SS? If so, provide a reference. There is no "special checking acct" associated with SS, as checks are drawn on the US Treasure, like every other federal expenditure.

So, do you suppose the Liar in Chief knows about this trust fund, its purpose, and how it might work when needed? Do you think he could ask someone to call the Chief Actuary for him if he needs an explanation?

Show us something, Larry. Support your repeated nonsense claims.

 
At 7/23/2011 8:54 PM, Blogger Larry G said...

" Everyone knows there is no actual money in the trust fund"

once again you show your ignorance or stupidity.

Of the dozen trust funds, NONE have money in them and ALL if them hold US securities - JUST LIKE many investors including China.

And they are redeemable and they are actually REDEEMED many times a day by all manner of 'investors'.

You are obviously abjectly ignorant of the US Govt trust funds and how they work.

... and/or you are parroting what you've heard without ever really doing due diligence on the info.

and you seem to have a bad attitude in general especially with regard to folks who call you out on your ignorance.

 
At 7/23/2011 9:05 PM, Blogger VangelV said...

"he never said anything about the trust fund"......" You are mistaken. He said that if the debt ceiling is not increased SS recipients may not get their money. "

I guess your critical thinking skills are not working very well. If the debt ceiling were not raised but SS had the money in the trust fund the money would still go out. The fact is that, unlike you, Obama knows that there is no money in the trust fund and with more money going out than coming in, the government needs to be able to borrow in order to make up the shortfall.


Show us something, Larry. Support your repeated nonsense claims.


He can't show you anything but his ignorance.

 
At 7/23/2011 9:11 PM, Blogger VangelV said...

Of the dozen trust funds, NONE have money in them and ALL if them hold US securities - JUST LIKE many investors including China.

The SS trust hold IOUs, not marketable securities. There is a difference, particularly when the issuer of the IOUs is broke and has run up against a credit limit.

And they are redeemable and they are actually REDEEMED many times a day by all manner of 'investors'.

Really? Which investor owns a SS trust fund IOU.

I suggest that you buy a dictionary and look up the word redeem.

 
At 7/23/2011 9:34 PM, Blogger Larry G said...

here's your trust funds - take a look:

http://www.treasurydirect.gov/govt/reports/tfmp/tfmp.htm

tell me the financial status of each one.

you know nothing guy... just whatever the right wing has parroted....

We have a CURRENT debt of 14+ trillion and an ANNUAL deficit of 1.5 trillion that SS has no part of and yet what is the focus of you right-wing ideologs masquerading as libertarians?

Mr. Obama did not create SS nor did he make changes to it although he did cut FICA taxes by 2% and yet you zealots attack him - over social security.

what a bogus bunch of tripe ....

ya'll have zero credibility..

you don't know the facts and you refuse to acknowledge the realities....

and are mean-spirited to boot...

no wonder.. with such a lack of knowledge.. it's clear that your only real strategy is to attack others...

 
At 7/23/2011 9:44 PM, Blogger VangelV said...

here's your trust funds - take a look:

http://www.treasurydirect.gov/govt/reports/tfmp/tfmp.htm

tell me the financial status of each one.


Well, here is the status of SS:

Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085.

The SS program is running a deficit. To pay recipients the trustees need to rely on the interest income IOUs earned by the IOUs issued to it by the government. But the problem is that the government has no money to pay real interest or to redeem the IOUs. It can only do that if it can use newly borrowed money for the purpose or if it cuts spending sharply in other areas.

As usual, your lack of critical thinking skills is showing in spades.

 
At 7/23/2011 9:46 PM, Blogger VangelV said...

Mr. Obama did not create SS nor did he make changes to it although he did cut FICA taxes by 2% and yet you zealots attack him - over social security.

No, I merely point out that SS is insolvent because the US government can't make good on its IOUs. I showed that Obama understood that, which is the reason he told CBS news that if the debt limit did not go up the government could not borrow enough to make up the shortfall.

 
At 7/23/2011 9:49 PM, Blogger Larry G said...

the SS trust fund is no different than the gas tax trust fund or the black lung trust fund.

All of them rely on the Fed to provide the money to pay the benefits.

FICA ran a deficit this year - PRIMARILY because 2% of the tax was temporarily eliminated to prove more in people's paychecks.

But the basic facts remain. SS does not own much of the 14 trillion debt nor the annual 1.5 trillion deficit so why do you focus on SS as the problem?

I think it's because you are a zealot ...uninterested in the facts and much more wedded to ideology.

If you relied on facts, at least you'd have half a leg to stand on but using SS as a whipping boy when it has almost nothing to do with the current deficit ...

well.. that's just plain dumb...

 
At 7/23/2011 9:51 PM, Blogger Larry G said...

" SS is insolvent"

what a triple load of manure.

SS/FICA brings in almost a trillion dollars a year - year after year.

The WORST thing that will happen to SS is that it will pay out only at 75% of scheduled benefits.

That's NOT insolvent - even then but we're not even there yet - and yet you focus on SS when it has little to nothing to do with the real EXISTING deficit and debt.

Why?

 
At 7/23/2011 10:11 PM, Blogger VangelV said...

the SS trust fund is no different than the gas tax trust fund or the black lung trust fund.

They are not trust funds in the real sense of the word. They are only 'trust funds' in the Orwellian fantasy of government.

All of them rely on the Fed to provide the money to pay the benefits.

They have nothing to do with the Fed directly. The SS fund is run by the government and it borrows by selling treasuries, which the Fed is unable to purchase directly.

FICA ran a deficit this year - PRIMARILY because 2% of the tax was temporarily eliminated to prove more in people's paychecks.

Without the tax break more people would have lost their jobs and been pushed to the SS rolls earlier. The big problem is the lousy demographics; there aren't enough workers to support all the people collecting SS benefits.

But the basic facts remain. SS does not own much of the 14 trillion debt nor the annual 1.5 trillion deficit so why do you focus on SS as the problem?

How dim can you be? I have never claimed that SS owes treasuries. Actually, if it did there would be no problem because the trustees can always sell the treasuries in the open market and make up the shortfall. The problem with SS is that it is running deficits and has NO maketable securities to sell.

Read the last bit again so that you understand what we are saying the problem is.

I think it's because you are a zealot ...uninterested in the facts and much more wedded to ideology.

I dislike both parties equally. The only political issue that I am passionate about is liberty. My only claims are that the SS trust fund has no maketable securities and that I believe the trustees when they report that the income is less than the outlays. I also claim that Obama acknowledged the problem when he said that if the debt ceiling did not rise he could not borrow enough to pay recipients. These are statements of fact.

 
At 7/23/2011 10:14 PM, Blogger VangelV said...

SS/FICA brings in almost a trillion dollars a year - year after year.

Well, last year SS fell short. The past surpluses were already spent. The 'trust fund' holds IOUs issued by a bankrupt government that needs to borrow in order to make up the shortfalls. That makes it bankrupt.

 
At 7/23/2011 10:15 PM, Blogger VangelV said...

The WORST thing that will happen to SS is that it will pay out only at 75% of scheduled benefits.

That is a default.

 
At 7/23/2011 10:39 PM, Blogger Larry G said...

" That is a default"

It's a TECHNICAL default if NOTHING is done between now and 2037.

Once again - WHY are you concentrating on this when it's not part of the CURRENT Debt/Deficit?

Shouldn't the PRIORITY be the CURRENT DEFICT & Debt - FIRST and if we want to fix SS - do what EITHER ONE of the two Deficit Commissions recommended?

why are you concentrating on this?

 
At 7/24/2011 4:01 AM, Blogger Ron H. said...

"Of the dozen trust funds, NONE have money in them and ALL if them hold US securities - JUST LIKE many investors including China."

Nope, wrong, Larryo. Read this direct from the source. There are currently no marketable Treasuries in the SS Trust Fund.

Don't keep embarrassing yourself - READ!

"And they are redeemable and they are actually REDEEMED many times a day by all manner of 'investors'."

Read. Larry. Click the link. You can do it.

"You are obviously abjectly ignorant of the US Govt trust funds and how they work."

Not me, Larry, read the reference I provided for you. You have to do it. I can't do this for you.

It's OK to admit you are wrong, Larry, no one will think less of you for it - because that's not possible.

Chink, chink, still no way in?

 
At 7/24/2011 4:15 AM, Blogger Ron H. said...

"That's NOT insolvent - even then but we're not even there yet - and yet you focus on SS when it has little to nothing to do with the real EXISTING deficit and debt.

Why?
"

Here's the thing: You don't understand that SS is a Ponzi scheme, you don't understand the nature of the SS trust fund or its current status, you don't understand NPV, and you don't understand unfunded liabilities.

Until you understand those things about this one single government program, there is nothing that you can discuss.

So, figure this one out, then bring up other subjects, otherwise it's pointless.

"Mr. Obama did not create SS nor did he make changes to it although he did cut FICA taxes by 2% and yet you zealots attack him - over social security."

Think about this, Larry: Although I applaud ANY tax cut, no matter the reason, do you believe that, considering that SS is right now broke, and faces massive future unfunded liabilities, the wisest move was to CUT FICA by 2%?

Doesn't it seem that FICA should be RAISED if anything? What was the Idiot in Chief thinking?

 
At 7/24/2011 8:06 AM, Blogger VangelV said...

It's a TECHNICAL default if NOTHING is done between now and 2037.

The unfunded liabilities for SS are greater than the debt. The debt can be repaid over a period of time by spending less than the government takes in every year. But you can't pay off the unfunded liabilities for SS unless you stop people from retiring at 65 and/or you hike premiums sharply.

Once again - WHY are you concentrating on this when it's not part of the CURRENT Debt/Deficit?

I am not concentrating on this. As I said before, Medicare is far worse than SS or the current debt.

Shouldn't the PRIORITY be the CURRENT DEFICT & Debt - FIRST and if we want to fix SS - do what EITHER ONE of the two Deficit Commissions recommended?

I have no problem with doing something about the current deficit first. That is why I have advocated cutting spending NOW.

why are you concentrating on this?

I am not. I am simply responding to the points that you are making by pointing out that the situation with SS is very different than your version of it.

 
At 7/24/2011 10:35 AM, Blogger Larry G said...

debt is fungible guy. the public cannot buy SS securities but the govt can back those securities by selling general treasury securities.

I thought you guys knew something?

apparently all hot air and little else.

re: ponzi scheme - no more or no less than ANY pay-as-you-go program.

Do you think DOD or Homeland Security - which are pay-as-you-go "ponzi" schemes?

you clearly do not understand what the trust fund is and is not.

re: FICA cut - not good, I agree but remember also that there is a $400 make-work-pay income tax credit for the same reason - to get money into the pocket of people who will spend it - in hope of improving the economy.

re: raising FICA - if your claim to "learnedness" was accompanied by real action - you would already know what the deficit commissions have suggested and that is out of more than a half dozen "options" presented by the SS Trustees?

Do you read?

re:unfunded liabilities

you are clearly not well my man.

How about telling me what the unfunded liabilities of MedicAid are and how they are computed if the program is funded by taxes alone.

DOD? same deal, funded by taxes alone... what is their unfunded liability and how is it computed?

Medicare Part B - same deal - give me an answer...

why does Medicare Part B - funded from taxes have unfunded liabilities and DOD ALSO funded from taxes does not?

re: concentrating on SS.

SS "defaults" in maybe 10-20 years IF NOTHING IS DONE. It is NOT a part of the CURRENT deficit and Debt.

We ARE INDEED talking about the deficit and the debt and you have no clue about it other than to use the right-wing propaganda to focus attention away from the actual deficit and debt and onto something that has no part of it right now.

Now you tell me.. what kind of logical thinking is that?

you tea party types have "problems".

 
At 7/24/2011 11:31 AM, Blogger VangelV said...

debt is fungible guy. the public cannot buy SS securities but the govt can back those securities by selling general treasury securities.

Not if it cannot borrow. As I wrote on a number of occasions, the government spent all of the money that was supposed to be used to pay for the SS program when the demographics ensured that there would be more going out than premiums coming in. The IOUs are not real securities and have no market value. All they are is a promise to tax in the future to make good on the theft committed by Congress.

re: ponzi scheme - no more or no less than ANY pay-as-you-go program.

Not exactly true. The accrued liabilities were not backed by marketable assets in the 'trust funds'. Other programs do not have the well defined liabilities that SS does. People know when and what they are owed. When payments are not made there is a default.

And let me note that the fact that there may be other Ponzi schemes in the US government it does not excuse the Ponzi scheme with SS and Medicare.

Do you think DOD or Homeland Security - which are pay-as-you-go "ponzi" schemes?

We went over this before. The entire DOD program is not based on accrued liabilities that require the government to pay out in perpetuity. Defence programs can be cut. Wars can be ended. Bases can be closed. You can't do that with SS without defaulting.

you clearly do not understand what the trust fund is and is not.

As I pointed out, trust funds do not use IOUs as their entire reserve.

Frankly, I have never seen anyone as dim and ideologically blinded as you seem to be.

 
At 7/24/2011 12:43 PM, Blogger Larry G said...

" Not if it cannot borrow. As I wrote on a number of occasions, the government spent all of the money that was supposed to be used to pay for the SS program when the demographics ensured that there would be more going out than premiums coming in. The IOUs are not real securities and have no market value. All they are is a promise to tax in the future to make good on the theft committed by Congress. "

FICA brings in almost a trillion dollars a year - almost as much as income tax receipt and in more than 95% of the years, it has generated a surplus - NOT a deficit. In other words, it has MORE THAN PAID for itself and your main claim here is that the govt "borrowed" the SS surplus and can't pay it back and that is social security's fault.

you are whacked out fella... that's not even decent logic.

"accrued liabilities" ? ha ha ha

not from SS/FICA - those are 2 trillion worth of SURPLUSES.

" We went over this before. The entire DOD program is not based on accrued liabilities"

and you continue to ignore the fact that MedicAID and Medicare Part B are funded the SAME EXACT WAY.

Answer the question and stop evading.

" As I pointed out, trust funds do not use IOUs as their entire reserve. "

there are 10 trust funds and they all work essentially the same way.

The Highway Trust fund is where the gas taxes are put - and they are used by the Feds and then paid back when highways are built.

same process guy,. but you are too dumb to see it.

tell me where the money for the Medicare Part B and MedicAid trust fund comes from.

Not FICA.

Tell me how many years worth of "accrued funding" are in the Medicare Part B trust fund.

How would you compute the unfunded liabilities for Medicare Part B and MedicAID?

take a minute to answer these questions instead of spewing ideological blather.

 
At 7/24/2011 1:10 PM, Blogger VangelV said...

FICA brings in almost a trillion dollars a year - almost as much as income tax receipt and in more than 95% of the years, it has generated a surplus - NOT a deficit. In other words, it has MORE THAN PAID for itself and your main claim here is that the govt "borrowed" the SS surplus and can't pay it back and that is social security's fault.

In the past the program used to bring in more in premiums than it paid out. But that money was spent and replaced with IOUs. Now that the program is running a deficit it needs the bankrupt US government to keep borrowing so that it can redeem those IOUs. The problem for those hoping to see the program continue is that there is no way to make the math work. The unfunded liabilities are greater than the national debt and the demographic bomb is ready to go off.

 
At 7/24/2011 3:32 PM, Blogger Larry G said...

"In the past the program used to bring in more in premiums than it paid out. But that money was spent and replaced with IOUs."

You're a RIOT guy. The ONLY money that was replaced with IOUs was the EXCESS FICA that was accumulated in the trust fund - 2.1 trillion worth.

All the years prior to that FICA generated almost a trillion and in most years MORE than was needed to pay SS benefits and the EXCESS was put into the trust fund and that's what the IOUs are for...

you need to stop listening to right wing zealots and do a little due diligence on the facts guy.

The money in the trust fund is the EXCESS FICA taxes collected in years prior.

you've yet to answer the question about how unfunded liabilities are computed for tax-funded programs like DOD and MedicAid.

 
At 7/24/2011 7:16 PM, Blogger Ron H. said...

Here are some of your pronouncements about the SS Trust Fund:

First, it doesn't exist -

"there is NO RESERVE FUND for ANY of Medicare or SS."

"this is NO TRUST FUND like you think it is.
"

Then it sort of exists -

"it is little more that a place to put money coming in - temporarily until it gets spent."

"...is those years where it makes up the difference from the trust fund (which is really just a small rainy day fund for these kinds of events)."

Then there IS a trust fund -

"The trust fund is where the excess is stored until it is needed - usually in recessions and other down economic periods."


"it has taken in more than enough to pay benefits AND accumulate a rainy-day trust fund for recession years - until now."

"The trust fund functions mostly as a working fund to make up any temporary shortfalls in the premiums/benefits balance -The "trust fund" is a contingency fund... that's all....."

And finally it not only exists, but has $2.1T in it -

"You're a RIOT guy. The ONLY money that was replaced with IOUs was the EXCESS FICA that was accumulated in the trust fund - 2.1 trillion worth."

This was quite a lot of spinning, but you have ended with esentially the right answer.

But the real question now is, based on everything you know about SS and its trust fund, can the checks go out on Aug 3 or can't they? If they can, where will the money come from? If they can't, why not?

Would you consider NOW to be one of those recession periods/contingencies/rainy days/shortfalls that would call for dipping into the surplus?

Is there anything of value in the SS contingency/rainy day/trust fund/checking account that can be redeemed for the money needed to cover the checks that need to go out on Aug 3?

We need to know, so we can plan our August budgets. Unlike Obama, we like to know what our income will be before we spend money we don't have.

 
At 7/24/2011 8:57 PM, Blogger Larry G said...

re: do the checks go out?

I would say that yes, general, with perhaps some less than scheduled since FICA is still coming in and is pretty much covering everything with a relatively minor shortfall.

this is what you don't seem to get.

About 100 billion dollars a month comes into FICA and that money is temporarily deposited in the trust fund which then issues checks to beneficiaries.

It's not like there will be NO money coming in.

It's the same with the rest of the govt.

It's like you still have money coming in but you owe more than what comes in so you choose what you are going to pay or not pay or you "short" everything by a certain percentage.

but if you were REALLY CONCERNED about this - it's not SS that is the big problem... it's the other spending yet you focus on SS which right now is the least of the problems.

 
At 7/24/2011 9:42 PM, Blogger VangelV said...

You're a RIOT guy. The ONLY money that was replaced with IOUs was the EXCESS FICA that was accumulated in the trust fund - 2.1 trillion worth.

No. The link you were given shows that all of the holdings of the trust funds are non-marketable securities. I take it that you never looked at it. Or that you are too dim to understand what was written.

All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.

and

Today all securities held by the trust funds are special issues, but the funds have held public issues in the past.

Even the trustees have said that the funds no longer hold marketable treasuries that can be sold to the public. All there is are illiquid IOUs.

you need to stop listening to right wing zealots and do a little due diligence on the facts guy.

The link was the SSA site, not any political faction on the right or left.

http://www.ssa.gov/OACT/ProgData/transactions.html

 
At 7/24/2011 9:57 PM, Blogger Larry G said...

we're talking about 2.1 trillion dollars of collected FICA taxes that were over an above what was needed to pay benefits.

That sounds like a SURPLUS to me and you're arguing about the kinds of securities.

Yes.. the securities are limited to the US only -but the US can and does issue treasury bonds to the public and they can do this to cover the SS securities if they wish.

but what's your point here?

you're claiming that SS is a Ponzi scheme when the trustees and other credible organization say that SS is a pay-as-you-go program that was never intended to hold a fund equivalent to 75-years of benefits much less invest that amount.

FICA generates a SURPLUS and your main complaint is that the securities are not public issue?

this being yet another esoteric point about SS being "broke"....

at a time when SS is far from broke and even if nothing is done will pay out 75% in 2037....

it has almost nothing to do with the current deficit and debt and yet you implicate it as a priority concern.

which is total, 100% idiocy.... and you know it. NOW... but it took multiple conversations to educate you that your prior information was little more than right-wing propaganda that you swallowed hook, line and sinker.. and now refuse to admit it.

get smart guy.

check the facts and do it by NOT listening to right wing idiots... whose main motive is to spread enough disinformation so that people forget what the REAL budget problems truly are.

Concentrating on SS/FICA while we have a 14+ trillion debt and an annual 1.5 trillion deficit is just plain idiotic.

we SHOULD be concentrating on the deficit that we have right now that has nothing to do with SS/FICA.

but because the right wing propaganda machine has done such a good job.. the average person.. and people like you spend your time worrying about the wrong issues.

 
At 7/25/2011 2:17 AM, Blogger Ron H. said...

"I would say that yes, general, with perhaps some less than scheduled since FICA is still coming in and is pretty much covering everything with a relatively minor shortfall."

And what about that shortfall? How will it be handled? will some recipients get less than they have been promised? Will some not get their checks at all?

Is their a fund to cover minor shortfalls and is there money in it to cover the checks at this time?

"but if you were REALLY CONCERNED about this - it's not SS that is the big problem... "

Right now, SS is the ONLY problem. When you either understand how SS works, or admit you don't have any idea, then other subjects might be discussed, but not before then.

 
At 7/25/2011 2:23 AM, Blogger Ron H. said...

"Yes.. the securities are limited to the US only -but the US can and does issue treasury bonds to the public and they can do this to cover the SS securities if they wish."

No they can't. No treasuries can be issued. The debt limit will be reached Aug 2nd, remember?

There isn't enough money in the kitty to pay all the bills, and the credit card is being declined, as it's maxed out.

What's to be done?

 
At 7/25/2011 2:32 AM, Blogger Ron H. said...

"That sounds like a SURPLUS to me and you're arguing about the kinds of securities."

"FICA generates a SURPLUS and your main complaint is that the securities are not public issue?"

That's right, Larry, those special issue bonds can only be redeemed by the treasury. They can't be sold to the public, the Fed, or to China. The treasury is broke. Remember that deficit? There is no money in the treasury to redeem the IOUs from SS.

The Treasury can't borrow any more right now by issuing debt. The limit has been reached.

No money at SS, no money in the treasury, what will happen?

 
At 7/25/2011 10:05 AM, Blogger Larry G said...

re: " Right now, SS is the ONLY problem."

right now, we have a 14+ trillion dollar debt and RIGHT NOW, we have a 1.5 trillion ANNUAL deficit that SS has nothing to do with.

now how intelligent is it to say what was said? not very,

re: treasuries issued - in NORMAL times general treasuries CAN BE SOLD to offset the special issue SS notes. the debt IS fungible.

what will happen?

remember - FICA will STILL generate about 100 billion a month and so will income taxes.

It's not like we don't have money in hand. It's more like that we owe the credit card company more than we can pay the full amount so we would do what some people do. Not pay some and/or pay some but not the full amount.

We'd have to pay our creditors first to keep from defaulting but then after that... say for instance, we release 100,000 soldiers from service since we are winding down those wars anyhow.

right?

or stop paying ethanol subsidies...

but the ONLY part of SS affected would be the 2% FICA which is temporary and could be put back into force.

the interesting thing about the issue is that it essentially gives the President line item veto power.

how does that grab ya?

 
At 7/25/2011 12:04 PM, Blogger Ron H. said...

"re: " Right now, SS is the ONLY problem."

right now, we have a 14+ trillion dollar debt and RIGHT NOW, we have a 1.5 trillion ANNUAL deficit that SS has nothing to do with.

now how intelligent is it to say what was said? not very,
"

As is usual with you, you don't read well, and didn't understand my comment.

Right now, you & I have a problem with SS and until that is resolved, there's no point in discussing anything else.

You didn't answer my question about the SS trust fund, or how the shortfall in FICA collections would be handled. Either you are really unable to grasp the concept, or you refuse to concede that you're wrong. I'm not sure which is worse.

 
At 7/25/2011 12:17 PM, Blogger Larry G said...

"Right now, you & I have a problem with SS and until that is resolved, there's no point in discussing anything else.

You didn't answer my question about the SS trust fund, or how the shortfall in FICA collections would be handled. Either you are really unable to grasp the concept, or you refuse to concede that you're wrong. I'm not sure which is worse.
"

RIGHT NOW - we have a relatively minor shortfall in FICA due to the 2% reduction which is temporary.

this pales in comparison to the 1.5 trillion ANNUAL shortfall in the general revenue budget and yet folks like you make SS "the" problem which is totally dishonest.

About a half dozen times in the history of FICA - there have been shortfalls - and subsequent adjusts to either the FICA tax itself and/or benefit structure.

The same procedure can again be done and will be, no matter what the right wing zealots like yourself blather on about.

Do you actually know what the shortfall in FICA IS my man and compare that to the shortfall in the income tax side of the budget?

You're grasping at straws.

Of ALL of the budget expenditures and shortfalls, SS is the smallest and most easily fixed.

and yet you guys concentrate on what?

that's not intelligent.

 
At 7/25/2011 12:23 PM, Blogger Ron H. said...

"re: treasuries issued - in NORMAL times general treasuries CAN BE SOLD to offset the special issue SS notes. the debt IS fungible."

Yes, but that makes as much sense as borrowing cash from your Visa to pay down your MasterCard.

But, that hasn't been done. There are $2.1 Trillion in IOUs in the trust fund, and no other type of treasuries.

And, these are Not normal times - that Visa is maxed out.

 
At 7/25/2011 12:47 PM, Blogger Ron H. said...

"RIGHT NOW - we have a relatively minor shortfall in FICA due to the 2% reduction which is temporary."

But, that won't correct anything before Aug 2nd, will it?

"About a half dozen times in the history of FICA - there have been shortfalls - and subsequent adjusts to either the FICA tax itself and/or benefit structure.

The same procedure can again be done and will be, no matter what the right wing zealots like yourself blather on about.
"

But, that won't correct anything before Aug 2nd, will it?

"Do you actually know what the shortfall in FICA IS my man and compare that to the shortfall in the income tax side of the budget?"

No, I don't, Larry, do you? Perhaps it's so small that the President can make it up out of his personal checking account. It's not important how MUCH the fund is short, only that it IS short.

I keep asking you how it will be handled, and you can't answer the question.

"You're grasping at straws."

No, I'm grasping for answers, and you don't have any.

"Of ALL of the budget expenditures and shortfalls, SS is the smallest and most easily fixed.

and yet you guys concentrate on what?
"

We are concentrating on a problem that is fairly straightforward and easy to discuss, but you don't understand it. You have the same lack of understanding with every other subject it seems, so until that changes, it's pointless to consider anything else.

First SS, then maybe other things.

 
At 7/25/2011 12:58 PM, Blogger Larry G said...

" But, that hasn't been done. There are $2.1 Trillion in IOUs in the trust fund, and no other type of treasuries."

yes, but unlike the 1.5 trillion deficit that 2.1 trillion represents 2.1 trillion in SURPLUS of FICA collected over the years - NOT a deficit.

re: how much the FICA shortfall is this year?

let's make this easy for you.

what percent of the 1.5 trillion deficit is the FICA shortfall?

do you know? you can find out. go look and report back.

" First SS, then maybe other things"

you're a RIOT

SS is not the problem RIGHT NOW.

the problem RIGHT NOW is the 1.5 trillion that has little to do with SS and you say " first SS"?

what a fool you are.

you can't even establish simple priorities.

 
At 7/25/2011 3:07 PM, Blogger Ron H. said...

"you can't even establish simple priorities."

I have set priorities, Larry, first we must fix your ignorance of how SS work, before we can do anything else.

I'm not holding out much hope that we can ever move forward from here.

 
At 7/25/2011 3:08 PM, Blogger VangelV said...

we're talking about 2.1 trillion dollars of collected FICA taxes that were over an above what was needed to pay benefits.

That sounds like a SURPLUS to me and you're arguing about the kinds of securities.


The surplus was already spent. The trust fund does not have any money or marketable securities that can be sold in the open market to make up for the shortfall. All it holds are IOUs. That matters. End of story.

 
At 7/25/2011 3:15 PM, Blogger VangelV said...

Concentrating on SS/FICA while we have a 14+ trillion debt and an annual 1.5 trillion deficit is just plain idiotic.

Everything has to be dealt with. All problems need to be addressed because kicking the can down the road will not work very well and could bring down the country.

My solution has been a simple one. Save the country by abandoning the idea of empire. Bring back the troops by ending the foreign wars and entanglements. End the War on Drugs. End all corporate welfare programs and embrace free markets. Fire the 85% or so of of federal employees who work for departments not authorised by the Constitution. Get rid of the legal tender laws and and embrace free banking. Repeal all victimless crimes. Do not meddle in voluntary transactions between competent individuals that involve no initiation of force or fraud. End corporate welfare and all transfer programs. Embrace free markets.

It is a simple approach but it requires courage and character that is lacking among the American political class and American voters. My bet is that they are much more like you and too scared to confront reality. They are more likely to embrace 'moderates' who will continue the very policies that got the country into the mess that it finds itself in until the markets no longer give them that option.

 
At 7/25/2011 3:27 PM, Blogger VangelV said...

You are so dim that I wonder why I try to explain it to you. But since there are others who may hold the same mistaken views I will continue to respond when I have the time.

re: " Right now, SS is the ONLY problem."

right now, we have a 14+ trillion dollar debt and RIGHT NOW, we have a 1.5 trillion ANNUAL deficit that SS has nothing to do with.

now how intelligent is it to say what was said? not very,


But as was pointed out to you, the unfunded liabilities are much bigger. We now know that without lifting the debt ceiling the myth of the trust fund will be exposed to everyone and that is a far bigger problem than not spending more than you take in from taxes.
re: treasuries issued - in NORMAL times general treasuries CAN BE SOLD to offset the special issue SS notes. the debt IS fungible.

There are a number of problems with this sentence. First, you are not in NORMAL times. The government has a debt problem and the Congress is not yet willing to lift the debt ceiling. That means that the Treasury can't issue new debt to redeem enough of the special issue debt in the 'trust funds' to make up the shortfall. That is a huge problem. Second, the special issue debt is not exactly fungible. In fact, it isn't real debt at all; just a promise to borrow or tax more in the future.

remember - FICA will STILL generate about 100 billion a month and so will income taxes.

The problem has never been income. It is spending. The government fails to live within its means and spends far more than it takes in. Discipline would require going back to the dark days of Clinton level spending when government was tiny and people were starving in the streets as bad old Bill threw out welfare bums from the rolls. How will your nation survive if it were forced to such austerity?

It's not like we don't have money in hand.

Actually, it is like you don't have money in hand. What you have is too little to allow the same level of spending.

It's more like that we owe the credit card company more than we can pay the full amount so we would do what some people do. Not pay some and/or pay some but not the full amount.

Of course, most people are forced to stop borrowing more once they reach their limit. The government should do the same.

We'd have to pay our creditors first to keep from defaulting but then after that... say for instance, we release 100,000 soldiers from service since we are winding down those wars anyhow.

right?


Right. You don't need to raise the debt ceiling. All you need to do is to only spend as much as you take in.

or stop paying ethanol subsidies...

Why not all subsidies?

 
At 7/25/2011 8:30 PM, Blogger Larry G said...

" first we must fix your ignorance of how SS work,... unfunded liabilities, and more ignorant blather from the right wing ideologues.

the EXISTING 14 trillion debt and 1.5 trillion ANNUAL deficit has virtually nothing to do with the FUTURE unfunded liabilities of SS.

You could wipe out SS right now and you were STILL have a 14 trillion debt and STILL have a 1.5 trillion annual deficit.

Ya'll are bonkers.

SS has NO un-fixable "unfunded liability" - no more that the previous half dozen changes made to it in the prior 60+ years to keep it on track.

If ya'll were truly serious and believable, you would AT LEAST ALSO address the 14 trillion debt and 1.5 trillion ANNUAL deficit but instead you focus on something that has virtually no import at this moment - because you are idealogues who oppose the CONCEPT of SS but then lie about it's finances to justify your lies.

SS is not the problem.

Medicare Part B, MedicAid and the Military are the current problems that are behind the 14 trillion debt/1.5 trillion ANNUAL deficit that you should be putting your feeble minds but as I said.. ideology and ignorance is your real problems here. Tea Party zealots masquerading as libertarians.

shame. shame.

 
At 7/25/2011 9:24 PM, Blogger Larry G said...

Headline: " Social Security faces $29 billion shortfall in 2010"

http://www.azcentral.com/arizonarepublic/news/articles/2010/03/15/20100315social-security-shortfall.html

Now 29 billion is not chump change.

But out of a FICA revenue stream of almost a trillion - if you were going to trim benefits equally - it would not amount to much.

On the other hand, if you compare 29 billion to 1.5 trillion which is the ANNUAL non-FICA deficit - it's pretty small potatoes.

but the right wing zealots here want to make Social Security/FICA - THE PROBLEM... by endless blather about the debt and unfunded liabilities measured on a 75-year horizon - that's the horizon that the Social Security Trustees use - not any industry financial standard.

Someone who is a REAL - PRINCIPLED FISCAL CONSERVATIVE would seriously ADDRESS the major deficit and debt issues which are behind the 14/1.5 trillion debt/deficit instead of trying to use it as justification for hammering FICA/SS.

This kind of logic IMHO is dishonest and essentially corrupt... and in no small measure - the reason why the folks who call themselves fiscal conservatives/libertarians have no real answers to the 14/1.5 trillion debt/deficit other than to point fingers at something that has virtually nothing to do with it.

I keep asking for the list of cuts sufficient to deal with the 1.5 trillion ANNUAL deficit and all I get is more idiotic blather about something that has nothing to do with it.

 
At 7/25/2011 9:30 PM, Blogger VangelV said...

You could wipe out SS right now and you were STILL have a 14 trillion debt and STILL have a 1.5 trillion annual deficit.

If you could wipe out SS right now the future deficit and debt issues would not be a problem. The unfunded liabilities in SS and Medicare are a much bigger problem than the deficit and $14 trillion debt.

SS has NO un-fixable "unfunded liability" - no more that the previous half dozen changes made to it in the prior 60+ years to keep it on track.

The stupid alert lights are blinking. The MNPV of the unfunded liabilities are larger than the debt and growing faster. The changes did not save the program because it still went broke. And now with the unfavourable demographics working against any 'fix' there is no way out but a default of some kind.

 
At 7/25/2011 10:03 PM, Blogger Ron H. said...

"If ya'll were truly serious and believable, you would AT LEAST ALSO address the 14 trillion debt and 1.5 trillion ANNUAL deficit..."

Larry, we cannot move on to a discussion of the deficit until you have a good understanding of the current subject. One tiny step at a time. Why must I keep repeating myself?

VangelV thinks you are too dim to ever get this, but I still have just a tiny bit of hope for you. Come on Larry, prove that pessimist wrong. Try to focus on just this one subject.

Did you look at the links you were provided? What did you learn? Anything? You aren't responding correctly.

Tell me how the SS system works, and how the Trust fund is involved. What is the current status of SS and the Trust Fund?

 
At 7/25/2011 10:09 PM, Blogger Larry G said...

" The unfunded liabilities in SS and Medicare are a much bigger problem than the deficit and $14 trillion debt. "

compared to what?

17 trillion over a 75-year horizon?

Medicare Part D - has a much bigger unfunded liability than SS.

So does Medicare Part B - by five-fold ..

as well as MedicAID.

Of ALL these programs, SS/FICA has the smallest unfunded liability BY FAR and it's a 2037 and later problem not the problem that Medicare Part B and MedicAid is right now.

But when you are dumb as a stump and refuse to find the facts.. you talk like you do.

Medicare Part B,C,D, MedicAid and the Military/2 wars have 10 times+ the unfunded liabilities of SS/FICA but when you are a right-wing ideologue.. facts are like cock-roaches, eh?

 
At 7/25/2011 10:15 PM, Blogger Larry G said...

"Tell me how the SS system works, and how the Trust fund is involved. What is the current status of SS and the Trust Fund? "

you can find out most everything you need to know by reading the trustees report but more important, you have to be able to read the trustees report in context of the 14 trillion/1.5 trillion debt/deficit which is a far bigger problem than FICA/SS is right now.

you are worried about a future problem when the wheels are off right now.

why?

Why don't you RANK by the numbers..
SS/FICA and the current budget/deficit/debt?

How about you tell me how much Medicare Part B and MedicAid consume in the current budget?

get rid of your lame ideology and let's talk real numbers here.

 
At 7/25/2011 10:31 PM, Blogger Ron H. said...

"Headline: " Social Security faces $29 billion shortfall in 2010""

Well, that article is from Mar 2010, so some serious additional problems now exist, but did you actually read beyond the headline? The article does a pretty good job of explaining the problem with the trust fund.

Now that we know the SS shortfall was $29B for 2010, do you have a number for 2011?

Never mind, I'll just give it to you. It's $45B.

The trouble is, now, no more money can be borrowed to make up the shortfall.

 
At 7/25/2011 10:35 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 7/25/2011 10:39 PM, Blogger Ron H. said...

You aren't responding correctly, Larry, you just just keep repeating the same thing over & over. You have to understand this before we can move on. You're just not getting it.

Maybe VangelV is right after all. so sad.

 
At 7/25/2011 10:44 PM, Blogger Larry G said...

"Never mind, I'll just give it to you. It's $45B."

45 billion verses 1.5 trillion and 14 trillion debt?

you gotta be kidding.

so we can't borrow to pay the 45 billion?

what about the 1.5 trillion?

you realize that the FICA tax was reduced by 2% and it is temporary and can be re-instated...right?

do you have any idea what the 45 billion out of the trillion in FICA revenues would manifest itself in reduced benefits if that is what might happen?

how much in reduced benefits per beneficiary?

got that number?

the average beneficiary gets about $1000 per month.

what percent is 45 billion of 866 billion?

5%? so, SS recipients would get a 5% reduction in benefits?

how about the 1.5 trillion?

Would you lay off 100,000 soldiers and bring them back from Afghanistan and Iraq and cease all nation-building?

Oh.. that's right.. you don't really care about the 1.5 trillion... just the 45 billion.

GAWD you are LAME!

 
At 7/25/2011 10:45 PM, Blogger Ron H. said...

"get rid of your lame ideology and let's talk real numbers here."

That would be wonderful, Larry, but you have shown all along that you don't understand real numbers, so it would be a sad waste of time, at least for me.

I was encouraged earlier when you slowly came around to describing the SS Trust Fund fairly well, but it stopped there. No further progress has been made.

 
At 7/25/2011 10:52 PM, Blogger VangelV said...

compared to what?

17 trillion over a 75-year horizon?


No. You need $17 trillion now to fund the program. The number explodes as time passes. As Ron wrote, you really should learn about the subject on which you are posting.

 
At 7/25/2011 10:58 PM, Blogger Larry G said...

" You are not responding correctly, Larry."

ha ha ha

coming from a whacked-out right wing ideologue.. a compliment...

tsk tsk

ya'll seem to be congenitally impaired in "understanding" debt and deficit and can only focus on one thing at a time.

now.. THAT's SAD!

 
At 7/25/2011 11:08 PM, Blogger Ron H. said...

"so we can't borrow to pay the 45 billion?"

No, Larry, we can't borrow to pay the $45 Billion.

Have you understood none of the discussion about the debt limit?

The credit card is maxed out. There is no more borrowing.

 
At 7/25/2011 11:19 PM, Blogger Larry G said...

"The credit card is maxed out. There is no more borrowing"

the 45billion is the least of your problems when you ALSO have 1.5 trillion worth of deficit.

If you asked any normal person which was more important - 45 billion or 1.5 trillion - it would be a no-brainer.

If you ask a right-wing ideologue that question - you get bizarre answers.

of course that goes to explain many of their other positions also....

 
At 7/25/2011 11:19 PM, Blogger Ron H. said...

"ya'll seem to be congenitally impaired in "understanding" debt and deficit and can only focus on one thing at a time."

It's important to focus on one thing at a time, Larry, you've shown that you're easily confused, and more than one subject at a time is too much for you. You have demonstrated this repeatedly.

In fact, one subject now appears to be too much.

You just admitted, once again, to not understanding unfunded liabilities in one of your recent comments. before we can address that, even as it applies to SS, you need to understand more about SS and the Trust Fund.

We're just not getting there, Larry.

Your teachers must have been close to suicide. Can you blame them for promoting you without regard to your level of accomplishment?

 
At 7/25/2011 11:24 PM, Blogger Ron H. said...

"The credit card is maxed out. There is no more borrowing"

"the 45billion is the least of your problems when you ALSO have 1.5 trillion worth of deficit."

Why can't or won't you address the statements and questions presented to you? How can we ever resolve your lack of understanding if you evade & obfuscate like that?

What's wrong with you?

 
At 7/25/2011 11:45 PM, Blogger Larry G said...

Larry G has left a new comment on the post "Chart of the Day: Texas Jobs vs. California Jobs":

" Why can't or won't you address the statements and questions presented to you? How can we ever resolve your lack of understanding if you evade & obfuscate like that?"

because 45 billion is a gnat on a dogs butt compared to 1.5 trillion - WHICH - YOU REFUSE TO ANSWER.

why don't YOU answer about the deficit and the debt and "unfunded liabilities" with regard to Medicare PartB?

I'd say, I've answered far more than you have.

 
At 7/26/2011 12:05 AM, Blogger Larry G said...

just to be clear here.

I HAVE answered all the legitimate questions that have been posed.

I HAVE ALSO answered the illegitimate questions - those framed by right-wing ideological propaganda that is not fact-based at all.

In fact - I'm fine with any/all use of FACTS.

and the FACTS show that FICA has generated over 2 trillion in surplus monies which PROVES WITHOUT A DOUBT that the program IS sustainable.

The big "hit" here is that SS is apparently not sustainable because it can't keep the politicians from spending it's surplus - and that's a whole different critter than saying the program is not sustainable or "bankrupt".

More important - SS "problems" are fairly mild near term compared to the 1.5 trillion annual deficit that is a far bigger threat to our economic well-being and that point is just totally passed by in this conversation.

SS "unfunded liabilities" that the ideologues here trumpet LESS than the unfunded liabilities of Medicare Part B - the subsidized prescription drug program and 5 times less than Medicare Part B and at least as much less than MedicAid but the zealots here focus NOT on the national debt nor the annual deficit - which are 50 times bigger than SS's problems nor do they focus on Medicare Part B, MedicAid or DOD - all of which are far bigger budget issues ...

it becomes clear that the right-wingers here are so focused on SS that they ignore the much bigger, much more immediate budget issues... which is in my mind - dishonest and unprincipled.

you want answers?

you folks can't stand the truth.

you live in your own little worlds disconnected from the real world ...and then have the temerity to talk to others about "understanding".

Lord!

 
At 7/26/2011 2:39 AM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 7/26/2011 3:14 AM, Blogger Ron H. said...

"The big "hit" here is that SS is apparently not sustainable because it can't keep the politicians from spending it's surplus - and that's a whole different critter than saying the program is not sustainable or "bankrupt"."

But Larry, that's a big problem! How will that $2.1 Trillion ever get back into the Trust Fund from the only place it can come from, the treasury, which is broke, and has a hug deficit to boot, as you keep pointing out, and no more borrowing possible?

Until you understand more about that, as evidenced by your ability to explain it correctly, including unfunded liabilities and Net Present Value, there is no point in discussing other subjects, as you will just have the same difficulties.

There is no more I can do for you until you force this knowledge into your skull some how.

 
At 7/26/2011 9:13 AM, Blogger VangelV said...

If you asked any normal person which was more important - 45 billion or 1.5 trillion - it would be a no-brainer.

You would be right if it were that simple. But, as usual, your ignorance does not permit you to see the big picture.

A debt limit is not a problem because all of us have one personally. All it means is that there comes a point after which we can't run deficits. The same is true of the government. Once it hits the debt limit it will not be able to spend more than it takes in. That would require cutting spending to late Clinton era levels, something that should not be too burdensome.

But the SS/Medicare issues are a huge problem for the national balance sheets. We just saw that the NET PRESENT VALUE of the unfunded liabilities stood at more than $100 trillion and the last time I looked even someone as dumb as you are should be able to figure out that $100 trillion is much bigger than $14 trillion. And that the increase in liabilities is bigger than the $1.5 trillion deficit.

In life one of the most important functions carried out by individuals and institutions is risk management. The few billion shortfall is not a big number when compared to the total pile of crap that has to be cleared away but it is a critical but it presents a huge risk to the system. If the debt ceiling is not raised the shortfall will bring into focus the fact that the SS program is insolvent and that the special interest securities, which count as around $2.7 trillion of the $14 trillion debt are nothing but IOUs. I have not looked at all of the rating agencies but I know that Weiss has already downgraded treasuries to junk. I suspect that other agencies that are paid by buyers and are not a part of the government protected cartel have done the same thing. We are now near an important point. Even if Congress chooses to kick the can down the road for a while, if nothing is done we will see a collapse of the domestic sovereign bond market and/or the purchasing power of the currency. The only argument now is about timing.

 
At 7/26/2011 9:16 AM, Blogger VangelV said...

I HAVE answered all the legitimate questions that have been posed.

Where? Making a claim that the numbers are too small is not an answer. You have to answer the questions because the answer is material to the bigger picture. I suspect that you are not as stupid as you appear so you are not dealing with the questions because you know that they will lead you to a trap from which there is no logical and factual escape.

 
At 7/26/2011 9:18 AM, Blogger VangelV said...

That's one of the questions you can't answer. Without a clear understanding of this one subject, SS, including the concept of Net Present Value, so unfunded liabilities are clear to you, there is nothing more I can for you. No meaningful discussion is possible.

Sorry Ron but you may be wrong about this. Our dim friend is not as stupid as he appears. He knows that as soon as he answers the questions he is in more trouble because he loses the bigger argument.

 
At 7/26/2011 9:20 AM, Blogger Larry G said...

Van - you don't know bat-crap from granola and prove it every time you open your mouth.

You don't seem to grasp the difference, for instance, between a 1.5 trillion debt and a 40billion temporary shortfall.

you don't understand the difference between Medicare Part A and Medicare Part B.

and you sure as heck don't understand unfunded liabilities with respect to Medicare Part B, C, D and MedicAid.

In short - you don't know but your mouth runs about twice as fast as your mental ability and honesty.

SS is going to have a problem between now and 2037. If absolutely nothing is done - it will STILL PAY OUT at 75%.

this is not what is going to happen with the 1.5 trillion debt ...Medicare Parts B,C,D and MedicAID and if you had half a brain - you'd recognize that.

you're focusing on the wrong issues for the wrong reasons because essentially you're a tea party zealot masquerading as a Libertarian and your rhetoric just totally gives you away.

 
At 7/26/2011 9:22 AM, Blogger Larry G said...

Ron - you have a similar problem but are more dishonest and cynical... but just as dumb when it comes to understanding simple facts and dealing with priorities.

 
At 7/26/2011 9:26 AM, Blogger Larry G said...

"But Larry, that's a big problem! How will that $2.1 Trillion ever get back into the Trust Fund from the only place it can come from, the treasury, which is broke, and has a hug deficit to boot, as you keep pointing out, and no more borrowing possible?"

Actually Ron - the "big" problem is you and the other ideologues inability to understand the difference between 40 billion and 1.5 trillion in terms of threats and priorities and to instead, ignore the bigger threat to focus on a much smaller problem - because you're opposed to the concept of SS but make your argument on bogus financials instead of a more honest and principled argument on the merits.

The 40 billion shortfall which is 3% of the total shortfall is not related to income taxes and general revenue spending as the 1.5 trillion is.

The 40 billion is primarily the result of the temporary 2% FICA tax Holiday and that 2% could be (and probably will) be re-instituted to deal with the shortfall.

so there goes your worry about what to do - guy.

Now how about you answering my question about how we compute unfunded liabilities for a general revenue-funded program - like Medicare Part B and DOD.

Got some answers?

 
At 7/26/2011 11:08 AM, Blogger Ron H. said...

"Sorry Ron but you may be wrong about this. Our dim friend is not as stupid as he appears. He knows that as soon as he answers the questions he is in more trouble because he loses the bigger argument."

Yes, and he just absolutely won't take that step.

 

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