Wednesday, September 21, 2011

To Really Fix Social Security, Let's Privatize It

The debate about whether or not Social Security is a Ponzi scheme is probably less important of an issue than a discussion about the ultimate and real solution to the unsustainable "insecurity of Social Security": privatization.  Chile's successful transition to a privatized pension system in 1980 provides a model for the U.S. and the rest of the world.  Jose Pinera, the architect of Chile's privatization efforts explains in this article "Empowering Workers: The Privatization of Social Security in Chile":

"A specter is haunting the world. It is the specter of bankrupt state-run pension systems. The pay-as-you-go pension system that has reigned supreme through most of this century has a fundamental flaw, one rooted in a false conception of how human beings behave: it destroys, at the individual level, the essential link between effort and reward--in other words, between personal responsibilities and personal rights. Whenever that happens on a massive scale and for a long period of time, the result is disaster.

Two exogenous factors aggravate the results of that flaw: (1) the global demographic trend toward decreasing fertility rates; and, (2) medical advances that are lengthening life. As a result, fewer and fewer workers are supporting more and more retirees. Since the raising of both the retirement age and payroll taxes has an upper limit, sooner or later the system has to reduce the promised benefits, a telltale sign of a bankrupt system.

Whether this reduction of benefits is done through inflation, as in most developing countries, or through legislation, the final result for the retired worker is the same: anguish in old age created, paradoxically, by the inherent insecurity of the "social security'' system.

In 1980, the government of Chile decided to take the bull by the horns. A government-run pension system was replaced with a revolutionary innovation: a privately administered, national system of Pension Savings Accounts.  After 15 years of operation, the results speak for themselves. Pensions in the new private system already are 50 to 100 percent higher--depending on whether they are old-age, disability, or survivor pensions--than they were in the pay-as-you-go system. The resources administered by the private pension funds amount to $25 billion, or around 40 percent of GNP as of 1995. By improving the functioning of both the capital and the labor markets, pension privatization has been one of the key reforms that has pushed the growth rate of the economy upwards from the historical 3 percent a year to 6.5 percent on average during the last 12 years. It is also a fact that the Chilean savings rate has increased to 27 percent of GNP and the unemployment rate has decreased to 5.0 percent since the reform was undertaken.

More important, still, pensions have ceased to be a government issue, thus depoliticizing a huge sector of the economy and giving individuals more control over their own lives. The structural flaw has been eliminated and the future of pensions depends on individual behavior and market developments."

404 Comments:

At 9/21/2011 9:10 AM, Blogger Jet Beagle said...

The Chile solution is great. But it is not clear how the U.S. government could finance the transition rules Chile adopted:

"1. Those already receiving a pension that their pensions would be unaffected by the reform

2, Every worker already contributing to the pay-as-you-go system was given the choice of staying in that system or moving to the new PSA system. Those who left the old system were given a "recognition bond'' that was deposited in their new PSAs.

3. All new entrants to the labor force were required to enter the PSA system. "


Without the 15% FICA revenues, how would the U.S. government pay for the first two transition rules?

 
At 9/21/2011 9:14 AM, Blogger VangelV said...

More important, still, pensions have ceased to be a government issue, thus depoliticizing a huge sector of the economy and giving individuals more control over their own lives. The structural flaw has been eliminated and the future of pensions depends on individual behavior and market developments.

This is the key. The government has to step aside because as long as the issue is politicized there will be charlatans to play games that rob contributors to pay for wasteful schemes.

 
At 9/21/2011 9:32 AM, Blogger Che is dead said...

"The Chile solution is great. But it is not clear how the U.S. government could finance the transition rules Chile adopted ... how would the U.S. government pay for the first two transition rules?" -- Jet Beagle

At this point, it's not clear how the U.S. government is going to finance the unfunded liabilities inherent in the current system. In that sense, there are no transition costs, only the recognition of currently unfunded liabilities. Moving to a system like Chiles would mean that the costs that those liabilities represent would ultimately be much less.

 
At 9/21/2011 9:32 AM, Blogger morganovich said...

"Without the 15% FICA revenues, how would the U.S. government pay for the first two transition rules?"

this is a key issue (though i think it's only 12.5% for SS)

i think the answer is to phase it in.

lower fica gradually and shift gradually to private accounts. many of us would likely get screwed on our contributions to date, but i'd happily surrender that to go private.

perhaps bracket it by age.

those under say, 35, just go private immediately. 35-50 pay 1/2 of fica and get the other half as private and will get some SS, but not much. 50+ pay more and get more.

i have not thought through the brackets much and those are just examples, but i suspect there is a system that could be made to work, maybe with 10 year break points.

ideally, we could take the "trust fund" money and apportion it to people as private accounts, but, as that money is mostly just an accounting fiction, that's going to be tricky.

 
At 9/21/2011 9:48 AM, Blogger Evergreen Libertarian said...

I understand that Sweden has a program that offers workers six alternatives. It would be interesting to see how that program works. Unfortunately I don't have the time to dig into it now. Anyone else care to give it a try?

 
At 9/21/2011 9:59 AM, Blogger Jet Beagle said...

Che is dead: "At this point, it's not clear how the U.S. government is going to finance the unfunded liabilities inherent in the current system."

According to the trustees, with no change in FICA tax rates, SS would be able to pay 3/4 of scheduled benefits for at least the next 75 years.

I would prefer gradual privatization. But it is clear to me that SS could survive if three things happened:

1. retirement ages raised to 70 and increased over time as life expectancy increases further;

2. annual benefit increases are tied to actual cost of living increases rather than to productivity-influenced wage inflation;

3. benefit maximums are reduced by a few thousand annually.

 
At 9/21/2011 9:59 AM, Blogger MaggotAtBroad&Wall said...

This article appears to have been written in the mid '90s. How did the Chilean model hold up during the financial meltdown of three years ago?

I spent a little bit of time trying to find an answer to that on the internet about a year or so ago, but didn't have much luck and quickly gave up.

 
At 9/21/2011 10:06 AM, Blogger Jet Beagle said...

morganovich,

I agree that phasing in privatization could work. But that would require some sort of shared sacrifice in order to simultaneously fund the existing pay-as-you-go program and reduce FICA taxes so that the yournger generations have funds to invest privately.

Over at Cafe Hayek, someone suggested this solution for funding the transition: selling assets of the government. I guess that would be the national forests or mineral rights where drilling is currently banned. I don't envision the "greenies" allowing that to happen without a big fight.

 
At 9/21/2011 10:14 AM, Blogger Jet Beagle said...

morganovich,

Sorry for not reading your comment carefully the first time. As I understand what you wrote, the sacrifice would be:

1. higher FICA taxes for those over 50 and no reduction in SS benefits;

2. lower FICA taxes and lower benefits for those between 35 and 50;

3. no FICAS taxes and no SS benefits for those below 35.

The rate for those over 50 would need to be at least double the existing rate in order to make up for all the lost FICA revenue from those younger than 50.

Perhaps the ages could be tweaked to make your proposal workable on paper. The burden on employers would be significant, requiring age verification costs plus reprogramming payroll software to accommodate variable FICA taxes.

 
At 9/21/2011 10:32 AM, Blogger Zachriel said...

morganovich: those under say, 35, just go private immediately. 35-50 pay 1/2 of fica and get the other half as private and will get some SS, but not much. 50+ pay more and get more.

Privatization can have a lot of advantages, but you haven't solved the problem. In order to maintain payments to current recipients you have to use the current payroll taxes to make those payments. In order to privitize, you have to have more money from somewhere.

As Americans don't want any new taxes, there doesn't seem to be a ready solution.

 
At 9/21/2011 10:36 AM, Blogger Zachriel said...

morganovich: 50+ pay more and get more.

Sorry, missed that part. Jet Beagle already responded to that point.

 
At 9/21/2011 10:46 AM, Blogger Buddy R Pacifico said...

I am for a gradual phase out of Social Security and implementation of private plans.

One of the problems is the ginormous amount of disability income paid out by Social Security. Today over 19 million people receive disability and/or Supplemental Social Security payments. The total number of people receiving Social Security benefits is 55 million.

This is going to be tough to reform.

BTW, a person 18 years or older can apply for disability payments using edib (Electronic Disability). Social Security receives over 20,000 requests a day for Disability!

 
At 9/21/2011 10:48 AM, Blogger VangelV said...

As Americans don't want any new taxes, there doesn't seem to be a ready solution.

You may be right. It might make sense to let the current system collapse and leave young workers on their own to handle their retirement needs. As for those already receiving the payments you can make up the shortfalls by resorting to the printing press and let inflation solve your problem.

 
At 9/21/2011 11:03 AM, Blogger Don said...

OK let's say you have a private plan that yields 20% per annum for everyone and everyone is eligible to sign up.

Does this solve all the problems?

Not at all. All this accomplishes on its face is to re-distribute future purchasing power from everyone not signed up or who made bad investments to those who are signed up and have made good or lucky investment choices.

Only if the private investments result in an a significant future increase in the supply of goods and services, keeping their prices down, do we get a general positive result.

So private investments are just a different gamble. Any obviously superior investments will be bid up in the beginning and have mediocre returns.

Regards, Don

 
At 9/21/2011 11:10 AM, Blogger morganovich said...

zach-

"Privatization can have a lot of advantages, but you haven't solved the problem. In order to maintain payments to current recipients you have to use the current payroll taxes to make those payments. In order to privitize, you have to have more money from somewhere."

but we already have that problem.

the SS trust fund is nothing of the sort.

we already need to find that money somewhere, even to keep making payments now.

there are already paygo shortfalls.

i think the answer is to, along with privatization, include means testing and up the retirement age.

if we could could up the age to 70-75 and knock out the 1/3 or so who have plenty of money to fund retirement on their own, then the system would be plenty solvent as it tailed off even with reduced fica income.

it seems to me that finding a balance of age and means could easily cut outlays by half and not do too much harm.

 
At 9/21/2011 11:11 AM, Blogger Benjamin said...

And then eliminate the USDA and voucherize the VA.

 
At 9/21/2011 11:29 AM, Blogger ws4whgfb said...

If social security was replaced with private pension plans there would be debacles involving government bailouts and underfunded pensions not being paid etc etc. This is the US not Chile.

There is no such thing as a free lunch. How can a private pension provide more income that the governemnt? Who can tax at will and print money at will? By running a more efficient ponzi scheme? By investing in risky investiments? How can anyone predict investment returns when you have idiots like we have in congress regulating the markets into insanity?

 
At 9/21/2011 11:37 AM, Blogger Jet Beagle said...

morganovich: "if we could could up the age to 70-75 and knock out the 1/3 or so who have plenty of money to fund retirement on their own"

So how much is "plenty of money"?

The very few of us who have $1 milion in savings can safely withddraw about $45,000 annually without risking running out of funds before death. Are you saying that those folks do not get the $30,000 annually from SS? That their retirement income gets reduced by 40%? But the other guys who saved nothing will continue receiving their $30,000 from SS?

I was with you, morganovich, until you used the term "means testing". It sounds too much like these words:

"From each according to his ability, to each according to his need"

 
At 9/21/2011 12:06 PM, Blogger morganovich said...

jet-

this is a failed socialist program.

trying to paint finding a way to unwind it as communism seems perverse to me.

$45 k a year is an awfully high bar to use. the average social security payment is $13,200.

we don't have any good options at this point.

the program is getting ready to fail epically.

all we can do is contain and minimize the damage.

also note that means testing need not be forever.

if your means fall below X later, then you qualify and start getting benefits.

SS cannot be a pension program. the money is simply not there.

the sooner we admit that it's going to have to become just a social safety net, the less harmful such a transition will be.

if you have a a half a million in savings, that ought to earn 35k a year just in profits.

i'd be willing to bet that 20-25% of retirees do.

if you managed to save 3k a year over 40 years and invested it, you'd have that.

they barely even need to touch their principal to hit $45k.

i agree with you that ideally, everyone who contributes should get paid, but this is not an ideal situation. we have a $2.5 trillion hole and paygo that has flipped upside down.

something has to give.

we need to get payout down.

raising the benefits age would work too, but it runs into the issue of a current 64 year old who was counting on it next year.

i suspect that you have gleaned from my other posts that i do not support taxing the rich to pay for everyhting, but i view means testing as a bit different.

this is not a tax, it's a wind down of a bad program structured in such a way as to do the least harm.

if you place out on means, you will, of course, be excused from any future SS fica tax on income.

that seems a decent trade off. i'd happily take it right now.

 
At 9/21/2011 12:21 PM, Blogger juandos said...

"But it is not clear how the U.S. government could finance the transition rules Chile adopted"...

"At this point, it's not clear how the U.S. government is going to finance the unfunded liabilities inherent in the current system"...

Well jet & che I wonder how much of that 'transition' and those 'unfunded liabilities' could be financed by scraping this federal crapola?

 
At 9/21/2011 12:26 PM, OpenID mickeythobart said...

A lot of the "privatization" proposals seem like mandates to invest in the stock market or something.

 
At 9/21/2011 12:26 PM, Blogger juandos said...

The 1936 Government Pamphlet on Social Security

After the first 3 year--that is to say, beginning in 1940--you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. This will be the tax for 3 years, and then, beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. After that, you and your employer will each pay half a cent more for 3 years, and finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay...

ROFLMAO!

 
At 9/21/2011 12:33 PM, Blogger Zachriel said...

juandos: Well jet & che I wonder how much of that 'transition' and those 'unfunded liabilities' could be financed by scraping this federal crapola?

So you want to defund the Center for Disease Control, the Food and Drug Administration, the FBI, and release all federal prisoners?

 
At 9/21/2011 12:39 PM, Blogger Seth said...

"More important, still, pensions have ceased to be a government issue, thus depoliticizing a huge sector of the economy"

Yes. And the key reason it likely won't happen here.

 
At 9/21/2011 12:50 PM, Blogger Seth said...

"How can a private pension provide more income that the governemnt?" -ws4whgfb

One, the 'income' the gov't pays is defined and not dependent on how well contributions to the system are invested in productive pursuits.

It looks like Chile moved this massive drain that was sucking money out of income and sending it through the gov't spending ringer (which is not governed by productivity) and switched it investments that are governed by productivity -- which also had positive results on the economy. Private investment yields innovation, income growth and employment.

 
At 9/21/2011 12:51 PM, OpenID Mickey Hobart said...

To really fix Social Security, end it.

 
At 9/21/2011 1:12 PM, Blogger juandos said...

"So you want to defund the Center for Disease Control, the Food and Drug Administration, the FBI, and release all federal prisoners?"...

Why yes zach, there's NO federal mandate for any of those things in the Constitution...

Personally I think all those tax wasting programs could be handled for less money and more efficiently either on the local and state level or through private enterprise...

 
At 9/21/2011 1:20 PM, Blogger juandos said...

"So private investments are just a different gamble. Any obviously superior investments will be bid up in the beginning and have mediocre return"...

Hey Don take a look at the following blog posting: Had You Maxed Out Social Security Over the Last 30 Years…

 
At 9/21/2011 1:45 PM, Blogger Zachriel said...

Zachriel: So you want to defund the Center for Disease Control, the Food and Drug Administration, the FBI, and release all federal prisoners?

juandos: Why yes zach{riel}, there's NO federal mandate for any of those things in the Constitution...

No, it's a legislative prerogative. Seriously, not regulate food and drugs? Release all federal prisoners?

juandos: Hey Don take a look at the following blog posting: Had You Maxed Out Social Security Over the Last 30 Years…

Try to remember that the money you paid into Social Security wasn't invested, but was paid to your parents and grandparents in benefits.

 
At 9/21/2011 2:00 PM, Blogger morganovich said...

zach-

"No, it's a legislative prerogative. Seriously, not regulate food and drugs? Release all federal prisoners?"

prisoners are one think (though many are held for stupid drug crimes that ought not be illegal) but in this day and age, why the hell do we need the FDA?

they are a disaster. on a risk weighted it takes $2.5 billion dollars to get a drug approved. even then, they are not doing much of a job.

i have no problem with the existence of an FDA and an approval process, but it should be voluntary. use it like a good housekeeping seal of approval. let consumers and physicians decide for themselves how valuable it is.

let other accreditation organizations compete and build their own reputations.

would you trust the american college of obstetricians and gynecologists? the american association of cardiologists? i would.

the FDA has expanded into a horrific bureaucracy that is doing far more harm than good.

i've been involved with dozens of biotech and healthcare companies, so i have a lot of firsthand knowledge there.

far from protecting us, they are an albatross around our necks.

if i had cancer, i'd want the ability to choose my drugs, including experimental ones.

you can always only use FDA drugs. if it's important to people, they will and drug companies will behave accordingly. why take the choice away from me and give it to an unaccountable body of bureaucrats?

the key to longevity in an FDA career is to never approve anything. post vioxx, that's pretty much what they do.

it has hamstrung a vital industry.

 
At 9/21/2011 2:03 PM, Blogger morganovich said...

zach-

"Try to remember that the money you paid into Social Security wasn't invested, but was paid to your parents and grandparents in benefits."

you keep telling this lie over and over, but it's still not getting any truer. some of it was spent, much of it SHOULD have been invested. there was a surplus for 60 years.

had it been, the trust fund would be more like $30tn, instead of a 2.5tn pile of IOU's.

 
At 9/21/2011 2:14 PM, Blogger Jet Beagle said...

morganovich,

A few points:

Any means testing method would almost certainly have to be based on household income. So the average payment data you quoted - which is benefit per recipient, not household - is not really meaningful, IMO.

The average Boomer retiree household is scheduled to receive much more than $13,200 in social security benefits.

Every financial advisor I've read - and I've ready many - uses 4.5% or 5% as the maximum which can be withdrawn from a retirement nest egg. Withdrawing 7% will almost likely result in one running out before death or else having inflation reducing your nest egg to a fraction of its original real value.


"something has to give.

we need to get payout down."


On this point I disagree. All we need to do is keep the total payout approximately in line with the SS tax receipts. Raising the retirement age and reducing the real growth in benefits will just about accomplish this.

"the program is getting ready to fail epically."

Medicare, yes. SS, no. SS will be able to pay 75% of scheduled benefits even if retirement ages are not raised. It should be able to pay 80% or more if full retirement ages are raised to 70 now and even higher as life expectancy increases. Paying 80% of scheduled benefits is not failing epically, IMO.

 
At 9/21/2011 2:27 PM, Blogger Jet Beagle said...

morganovich: "much of it SHOULD have been invested. there was a surplus for 60 years."

There were insignificant surpluses prior to 1987. From 1987 to 2011, the cunulative SS surplus grew from $47 billion to $2.6 trillion. So it's more accurate to refer to 24 years of surpluses, IMO.

Economists I've read say that public investment of $100 billion a year in private markets was not feasible, and unlikely to have been free of political influence. That's why Greenspan and others recommended using the surpluses to retire government debt held by the public. That would have reduced the total debt burden of future generations by $2.6 trillion.

Both Democrats and Republicans just spent the surpluses to gain favors, of course.

 
At 9/21/2011 2:34 PM, Blogger Buddy R Pacifico said...

If Social Security was replaced it seems this would involve three programs:

1. A defined benefit retirement with CPI adjustments and right of survivorship. This replaces current Social Security retirement.

2. A disability benefit program for anyone aged 18 to full retirement age. This replaces current Social Security Disability.

3. A supplemental income program for those receiving disability AND

a supplemental income program for those receiving reitrement benefits who do "meet financial limits. This replaces current Social Security Supplmental Income.

Hmmm.

 
At 9/21/2011 2:41 PM, Blogger VangelV said...

OK let's say you have a private plan that yields 20% per annum for everyone and everyone is eligible to sign up.

You can't get 20% returns with a very large fund. The larger the fund the closer its returns move towards GDP growth.

So private investments are just a different gamble. Any obviously superior investments will be bid up in the beginning and have mediocre returns.

No. Private plans do not steal from members by exchanging money from IOUs. They hold marketable assets that can be used to pay for benefits without relying on borrowing.

 
At 9/21/2011 2:42 PM, Blogger VangelV said...

If social security was replaced with private pension plans there would be debacles involving government bailouts and underfunded pensions not being paid etc etc. This is the US not Chile.

Are you claiming that the citizens of Chile are a lot smarter than Americans?

There is no such thing as a free lunch. How can a private pension provide more income that the governemnt?

Because the private funds can't steal the excess contributions.

 
At 9/21/2011 2:46 PM, Blogger VangelV said...

After the first 3 year--that is to say, beginning in 1940--you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. This will be the tax for 3 years, and then, beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. After that, you and your employer will each pay half a cent more for 3 years, and finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.

The definition of the term $ has changed. In the 1940s the $ limit was close to 100 ounces of gold in earnings. Today that would mean a limit of around $170K or so.

 
At 9/21/2011 2:58 PM, Blogger sethstorm said...

"To Really Break Social Security, Let's Privatize It"

Putting casino-like uncertainty in one's future is one more way not to do such a thing. Couching it in the language that makes it look like the worker wins - when they really don't - doesn't make it look any better.

Given that it was introduced in 1980, I'd question how voluntary things were w/ that plan. It's easy to switch people over when you can intentionally sour the old plan.

How about trying to not use Social Security as a general slush fund first? It's a lot easier than giving bankers an tighter bind on the US government.

 
At 9/21/2011 4:01 PM, Blogger morganovich said...

jet-

""we need to get payout down."

On this point I disagree. All we need to do is keep the total payout approximately in line with the SS tax receipts."

this is internally inconsistent. you disagree that we need to get pay out from the system down, then say we need to get payout down.

payout already exceeds income.

thus, it needs to come down, according to your own statement.

you say you disagree, but it sounds to me like you just agreed with me.

i don't really care if it's done by age or means test or some combination.

each has advantages in terms of getting out of this hole.

i do see your point about bad precedents in screwing the wealthy, but that $13,500 household income is still paltry.

you could make that just in annual return on $250k of savings and never touch your principal.

many, many people have that much savings.

we need to decide what SS is. is it really a pension scheme?

in that case, we should just up the age and give it to everyone.

if it's a social net, then, like welfare, only those who need it should get it.

i can certainly see arguing for the former over the latter, but that's not how it has been used for some time.

with just age hikes, you also get very little immediate savings unless you kick people out of the program, which would be messy and potentially quite unfair as they may have planned on it and be left in a bad spot.

regarding 24 years of surpluses, point taken. but still, that ought to mean that we ought to have $8 tn in an account somewhere, not a pile of iou's.

that money would give the program all kinds of options including pro rata disbursement into private accounts.

instead, we are painted into a corner by kleptocrats.

"Economists I've read say that public investment of $100 billion a year in private markets was not feasible"

that seems a pretty specious claim.

there are individual stocks with market caps 4 times that.

the SPY (spider) contract alone trades over $30bn in volume per day.

that makes $100bn/yr 1.3% of the volume in one instrument.

the debt markets dwarf that.

i think those economists are pushing a public policy agenda. $100bn/yr is a drop in the bucket.

regarding the corruption, so cut them out. make individual accounts. don't let the feds allocate anything. run it like an IRA.

the return differential is staggering. SS yields pretty much zero (and negative nominal at the high end).

over 40 years, a 6% return creates a 10X return difference. even people get even half that (and you can do that in bonds even now) it's still massive out-performance.

"SS will be able to pay 75% of scheduled benefits even if retirement ages are not raised. It should be able to pay 80% or more if full retirement ages are raised to 70 now and even higher as life expectancy increases. Paying 80% of scheduled benefits is not failing epically, IMO."

those calculations assume the trust fund exists.

paying 70-80% of a payout that already had a negative rate of return is an epic fail as an investment.

if you think -30 to -40% return (after the annual nominal losses compound with inability to pay) is an acceptable investment, then i'd hate to see what you consider a bad one.

if i showed that kind of return, i'd have no investors as fast as they could redeem.

 
At 9/21/2011 4:03 PM, Blogger morganovich said...

seth-

"Putting casino-like uncertainty in one's future is one more way not to do such a thing. Couching it in the language that makes it look like the worker wins - when they really don't - doesn't make it look any better. "

what unbelievable nonsense.

SS gets NEGATIVE returns. at least at a casino, you can win.

and casino is a ridiculous metaphor.

buy US bonds. even now, the 30 year yields 3%. that's a helluva lot better than SS and less risky.

if you have a bond, it's yours.

if you have SS, you can get benefits cut.

it's the same payer and much less risk.

 
At 9/21/2011 4:30 PM, Blogger Zachriel said...

morganovich: but in this day and age, why the hell do we need the FDA?

To oversee food and drug safety. Are you saying that it was once justified to have a government agency oversee food and drug safety?

morganovich: there was a surplus for 60 years.

However, the amount in the Trust Fund has varied considerably as the net revenues have varied considerably. The Trust Fund is meant for float, and for that purpose is put into U.S. securities that earn market rates. You do realize that a lot of investors buy U.S. securities for safety.

morganovich: had it been, the trust fund would be more like $30tn,

Starting in 1937, if we were to invest the balance of the Trust Fund each year, and after having paid beneficiaries, then make 4% above the interest paid by securities, it would not lead to $30 trillion, but less than $4 trillion. And the risk would have been much higher.
http://www.ssa.gov/oact/STATS/table4a1.html

 
At 9/21/2011 4:44 PM, Blogger morganovich said...

"To oversee food and drug safety. Are you saying that it was once justified to have a government agency oversee food and drug safety? "

whether it was ever needed is questionable. whether it should have been mandatory is not. that should never have happened.

but today? in the internet age? with information this easy to share and disseminate?

doctors can now see all the studies. so can their organizations. AGOG cuts a lot more ice with OBGYNS than the FDA.

it's easy to do you homework, and easy to check several different accrediting agencies.

the FDA is less useful and more of a hindrance every day.

the SS "trust fund" is supposedly 2.6tn.

the big surpluses started in 1987.

24 years at 6% (easily hit, your 4% number is WAY below even bond yield for much of that period and not even half of equity yields) gets you 4X your money. not all need to be paid out as one, so you can weight the funds over the withdrawal period.

that's $10tn in payouts easily, just in that period, more if the tail for paygo is longer (as it would be). you'd likely be at more like 15tn. (and that's just from 24 years)

instead, i get negative nominal ROIC.

i figured it out once. i'm losing about 70bp/year. add in inflation, and it's worthless.

assume 4% inflation. that's -470bp of real return annually.

that means that over a 40 year career, the first dollar i put in will buy 14 cents of real value when i get it at 65.

i'd be better off playing "any 7" on a craps table in vegas.

 
At 9/21/2011 4:56 PM, Blogger Zachriel said...

morganovich: whether it was ever needed is questionable.

You must have never heard of the meat packing scandals that led to the federal regulation of food safety.
http://en.wikipedia.org/wiki/Federal_Meat_Inspection_Act

morganovich: with information this easy to share and disseminate?

You can't see the conditions on the inside of a meat packing plant from the outside.

morganovich: 24 years at 6% (easily hit, your 4% number is WAY below even bond yield for much of that period and not even half of equity yields) gets you 4X your money.

We said 4% *above* the bond rate. The interest is added to total receipts. Using your estimate of 4% over the period for bond yields, that means you are earning 8%.

morganovich: that means that over a 40 year career, the first dollar i put in will buy 14 cents of real value when i get it at 65.

You keep forgetting. The first dollar you put in goes to your dear parents.

 
At 9/21/2011 5:24 PM, Blogger Larry G said...

you can form a church... they don't have to pay FICA....

looks like these big-time evangelicals figured out that tax loophole!

:-)

essentially what you'd be doing is just to go back and "pre-fund" something that already a pay-as-you-go plan.

Chile - by the way is a MANDATED payroll tax guys...

doesn't that violate your beliefs?

name one country that has a voluntary payroll tax...for retirement.

we already have voluntary IRA and 401(k)s.... anyhow....

 
At 9/21/2011 5:30 PM, Blogger Benjamin said...

A few weeks ago I was reading an article in Money magazine about a couple who retired at 40. While they do live frugally in relatively low-cost St. Louis, the primary reason they were able to retire is that they each served for 20 years in the military and now receive a pension of $58,500 per year. They will receive this amount, adjusted for inflation, for the rest of their lives! On top of that, they get health coverage forever as well.

Obviously there are some extra issues involved in working in the military. National duty, risk of injury, possibly lower pay, and constant relocation, just to name a few. But let’s just focus on the financial aspects here. I knew military pensions were good, but I didn’t know they started as soon as you retired. I figured they’d kick in at 60 or 65, not right away.

Can we fix military pensions and Social Security? Please?

 
At 9/21/2011 5:42 PM, Blogger Jet Beagle said...

morganovich,

When I said I disagree about reducing the payout, I meant that an individual's annual payout need not be reduced. Instead, it only needs to not increase the way it has been increasing. Also, I did mean that the number of years of payout could be reduced (increased retirement age), but that the individual's benefit for each of those year's need not.

 
At 9/21/2011 5:47 PM, Blogger Jet Beagle said...

This comment has been removed by the author.

 
At 9/21/2011 5:54 PM, Blogger Jet Beagle said...

morganovich: "i do see your point about bad precedents in screwing the wealthy, but that $13,500 household income is still paltry."

I don't think your're undestanding my post at all. It is not $13,500 household income. It's $13.500 per average beneficiary. That would be $27,000 for a household which included two retirees.

morganovich: "you could make that just in annual return on $250k of savings and never touch your principal."

If one never increases his principal, his real dollar value of returns on that principle very quickly decline to half. Retirement savings must be capable of funding 30 or more years of a couple's lives. A household cannot take out all the returns and maintain their standard of living. At least a third if not more of earnings must be reinvested.

 
At 9/21/2011 5:56 PM, Blogger Jet Beagle said...

Morganovich: "there are individual stocks with market caps 4 times that.

the SPY (spider) contract alone trades over $30bn in volume per day."

What the economists meant is that investing $100 billion a year for 24 years would be so much that markets would be distorted. It's only $100 billion each year, but became $2.6 trillion by the end of 24 years. Having the government control $2.6 trillion of private equities would distort markets, IMO.

I don't see how the amount of trades on a daily basis has any relevance to the issue of a $2.6 trillion investment. The government would not be trading the $2.6 trillion daily, but rather would be holding equities worth that much.

 
At 9/21/2011 6:08 PM, Blogger Jet Beagle said...

morganovich: "those calculations assume the trust fund exists."

No, they do not. SS can be funded at about 75% or higher from SS tax receipts alone. I believe that's true in 2015, in 2025, and for every year thereafter.

 
At 9/21/2011 6:15 PM, Blogger VangelV said...

So you want to defund the Center for Disease Control, the Food and Drug Administration, the FBI, and release all federal prisoners?

Not the violent prisoners who can be kept in jail for breaking state laws. But yes, you do not need the FDA, CDC or FBI. While each may do some good on the whole they do far more harm.

 
At 9/21/2011 6:21 PM, Blogger VangelV said...

1. A defined benefit retirement with CPI adjustments and right of survivorship. This replaces current Social Security retirement.

First, how can anyone count on a guaranteed benefit if you can't even guarantee that the unit of measure will stay the same? Do you really want a fixed income if the government kills the currency?

Second, why not let individuals choose what they want?

2. A disability benefit program for anyone aged 18 to full retirement age. This replaces current Social Security Disability.

Why not allow people to buy whatever they want from private providers? Costs should certainly be a lot lower as there would be a lot less fraud and a great deal less bureaucratic waste.

3. A supplemental income program for those receiving disability AND

Just let people buy the plan that they want. There is no need to plan everyone's life if they are competent adults and can make decisions for themselves.

a supplemental income program for those receiving reitrement benefits who do "meet financial limits. This replaces current Social Security Supplmental Income.

Hmmm.


As I wrote above, there is no need to plan everyone's life if they are competent adults and can make decisions for themselves. Let people buy what they want when they want it.

 
At 9/21/2011 6:30 PM, Blogger Larry G said...

" there is no need to plan everyone's life if they are competent adults and can make decisions for themselves. Let people buy what they want when they want it"

Isn't Chile's system mandatory?

why?

 
At 9/21/2011 7:36 PM, Blogger Buddy R Pacifico said...

"As I wrote above, there is no need to plan everyone's life if they are competent adults and can make decisions for themselves. Let people buy what they want when they want it."

I am not suggesting planning anyone's life but my own.

Privatization of immense federal largesse for a pension plan with right of survivorship, disability at any age and supplemental income is embedded. The sixteen million (and growing fast) who recieve disability, and those who receive supplemental income, know that only the government can confiscate to provide these benefits.

I was merely laying out a framework that will be impossible to privatize except for basic retirement income.

 
At 9/21/2011 8:26 PM, Blogger sethstorm said...


and casino is a ridiculous metaphor.

Yet it is accurate. Given how stock markets(and by extension, mutual funds) have operated(and are operating), there is little difference between the two.


Why not allow people to buy whatever they want from private providers? Costs should certainly be a lot lower as there would be a lot less fraud and a great deal less bureaucratic waste.

Not truthful at all. A company would just make it even more opaque, and private providers would not provide the same uniformity of service.



Just let people buy the plan that they want

You incorrectly presume that it exists - even for reasonable demands.

 
At 9/21/2011 10:01 PM, Blogger marmico said...

Are you bozos finished?

The Chilean system was such a resounding success that they made a major overhaul in 2008 such that 60% of the elderly wouldn't fall through the cracks.

It's been 30 years since privatization but the government still forks over 3% of GDP for pensions.

Comparatively in the U.S., the government forked over less than 0.5% net of GDP last year. Oh yeah, there are a myriad of acronyms for deferred private savings plans in the U.S. which boosts retirement incomes.

Chile got nuttin' like SEPs, IRAs, ROTHs, 503Bs, 401Ks.

Oh yeah, did you notice how much the friggin' financial institutions scoop on management fees for the Chilean privateers?

Chile, just what Wall Street ordered!

 
At 9/21/2011 11:37 PM, Blogger Che is dead said...

"Are you bozos finished?" -- marmico

Before you go throwing around words like "bozo" you might want to actually read the documents that you link to.

The Chilean system has three parts, or pillars: a poverty prevention pillar (now being funded out of general revenue), a compulsory contribution pillar (a privatized version of our SS and the system that we are discussing here) and voluntary savings pillar (which is almost exactly like our 401K/IRA savings system)

It was the poverty prevention pillar that was overhauled in 2008 in order to accommodate that part of the population that had never made pension contributions and those who had not had enough time under the new compulsory contribution system to accumulate the minimum level of savings for retirement as established by the government.

The document points to the success of the reforms made to the compulsory contribution system in lowering state related retirement obligations as making it possible to increase the payments to those caught in the transition to the privatized plan without any budgetary impact.

So, it seems that the only "bozo" here is you.

 
At 9/22/2011 12:38 AM, Blogger Hydra said...

Public pensions were created because of flaws in how people behave, and because of failures in private plans.

 
At 9/22/2011 12:39 AM, Blogger Hydra said...

Does the chilean system have required contributions?

 
At 9/22/2011 12:45 AM, Blogger Hydra said...

I think that changing colas alone would fix ss for the foreseeable future.

Especially if we index payments down to account for relation.

 
At 9/22/2011 12:57 AM, Blogger Hydra said...

Buddy: I collected disability while I was disabled, and the amount I collected was deducted from my private disability insurance. Ss disability is a subsidy to private insurors.

There are a lot of disabled people: I think something like one person in three will be disabled at some point, as I was.

If you do not have disability insurance and depend on your labor, better get some.


It does not matter how many applications they get. As far as I can tell, ALL of them are initially rejected, regardless. Then you go hire a lawyer to apply for you.

 
At 9/22/2011 12:58 AM, Blogger juandos said...

"No, it's a legislative prerogative. Seriously, not regulate food and drugs? Release all federal prisoners"...

Apparently life is unsafe for zach if it doesn't have some sort of federal imprimatur on it...

What makes you think the federal government can do a good job of regulating anything?

"No, it's a legislative prerogative...

Thank you zach for reaffirming how our elected federal officials can't seem to keep a simple oath, the oath they take when they are sworn into their elective office...

"Try to remember that the money you paid into Social Security wasn't invested, but was paid to your parents and grandparents in benefits"...

Therein lies the problem zach, not only did I get hosed but so did my parents and grand parents...

See, I knew you could figure out if you just looked at the problem as a whole instead of its multiple parts...

 
At 9/22/2011 1:01 AM, Blogger Hydra said...

So contributions to the Chilean plan are compulsory, like obamacare health insurance will be compulsory.

The freedom freaks wont like that. They will WA t to be able to opt out.

 
At 9/22/2011 1:04 AM, Blogger juandos said...

"There is no such thing as a free lunch. How can a private pension provide more income that the governemnt?"...

Ask yourself this simple question ws4whgfb: what's the rate of return on the money extorted from you and your employer worth after thirty years vs what would it be worth if just you had taken that FICA amount and invested in some sort of index fund?

 
At 9/22/2011 1:12 AM, Blogger Hydra said...

Why should younger persons get a much better people soon than I do? If the huge returns on investment materialize, tax the returns to equalize projected pensions.

After all, one reason they will be able to contribute is they don't have to support the geezers struggling by on ss.

 
At 9/22/2011 1:17 AM, Blogger Hydra said...

I think Don has a point. So much investment will lower the returns.

 
At 9/22/2011 5:28 AM, Blogger D Oliver said...

How much of our model can you base on an emerging market with an entirely different understanding of poverty?

What I find most troubling about the whole issue of privatization is that supporters quote data that is 15 years old. "After 15 years of operation, the results speak for themselves." I haven't the slightest idea of whether it is a good idea or not. But when I see people quote data that is 2 market crashes ago, it makes me wonder.

What is the latest story....

 
At 9/22/2011 7:09 AM, Blogger Zachriel said...

juandos: Apparently life is unsafe for zach if it doesn't have some sort of federal imprimatur on it...

Teddy Roosevelt didn't believe the reports about unsafe conditions in food processing plants and had to send his own people to find out the truth. The truth was that the private sector failed to provide even a modicum of safe conditions for the processing of food.

juandos: Thank you zach{riel} for reaffirming how our elected federal officials can't seem to keep a simple oath, the oath they take when they are sworn into their elective office...

It's a *constitutional* prerogative.

juandos: Therein lies the problem zach{riel}, not only did I get hosed but so did my parents and grand parents...

Then you should lobby to change the law. However, the vast majority of Americans over many generations have supported Social Security. More than likely, it will continue in one form or another.

juandos: what's the rate of return on the money extorted from you and your employer worth after thirty years vs what would it be worth if just you had taken that FICA amount and invested in some sort of index fund?

Remember, the money wasn't invested, but went to your parents' Social Security benefits.

 
At 9/22/2011 8:15 AM, Blogger VangelV said...

Teddy Roosevelt didn't believe the reports about unsafe conditions in food processing plants and had to send his own people to find out the truth. The truth was that the private sector failed to provide even a modicum of safe conditions for the processing of food.

That is not true. The interstate meat industry was using ice-chilled containers for trains and ships to allow meat packers to ship dressed meats. There was little spoilage if the meat was kept on ice. Roosevelt had asked that an investigation of the meat industry be performed. The investigation showed nothing that was incriminating.

Actually, the large meat packers supported the Pure Food and Drug Act of 1906. Its regulatory costs destroyed most of their smaller competitors and its enactment gave the products shipped to European customers the backing of the US government.

Bully Boy: The Truth About Theodore Roosevelt's Legacy

 
At 9/22/2011 9:24 AM, Blogger Hydra said...

And their payments went to their parents. What is the point?

 
At 9/22/2011 10:17 AM, Blogger Che is dead said...

"Remember, the money wasn't invested, but went to your parents' Social Security benefits." -- Zach

If this is true, then why did they collect payroll taxes in excess of my parents benefits? And why did they pay my parents benefits in excess of the actuarial value of their contributions? Why were payroll taxes increased more than 20 times in order to support these excess payments? And, please, no more of your diversionary bullshit about smoothing out demographic trends, etc.

 
At 9/22/2011 10:18 AM, Blogger Paul said...

"Remember, the money wasn't invested, but went to your parents' Social Security benefits."

And yet the Social Security administration continues to tell us the income is "invested" in "...securities guaranteed as to both principal and interest by the Federal government."

Sounds like a swindle to me.

 
At 9/22/2011 10:24 AM, Blogger Che is dead said...

"What I find most troubling about the whole issue of privatization is that supporters quote data that is 15 years old. "After 15 years of operation, the results speak for themselves." I haven't the slightest idea of whether it is a good idea or not." -- D Oliver

Here's an article about three Texas counties which opted out of SS and created private accounts 30 years ago. No emerging markets. Plenty of time to assess their performance relative to SS. Remember, these plans earn returns on REAL assets not on an imaginary "trust fund". The participants have accumulated REAL wealth that they have PERSONAL control of:

How Three Texas Counties Created Personal Social Security Accounts and Prospered, Forbes

 
At 9/22/2011 10:25 AM, Blogger morganovich said...

"What the economists meant is that investing $100 billion a year for 24 years would be so much that markets would be distorted"

i understand what they mean, but i think it's an unsupportable assertion.

the new york stock exchange alone has a $13 tn market cap.

100bn is 0.7% of that.

add in nasdaq and the amex, and that number drops to probably 0.4%.

add in the US debt market, and you are looking at more like 0.1%.

it seems awfully implausible to me that 0.1% a year is going to distort markets meaningfully.

it's also a false argument.

it's already distorting markets.

the federal IOU's that make up the "trust fund" are just another kind of federal debt. they keep bonds from being issued as they would otherwise need to be to fund deficit spending creating a defacto price support and depressing interest rates, harming bond buyers.

btw-

i spent some time last night thinking about your arguments on means testing, and i have come around to your viewpoint.

mere exigence is not a good basis for policy. it's an easy trap to fall into, but i think you are correct in your assessment that it is both unfair and sets a bad standard.

 
At 9/22/2011 10:28 AM, Blogger Larry G said...

" If this is true, then why did they collect payroll taxes in excess of my parents benefits?"

http://www.ssa.gov/history/reports/crsleghist2.html

because their 75-year look-ahead told them that there was going to be a baby-boom effect and they made changes to partially pre-fund it - to give them time to make phased changes...over time...

SS was designed to be changed.

if you look at the link it has a long, long history of changes to keep the benefits balanced with revenues.

 
At 9/22/2011 10:33 AM, Blogger Zachriel said...

Che is dead: If this is true, then why did they collect payroll taxes in excess of my parents benefits?

Because after WWII there was a boom in human reproduction in the U.S. The end result of this is a larger than normal bulge in the population, first as babies, then teenagers, then adults, then retirees. In order to prepare for this demographic bulge surpluses implemented to build up the Trust Fund.

Che is dead: And, please, no more of your diversionary bullshit about smoothing out demographic trends, etc.

But that's the reason.

Che is dead: And yet the Social Security administration continues to tell us the income is "invested" in "...securities guaranteed as to both principal and interest by the Federal government."

That's correct. The Trust Fund is float that is invested in U.S. securities.

 
At 9/22/2011 10:33 AM, Blogger Larry G said...

" Here's an article about three Texas counties which opted out of SS"

SS took note of it also:

http://www.ssa.gov/policy/docs/ssb/v62n1/v62n1p47.pdf

but who ended up paying the benefits of the people who lived in Galveston and were on SS?

Chile did this and they had - and continue to have huge costs of trying to pay current beneficiaries - they still have to tax to pay the current beneficiaries.

http://www.ssa.gov/policy/docs/ssb/v59n3/v59n3p45.pdf

if you convert to a privatized system - it will still have to be mandatory - just like Chile's or Singapores is - right?

 
At 9/22/2011 11:03 AM, Blogger Che is dead said...

" ... because their 75-year look-ahead told them that there was going to be a baby-boom effect and they made changes to partially pre-fund it" -- Larry

"Because after WWII there was a boom in human reproduction in the U.S. ... In order to prepare for this demographic bulge surpluses implemented to build up the Trust Fund." -- Zach

Except that they did not "pre-fund" it. They have simply spent the money, issuing non-transferrable IOUs that push future payment onto the same taxpayers currently funding the system. In effect, we have to pay for our government retirement checks twice - once in the form of payroll taxes and then again in the form of income taxes. If this were a "income transfer program" as Zach, has repeatedly argued in the past, then why collect excess revenue? And why make payments in excess of the actuarial value of contributions?


"Here's an article about three Texas counties which opted out of SS" ... SS took note of it also" -- Larry

The SSAs report is a meaningless comparison since it relies on interest paid on nonexistent assets in a fictional "trust fund" in support of SS. The Texas counties have REAL assets and hold REAL wealth. The bad news for SS is that even if one accepts the government fairy tale the Texas system still significantly outperforms.

 
At 9/22/2011 11:16 AM, Blogger Jet Beagle said...

morganovich: "the federal IOU's that make up the "trust fund" are just another kind of federal debt. they keep bonds from being issued as they would otherwise need to be to fund deficit spending creating a defacto price support and depressing interest rates, harming bond buyers."

Good point.

Twenty years ago, I would have argued that without SS surpluses, the federal government wouldn't have spent as much. I would have argued that voters never would have tolerated an additional $2.6 trillion in privately held federal debt. Boy, was I wrong.

The other point I was making is that the market distortion is not $100 billion. It would have been $2.6 trillion by 2010. $2.6 trillion would be a significant part of the NYSE market cap of $13 trillion. Of course, SS trust fund could have been invested in assets other than NYSE.

 
At 9/22/2011 11:21 AM, Blogger Jet Beagle said...

Che is dead: "If this is true, then why did they collect payroll taxes in excess of my parents benefits?"

In order to increase other spending while telling voters they were investing savings on their behalf.

 
At 9/22/2011 11:40 AM, Blogger morganovich said...

"then retirees. In order to prepare for this demographic bulge surpluses implemented to build up the Trust Fund. "

which means that principal was invested (or supposed to have been)

you have just disproven your own argument.

 
At 9/22/2011 11:46 AM, Blogger morganovich said...

"The other point I was making is that the market distortion is not $100 billion. It would have been $2.6 trillion by 2010. $2.6 trillion would be a significant part of the NYSE market cap of $13 trillion. Of course, SS trust fund could have been invested in assets other than NYSE."

a couple of points:

1. that 2.6tn was invested over 25 years.

2. the nyse is not the only place to put money. the US bond market is much larger than that.

3. most importantly, you are making an assumption of static growth/corporate formation.

if that money had been invested, there would have been more companies formed, more investment, and more growth.

sure, it might mean the NYSE was worth more, but it might also have more, bigger, and more profitable companies on it.

investment is not zero sum.

there would be more value and earnings underpinning the valuations. there is no necessary effect on P/E's or returns.

at worst, it would just up bond allocations as bond yields went up in response to more issuance, but that would not harm the overall returns to balanced strategies.

 
At 9/22/2011 12:34 PM, Blogger Larry G said...

" Except that they did not "pre-fund" it."

well they did... the audit shows they did...

what happened after that is not SS fault - they did what they had to do.

ALL trust funds by the way get turned over to the Treasury and get IOUs....

all of them work this way...it's not unique to SS

 
At 9/22/2011 12:37 PM, Blogger Larry G said...

" The SSAs report is a meaningless comparison since it relies on interest paid on nonexistent assets in a fictional "trust fund" in support of SS. The Texas counties have REAL assets and hold REAL wealth. The bad news for SS is that even if one accepts the government fairy tale the Texas system still significantly outperforms. "

actually the fact that the SSA looked at Galveston as well as Chile shows due diligence on their part and yes they did do an honest evaluation unlike you folks here.

The problem with Galveston and Chile is that switching over to a pre-funded pension plan from a pay-as-you-go insurance plan has some up-front costs and the only real way to do it is to continue to pay for the pay-as-you-go system while adding new/additional money to a pre-funded individual account system.

all of this was covered in those reports.

we could do that but it will cost you MORE, not LESS and the people who will most benefit from it are the younger generation.

so if you really believe that is a better system - you'll have to be the one to sacrifice.

 
At 9/22/2011 12:39 PM, Blogger Zachriel said...

Che is dead: Except that they did not "pre-fund" it. They have simply spent the money, issuing non-transferrable IOUs that push future payment onto the same taxpayers currently funding the system.

That's what happens when you run large deficits rather than trying to put money aside for a rainy day. But that has to do with the overall budget, not Social Security.

Che is dead: In effect, we have to pay for our government retirement checks twice - once in the form of payroll taxes and then again in the form of income taxes.

Well, Americnas have been getting a sharp discount on taxes overall, due to income tax cuts, unfunded wars and an expansion of Medicare that didn't include additional revenues. Now the bill is coming due.

morganovich: if that money had been invested, there would have been more companies formed, more investment, and more growth.

It was "invested." The story was that tax cuts and wars would pay for themselves. How did that work out?

 
At 9/22/2011 12:50 PM, Blogger Che is dead said...

"In order to increase other spending while telling voters they were investing savings on their behalf." -- Jet Beagle

Thank you.

 
At 9/22/2011 1:07 PM, Blogger Che is dead said...

Both Larry and Zach apparently consider themselves incapable of controlling their own money. Preferring to turn their money over to faceless bureaucrats with a proven record of fiscal recklessness. Bureaucrats that have forced upon us all an investment scheme, that were it implemented in the private sector would earn it's perpetrators a jail sentence. And yet, they feel qualified to lecture others on the fine points of retirement planning.

Zach's degeneration into leftist attacks on tax cuts and defense spending only serve to underline the essential traits necessary to embracing the leftist world view - the willing suspension of disbelief and the overwhelming instinct to follow.

 
At 9/22/2011 1:18 PM, Blogger Larry G said...

"Both Larry and Zach apparently consider themselves incapable of controlling their own money. Preferring to turn their money over to faceless bureaucrats with a proven record of fiscal recklessness."

not at all.. I consider mandated payroll taxes a taxpayer protection from scofflaws that won't save.

"Bureaucrats that have forced upon us all an investment scheme, that were it implemented in the private sector would earn it's perpetrators a jail sentence."

worldwide? ha ha ha...

"And yet, they feel qualified to lecture others on the fine points of retirement planning."

I don't lecture. I rebut out and out lies ... I don't mind debating the concept with FACTS but I object to the bomb-throwing propaganda and misinformation being served up.

re: leftist world.

I'm in favor of a balanced budget.

I'm opposed to spending more money than we take in especially when it totals 1.5 trillion a year.

and I'm opposed to those who can't keep straight what the real threats are to the budget and who veer away from the real problems to dishonestly attack something that is the least of the problems - because they disagree with it conceptually - but portray their opposition on illicit reasons.

we need some basic honesty in the debate.. and so I disagree with those that use dishonest arguments.

I actually would support personal savings accounts over the current SS but it would have to be mandatory - as it is in every industrialized country in the world including Singapore and Chile....

you need a mandatory system to protect other taxpayers from those who would not save and then seek govt aid when they become destitute.

we don't have the political backbone to repeal EMTALA and MedicAID.

Until we develop that political backbone we must have a mandatory system.

I keep asking you guys to name the best countries in the world that have no mandatory payroll tax and ya'll are MUTE... no responses...

because you are arguing ideological theories not practical solutions.

and you're doing it in inherently dishonest ways...to boot

 
At 9/22/2011 1:33 PM, Blogger Zachriel said...

Che is dead: Both Larry and Zach apparently consider themselves incapable of controlling their own money.

Considering the length of this and the related threads, it's amazing you continue to misunderstand a simple position.

The best-laid schemes o' mice an' men
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!

Even the most careful planner can be waylaid by events beyond their control. Someone in the family may get sick. Or a trusted advisor who loses the deposit. Or a natural calamity. Or an economic depression that destroys assets and incomes. Others are simply financially unwise, but may contribute in other ways.

 
At 9/22/2011 2:05 PM, Blogger Che is dead said...

"Someone in the family may get sick. Or a trusted advisor who loses the deposit. Or a natural calamity. Or an economic depression that destroys assets and incomes ..." -- Zach

Or, the government may confiscate the earnings that might comprise your savings for the future, only to defraud you by promising to invest those savings on your behalf, instead squandering them. Then, when that day comes, you find that you are taxed once more with the proceeds of the second tax returned to you in payment of the promise on the first.

"... it's amazing you continue to misunderstand a simple position." -- Zach

You've been had. And the answer is not perpetuating the same fraud onto the next generation so that you can be spared the consequences.

 
At 9/22/2011 2:12 PM, Blogger Larry G said...

"You've been had. And the answer is not perpetuating the same fraud onto the next generation so that you can be spared the consequences."

are you talking about this country or all countries with mandatory payroll taxes and social insurance programs?

is it a worldwide conspiracy?

 
At 9/22/2011 2:17 PM, Blogger Paul said...

Zach,

"The story was that tax cuts and wars would pay for themselves. How did that work out?"

What idiot told you a story that the wars would pay for themselves? Please show me that link. But that aside, why is it you only point out these two expenses, as if they were the only other items in the federal budget? I keep hearing this idiot Obama talk about the "investments" in the failed liberal programs we have dumped trillions into over the decades. Why is it they are exempt from contributing to the debt?

Give me the tax cuts and wars any day.

 
At 9/22/2011 2:17 PM, Blogger Che is dead said...

"are you talking about this country or all countries with mandatory payroll taxes and social insurance programs? ... is it a worldwide conspiracy?" -- Larry

Hey, genius, take a look at the current fiscal situation of all of those countries with "mandatory payroll taxes and social insurance programs" and get back to me.

 
At 9/22/2011 2:19 PM, Blogger Zachriel said...

Che is dead: Or, the government may confiscate the earnings that might comprise your savings for the future, only to defraud you by promising to invest those savings on your behalf, instead squandering them.

You keep acting as if the American people didn't have anything to do with it. Of course they did. Though Bush didn't get the most votes in 2000, millions voted for him on the promise that he would cut taxes. He was then reelected after having start two unfunded wars. Wars and tax cuts that would pay for themselves. The American people chose their path. They still have more resources and more possibilities than any other nation on Earth.

 
At 9/22/2011 2:40 PM, Blogger Paul said...

"Though Bush didn't get the most votes in 2000, millions voted for him on the promise that he would cut taxes."

Yep, he should only have cut the top marginal rate, the lower tier cuts most likely did not pay for themselves. Lets raise taxes on the approx 50% of the public who pay no net income taxes, I agree with that.

"Wars and tax cuts that would pay for themselves."

Where? Show me where Bush said this.

"The American people chose their path. "

Yep, we're in a bind now, aren't we? Time to zero out the mountains of waste and failed liberal programs.

 
At 9/22/2011 2:41 PM, Blogger Zachriel said...

Paul: What idiot told you a story that the wars would pay for themselves?

"When it comes to reconstruction, before we turn to the American taxpayer, we will turn first to the resources of the Iraqi government and the international community."
Donald Rumsfeld
Secretary of Defense

"There is a lot of money to pay for this that doesn't have to be US taxpayer money, and it starts with the assets of the Iraqi people."
Paul Wolfowitz
Deputy Secretary of Defense

"Iraq has tremendous resources that belong to the Iraqi people. And so there are a variety of means that Iraq has to be able to shoulder much of the burden for their own reconstruction."
Ari Fleischer
White House press secretary

"The costs of any intervention would be very small."
Glenn Hubbard
Chairman of the Council of Economic Advisors

Paul: But that aside, why is it you only point out these two expenses, as if they were the only other items in the federal budget?

Because the U.S. budget was in surplus and paying down public debt when a series of policies changed the direction.

Paul: Give me the tax cuts and wars any day.

Goodness.

Paul: Hey, genius, take a look at the current fiscal situation of all of those countries with "mandatory payroll taxes and social insurance programs" and get back to me.

Germany, Norway, Sweden, Japan, Netherlands, Denmark, all have their problems, but they are strong economies with robust markets and extensive social safety nets.

 
At 9/22/2011 2:43 PM, Blogger Zachriel said...

Paul: Lets raise taxes on the approx 50% of the public who pay no net income taxes, I agree with that.

90% of households share the federal tax burden with 75% of households paying more in payroll taxes than income taxes. Clinton rates were higher for all brackets, yet the economy still experienced robust growth.

 
At 9/22/2011 3:02 PM, Blogger Paul said...

Zach,

None of those quotes say the wars would pay for themselves, and it looks to me like they're all about Iraq, not Afghanistan. Sorry if you didn't read the fine print when you believed the wars would pay for themselves.

"Because the U.S. budget was in surplus and paying down public debt when a series of policies changed the direction."

The Clinton recession, though it began in early 2000, didn't fully kick in until 2001, after Clinton had exited the scene. All those projected surpluses were so much bunk as the dot com/Y2K bubbles burst. Also, Arabs were enrolling in flight schools in the late '90's while Bill Clinton was President and uninterested in the numerous chances he had to kill or capture bin Laden. Another problem he left for the next guy.

You also leave out the massive debt run up by the current nitwit. How about his policy changes? Cast in stone forever? Stimulus? Obamacare? Dodd-Frank?

But that aside, so what? There's no logical reason why we should continue to pay for the ocean of waste, mismanagement, and failed liberal programs just because they were already in place when Bush took office.

"90% of households share the federal tax burden with 75% of households paying more in payroll taxes than income taxes."

And they theoretically get those payroll taxes back when they retire in the form of SS and Medicare. Apples and oranges. But I thought you wanted to rescind the Bush tax cuts? Why not at least start with the group not paying any income taxes at all?

 
At 9/22/2011 3:43 PM, Blogger VangelV said...

ALL trust funds by the way get turned over to the Treasury and get IOUs....

all of them work this way...it's not unique to SS


Actually, not all trust funds work that way. Private funds cannot exchange money for IOUs because it is illegal for them to do so.

 
At 9/22/2011 3:47 PM, Blogger VangelV said...

What idiot told you a story that the wars would pay for themselves?

Actually, both Republicans and Democrats who voted for the Iraq war claimed that Iraqi oil would take care of the costs of the war. In case you are looking for specific quotes you can try looking at this.

 
At 9/22/2011 3:48 PM, Blogger Larry G said...

Actually, not all trust funds work that way. Private funds cannot exchange money for IOUs because it is illegal for them to do so.

all trust funds in the US govt work that way... and the trust funds are backed by the same guarantee that the govt gives for savings bonds and treasury securities.

all you have with a savings bond or a treasury security is an IOU.

what kind of idiocy are you promoting here?

and in the private sector what do you consider no-recourse loans and promissory notes if not IOUs?

 
At 9/22/2011 3:51 PM, Blogger Paul said...

Vangel,

"In case you are looking for specific quotes you can try looking at this."

Again, none of those quotes said the war in Iraq would pay for itself. Best you can say is they underestimated the cost.

And again, Zach said the "wars," including Afghanistan. Afghanistan doesn't have any oil and nobody said it would pay for itself.

 
At 9/22/2011 3:52 PM, Blogger DeeBee9 said...

You presented an argument that even progressives might agree with until you mentioned that Chile's changes gave people more control over their own lives.

 
At 9/22/2011 3:55 PM, Blogger Paul said...

"all trust funds in the US govt work that way... "


Yes, well, who are we to question the way those geniuses in DC run the well oiled machine known as the federal government.

"what kind of idiocy are you promoting here?"

The only idiocy I see is coming from somebody trying to convince others that an IOU is no different than money in the bank.

 
At 9/22/2011 4:04 PM, Blogger Zachriel said...

Paul: None of those quotes say the wars would pay for themselves, and it looks to me like they're all about Iraq, not Afghanistan.

Sure they do. In any case, they were not funded.

Paul: Sorry if you didn't read the fine print when you believed the wars would pay for themselves.

We never believed they would be.

Paul: You also leave out the massive debt run up by the current nitwit.

Most of the current deficit, other than the tax cuts, is due to the recession.

Paul: Why not at least start with the group not paying any income taxes at all?

Clinton-era tax rates seemed to be a much better compromise. However, taxes should wait until the economy has returned to normal growth.

 
At 9/22/2011 4:23 PM, Blogger Paul said...

Zach,

"Sure they do."

No, they don't. I can read, I assume you can also, else we wouldn't be having this discussion.

"Most of the current deficit, other than the tax cuts, is due to the recession."

Funny, I remember Obama telling us staggering deficits would be the recession's cure. But...the recession? I thought Obama pushed the car out of the ditch, saving and creating millions of jobs. Of course, he also went on a massive spending spree. And he launched a war against private enterprise, killing off revenues.
The bill is coming due now, Zach. Time to cut spending.

And Bush inherited a recession, too. That bit didn't seem to show up in your asessment that Bush's tax cuts and response to terrorist attacks on 9/11 are the root of the problem.

 
At 9/22/2011 5:04 PM, Blogger Che is dead said...

As President Obama prepares to tie a bow on U.S. combat operations in Iraq, Congressional Budget Office numbers show that the total cost of the eight-year war was less than the stimulus bill passed by the Democratic-led Congress in 2009.

According to CBO numbers in its Budget and Economic Outlook published this month, the cost of Operation Iraqi Freedom was $709 billion for military and related activities, including training of Iraqi forces and diplomatic operations.

The projected cost of the stimulus, which passed in February 2009, and is expected to have a shelf life of two years, was $862 billion.

CBO: Eight Years of Iraq War Cost Less Than Stimulus Act

The left lives in a world of lies.

 
At 9/22/2011 5:14 PM, Blogger Paul said...

Che,

I dare say that number is a tad less than the $3-4 trillion figure idiots like Benji are always throwing around.

 
At 9/22/2011 5:26 PM, Blogger Larry G said...

it's no lie though that the total DOD budget .. doubled and that does not include the increases in Homeland Security nor the nation-building costs...

between DOD and HS - we now spend virtually 100% of what we take in in income taxes on those two.

Obama did not cause that......

 
At 9/22/2011 5:55 PM, Blogger Zachriel said...

Paul: I can read, I assume you can also, else we wouldn't be having this discussion.

It's quite clear that they were telling the public that the Iraqis could pay for the bulk of the costs associated with the war. That was wrong by orders of magnitude.

Paul: Of course, he also went on a massive spending spree.

The problem with your citation is that it doesn't properly distinguish between newly authorized spending from increases in entitlements due to demographic changes. The Obama Administration has instituted few ongoing programs, and the stimulus was a one-time expenditure.

Paul: And Bush inherited a recession, too.

Bush did not inherit the results of the largest financial meltdown since the Great Depression.

Paul: Time to cut spending.

Of course spending has to be cut. On the other hand, most Americans want certain social programs, so once having decided that, then they have to pay for them.

Paul: CBO: Eight Years of Iraq War Cost Less Than Stimulus Act

The figure only includes immediate costs, not long term costs, such as veterans care and equipment replacement. CBO estimates total costs at $2.4 trillion. Nor does it include the cost to Afghanistan and Iraq.

 
At 9/22/2011 6:38 PM, Blogger Che is dead said...

"The figure only includes immediate costs, not long term costs, such as veterans care and equipment replacement. CBO estimates total costs at $2.4 trillion. Nor does it include the cost to Afghanistan and Iraq." -- Zach

If you're going to make shit up, why not say $10 trillion or $20 trillion.

 
At 9/22/2011 6:50 PM, Blogger Che is dead said...

"The Obama Administration has instituted few ongoing programs ..." -- Zach

You truly are delusional. First, Obama inherited everything that he voted for. When the Democrats took control of Congress in 2007 the budget deficit was betweem $140-$160 billion dollars and had been falling for years. The Democrats immediately started spending money, eventually driving deficits to over $1 trillion, and Obama supported all of that spending. Second, Obama and the Democrats gave us Obamacare, a fiscal abortion that will ultimately cost this country far more than the Medicare and Medicaid programs which are currently running unfunded liabilities in excess of $70 trillion dollars.

"... and the stimulus was a one-time expenditure." -- Zach

Which one? As we write he has proposed spending another 1/2 trillion dollars.

 
At 9/22/2011 8:36 PM, Blogger VangelV said...

all trust funds in the US govt work that way... and the trust funds are backed by the same guarantee that the govt gives for savings bonds and treasury securities.

all you have with a savings bond or a treasury security is an IOU.


Look you idiot. Here is a simple scenario that even someone as dim as you can figure out.

A. I have a $1 million Treasury Bond.

B. You have a $ million IOU.

We both need money. I can go out and sell my bond today. You can't because the IOU has no market on which it can trade.

Whether you want to admit it or not, there is a huge difference. The trustees could have sold treasuries to keep paying out the promised benefits for decades if the trust funds were held treasuries. If the debt ceiling is not lifted they will have to cut benefits because there is no way to make up the shortfall.

 
At 9/22/2011 8:46 PM, Blogger Larry G said...

can you sell a savings bond, Van?

If you had a million dollars worth of savings bonds could you sell them to someone else?

 
At 9/22/2011 8:51 PM, Blogger VangelV said...

Again, none of those quotes said the war in Iraq would pay for itself. Best you can say is they underestimated the cost.

That is not the way the Iraq was was sold. It was all right the voters were told by both Democrats and Republicans because the Iraqis have oil and that oil could be brought to market. Not only would they pay for many of the activities but the fall in oil prices would be a huge benefit to Americans.

"The likely economic effects [of a war in Iraq] would be relatively small.... Under every plausible scenario, the negative effect will be quite small relative to the economic benefits."
Lawrence Lindsey

"Iraq has tremendous resources that belong to the Iraqi people. And so there are a variety of means that Iraq has to be able to shoulder much of the burden for their own reconstruction."
Ari Fleischer

"There is a lot of money to pay for this that doesn't have to be US taxpayer money, and it starts with the assets of the Iraqi people. We are talking about a country that can really finance its own reconstruction and relatively soon."
Paul Wolfowitz


There you go. Iraq's oil revenues would pay for the reconstruction. American expenditures would be offset by the positive economic developments as oil prices declined.

 
At 9/22/2011 11:13 PM, Blogger Hydra said...

Vange:

Larry is an idiot, but you need to learn when you are outclassed and out gunned.

 
At 9/23/2011 3:24 AM, Blogger Ron H. said...

Don: "OK let's say you have a private plan that yields 20% per annum for everyone and everyone is eligible to sign up."

Wow! Sign me up right away, Mr. Ponzi.

"Does this solve all the problems?

Not at all. All this accomplishes on its face is to re-distribute future purchasing power from everyone not signed up or who made bad investments to those who are signed up and have made good or lucky investment choices.
"

That sounds a lot like how the real world works already.


"Only if the private investments result in an a significant future increase in the supply of goods and services, keeping their prices down, do we get a general positive result."

That is almost guaranteed.

 
At 9/23/2011 4:28 AM, Blogger Ron H. said...

"If you had a million dollars worth of savings bonds could you sell them to someone else?"

Yes.

 
At 9/23/2011 7:12 AM, Blogger Zachriel said...

Che is dead: If you're going to make shit up, why not say $10 trillion or $20 trillion.

http://www.reuters.com/article/2007/10/24/us-iraq-usa-funding-idUSN2450753720071024

Many of the extra costs comes from borrowing from Peter to bomb Paul.

Zachriel: The Obama Administration has instituted few ongoing programs ...

Che is dead: You truly are delusional.

You forgot to name the new, ongoing programs.

VangelV: A. I have a $1 million Treasury Bond.

B. You have a $ million IOU {from the U.S. government that can be surrendered for cash}.

We both need money. I can go out and sell my bond today. You can't because the IOU has no market on which it can trade.


Special securities can be surrendered for cash. Short of a default, they are as good as cash. Not only that, but federal government guarantees make excellent collateral for loans. Give us a government guarantee, and we'll show you the cash.

 
At 9/23/2011 7:16 AM, Blogger mike k said...

Of course spending has to be cut. On the other hand, most Americans want certain social programs, so once having decided that, then they have to pay for them.-Zach

The problem is most Americans want other people to pay for their "certain social programs". That makes them welfare programs, redistributionist by nature and completely different from the original intent of SS.

 
At 9/23/2011 7:29 AM, Blogger Larry G said...

"Of course spending has to be cut. ... That makes them welfare programs, redistributionist by nature and completely different from the original intent of SS.

cutting SS won't touch the existing 1.5T deficit.

cutting SS benefits would, in fact, result in FICA generating surplus again - surplus that would then be spent (again) on other govt programs.

the narrative here that SS is at the center of the deficit just does not hold water.

It's not even on the fringes....since the law says that SS benefits will be limited by what FICA will generate - and has nothing to do with the income tax.

the only connection between SS and the income tax - is the money is the trust fund but if you wiped out the trust fund and let SS go on by itself = it would... and without other changes like fixing the COLA or similar it would automatically cut benefits.

that's the number one problem here.

we have a 1.5T deficit and the folks here focus - not on what is at the core of that deficit - but SS and they use misrepresentations to make an illicit argument.

 
At 9/23/2011 7:40 AM, Blogger VangelV said...

can you sell a savings bond, Van?

If you had a million dollars worth of savings bonds could you sell them to someone else?


Yes Larry, you can sell bonds. That is what the bond market does.

 
At 9/23/2011 8:08 AM, Blogger Larry G said...

If you had a million dollars worth of savings bonds could you sell them to someone else?


Yes Larry, you can sell bonds. That is what the bond market does.


" The non-marketable securities (such as savings bonds) are issued to subscribers and cannot be transferred through market sales."

http://en.wikipedia.org/wiki/United_States_Treasury_security

next weasel answer please....

 
At 9/23/2011 9:10 AM, Blogger Che is dead said...

"Many of the extra costs comes from borrowing from Peter to bomb Paul." -- Zach

Why stop at 2017? Why not 2050 or 2100? Like I said, if you're going to make shit up, go big. And all those "long term interest costs" nearly disappear when interest is applied not to the whole effort, but in proportion to all government borrowing at the time.

If you are trying to demonstrate that leftists can be creative liars, we already knew that. Funny how leftists, like you, never apply "long term interest costs" when discussing the how expensive the New Deal was, or the "War On Poverty". You also fail to mention it when costing out Obama's failed "stimulus" and SS, Medicaid and Medicare. No, you save your bullshit for anything related to defense. Pathetic.

 
At 9/23/2011 11:19 AM, Blogger Zachriel said...

mike k: The problem is most Americans want other people to pay for their "certain social programs". That makes them welfare programs, redistributionist by nature and completely different from the original intent of SS.

The middle class pays a higher percentag of their income for Social Security, which has always been redistributive in nature, from young to old.

Che is dead: Why stop at 2017? Why not 2050 or 2100?

There are good reasons to believe that the U.S. will still be involved in Iraq and Afghanistan for several more years at least. Veterans costs will continue beyond that.

In any case, you were provided your answer.

 
At 9/23/2011 2:59 PM, Blogger VangelV said...

Pension plans do not hold 'savings bonds' because they are not marketable. The regulations make it clear that the trustees have to hold marketable bonds. If you think otherwise please cite any private plans that hold non-marketable treasuries.

 
At 9/23/2011 3:07 PM, Blogger Hydra said...

If you are trying to demonstrate that leftists can be creative liars, we already knew that.

================================

Conservatives are unable to lie as creatively, which is one reason their arguments are transparent failures.

The best they can come up with is the endlessly repeated (and still incorrect) claim that SS is a Ponzi scheme.

 
At 9/23/2011 3:12 PM, Blogger VangelV said...

Conservatives are unable to lie as creatively, which is one reason their arguments are transparent failures.

Not true. They were effective enough liars that the left voted overwhelmingly to go to war to get Saddam's WMDs.

The best they can come up with is the endlessly repeated (and still incorrect) claim that SS is a Ponzi scheme.

It is a Ponzi Scheme. Obama admitted that during the debt ceiling conflict with the Republicans. Clinton admitted it several times. But the left is much better at lying so you have to pay attention to its words more carefully.

 
At 9/23/2011 3:51 PM, Blogger Larry G said...

" Pension plans do not hold 'savings bonds' because they are not marketable"

that may be.

are you saying that savings bonds are worthless IOUs?

how much do you think those treasury notes would be worth the first time someone tries to redeem on and can't?

 
At 9/23/2011 8:32 PM, Blogger VangelV said...

are you saying that savings bonds are worthless IOUs?

If you need the money to avoid a default and you have no other marketable assets they are worthless.



Not a lot. But the treasury market is very liquid and deep. The trustees can use it to raise the funds that they need to make up shortfalls if the SS reserves held USTs instead of IOUs. But they do not and they have to depend on Congress giving the Treasury the ability to keep borrowing or for the president to cut elsewhere while cash is diverted to SS.

 
At 9/23/2011 8:38 PM, Blogger Larry G said...

are you saying that savings bonds are worthless IOUs?

If you need the money to avoid a default and you have no other marketable assets they are worthless.

so folks who have savings bonds have worthless IOUs?

no sideways weaseling here.

be honest...

why would savings bonds be any different than trust funds according to what you are saying..

 
At 9/24/2011 7:58 AM, Blogger Zachriel said...

VangelV: If you need the money to avoid a default and you have no other marketable assets they are worthless.

EE Savings bonds can be cashed after twelve months. Saying they don't have value is just silly. It's one of the safest investments available.

 
At 9/24/2011 8:25 AM, Blogger VangelV said...

are you saying that savings bonds are worthless IOUs?

If you need the money to avoid a default and you have no other marketable assets they are worthless.

so folks who have savings bonds have worthless IOUs?


If they need the money to make their mortgage payments or pay back a loan and can't sell the saving bonds within a reasonable period of time or could not borrow against them than those bonds would be as useless to them as the IOUs are to the trustees.

But usually people are not in that position and the bonds are redeemable after a short period of time. That makes the bonds much more appropriate.

why would savings bonds be any different than trust funds according to what you are saying..

In some cases they may not be. If you need capital to shore up a shortfall and can't sell the savings bonds within a relatively short period of time they would be inappropriate holdings. (Which is why the regulators do not allow private plans to hold non-marketable securities as reserves.)

Of course, many of the savings bonds that are issued by the government can be cashed in after a short period. Those are cash equivalent and anyone who held them can actually borrow from the bank against them before the redemption period. That is not the case for IOUs, which are not marketable and cannot be turned in any time the trustees want to convert them to cash. As such the savings bonds are a lot better as holdings as the IOUs.

Again you are showing your ignorance. The savings bonds issued by your government are redeemable within a reasonable period because the government had to include that option if it wished to market them to the public. The IOUs have no such feature because the government could dictate terms to the trustees that it appoints. As such savings bonds are totally different than the IOUs.

 
At 9/24/2011 8:27 AM, Blogger VangelV said...

EE Savings bonds can be cashed after twelve months. Saying they don't have value is just silly. It's one of the safest investments available.

I agree. Bonds that can be cashed in after a short period of time have value that non-marketable IOUs do not have. That is why the trustees would have been much better off holding savings bonds of staggered maturities than the IOUs that are held by the fund.

 
At 9/24/2011 8:35 AM, Blogger Larry G said...

weasel ALERT!

we're not talking about what people do with them.

I asked how they were any different from other non-marketable securities that you classify as worthless IOUs and instead of answering truthfully -you hand wave.

 
At 9/24/2011 8:40 AM, Blogger Larry G said...

" I agree. Bonds that can be cashed in after a short period of time have value that non-marketable IOUs do not have. That is why the trustees would have been much better off holding savings bonds of staggered maturities than the IOUs that are held by the fund."

trust fund securities "can be cashed in also"

so what's different?

trust fund securities are also "staggered"....

they are cashed every day usually at maturity..just like savings bonds...

savings bonds are very similar to trust fund securities.

neither is marketable and both can be redeemed for cash - and as far as I know the govt has never said they could not redeem them.

so you're basically making things up as you go along all so you can maintain your propaganda narrative...

 
At 9/24/2011 8:41 AM, Blogger Zachriel said...

VangelV: As such the savings bonds are a lot better as holdings as the IOUs.

Um, they are IOUs. Nor are they marketable. This is the precise reason you have constantly repeated as to why U.S. Special Securities have no value.

VangelV: Those are cash equivalent and anyone who held them can actually borrow from the bank against them before the redemption period.

You can't borrow against EE U.S. Savings Bonds.

VangelV: That is not the case for IOUs, which are not marketable and cannot be turned in any time the trustees want to convert them to cash.

U.S. Special Securities can be surrendered for cash. You are making a distinction without a difference.

When someone buys a U.S. Savings Bond, they are given a promise in return. They can't sell the promise, but they can cash it in after twelve months. When Social Security buys a U.S. Special Security, they are given a promise in return. These, too, can be surrendered for cash. Indeed, they *are* being surrendered for cash.

 
At 9/24/2011 8:41 AM, Blogger VangelV said...

weasel ALERT!

we're not talking about what people do with them.

I asked how they were any different from other non-marketable securities that you classify as worthless IOUs and instead of answering truthfully -you hand wave.


As your pal admitted savings bonds can be converted to cash within a year. That makes them very different than the IOUs that can't be converted to cash.

If you look at SS one 'fix' is to start by giving the trustees the same options as holders of savings bonds. Let them convert the IOUs to cash so that they do not have to rely on the whims of the Treasury Secretary. That would mean that the system can keep going for a lot longer without the risk of having the cheques not go out. Of course, if that happened Obama or his successor could not use fear as leverage in debt ceiling debates.

 
At 9/24/2011 8:42 AM, Blogger Zachriel said...

This comment has been removed by the author.

 
At 9/24/2011 8:44 AM, Blogger Larry G said...

double WEASEL ALERT!

" As your pal admitted savings bonds can be converted to cash within a year. That makes them very different than the IOUs that can't be converted to cash. "

SS converts treasury notes to cash - within a year.

every day SS delivers FICA cash to the treasury and received notes that are redeemable in the future.

at the same time they receive treasury notes they are cashing in the older notes and receive the cash PLUS interest for them.

 
At 9/24/2011 8:48 AM, Blogger Zachriel said...

Let us add a very simple point. Virtually everyone knows the value of U.S. Savings Bonds.

VangelV: That makes them very different than the IOUs that can't be converted to cash.

But U.S. Special-issue Securities *can* be converted to cash.

 
At 9/24/2011 8:51 AM, Blogger VangelV said...

trust fund securities "can be cashed in also"

so what's different?


If I have a savings bond that is older than one year I can demand the cash right away. The trustees can't demand that the IOUs are cashed in. That is a difference my dumb weaselly friend.

trust fund securities are also "staggered"....

they are cashed every day usually at maturity..just like savings bonds...


No they can't. That is why Obama said that the cheques might not go out. The Treasury could choose not to make up the shortfall. But if it chose not to honour the contract and cash in savings bonds that would be seen as a default by the markets. In the first case the leverage is on the side of the Treasury. In the second it is with the bond holder.

savings bonds are very similar to trust fund securities.

neither is marketable and both can be redeemed for cash - and as far as I know the govt has never said they could not redeem them.

so you're basically making things up as you go along all so you can maintain your propaganda narrative...


But you are lying. As I said, most saving bond holders can demand that their securities are redeemed after one year. (I assume that there are some forms of savings bonds that are similar to the IOUs but do not know all the products to identify them.)

As Obama pointed out, the trustees had no option of redeeming their IOUs to pay the shortfalls to beneficiaries. They had to depend on the Treasury being able to borrow new money even though there was plenty in tax revenue coming in to service the treasury obligations.

 
At 9/24/2011 8:57 AM, Blogger Zachriel said...

VangelV: The trustees can't demand that the IOUs are cashed in.

Yes, they can. They can even cash them before maturity.

VangelV: That is why Obama said that the cheques might not go out.

If the trustees make a demand on a bond, and the U.S. reneges, then it's a voluntary default.

VangelV: As I said, most saving bond holders can demand that their securities are redeemed after one year.

Yes, and if the U.S. voluntarily reneges, then it would be a default. Same difference.

VangelV: In the first case the leverage is on the side of the Treasury. In the second it is with the bond holder.

The U.S. Savings Bond hold has no other leverage than the good name of the United States, the same as the Special-issue Securities held by the Trust Fund. Both are backed by the full faith and credit of the United States, for what that's worth.

 
At 9/24/2011 8:59 AM, Blogger Larry G said...

this is what Van calls a "lie"...

" The Treasury securities held by the trust funds have some special features that make them even more attractive investments than other Treasury securities. First, the trust funds’ investments do not fluctuate in value and can always be redeemed at par. Even if the securities must be redeemed early, Social Security is guaranteed not to lose money on its investment. Second, all of the securities purchased by the trust funds — even short-term securities that will mature in one or two years — earn interest at the same rate as medium- and long-term Treasury securities (those not due or callable for at least four years)."

http://www.cbpp.org/cms/index.cfm?fa=view&id=3299

 
At 9/24/2011 9:03 AM, Blogger Larry G said...

" As Obama pointed out, the trustees had no option of redeeming their IOUs to pay the shortfalls to beneficiaries. They had to depend on the Treasury being able to borrow new money even though there was plenty in tax revenue coming in to service the treasury obligations"

no more or less than any other obligations of the govt ....marketable treasury notes as well as other govt-funded operations like DOD.

Right NOW, FICA funds more than 90% of SS.. even if the trust funds were not redeemable.. FICA would still pay out - but at a slightly reduced rate.

as opposed to the rest of the govt which would get no funds...and have to shut down.

again.. you make SS the problem it's not.... it's a minor issue compared to the rest of govt.

 
At 9/24/2011 9:13 AM, Blogger VangelV said...

Um, they are IOUs. Nor are they marketable. This is the precise reason you have constantly repeated as to why U.S. Special Securities have no value.

After one year they are cash equivalent. They can be redeemed for cash at any time. This is not true of the non-marketable IOUs held by SS. The public would not buy savings bonds if they did not have generous cash conversion terms. The trustees have to buy whatever Congress deems acceptable.

You can't borrow against EE U.S. Savings Bonds.

In the US it has been very easy to get loans. A finance company would provide a loan to someone who had the ability to raise cash within a few months. But if you are right and no loan would be possible a savings bond that is less than one year old would be as useless as the IOUs in the SS trust fund.

But note your problem. Let us look at a trust fund full of savings bonds with the same issue dates as the IOUs. There would be no problem cashing in 90% or more of the savings bonds by the trustees because they would be entitled to get cash immediately. If the government chose to refuse to convert the bonds to cash that would be seen as a default by the markets and would drive interest rates much higher or even stop the ability of the Treasury to borrow in the bond market.

The same holdings made up of IOUs have no right to an immediate cash conversion. The Treasury could actually choose not to make up any shortfalls without affecting the bond market because without the convertibility feature there would be no default. This is why Obama made his speech about SS cheques not going out without worry about the bond markets.

U.S. Special Securities can be surrendered for cash. You are making a distinction without a difference.

Actually, Obama said that they couldn't. There was no obligation on the part of the Treasury to convert the IOUs held in the trust fund. Obama pointed out that the SS cheques might not go out. He could not make that statement if the trustees could demand cash conversion as savings bonds holders can.

 
At 9/24/2011 9:19 AM, Blogger VangelV said...

When someone buys a U.S. Savings Bond, they are given a promise in return. They can't sell the promise, but they can cash it in after twelve months. When Social Security buys a U.S. Special Security, they are given a promise in return. These, too, can be surrendered for cash. Indeed, they *are* being surrendered for cash.

I guess that your friend's weasel alert is going off.

As your wrote, savings bond purchases are able to cash in their securities after twelve months without asking anyone's permission. The government has an obligation to give them their money. But the SS trustees cannot to cash in the IOUs when they choose to. Even if the government has plenty of tax revenues it can choose to ignore the SS trust needs and fund wars, welfare programs, NASA, or whatever else it wants. This is why Obama made it clear that SS cheques might not go out. If what you said were true he could not make the statement because the trustees could tell him to piss off and use their money in any way that they wanted.

You lefties are good liars but your lies create too many contradictions and get in the way of each other. Your own man, Obama admitted that the trust funds could not convert IOUs to cash whenever the trustees wanted and had to rely on the choices made by the Treasury.

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

" But the SS trustees cannot to cash in the IOUs when they choose to. "

" ..The Treasury securities held by the trust funds have some special features that make them even more attractive investments than other Treasury securities. First, the trust funds’ investments do not fluctuate in value and can always be redeemed at par. Even if the securities must be redeemed early, Social Security is guaranteed not to lose money "

http://www.cbpp.org/cms/index.cfm?fa=view&id=3299

yet another lie from Mr. Weasel.

 
At 9/24/2011 9:51 AM, Blogger Zachriel said...

VangelV: After one year they are cash equivalent. They can be redeemed for cash at any time. This is not true of the non-marketable IOUs held by SS.

That is false. They can be surrendered for cash at any time, even before maturity.

VangelV: There was no obligation on the part of the Treasury to convert the IOUs held in the trust fund.

That is false. If the U.S. doesn't honor the securities when presented for payment, they are in default. Don't you remember? If the U.S. refused to raise the debt ceiling, it would have led to a default.

VangelV: But the SS trustees cannot to cash in the IOUs when they choose to.

When Social Security runs a deficit, they are required to redeem Trust Fund securities, by law, and the U.S. is required to redeem them in cash, by law.

 
At 9/24/2011 10:11 AM, Blogger Larry G said...

Van is lying his butt off and doesn't even have the backbone to admit when he's caught lying...

or he's just plain ignorant and makes things up as he goes along - like the Heritage/Cato folks do....and Mr. Perry here with his bomb-throwing misrepresentations....that attract folks like Van...to spout their lies.

we DO have some serious problems to deal with including SS but when you refuse to deal with the truth..and facts, how can you actually make informed decisions about what to do?

I call such purveyors of untruths - propaganda whores... because they must not truly be about finding solutions if their advocacies are based on lies, misrepresentations, distortions and outright disinformation.

 
At 9/24/2011 3:22 PM, Blogger Ron H. said...

"I call such purveyors of untruths - propaganda whores..."

LOL That's a good one! Hold on while I write that down. That might be useful someday.

I've already listed "ignorance whores" and stupidity whores", which I've defined as " = Larry G."

 
At 9/24/2011 3:32 PM, Blogger Ron H. said...

"The Treasury securities held by the trust funds have some special features that make them even more attractive investments than other Treasury securities...

...Even if the securities must be redeemed early, Social Security is guaranteed not to lose money on its investment...
"

Your entire quote doesn't mean exactly what you think it does, but I'm only pointing out here the dishonest use of the word "investment", which most people don't use to describe a non-marketable IOU that represents a claim on future tax collections.

 
At 9/24/2011 3:51 PM, Blogger Zachriel said...

Ron H: Your entire quote doesn't mean exactly what you think it does, but I'm only pointing out here the dishonest use of the word "investment", which most people don't use to describe a non-marketable IOU that represents a claim on future tax collections.

A U.S. Savings Bond EE is a non-marketable IOU, can't be used as collateral, and yet is almost universally considered a very safe investment.

 
At 9/25/2011 7:29 AM, Blogger mike k said...

The middle class pays a higher percentag of their income for Social Security, which has always been redistributive in nature, from young to old. -Zach

Higher than who?

The actual dollars going in and out at any one moment are redistributed but the original intent of SS was not to be a welfare program but a minimum retirement insurance program as the progressives always point out. That's why benefits are based on contributions.

 
At 9/25/2011 8:46 AM, Blogger Zachriel said...

mike k: Higher than who?

The working classes pay a higher percentage of payroll taxes than upper income groups. The working classes have lower life expectancy at retirement, so they tend to collect for fewer years, as well.

mike k: ... That's why benefits are based on contributions.

Yes, but apparently, payroll taxes are also being used to cover much of the deficit due to low marginal income tax rates.

 
At 9/25/2011 9:54 AM, Blogger VangelV said...

The working classes pay a higher percentage of payroll taxes than upper income groups. The working classes have lower life expectancy at retirement, so they tend to collect for fewer years, as well.

The program limits how much of a benefit you can get. That limits the amount of tax you pay. Rich people pay a lot more in SS taxes but it is a lower percentage of their total income. But they get a lot less of their retirement income from SS than poor people and get SS payments clawed back in extra taxes, reduced credits, reduced eligibility for other programs, etc.

The left tries to deceive but the deception cannot change the reality. In the US most of the taxes are overwhelmingly paid by the rich and most of the social benefits go to the poor. The rich pay far more than their share because politicians can use the political process to buy votes from the poor, who are easy to bribe.

But the process is not stable and is actually worse for the poor than for the rich and the ruling elite. No matter how the tax code is written, it will still be written by lobbyists who will be looking after their employers. Each dollar of extra tax from someone deemed 'rich' will be offset by special benefits and protection that protects the 'rich' from competition. There will be some loophole that will shield more income from the IRS. There will be some subsidy or some tariff to protect companies from competition. The middle class will wind up paying because it has no lobbyists and all consumers will wind up paying in the form of higher prices. Most people will become poorer while the rich will be protected.

You lefties are actually very stupid and too easy to manipulate. If you want to do real harm to the 'undeserving' rich you do not need to tax them more. Just stop protecting them from competition that would aid all consumers. Deregulate the system so that the barriers to competition are lifted. Give people the choice of purchasing goods and services from whichever producer offers the best prices. Get rid of the barriers to labour and the licensing regulations that allow some to earn much more than they could in a competitive environment. Stop ripping off savers and workers by taking away the ability of the financial system to create purchasing power out of thin air.

Of course, the left does not really care much about workers or the poor. Like the right its interest is in power and rule. Which is why both need to be rejected and Americans need to wake up for the need to start standing up for individual liberty rather than collectivism.

 
At 9/25/2011 9:56 AM, Blogger VangelV said...

Yes, but apparently, payroll taxes are also being used to cover much of the deficit due to low marginal income tax rates.

No they are not. They are used to fund general operations which includes supporting the warfare state favoured by the right and the welfare state favoured by the left. This is why the redistribution schemes need to end. If you want war then shell out your own money to pay for it. If you want a redistribution scheme than give your own money to those that you think are more deserving of it than your family.

 
At 9/25/2011 10:23 AM, Blogger Zachriel said...

VangelV: The program limits how much of a benefit you can get. That limits the amount of tax you pay.

Roughly. It doesn't run out if you live a long time, for instance.

VangelV: Rich people pay a lot more in SS taxes but it is a lower percentage of their total income.

Yes, benefits are tied to contributions. However, poor people and blacks generally have shorter lifespans, so tend to receive fewer benefits. Overall, the benefit formula still provides a net benefit to low income and women, primarily due to high survivorship in women, but this net benefit has been decreasing over time.

VangelV: No they are not. They are used to fund general operations which includes supporting the warfare state favoured by the right and the welfare state favoured by the left.

The vast majority of Americans support Social Security and Medicare, so having decided that, it's a matter of how to pay for it.

 
At 9/25/2011 11:52 AM, Blogger VangelV said...

Let me add a simple point. Everyone knows the value of U.S. Savings Bonds.

It is equal to its cash value after 12 months or the NPV of its discounted returns. The IOUs cannot be cashed out after 12 months. They are not the equivalent of savings bonds.

 
At 9/25/2011 11:53 AM, Blogger VangelV said...

SS converts treasury notes to cash - within a year.

The trustees have no right to demand that the bonds are exchanged for cash my lying friend. As Obama pointed out not too long ago, SS cheques depend on the debt ceiling being lifted because the IOUs are not marketable or convertible to cash.

 
At 9/25/2011 11:59 AM, Blogger VangelV said...

But U.S. Special-issue Securities *can* be converted to cash.

No. The trustees have no right to convert them to cash. They will only get cash if the government is allowed to borrow new money or divert money from elsewhere. Failure to convert them is meaningless to the bond market.

On the other hand, holders of savings bonds can demand cash twelve months after purchase. They do not need permission from the Treasury Secretary, Congress, or the President. Failure to get the money constitutes default.

 
At 9/25/2011 12:01 PM, Blogger VangelV said...

VangelV: The trustees can't demand that the IOUs are cashed in.

Z: Yes, they can. They can even cash them before maturity.


No they can't.

http://www.youtube.com/watch?v=2KbVUF_SL54&feature=related

 
At 9/25/2011 12:40 PM, Blogger Larry G said...

" The Treasury securities held by the trust funds have some special features that make them even more attractive investments than other Treasury securities. First, the trust funds’ investments do not fluctuate in value and can always be redeemed at par. Even if the securities must be redeemed early,..."

http://www.cbpp.org/cms/index.cfm?fa=view&id=3299

 
At 9/25/2011 1:35 PM, Blogger Zachriel said...

VangelV: The trustees have no right to demand that the bonds are exchanged for cash ...

That's what the law requires. If the cash is not provided, then the U.S. is in default on a legal obligation, just as they would be in default on many other obligations if the U.S. didn't raise the debt ceiling.

VangelV: The trustees have no right to convert them to cash.

The Treasury is required by law to redeem them for cash.

VangelV: On the other hand, holders of savings bonds can demand cash twelve months after purchase.

Yes, and if the U.S. doesn't have the money, then they either borrow the money elsewhere, or they are in default. It's the exact same situation. It's not as if the U.S. put your cash into a safe or tangible assets.

VangelV: No they can't.

It's the same situation with a U.S. Savings Bond. You give the U.S. Treasury money. They give you a bond. Later, when you present the bond, the U.S. has to redeem it in cash. That means they have to pull the cash from somewhere else. When running deficits, it means they have to borrow it elsewhere.

 
At 9/25/2011 1:39 PM, Blogger Ron H. said...

"The Treasury securities held by the trust funds have some special features that make them even more attractive investments than other Treasury securities. First, the trust funds’ investments do not fluctuate in value and can always be redeemed at par. Even if the securities must be redeemed early,...""

You keep posting this. What do you think it means? Please explain in Larry-speak what you think it means.

Does it depend at all on whether there's money available at Treasury?

Obama said there was no money to cover SS checks on Aug 3, unless the debt ceiling was raised.

Was he lying? Merely posturing to scare people?

Was he correct that no money was available?

Is there some other explanation?

 
At 9/25/2011 1:48 PM, Blogger Larry G said...

what it means is that they can redeem them before maturity which contradicts what is being claimed.

but neither of you seem to understand that trust fund transactions are DAILY transactions.

all FICA money in flowing into the treasury every day and every day SS receives those "IOUs".

and EVERY DAY - SS redeems older "IOUS" that were issued months previously.

so there is a constant, daily flow of transactions.

the trust fund does not "suddenly" run out of money.....unless the Govt decides one day that it can longer pay.

but on that same day - DOD soldiers would not get paid... nor would anyone trying to redeem savings bonds... or for that matter treasury notes which would instantly devalue to pennies on the dollar...

this is not going to happen - but even if it did - what makes you think that ONLY SS would be affected and not all the other things?

but even if this did happen (and it never will) but assume it will.

Then FICA will continue bringing in about a trillion and it will be , instead of sent to the treasury, immediately paid out - albeit at a 75% level but not zero.

while this is going on - all hell is going to be breaking lose on anyone else who holds treasury notes as they start wondering when their holding will also be rendered worthless.

in other words, ya'll are quite nutty on this...

but I'm getting used to it.

 
At 9/25/2011 1:56 PM, Blogger Zachriel said...

Ron H: Does it depend at all on whether there's money available at Treasury?

The law requires the redemption of the special securities (and Savings Bonds, for that matter). If the Treasury can't raise the money, then the U.S. is in default.

This is the problem with the current U.S. system vis-à-vis the debt ceiling. With the one hand, the U.S. incurs obligations and orders agencies to spend monies, while with the other hand, a minority can refuse to authorize those very monies.

 
At 9/25/2011 2:24 PM, Blogger Larry G said...

" This is the problem with the current U.S. system vis-à-vis the debt ceiling. With the one hand, the U.S. incurs obligations and orders agencies to spend monies, while with the other hand, a minority can refuse to authorize those very monies. "

indeed but why is SS the center of it?

 
At 9/25/2011 4:43 PM, Blogger Ron H. said...

"This is the problem with the current U.S. system vis-à-vis the debt ceiling. With the one hand, the U.S. incurs obligations and orders agencies to spend monies, while with the other hand, a minority can refuse to authorize those very monies."

This may be likened to "tying them down with the chains of the Constitution", although it doesn't work very well.

The debt ceiling is a joke, and a political game playing device for those in office.

 
At 9/25/2011 9:08 PM, Blogger VangelV said...

But that is the point. They can't be redeemed early if the Treasury Secretary does not want to redeem them. This is why Obama stated that SS cheques might not go out if the debt ceiling was not raised. Even though the US government would have enough tax revenue to service its Treasury debt it chose not to inject money into SS by redeeming the IOUs unless it got a deal on the debt ceiling. If the IOUs were marketable there would be no need to depend on the Treasury Secretary or Obama.

 
At 9/25/2011 9:11 PM, Blogger VangelV said...

That's what the law requires. If the cash is not provided, then the U.S. is in default on a legal obligation, just as they would be in default on many other obligations if the U.S. didn't raise the debt ceiling.

No, the US would not be in default unless it stopped paying interest on USTs or refusing to exchange them for cash when they matured. As you guys pointed out, the SS law is very flexible and the President and Congress can reduce benefits without triggering a default in the bond market. (The IOUs do not trade in the bond market. They have no market at all and are nothing more than promises to tax or borrow in the future.)

 
At 9/25/2011 9:15 PM, Blogger VangelV said...

The Treasury is required by law to redeem them for cash.

But as Obama pointed out, that is not true.

Yes, and if the U.S. doesn't have the money, then they either borrow the money elsewhere, or they are in default. It's the exact same situation. It's not as if the U.S. put your cash into a safe or tangible assets.

It is not the same. There is no market for IOUs so there can not be a meaningful default. The IOUs are just a promise to borrow or tax more in the future. Bonds are a promise to pay interest and return principle to holders. There is a huge difference.

It's the same situation with a U.S. Savings Bond. You give the U.S. Treasury money. They give you a bond. Later, when you present the bond, the U.S. has to redeem it in cash. That means they have to pull the cash from somewhere else. When running deficits, it means they have to borrow it elsewhere.

Marketable bonds have redemption clauses that have to be met if default is to be prevented. The IOUs are not marketable securities. They are just promises to borrow and tax more. If the Treasury chooses not to keep its promises to the trustees there is no default in the bond market.

 
At 9/25/2011 9:43 PM, Blogger Larry G said...

" But that is the point. They can't be redeemed early if the Treasury Secretary does not want to redeem them"

more weaseling on your part...

you made a flat statement that they could not under any conditions and so you were either ignorant or being engaging in more propaganda.

your basic premise seems to be that the Treasury "might" refuse to honor...

right... they'd just refuse to honor SS trust funds no savings bonds and not treasury notes.

from the other sides if the US defaults on ANY of them - it would have very serious consequences for ALL of them.

 
At 9/26/2011 6:06 AM, Blogger Zachriel said...

VangelV: They can't be redeemed early if the Treasury Secretary does not want to redeem them.

If the money is there, it has to be paid. The Secretary has no legal choice in the matter. If the money is not there, the U.S. is in default.

VangelV: This is why Obama stated that SS cheques might not go out if the debt ceiling was not raised.

Then the U.S. would have been in default.

VangelV: No, the US would not be in default unless it stopped paying interest on USTs or refusing to exchange them for cash when they matured.

Don't you remember all the economists saying that the U.S. would be in default if the debt ceiling wasn't raised? The U.S. has legal obligations. By law, special-issue securities are backed by the full faith and credit of the United States. If they are not redeemed on demand, then the U.S. is in default.

VangelV: As you guys pointed out, the SS law is very flexible and the President and Congress can reduce benefits without triggering a default in the bond market.

Only through legislation, not by fiat. But yes, they can prevent a run down on the Trust Fund by reducing benefits.

VangelV: (The IOUs do not trade in the bond market. They have no market at all and are nothing more than promises to tax or borrow in the future.)

Just like U.S. Savings Bonds.

VangelV: But as Obama pointed out, that is not true.

If the U.S. is in default, then the Treasury may have to decide who gets paid first. It's still a default. (It's not even clear the Secretary has such authority, and may be forced to pay bills in the order they are due and as the money becomes available.)

VangelV: There is no market for IOUs so there can not be a meaningful default.

There's no market for U.S. Savings Bonds either. But not paying them would be default. Any inability or unwillingness to pay a lawful debt is a default, by definition.

VangelV: Marketable bonds have redemption clauses that have to be met if default is to be prevented.

You didn't answer.

It's the same situation with a U.S. Savings Bond. You give the U.S. Treasury money. They give you a bond. Later, when you present the bond, the U.S. has to redeem it in cash. That means they have to pull the cash from somewhere else. When running deficits, it means they have to borrow it elsewhere. If they can't or won't, then the U.S. is in default.

 
At 9/26/2011 8:26 AM, Blogger VangelV said...

If the money is there, it has to be paid. The Secretary has no legal choice in the matter. If the money is not there, the U.S. is in default.

This is not true. The money was there to pay SS beneficiaries even if the debt ceiling were not raised. There was plenty of tax revenue to allow the Secretary to pay SS benefits but Obama said that the cheques may not go out. He could not say that if the trust fund had marketable securities that could be exchanged for cash in the bond market.

 
At 9/26/2011 8:43 AM, Blogger Larry G said...

If the money is there, it has to be paid. The Secretary has no legal choice in the matter. If the money is not there, the U.S. is in default.

"This is not true. The money was there to pay SS beneficiaries even if the debt ceiling were not raised. There was plenty of tax revenue to allow the Secretary to pay SS benefits but Obama said that the cheques may not go out. He could not say that if the trust fund had marketable securities that could be exchanged for cash in the bond market."

the money was no more "there" that it was (or was not) for DOD employees or savings bonds holders...etc..

your scenario is bizarro in several dimensions including the fact that out of all the obligations of the US - you pick the one that has the least issues.

the worst case for SS if the trust fund was not accessible would be to pay direct benefits to SS recipients EVEN IF THE US WAS IN DEFAULT!

your whole line of "reasoning" is tortured and premised on things not likely - and simply not true to start with.

You could honestly argue this using facts and realities but instead you continue to hew toward an anti-SS ideology where you "fit" the facts to suit your bizarro perspective.

 
At 9/26/2011 8:48 AM, Blogger VangelV said...

you made a flat statement that they could not under any conditions and so you were either ignorant or being engaging in more propaganda.

No I did not. I said that they can't be redeemed whenever the trustees needed money unless the Treasury Secretary gave his blessing. That is not the case with marketable securities, which can be converted to cash in the bond markets at any time. Had the trust funds held US bonds they could have sold as many as they needed to keep the cheques going to beneficiaries.

This is a huge difference yet you and your buddies on this thread fail to acknowledge it.

your basic premise seems to be that the Treasury "might" refuse to honor...

No. It is that the Treasury does not have to redeem IOUs but that marketable bonds can be converted to cash in the bond market.

right... they'd just refuse to honor SS trust funds no savings bonds and not treasury notes.

Correct. If they default on the treasury notes they would be default and the bond market for USTs would melt down. IOUs are just promises to tax more or borrow more.

 
At 9/26/2011 8:48 AM, Blogger VangelV said...

from the other sides if the US defaults on ANY of them - it would have very serious consequences for ALL of them.

Eventually there will be a serious problem. But until then it is better to have marketable securities that can be used to pay off obligations because they are convertible to cash.

VangelV: This is why Obama stated that SS cheques might not go out if the debt ceiling was not raised.

Z: Then the U.S. would have been in default.


No. There was plenty of money to pay the interest on US Treasuries. Not converting IOUs does not constitute default.

Don't you remember all the economists saying that the U.S. would be in default if the debt ceiling wasn't raised? The U.S. has legal obligations. By law, special-issue securities are backed by the full faith and credit of the United States. If they are not redeemed on demand, then the U.S. is in default.

I do remember all the Keynesians try to argue for a debt ceiling increase claiming that the US would default. But default has nothing to do with the debt ceiling. It has to do with making interest payments on your debt. And we all know, even the idiot Keynesians, that there was plenty of money to pay the debt.

IOUs are not bonds. As long as the holders of US bonds got paid there would be no default. In fact refusing to make good on the IOUs would leave a lot more money to service the other debts and keep the US from bankruptcy.

Only through legislation, not by fiat. But yes, they can prevent a run down on the Trust Fund by reducing benefits.

Obama made it very clear that he had a great deal of discretion. He could have stopped full payments without any legislation.

Just like U.S. Savings Bonds.

No. As you pointed out when savings bonds are marketed they allow the buyers to convert them to cash after 12 months upon demand. There is no such guarantee with the IOUs. And as I pointed out, if you need the money to avoid bankruptcy and can't cash in your savings bonds than they are as useless as the IOUs.

If the U.S. is in default, then the Treasury may have to decide who gets paid first. It's still a default. (It's not even clear the Secretary has such authority, and may be forced to pay bills in the order they are due and as the money becomes available.)

No. As long as the UST interest payments continue to be made there is no default even if all IOU promises are repudiated.

There's no market for U.S. Savings Bonds either. But not paying them would be default. Any inability or unwillingness to pay a lawful debt is a default, by definition.

Yes, not paying on US Savings Bonds would be a default on those particular obligations. But that is very different than a default on USTs. As long as payments continued to be made on that front there would be no default and the bond market would continue to operate. Governments break promises to their citizens all the time. Some times the bond markets see those broken promises as very positive because the repudiation of some obligations can leave the government in better financial shape to service its debts. Just look to Greece. The foreign bond holders want the government to break its promises to retirees.

It's the same situation with a U.S. Savings Bond. You give the U.S. Treasury money. They give you a bond. Later, when you present the bond, the U.S. has to redeem it in cash. That means they have to pull the cash from somewhere else. When running deficits, it means they have to borrow it elsewhere. If they can't or won't, then the U.S. is in default.

Not as far as the UST market is concerned. A default is only material if it affects the sovereign debt.

 
At 9/26/2011 8:53 AM, Blogger Larry G said...

" No I did not. I said that they can't be redeemed whenever the trustees needed money unless the Treasury Secretary gave his blessing."

no you did not. you said it was illegal to do so and now you are once again weaseling.

" No. It is that the Treasury does not have to redeem IOUs but that marketable bonds can be converted to cash in the bond market."

when has the treasury done that?

how can you "convert" marketable securities to cash when it is others like China and Savings Bonds holder that hold the notes?

" . IOUs are just promises to tax more or borrow more."

that's true. what does that have to do with FICA generating a trillion dollars a year to pay SS benefits?

 
At 9/26/2011 8:58 AM, Blogger Larry G said...

"It's the same situation with a U.S. Savings Bond. You give the U.S. Treasury money. They give you a bond. Later, when you present the bond, the U.S. has to redeem it in cash. That means they have to pull the cash from somewhere else. When running deficits, it means they have to borrow it elsewhere. If they can't or won't, then the U.S. is in default.

Not as far as the UST market is concerned. A default is only material if it affects the sovereign debt."

the US could ONLY get more money by selling MORE Treasuries - NOT REDEEMING them ....

you got it ass backwards as you continue to weasel.

this has virtually nothing to do with the trust fund and a lot more to do with how the govt borrows money by selling it's debt.

Once it sells US Treasury notes for cash - the cash can AND IS spent on a number of different obligations from DOD salaries and pensions to paying redeemed savings bonds to redeeming SS trust fund notes.

the cash is FUNGIBLE and as long as people will buy US Treasury notes - the money can be spent on ANYTHING.

your whole scenario is illicit and untrue... but it demonstrates a lot about your character...and your refusal to be honest about things.

 
At 9/26/2011 9:01 AM, Blogger VangelV said...

the money was no more "there" that it was (or was not) for DOD employees or savings bonds holders...etc..

your scenario is bizarro in several dimensions including the fact that out of all the obligations of the US - you pick the one that has the least issues.


No. I am stating the facts as they are. The government takes in enough money to service its interest payments so it does not have to default. Because it spends more than it takes in it has to choose what to cut. If it chooses not to inject money into pension plans and those plans have shortfalls that does not constitute a default in the treasury market any more than a cut in DOD is considered a default.

If the trustees had USTs instead of IOUs they could go to the market and get cash as required to keep their obligations to plan beneficiaries.

This is the way the real world works. In the real world paper that makes promises of future taxation is not as valuable as marketable treasuries.

 
At 9/26/2011 9:08 AM, Blogger VangelV said...

the worst case for SS if the trust fund was not accessible would be to pay direct benefits to SS recipients EVEN IF THE US WAS IN DEFAULT!

your whole line of "reasoning" is tortured and premised on things not likely - and simply not true to start with.

You could honestly argue this using facts and realities but instead you continue to hew toward an anti-SS ideology where you "fit" the facts to suit your bizarro perspective.


I do use reality. Marketable securities can be sold and the trustees can meet obligations for quite some time as they convert them to cash. IOUs are not marketable and can't be converted to cash on demand. That allows politicians to play games with SS beneficiaries and use them as leverage in political negotiations.

When it comes to meeting its obligations the US is toast. Not only are the labour markets reeling and demographics working against the SS system you have more than $100 trillion of unfunded liabilities that are growing far faster than tax revenue. Spending is out of control. The only way to try to fix the problems is to cut spending to the bone and deregulate most economic and social activities or destroy the currency. Neither way is good for people counting on SS and Medicare.

 
At 9/26/2011 9:11 AM, Blogger VangelV said...

no you did not. you said it was illegal to do so and now you are once again weaseling.

Reference please. While I may have misstated my thoughts it is more likely than you are lying as usual. Please cite what I wrote in context. Note that when I talk about what is illegal with private plans may not be illegal with SS because, unlike private individuals, Congress and the President are allowed to steal.

 
At 9/26/2011 9:20 AM, Blogger Larry G said...

" No. I am stating the facts as they are. The government takes in enough money to service its interest payments so it does not have to default. Because it spends more than it takes in it has to choose what to cut. If it chooses not to inject money into pension plans and those plans have shortfalls that does not constitute a default in the treasury market any more than a cut in DOD is considered a default."

nope. you said that SS was the problem and that it would need to be cut first ahead of anything else... because the trust fund did not use marketable securities.

propaganda and blather and weaseling instead of facts and realities.


"If the trustees had USTs instead of IOUs they could go to the market and get cash as required to keep their obligations to plan beneficiaries."

OR they could JUST FUND WITH FICA and forget it...

the bottom line is that they WOULD STILL PAY 75% BENEFITs EVEN IN A DEFAULT.

"This is the way the real world works. In the real world paper that makes promises of future taxation is not as valuable as marketable treasuries."

the "real world" is not what you are talking about here..

you're talking about a specific doomsday scenario that is torturously constructed in an effort to propagandize the issue.

you are basically dishonest.

 
At 9/26/2011 9:21 AM, Blogger Larry G said...

" I do use reality. Marketable securities can be sold "

you mean NEW DEBT to get MORE CASH.

right?

how does getting more cash result in default?

in your scenario - we'd refuse to issue more notes for more debt...

right?

the govt does not have any securities to "cash" in (redeem)... it's the other way around.

more bizarro logic on your part.

 
At 9/26/2011 2:35 PM, Blogger Ron H. said...

VangelV: " I do use reality. Marketable securities can be sold "

Dumdum: "you mean NEW DEBT to get MORE CASH.

right?
"

No he doesn't.

Marketable securities can be sold on the market. That's why the word "marketable" appears before the word "securities".

I can sell a UST to my neighbor, or to anyone else, directly, for cash, or I can sell it on the bond market through a broker.

Bonds are traded in great numbers every day just like stocks, and are not all new issues any more than the stocks traded on the stock exchanges are all newly issued stocks.

It's a real mystery how you can continue to argue these things when you have no clue what you're talking about.

 
At 9/26/2011 2:38 PM, Blogger Larry G said...

" Marketable securities can be sold on the market."

they can indeed but what good does that do to the US Govt to have China sell their "marketable" securities to Russia?

"marketable" securities of EXISTING (already sold) securities is just private market trading.. and does not affect the US Treasury.

the only way we could get MORE cash to pay DOD, etc.. is to sell MORE (new) treasuries...

and when Treasury sells NEW notes, they get CASH and with that CASH they can then pay bills ..including redeeming the SS (and savings bonds) notes.

 
At 9/26/2011 2:40 PM, Blogger Larry G said...

but ya'll make this a deal about SS and the trust funds and they are, at most, tangential to the larger issue of US Treasury notes and debt.

The Trust funds is not the primary revenue-provider of SS to start with.

It's merely a place to park surpluses and to draw down on them...

if SS did not draw down on the surplus in the trust fund - they would still provide 75% of benefits.

Much, much worse things WILL happen if the govt decides to NOT SELL more treasury notes..i.e. incur more debt.

 
At 9/26/2011 2:54 PM, Blogger Ron H. said...

"in your scenario - we'd refuse to issue more notes for more debt..."

Who is "we"? Are you somehow involved in issuing new government debt?

"right?"

Wrong. That method was unavailable due to the debt limit. That's why Obama said he might choose not to pay SS benefits, as no more money could be borrowed.

That pure political theater was calculated to cause millions of angry phone calls from SS recipients to their representatives, demanding they vote to raise the debt limit.

If the SS trust fund held actual USTs, instead of IOUs, they could have been sold on the open market to fund the checks rather than depending on Treasury which had on funds.

After all this time, that should all be very clear to you. What's the problem?

 
At 9/26/2011 2:59 PM, Blogger Larry G said...

"Wrong. That method was unavailable due to the debt limit. That's why Obama said he might choose not to pay SS benefits, as no more money could be borrowed.

That pure political theater was calculated to cause millions of angry phone calls from SS recipients to their representatives, demanding they vote to raise the debt limit.

If the SS trust fund held actual USTs, instead of IOUs, they could have been sold on the open market to fund the checks rather than depending on Treasury which had on funds."

no. if the debt limit was not increased, the US could not sell more treasury notes and raise more cash.

It's totally irrelevant that notes already sold by the treasury can be "traded".

you are being purposely deceptive here... more weaseling..more propagandizing... and less honesty.

 
At 9/26/2011 3:32 PM, Blogger Ron H. said...

"no. if the debt limit was not increased, the US could not sell more treasury notes and raise more cash."

LOL, you are incredible.

That much is correct. So, as a result, the SS trust fund, which has a balance of $2.5 trillion, could not cash in any IOUs.

BUT - ongoing tax receipts flowing into Treasury could have been used to pay SS benefits, instead of some other obligations.

Obama chose to scare people by threatening SS benefits rather than threatening to close the USDA, DEA, DOE, and others, the news of which would have been met with yawns, and responses like "who cares?"

"It's totally irrelevant that notes already sold by the treasury can be "traded"."

It is FAR from irrelevent, it is the exact point. If the SS trust fund held marketable USTs, they could have been sold on the open market, to make up the shortfall, as is the purpose of the trust fund after all, something you have repeatedly pointed out.

That would have made the debt ceiling irrelevant to SS beneficiaries.

"you are being purposely deceptive here... more weaseling..more propagandizing... and less honesty."

That's a handy dodge you can use to hide your abysmal ignorance of the subject. I believe it's called "shooting the messenger".

 
At 9/26/2011 3:46 PM, Blogger Larry G said...

"That much is correct. So, as a result, the SS trust fund, which has a balance of $2.5 trillion, could not cash in any IOUs."

BUT - ongoing tax receipts flowing into Treasury could have been used to pay SS benefits, instead of some other obligations."

correct... you have revenues coming in but spending more than that so the diff is financed with debt.


"Obama chose to scare people by threatening SS benefits rather than threatening to close the USDA, DEA, DOE, and others, the news of which would have been met with yawns, and responses like "who cares?" "

he did... agree... but that's not the primary thing you folks have been arguing here...is it?


"It's totally irrelevant that notes already sold by the treasury can be "traded"."

It is FAR from irrelevent, it is the exact point. If the SS trust fund held marketable USTs, they could have been sold on the open market, to make up the shortfall, as is the purpose of the trust fund after all, something you have repeatedly pointed out."

who would sell WHAT on the open market?

people who already own treasury notes will trade them but that won't affect the govt's selling new debt...or not...

if the govt needs more cash - it sells more treasury notes and it gets CASH for them and it can (and DOES) use that cash to pay other obligations ... like pay for DOD or benefits for SS...

the "notes" that SS holds is an accounting of what is owed ...nothing more...

they do not have to be sold on the market as long as they can be, and ARE redeemable for CASH from the Treasury.

the WHOLE GOVT works like this - the DOD pension fund works LIKE THIS... it is a TRUST FUND ALSO and it ALSO has non-marketable securities.

you guys don't know your ass from a whole in the ground.. you're blowing smoke.


That would have made the debt ceiling irrelevant to SS beneficiaries.


"you are being purposely deceptive here... more weaseling..more propagandizing... and less honesty."

That's a handy dodge you can use to hide your abysmal ignorance of the subject. I believe it's called "shooting the messenger".

it's not a dodge.. it's the truth.

you guys don't know shit and the more you blather the more it shows that you have a right wing agenda and little else...

 
At 9/26/2011 4:15 PM, Blogger VangelV said...

the US could ONLY get more money by selling MORE Treasuries - NOT REDEEMING them ....

you got it ass backwards as you continue to weasel.


How shallow can you idiots be? The US government could not sell USTs if it did not pay the interest or redeem the matured treasury securities.

this has virtually nothing to do with the trust fund and a lot more to do with how the govt borrows money by selling it's debt.

As you so ably pointed out in your citation, the Trust fund is an accounting device. It has no reserves to pay off beneficiaries. When there is a shortfall the government has to either cut benefits or tax workers and companies a second time to replace the stolen money that was paid previously.

Once it sells US Treasury notes for cash - the cash can AND IS spent on a number of different obligations from DOD salaries and pensions to paying redeemed savings bonds to redeeming SS trust fund notes.

But the trust fund was supposed to hold the excess SS contributions to pay for SS benefits. The tax was already paid. Even if you used borrowed money that is still deferred taxation because the money will have to be paid back with interest.

the cash is FUNGIBLE and as long as people will buy US Treasury notes - the money can be spent on ANYTHING.

The cash was STOLEN from the trust funds. When everyone found out the trust fund became an accounting device and no reserves became necessary. The reserves were supposed to pay the benefits of those that paid the taxes, not on welfare or warfare.



Actually, the only thing really demonstrated is your stupidity or dishonesty. Pick one.

 
At 9/26/2011 4:20 PM, Blogger VangelV said...

nope. you said that SS was the problem and that it would need to be cut first ahead of anything else... because the trust fund did not use marketable securities.

propaganda and blather and weaseling instead of facts and realities.


Actually, I was quoting Obama. He said that the cheques would not go out. Obviously he did not value the promises made when the IOUs were issued as much as warfare/welfare spending that could have been cut instead.

His statement is the reality. End of story.

OR they could JUST FUND WITH FICA and forget it...

the bottom line is that they WOULD STILL PAY 75% BENEFITs EVEN IN A DEFAULT.


Which would be a default and theft from future beneficiaries who will have to pay much more than they will ever get out. Why is it moral to steal from workers and their employers?

the "real world" is not what you are talking about here..

you're talking about a specific doomsday scenario that is torturously constructed in an effort to propagandize the issue.

you are basically dishonest.


I am talking about the way things are, not the way they will be. The unfunded liability stands at $16 trillion TODAY. The IOUs are in the fund TODAY. There are no reserves in the trust funds TODAY. That makes the SS system politically and actuarially unfixable. We can quibble about when the purchasing power of SS benefits will be cut but not if it will be cut.

 
At 9/26/2011 4:29 PM, Blogger Ron H. said...

comedian: "The Trust funds is not the primary revenue-provider of SS to start with.

It's merely a place to park surpluses and to draw down on them...
"

That's correct. That surplus at this time is $2.5 tn.

comedian: "if SS did not draw down on the surplus in the trust fund - they would still provide 75% of benefits."

They could, but they are required to use the trust fund first. That would be easy if the fund held marketable securities.

Do you realize that such a default on promised benefits, whether that promise is real or only implied, would cause such outrage among the public as to doom the program.

Politicians seeking office could run, and be elected, on only their promise to end the reviled ponzi scheme.

Me: Marketable securities can be sold on the market."

comedian: ""they can indeed but what good does that do to the US Govt to have China sell their "marketable" securities to Russia?"

LMAO, Please stop! Your killing me here. Give me a chance to catch my breath before you make another joke.

Talk about irrelevant, that's it.

You need to understand the bond market. Please educate yourself before you attempt to continue discussing this subject. Millions of individuals, institutions, countries, and the Federal Reserve, buy and sell bonds, not just China.

If the SS trust fund held real marketable securities, they could be sold to Russia, or any other buyer, and the promises to seniors would be honered, regardless of conditions at Treasury.

 
At 9/26/2011 4:37 PM, Blogger Larry G said...

" How shallow can you idiots be? The US government could not sell USTs if it did not pay the interest or redeem the matured treasury securities. "

ha ha ha...

if the US govt REDEEMS matured treasury securities - WHERE does it get the money to do that?

they have to SELL MORE SECURITIES guy.. if they want more cash.

if they redeem they have to come up with cash...

 
At 9/26/2011 4:43 PM, Blogger Larry G said...

"But the trust fund was supposed to hold the excess SS contributions to pay for SS benefits."

ONLY WHEN FICA does not produce enough... the shortfall right now is pennies...on the dollar at most.

"The tax was already paid. Even if you used borrowed money that is still deferred taxation because the money will have to be paid back with interest."

that's TRUE with EVERY SINGLE TRUST FUND FOOL - Medicare Part A.. DOD civilian and military pensions, gas tax money... etc.... ALL OF THEM!

why do you ONLY target SS?

the cash is FUNGIBLE and as long as people will buy US Treasury notes - the money can be spent on ANYTHING.

the CASH that they get by selling MORE TREASURY NOTES - IS FUNGIBLE and once they have it in had - they can and do spend it on SS, DOD pensions, Medicare Part B, etc, etc, etc.. why do you TARGET SS on this?


"The cash was STOLEN from the trust funds. When everyone found out the trust fund became an accounting device and no reserves became necessary. The reserves were supposed to pay the benefits of those that paid the taxes, not on welfare or warfare."

lord my sides are hurting here.

No one except the truly ignorant "found out" because the way it works has been documented from day one... for decades...

the "reserve" funds were designed to hold the excess ...to then be spent in times of shortfalls and guy..

it has worked that way for 6 decades.

the fact that you just "found out" about it ... after lying your butt off about things you do not know and calling others morons and idiots says a LOT ABOUT YOU.

you need to grow up.

 
At 9/26/2011 4:48 PM, Blogger Larry G said...

"Which would be a default and theft from future beneficiaries who will have to pay much more than they will ever get out. Why is it moral to steal from workers and their employers?"

it's NOT a DEFAULT when you cut benefits guy.

they've done this a dozen times or more since SS was created and they are going to do the same thing for Medicare...

but Medicare won't go away because they cut benefits and increase premiums no more than State FArm will "default" when it raises premiums and decreases coverage.

you are basically dishonest.

I am talking about the way things are, not the way they will be.

no you're not.. you're lying and it shows.

"The unfunded liability stands at $16 trillion TODAY. The IOUs are in the fund TODAY. There are no reserves in the trust funds TODAY. That makes the SS system politically and actuarially unfixable. We can quibble about when the purchasing power of SS benefits will be cut but not if it will be cut."

MANY, MANY govt programs BESIDES SS have unfunded liabilities and MOST Of them MANY TIMES AS BIG AS SS yet you target SS....

why?

Medicare Part B has 8 times the unfunded liabilities AND a trust fund also so why do you target SS?

you're a bad boy. shame. shame.

;-) I bet you spent many a day in study hall, eh?

 
At 9/26/2011 5:45 PM, Blogger Ron H. said...

"that's TRUE with EVERY SINGLE TRUST FUND FOOL - Medicare Part A.. DOD civilian and military pensions, gas tax money... etc.... ALL OF THEM!"

Can you support that claim with a reference? I'm particularly interested in the DOD military and civilian pension funds.

 
At 9/26/2011 5:50 PM, Blogger Larry G said...

http://comptroller.defense.gov/cfs/fy1998/50_MRTFCFO98.pdf

 

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