I'm curious, to what extent have the finances improved since ten or so years ago? Back during the last time major changes to the system were proposed, 2005, I think I remember reading that projections had gotten better. Not that they indicated no problem existed, mind you, only that whatever problems did exist didn't appear to look as bad as they once did. I also remember reading that small changes in productivity and immigration could make huge parts of the financing problem go away.

Dean, do you care to comment? I don't think there has ever been any paper that has come out and said all this at once, so this is just a general impression. Of course, I could be wrong, so if I am, someone please let me know.

Dean is correct but fear-mongering is what politicians do.

“The whole aim of practical politics is to keep the populace alarmed – and thus clamorous to be led to safety -- by menacing it with an endless series of hobgoblins, all of them imaginary." -- H.L. Mencken

but...
Dean is correct but fear-mongering is what politicians do.

“The whole aim of practical politics is to keep the populace alarmed – and thus clamorous to be led to safety -- by menacing it with an endless series of hobgoblins, all of them imaginary." -- H.L. Mencken

but...

• I do think that the SS tax on lower income young people should be much less.
• The rich and middle class should NOT get any more in retirement from SS than the poor get.
• I think that SS is not and should not be a retirement program but a welfare program for the old. I believe that the idea that SS is a retirement program is a fraud and is destructive to both rich and poor, to the poor because they have to pay the tax and to the rich/middleclass because they could use the money better elsewhere and make better retirement plans on their own (maybe invest more or maybe plan to live with their children etc.).
• I think that the SS and Medicare taxes should be eliminated and the more progress income tax increased to cover for that.

SS could go on indefinatly with only small modifications but I still think the current structure is down right silly and should be fundamentally reformed.

Brian J,

In 2006 the CBO was expecting the Social Security Trust Fund to be empty in 2046, in 2008 that number reassessed and is now 2049.

That was with no action, we got 3 more years. It isn't an economic explanation, but it is a bit telling about the long term prospects.

In fact Medicare Part D (just that part, the prescription drug program) is expected to be short $8.4 trillion short vs Social Security's $6.8 trillion over 75 years. That is data from David Walker, the star of IOUSA. You can look at his data in the last graphic of this web page.

Addendum to my post:

The SS tax being on low income people promotes under the table working. I know that it is antidotal but I know people how work for cash and do not report anything. Most are low income people.

Floccina,

You are falling into some of the right wing traps.

First and most importantly, it isn't just for retirement, people need to get over that crazy and narrow idea. It is social insurance. It will cover you if you work enough quarters and get disabled with disability benefits. It will also cover your spouse and children if you die with survivor's benefits.

Following up on that concept, you get tricked into the privatization slippery slope by saying that people can do better with their own retirement plans. If they have the money, they can do that independently of this social insurance program.

The idea of an even tax rate and benefits tied to contributions is to make it not look like welfare, that makes it more palatable to higher earners and lower earners.

It sounds like you are a compassionate person, please don't fall for some of these less helpful ideas.

By the way, the idea of taxing low income workers less is one that I support, I once saw a suggestion that the range of the pay roll tax stay the the same or slightly expanded, but the for the payroll tax only to apply to income after $20,000 (so add $20k to the whatever the current ceiling is), but still base the benefits as if paying for those first $20,000. That would reduce the payroll tax burden on those making very low wages.

I blame Obama for bring it up yet again. Medicare? Yes - it needs to have the Medicare Advantage subsidy boondoggle ended. But dragging out SocSec yet again is foolish in this climate. There is nobody reasonable to negotiate with so don't open negotiations.

I'm glad somebody quoted Mencken. I have pretty much the same world view. For those who don't know, H.L. Mencken was an early 20th century writer. He was sort of an intellectual version of George Carlin. His "Treatise on the Gods" is a d!mn good read.

The reason they are after Social Security is because it is money that goes to people, rather than corporations.

All money spent by the government must be filtered through corporate america.

That's why they chince on soldiers but blow huge chunks of change on space weaponry and other crazy wastes of money. They hate money going to people!

Besides, Social Security has essentially functioned as a slush fund for defense spending. Extra money is collected through SocSec and spent on militarism. Once it can no longer do this, then it is time to dispose of it.

Brian J/End the Echo: Here are the years the Trust Fund was projected to be depleted, by year of projection (from the overviews of the annual reports, found here.

1992: 2036
1993: 2036
1994: 2029
1995: 2030
1996: 2029
1997: 2029
1998: 2032
1999: 2034
2000: 2037
2001: 2038
2002: 2041
2003: 2042
2004: 2042
2005: 2041
2006: 2040
2007: 2041
2008: 2041

As someone who turns 65 in 2041, I find this interesting.....

The projections on Social Security are welcome and not necessarily news.

The unfinished business on the reactionary conservative agenda (having destroyed the credibility of government and brought back deflation and perhaps depression) is to end Social Security and Medicare as we know them.

Destroying secure jobs and defined benefit pension plans are other item that the GOPpers have checked off.

Pray tell folks, without secure jobs, a defined pension, and health care where do you suppose our seniors will find the wherewithal to retire?

@End The Echo
First and most importantly, it isn't just for retirement, people need to get over that crazy and narrow idea. It is social insurance. It will cover you if you work enough quarters and get disabled with disability benefits. It will also cover your spouse and children if you die with survivor's benefits.
I am aware that SS also covers the disability benefits and survivor's benefits.
Following up on that concept, you get tricked into the privatization slippery slope by saying that people can do better with their own retirement plans. If they have the money, they can do that independently of this social insurance program.
This does not completely dismiss what you say but when I speak of investment I think vey broadly. I include paying off the mortgage on a home, buying more insulation to lower future electric bills etc., even building better relationships (intergenerational and other). These types of investments often have better yields than stocks and bonds. In my plan SS would still be a backstop against poverty if other investment failed. I am not convinced that the returns from SS, including the insurance benefits, exceed other investments for most people. Further we are not talking about getting rid of the insurance benefits of SS just the payout above some base to above average earners.
The idea of an even tax rate and benefits tied to contributions is to make it not look like welfare, that makes it more palatable to higher earners and lower earners.
I believe that there is support in the general population for public retirement insurance so I do not think that the high earners would ever be allowed to opt out of paying for the program.
I like your idea of exempting income below 20K or 30k a year along with, after the economy comes back, removing the 90k cap from SS taxation.
I hope that my ideas are not right wing or left wing across the bread but are selected based on my current knowledge of the word.

Ummmm....can we agree then that Social Security is unsustainable without further changes? Can we also agree that economically literate adults should avoid conflating the concepts of bankruptcy and insolvency in general-interest publications like the NYT?

Nathan, put another way, you mean in the last 12 years, the year projected has been extended by exactly 12 years? I do find that interesting...

1996: 2029
1997: 2029
1998: 2032
1999: 2034
2000: 2037
2001: 2038
2002: 2041
2003: 2042
2004: 2042
2005: 2041
2006: 2040
2007: 2041
2008: 2041

SS is perfectly sustainable as currently written since any shortfall in revenue is dealt with through a cut in benefits. Whether this will actually occur or be allowed to occur is another question.

They aren't projections, they are scenarios, and there are three (3) of them, every year. The idea is to mix all the variables, such as population growth, economic growth, productivity growth, etc. etc., to come up with three possibilities: Default in around 10 to 15 years, default in 35 or 40 years, and default never. The newspapers report the middle scenario as a prediction -- which is why default always looks 35 to 40 years away. The actual trends of all the variables show that the economy is heading to somewhere between the 40-year default, and never. It can be fixed with some small tweaks, a long time from now. It just isn't a big problem.
It appears that the political donor class hopes to keep the Trust Fund disappeared into the Bush Tax Cuts, and they are the ones supplying quotes to the newspaper reporters. See:

http://www.youtube.com/watch?v=Tts2uTWt6e8

Floccina,

Okay, you did acknowledge that SS is more than retirement, but your focus of it is only on the old.

I think that SS is not and should not be a retirement program but a welfare program for the old.

And that bothers me a lot. Regarding the return on the investment, well based on the money I have paid in at the ripe young age of 38, if I were to be disabled and live 40 more years, I would definitely get a better return on my inputs (investments).

What seems to go unmentioned is that FICA and Medicare payroll taxes currently exceed current payouts, and the surplus is being used to finance the rest of the federal government. That surplus disappears fairly soon according to most projections, and I think it's still true that each dollar on hand can be spent just once.

The "projections" are obviously based on extrapolations of past economic conditions which were in turn fundamentally based of the development of dependence on exhaustible resources, especially energy resources, a dependence the scale of which is difficult to exaggerate. Therefore the projections are obviously wrong, unfortunately. I commend the following article by Richard Heinberg to the attention of Dean and many of the others posting here: http://www.energybulletin.net/node/47659

End The Echo,

That's a very good point about Medicare Part D. It's one I often made back during this discussion a few years ago. Once again, this is not to say that Social Security's problem will fix itself, but that if it's so incredibly overwhelming like some wish to claim, it makes absolutely no sense to add on another entitlement program.

Normally I agree with Dean, but he's wrong this time. What's unsustainable is the corporate welfare in the form of tax breaks which allows corporations like IBM and others to pay no taxes and move jobs to India.

That's what is unsustainable.

Btw Dean, nice to see you on Democracy Now!

It's important to point out that the Social Security Trust Fund is filled with IOUs from the US Gov't to the US Gov't. Past annual SS suprluses covered non-entitlement deficit spending in a given year in exchange for treasuries, ie the "Trust Fund". Trust fund redemptions to cover future SS benefits will come from the repayment of those treasuries, which will require either i) additional treasury issuance or ii) higher taxes. There isn't a pot of money sitting around waiting for future retirees.

Blus Dog,

The trust fund holds U.S. government bonds. Bonds are a type of IOU, but in this country it is standard to refer to them as "bonds." Most business sections include a chart giving "bond yields." I have never seen one that listed "iou yields."

Steve is correct, the projections will be off... but in a positive direction. I've been around almost 200 years, and politicans as well as economists love playing this projection game. The only problem is that they are never correct as the world changes too much by the projected date.

Baker doesn't fearmonger about social security, but he does about health care.

Both will be fine, you spoiled baby boomer tots!

Dean Baker misses the housing bubble:

All of his previous rants about the solvency of Social Security were based on income from phony housing bubble wealth. Dean Baker's blog would do a good service to its readers to start relying on a different economist--one who didn't miss the housing bubble.

Blue Dog seems to think that all those investment advisors who for decades have touted US government bonds as a super safe investment were somehow wrong, because they're "just IOUs". Yes, Blue Dog, it's possible the US government will actually go so broke it will default on all its debt but really, no one sane thinks that's even a remote possibility.

Everyone note that SS "going broke" period is typically extended every so often because the assumption made in the trustees' report is that the economy will have far lower growth -- for decades on end -- than we've ever had for more than a few years. If, however, we do have a 50 year long Great Depression, those assumptions will be pretty much on target; I don't see that happening really. But even if we did, a simple and rather small increase patroll tax would make up the difference.

Name 3 private pension funds that are in better shape than the Social Security trust fund.

The PBGC is something like 11.5 billion short, that's how well corporations have managed their pensions funds.

Many workers have seen their 401(k)s greatly decrease in value, and it seems as though an increasing number of employers are saying they will no longer do match employee contributions to the extent they did before.

For the past 5-7 years, corporations have petitioned Congress to let them decrease their contributions to their pension funds because they predicted such returns from the market/whatever the corporations invested in. Congress has generally given in. Given what has happened to the market in the past year or so, do you think those funds are in better shape than SSA?

Floccina, what is stopping what's left of the middle class from investing other earned income in those items you mention?

When the GOP first started with their privatization propaganda, I was giving free talks on the Social Security disability program to laypeople. I started hearing, oh, if I only had the money withheld for Social Security I would've invested it & gotten a better return, complain, complain.

Except: none of those people had any other investments or savings. So why would I believe they wouldn't have the SS withholding the same way they spent the rest of their money?

Why assume that people would invest wisely (would it be because real estate & the stock market always go up?)? That certainly does not seem to be the case.

Quite a few people invested in the market in the 1920's. Those of us who read history are aware of how well that worked for the majority. I believe that is one of the reasons that the Social Security program was established.

Dean is correct, the fund is in pretty good shape, and what small problems it has can be easily fixed. There is no need for reform.

If someone wants to save more, what's stopping them if they can afford to do so? There are savings accounts, IRAs, etc. If you want to invest in your home, who's stopping you?

If you look at the SSA website, you will see that Social Security is not meant to be anyone's sole source of retirement income. It's supposed to be "one leg" of a "three legged stool." The other two legs are: pension (hah! Good luck with that for many people) and savings. Thus, Floccina, the creators of the Social Security program intended that people would be saving or otherwise providing for their retirement--just as you suggest.

And no question, unless you've got a very well paying job & a good employer, SS provides a far superior disability & survivor's benefits program then most people can afford to purchase & pay for (premiums every year) in the private market.

kudos azurite

There have been a couple of mentions of the SS wage cap, currently $106K and has been increasing by 3-5% annually for decades. SS tax on an upper-middle class income of around $100K has more than doubled since the early 90's, more than erasing the Bush tax cuts for the same income range.

Azurite asks:

Floccina, what is stopping what's left of the middle class from investing other earned income in those items you mention?

Nothing and many do invest in those things.

Why assume that people would invest wisely (would it be because real estate & the stock market always go up?)? That certainly does not seem to be the case.

“Wisely” depends on the person, if you talk to old people they are at least as likely to tell you to spend more of your money while you are young when you can still enjoy it, as to tell you to save more money for when you retire or are too old to work. I would rather divert more money to young poor people than to old middle class and rich people. You probable strongly disagree but from my observation it appears difficult to drop out of the middleclass/rich into the poor. It is not just about money but about contact knowledge etc.

Dean is correct, the fund is in pretty good shape, and what small problems it has can be easily fixed.

Here we agree, I am certain that it is true that the SS fund is in pretty good shape.

There is no need for reform

So are you saying that SS is optimal and that lower contributions with higher benefits for low earners and lower benefits for higher earners would not be good nor even would be higher SS taxes and higher benefits for all? You seem to be saying that SS is as close to optimal as we are likely to get? That lowering the SS tax on the poor is too dangerous because it would make it politically possible later on to lower the payout to middleclass and the rich thereby welfarizing the program which would erode its political strength to the point where the whole thing could fall. I disagree with this position, I think that there would be wide spread support for SS even if it was more of a welfare program.

BTW in my mind it is true that it does not matter what shape the fund is in, the only thing that matter is the political strength of the program.

So are you saying that SS is optimal

This is a perfect example of a "straw man" agrument. You posit that he said something that is obviously not true, then proceed to tear it down.

azurite never claimed that SocSec was "optimal", he only claimed that it was (more) functional, robust, and reliable than other options.

Nothing is perfect. But when we compare SocSec to other public and private programs, we see that it is healthy,effective and competitive.

In short, Floccina, you were being a bit of a boor. You seem smart enough, so I imagine we won't see more of this straw man drivel from you in the future

As long as someone stops by, on their way to town, and collects YOUR SOCIAL SECURITY TAX, to turn over to The Social Security Administration, then NOTHING is wrong. ALL else, TAX amounts to benefits are merely a negotiated deal between clients (those that use a Social Security Number) and Congress, subject to change at the whim of Congress.

Nathan,

Keep in mind that if the mid-range forecast comes true, with no adjustments, and the trust fund is "depleted" in 2041, then what will happen is that you will receive as a social security pension something on the order of 120% in real terms of what today's recipients receive, rather than 170%, oh woe and crisis. Duh.

More nonsensical analysis from both sides of the partisan divide -- those who use the premise that SS is insufficiently "solvent" as an argument for cutting SS spending, and those who use the premise that SS is fully or nearly fully "solvent" as an argument against cutting SS spending.

"Solvency" is irrelevant to the policy decision of whether or not to reduce projected SS spending (by reducing eligibility and/or benefit levels).

We face an unsustainable long-term OVERALL fiscal imbalance. This OVERALL fiscal imbalance is the difference between projected OVERALL spending and projected OVERALL revenues (as a percent of GDP).

We must find ways to reduce this imbalance. Sacrifices and trade-offs will be required and will be different depending on how we do reduce this imbalance. Economics can inform us as to what those alternative sets of likely trade-offs are (those associated with the policy alternatives). Our values and priorities can guide us in choosing from among those sets of trade-offs and thus in making policy choices.

The fact that SS has a dedicated tax that provides one degree of "solvency" or another is IRRELEVANT to the above. If maintaining current SS eligibility and benefit level formulas is a high enough priority to justify solving the fiscal imbalance entirely elsewhere on the spending and/or revenue side, we can increase SS FICA revenues or supplement them from the general fund. A lack of "solvency" under current SS FICA and SS spending policies thus doesn't dictate that we must cut SS. Conversely, if we decide that it is either not possible or undesirable to adequately reduce our long-term fiscal imbalance without some reduction in SS eligibility (e.g., retirement age; means testing) or benefit levels -- relying on greater sacrifices elsewhere in spending or taxation, we should do so even if SS is/were fully "solvent" (we'd just have to lower SS FICA taxation to match the lower projected spending under the new policy). So again, SS "solvency" is irrelevant.

For more on this, including my "Apartment Illustration" and "Defense Tax" illustration, see http://theforvm.org/diary/brooks-and-b-rational/social-security-solvency-and-irrational-partisan-rhetoric

Certainly hyperpartisans on both "sides" -- including Dean Baker here -- can continue to apply nonsensical analytical and conceptual frameworks to score partisan rhetorical points, but it would be a service to the nation if they would stop and instead apply sound analysis and engage in honest, sensible discussion and debate.

The state of the general budget has nothing to do with SS.

SS has its own funding stream - which is currently financing about 9% of the general budget.

The only change SS needs is to return to pay-go.

Let the financiers & muckety-mucks take the hit on "fixing" the general budget, they caused the problems & they've gotten a tax cut off SS funds since 1983.

hb,

You write:
The state of the general budget has nothing to do with SS.

SS has its own funding stream - which is currently financing about 9% of the general budget.

That is the type of invalid conceptual/analytical framework I'm referring to in my comment above.

hb,

The second line in my comment...

SS has its own funding stream - which is currently financing about 9% of the general budget.

...should have been in italics as well as the first line, as a quote from your comment.

Disclaimer: I live in India, and know little about US healthcare and social security.
Yet, I find it interesting that in this entire discussion there is nothing about the state of people's health, and their reliance on modern medicine. I am no Luddite, but i have watched the share of US GDP spent on medicine climb over the decades, and find people from the modern world, including our urban populations increasingly reliant on medicines and surgical procedures, while being ever more cavalier with preventive health - diet, exercise, and weight.

Dean's headline doesn't even match the content of the paragraph he writes in which he acknowledges that changes have to be made to sustain the program. Where is the political will to make these changes?? My grandmother used to be fond of the old adage. "A stitch in time saves nine." This applies well to SS in that the sooner changes aer made, the smaller such changes will have to be.
Blue Dog is right on in saying this is welfare for old people. I began taking benefits a few months ago when I turned 62. I actually ran the calculations year by year and determined that the rate of return on the funds deposited by me and my employers was 0.8%. And that ignores the fact that I paid taxes on my portion of the contributions and am now paying taxes again on 85% of the benefits I receive. If I had been able to invest the money myself at 5% (and not pay taxes on the earnings as they accumulated), I could have purchased an annuity paying over $100,000 per year!
As far as the date that the so-called trust fund runs out of money, that is rather meaningless since the trust fund is basically a bunch of government IOU's to itself.
DeToqueville (spelling?) wrote that a democracy is doomed when people discover that they can vote themselves a largesse. I fear that we may have passed that tipping point, not only with social secuirty and Medicare, but with all the other irresponsible spending and deficits thats we are incurring.
I truly am concerned for my kids and future generations that follow.

Actually the generation being born is predicted to be the first with a shorter expected lifespan than their parents', so we can count on giant agribusiness and industrialized food to save us all some SS money by killing off generations more quickly!

Around 2015 the SS dynamic will shift. Instead of propping up the general fund, the payouts exceed the payroll taxes coming in. How will the federal government handle that?

That is the type of invalid conceptual/analytical framework I'm referring to in my comment above.

Well, you leave out the legal framework....conveniently so, because the law is clear.

Using a lot of fancy syllables doesn't change the law.

SS does have its own funding stream. That is the law. Folks are welcome not to like the law, but this is simply a statement of fact. And, according to CBO, SS is fully funded until 2049.

As to the question of whether the rest of the budget will face problems, if we don't fix health care, it certainly will. Is that a reason to cut SS benefits that are already paid for? well, if things are really bad enough then I suppose everything, including defaulting on the government debt more generally (not just the bonds held by SS) should be on the table. Of course, no projections show the situation being so dire in any reasonably time horizon.

Finally, the current crisis is likely to make the situation look better for SS. The crash of Wall Street with its big salaries is likely to lead to some downward redistribution of wage income. If it goes far enough, we will get back to the 1983 situation where 90 percent of wage income fell under the SS tax ceiling, compared with 83 percent today. This would close at least 40 percent of the projected shortfall.

Enemies of social insurance, like Brooks, keep on insisting that it's the "OVERALL" [his caps] fiscal balance that matters. And of course, at one level that is quite true: in a period when SS contributions are less than SS payouts, the SS administration will start redeeming its government bonds, and the Federal government will either need to issue bonds to other buyers (driving up interest rates) or raise taxes to make up the gap.

However: Brooks and his ilk play a pretty trick by emphasizing overall obligations when talking about SS but ignnoring overall spending. Even if the SS administration is redeeming its bonds, the Federal government will still be spending a LOT on other things, too. SS redemptions will be only a small part of the future Federal budget at the time, and will require balancing priorities and assessing how to meet the OVERALL expenditures -- just like now! After all, the Federal government redeems its bonds on a daily basis, but this is not somehow bringing our system to a crashing halt.

And frankly, if in 2016, or whenever SS expenditures begin to exceed SS revenue, we have to make a few budget cuts elsewhere, is that such a bad thing? Aren't conservatives for cutting the budget, anyway? For example, do we really need to continue spending more on military hardware than the next TEN nations in the world--and much of it on exotic military-industrial boondoggles? Do we need to continue vast subsidies to Midwestern agribusiness? I'm all for fiscal prudence, but being prudent means cutting the wasteful spending, not the prudent spending, whereas the SS alarmists want to make us think that redeeming the SS bonds will result in sudden huge increases in taxes, or cuts to the Washington Monument and Apple Pie.

The real question, then, is whether SS is a prudently managed program that fulfills well-defined public policy goals: if you put it that way, a vast majority of Americans agree that it is.

Dean,

Once again, you've made some misleading statements that I need to set straight for readers and once again urge you not to persist with.

You write:
SS does have its own funding stream. That is the law. Folks are welcome not to like the law, but this is simply a statement of fact.

Yes, of course is currently set up to have "it's own funding stream" (a dedicated tax, SS FICA). Obviously I'm not denying that. My point is that this current method of funding and the degree of "solvency" or "insolvency" that is projected to be produced via this funding method and it's level and structure (tax rates and applicable income) is irrelevant to the policy decision of whether or not to reduce projected SS spending by reducing eligibility and/or changing the formula for benefit levels. I've already explained why in my comments above, and I've also provided a link to a blog entry (diary) of mine with further explanation and illustrations. It is nonsensical to make such a decision based on the degree of projected SS "solvency" under current policy, as if the fact that we currently carve out some of our revenues via a dedicated tax of a particular rate applied to particular income means that such a decision should be made in a vacuum, outside the context of our OVERALL revenues (and potential revenues) and overall spending (and potential spending), and all the fiscal policy decisions we must make to reflect our priorities as a nation. See my "Defense Tax" illustration at that link if this notion is still somehow unclear.

You write:
As to the question of whether the rest of the budget will face problems, if we don't fix health care, it certainly will. Is that a reason to cut SS benefits that are already paid for?

"Already paid for"?? Excuse me?? First, the only assets in the SS "trust fund" are obligations of future taxpayers (as opposed to assets that can generate income from sources other than taxpayers). Second, the SS "trust fund" balance (just a few trillion dollars) represents only a small fraction of projected SS spending over the next few decades. No matter how you slice it -- and even if we were to assume, just arguendo, that SS is projected to be fully "solvent" forever -- it simply isn't true that projected SS spending is "already paid for". Rather, it will be funded via future taxation, mostly above and beyond the amount of the current "trust fund" balance. And again, from a policy choices perspective, this taxation should be viewed as part of our OVERALL taxation, and SS spending as part of our OVERALL spending, and choices should be made accordingly, based on our values and priorites. Whether or not (or to what degree) our current SS FICA tax rate applied to the currently applicable type and level of income is projected to cover projected SS spending per current policy is IRRELEVANT to the decisions of whether or not we want to spend less, the same or more on SS than is currently projected, as I've already explained in my initial comment on this thread http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=01&year=2009&base_name=there_is_no_plausible_scenario#comment-6249308

You write:
well, if things are really bad enough then I suppose everything, including defaulting on the government debt more generally (not just the bonds held by SS) should be on the table.

I was not speaking of defaulting on the bonds held by SS. The SS "trust fund" bonds must be honored via future taxation and the revenues must be spent on SS benefits. But again, the amount of the "trust fund" balance is a small fraction of projected SS spending over the next few decades. There is plenty of room for reductions in projected SS spending, if we choose that course, without coming anywhere close to defaulting on the SS "trust fund" bonds. So that old line is just a straw man that misleads people.

PQuincy,

First, you have no basis for characterizing me as one of some group of "Enemies of social insurance", nor of accusing me of trying to "trick" people. As for the latter, I would think that at the very least, you would demonstrate how what I'm saying is incorrect, which you obviously haven't done. (
That's not to say that anyone who says something incorrect is being dishonest -- trying to "trick" others -- but generally a good starting point for such an accusation is to at least make some sensible case that what the person said was incorrect).

Your second paragraph boils down to saying that even if we spend the full amount projected for SS spending, we will still have money left over for other things. Well, yeah. The question is, would doing that best reflect our values and priorities, given the trade-offs involved with spending that amount on SS. Maybe it would, maybe it wouldn't. I'm not arguing either way here. I'm just saying we should apply a rational framework to that decision and ask sensible questions accordingly.

In your third paragraph you acknowledge trade-offs and give examples of your priorities. Good, you're on the right track with that general manner of thinking about fiscal policy choices generally, including how much to spend on SS. The question is, basically, if we maintain current SS policies and spend the full projected amounts for SS spending, what types and levels of sacrifices will we (and which of us) have to make, and how does that compare (per your values and priorities) to some other sets of policies that include reduction in projected SS spending and less sacrifice in other areas? For example, just hypothetically, would you still want millionaires to receive SS checks of amounts per current formulas if that would require (even after all the reductions you'd want in Defense spending, etc., and even after tax rates on "the rich" are raised substantially) higher taxes on low-income or middle-income workers? Those are the kinds of questions to ask and on which to base your policy preference with regard to future SS spending. The degree of SS "solvency" per the current funding structure (SS FICA tax rates and applicable income) and current spending policy is IRRELEVANT. That's my point. Is it clear to you now?

Sorry Brooks,

the fact that SS has its own funding stream is absolutely relevant, both legally and morally (in my view). As I say, you're welcome not to like the law, but this is the law.

And, the SS trust fund has assets in government bonds in the same way that Peter Peterson has assets in government bonds.

I will continue to do my absolute best to counter the disinformation of the Peterson-types on this issue.

Jim and NJDallas,

Actually, although it did not last year and will not this year, in a majority of years in the last decade, the social security system did better than the so-called "low cost scenario" under which the system never runs a deficit, not in 2015 or 2019 or 2041 or 2049 and most certainly never runs out of money. Rather, it continues to lend money to the rest of the budget forever, if at a lower rate than it has in the past.

Brooks,

We have gone around on this too many times already, but I, for one, would rather deal with longer term budget problem by getting the rate of increase of medical care costs under control, as Dean suggests, along with cutting defense spending and raising taxes on higher income people. Sure, one could go after social security, but I see no good reason to do so. There are other and better ways to deal with this problem, although clearly people can (and do) disagree on this matter.

Dean is right that the legal arrangements mean that what must be paid for social security must be paid, but you are right that as the situation of the social security balance changes, this does have implications for the broader budgetary situation. Good enough for you?

As long as the "trust fund" is never tapped into everything will hum along like a sewing machine. Once the outbox is bigger than the inbox, and the "trust fund" tapped, then things will fall apart. Most likely a rate increase and a major benefit cut will occur.

Dean,

Re:
Sorry Brooks,

the fact that SS has its own funding stream is absolutely relevant, both legally and morally (in my view). As I say, you're welcome not to like the law, but this is the law.

Sorry Dean, but you can say whatever you want, but if you have no refutation of what I've contended and clearly explained regarding irrelevancy of SS "solvency" to the decision of whether or not to reduce projected SS spending, then your repetitious statements of (misleading) facts are empty and are an apparent indication that you realize that what I've said is correct.

Re:
And, the SS trust fund has assets in government bonds in the same way that Peter Peterson has assets in government bonds.

Again, you can repeat that straw man till the cows come home, but again, I'm not suggesting that we default on the SS "trust fund" bonds, nor that the SS bonds represent any less of an obligation of future taxpayers than do those other government bonds to which you refer. Apparently, you are either not listening, not understanding, or deliberately misleading people about what I'm saying.

I will continue to do my absolute best to counter the disinformation of the Peterson-types on this issue.

I would think you'd find it more efficient to start by countering (or ceasing to present) your own disinformation.

And since you mentioned "morality", as I've indicated, we absolutely should apply our morality (or "our values", the term I used intended to be roughly synonymous with or encompassing morality) in deciding whether or not to spend less than the projected spending for SS. Of course we should. My point is just that the degree of SS "solvency" per current policies is irrelevant, as I've explained clearly and repeatedly on this thread and at the link I provided in my initial comment.

Dean / ALL,

The paragraph in my comment:

the fact that SS has its own funding stream is absolutely relevant, both legally and morally (in my view). As I say, you're welcome not to like the law, but this is the law.

was obviously a quote of Dean from his prior comment. I have to remember that (apparently) I must indicate italics for each paragraph individually on this site (or I'm getting something else wrong about the formatting).

Barkley,

We have gone around on this too many times already, but I, for one, would rather deal with longer term budget problem by getting the rate of increase of medical care costs under control, as Dean suggests, along with cutting defense spending and raising taxes on higher income people. Sure, one could go after social security, but I see no good reason to do so.

I have indeed tried several times in the past to get folks here to understand (and to admit the validity of, if they do understand) my correction of their analytical/conceptual error with regard to SS "solvency". I've been away from this site for a while (except for an occasional comment) and I see the perpetuation of the error persists, so I'm just trying again. Perhaps in the interim some have thought more about it (or for some reason are now willing to admit its validity) and/or perhaps there are some new readers.

You present your preferences as to where sacrifices should be made -- your priorities among alternative trade-offs -- to reduce our long-term fiscal imbalance via fiscal policy choices. That's good. As I've said many times, economics can help us identify and quantify the types and levels of trade-offs associated with such policy choices (and check on the validity of your assumptions -- e.g., quantifying how much the imbalance would be reduced by cutting projected spending on X program by Y%, and with what effects on the economy and ultimately on people). Armed with a good sense of what those alternative trade-offs are, we can then apply our values and priorities in choosing among them via policy choices. And it may be that two individuals' assumptions are valid and sufficiently thorough regarding what the trade-offs associated with policy alternatives are, but they have different preferences based on different values and priorities. My point is just that such a rational approach -- a rational conceptual and analytical decision-making framework -- should be applied, and that the arguments partisans are making (on both sides -- advocating cuts in projected spending or advocating against them) based on SS "solvency" or lack of "solvency" are nonsensical, not part of such a rational approach.

Put differently, there may be strong arguments one way or the other -- for cutting projected SS spending or for not doing so -- but the degree of SS "solvency" or "insolvency" based on current policies is not one of those strong (or even valid) arguments.

Dean is right that the legal arrangements mean that what must be paid for social security must be paid

Dean keep repeating that even though I have stated it as well. Again, we must honor the obligation of the "trust fund" bonds, and SS FICA revenues must be spent on SS benefits. Apparently Dean's repetition of that point is just a straw man (or he's not really reading my comments).

but you are right that as the situation of the social security balance changes, this does have implications for the broader budgetary situation.

That's not my point at all. It's true, as I've told you in the past (ceteris paribus -- all other revenues and spending equal -- a larger gap between SS revenues and SS spending obviously means a higher overall fiscal imbalance), but that's not my point. I don't want to be any more repetitious than necessary, and I'd have to cut and paste a lot, so instead I'll just encourage you to read my other comments on this thread, and if you wish, let me know if my point is still unclear to you.

Brooks your point is perfectly clear. It always has been. It is just that nobody thinks it is important. Not at AB, not at Econospeak, not at the Forvm, and not even at SwordsCrossed, and certainly not here.

Dr. Baker and Prof. Rosser have considered your argument on any number of occasions and rejected it and this even though you have helpfully repeated at ever slower speeds and ever greater length.Which should lead you to one of two conclusions. Either your argument is in fact not correct or you are not skillful enough to adequately transmit it.

I do not see that you have made any significant modification in either the content or presentation of this argument in all the months that you have been trying to present it. Maybe you should drop this particular topic as being at a minimum a waste of YOUR time?
__________________

SS revenues always have and at this point exceede SS spending. That difference, to be REAL, ends up in Military Budgets through investment in the "trust fund". The ONLY time The Client(those that use a Social Security Number)need worry is when the Military is antsy about THEIR OWN BUDGETS. Desiring increase or fearing decrease, The Military will pressure Congress and inturn Congress pressures the Client first with these questions of "solvency", the TAXPAYER at large being the harder nut to crack.

Bruce,

As usual, you offer nothing but empty rhetoric in lieu of argument. I realize you are apparently still holding a grudge from the embarrassment you apparently felt from our past exchanges and are apparently fearful of my return to commenting at AB and here causing you further embarrassment (then, as now, due to my exposure of the invalidity of arguments you've made a hobby of making, and due to your obvious evasiveness and empty rhetoric every time I've tried to engage you substantively) but if you have no refutation of, question, or other comment that actually addresses my point, perhaps you'd be happier finding some other use of your time rather than engaging in petty and entirely vacuous sniping.

As I told you yesterday on AB, I'm really not interested in yet another exchange with you filled with your garbage, but if you wish to discuss anything substantively and in good faith, that would be great.

Around 2015 the SS dynamic will shift. Instead of propping up the general fund, the payouts exceed the payroll taxes coming in. How will the federal government handle that?

Well the current date for shortfall is projected by the Trustees to be 2017. That date was projected to be 2012 in the 1996 Report and 2015 in the 2000. Which means for one thing you are using the wrong verb form, instead of 'will' you might substitute the word 'might', 'could' or if you really have confidence in the current projection 'should shift'. The situation is not static, instead it is dynamic and as Lee Arnold points out the record in recent years has tending to show outcomes between Intermediate and Low Cost meaning that we could well see positive changes in both the 2017 and 2049 numbers (but probably not with the next Report, currently SS receipts look to be minutely trailing IC projections).

Which brings up my actual point. Yes there will be changes at the bend points but unless we understand the magnitude of those changes we will blow the diagnosis. At some point in 2017 tax receipts will still be enough to pay full benefits, in the next month they won't but this doesn't imply some sharp discontinuity instead both the shrinkage in the cash surplus between now and then is slow and so too will be the growth of the resultant gap. The government will handle the very small initial gap basically with a shrug, you are talking about a gap of $20 bn or so in 2018 as against accrued interest of around $190 bn for that year (inflation adjusted). Now the numbers ramp up but only gradually and in a predictable manner and don't get particularly significant until about 2030.
http://www.ssa.gov/OACT/TR/TR08/VI_OASDHI_dollars.html#140103
At which point unless we get overall health care costs under control will be the least of our worries.

People tend to think of SS shortfall and depletion as cliff events, you get to the edge and fall off. Instead they are hill events and not particularly steep hills at that. The federal government will navigate these particular hills just fine, unless of course unpredictable cracks occur in the larger financial landscape. Those cracks don't mean we need to do a preemptive bulldozing of the SS hill.

Brooks you are too funny. No one in the world that I know of thinks you embarrassed me in the slightest in our exchanges at AB or here. Instead they, like Dr. Baker and Prof. Rosser concluded that your argument was thoroughly without merit.

There is a reason why I was asked to host a Social Security series at AB and you were not. And it is not because Dan and the gang like to have a hearty laugh at my expense.

If your comments get deleted at AB it will not be because I am afraid of your superior skills, it will instead simply be a way of keeping our readership from being bored to tears. (And yes I do have the keys to the moderation car and an explicit green light from the carowner to run it over you if need be.)

Bruce,

Again, if you have something substantive to say regarding my point, say it. If you think it's invalid, explain. If you think it's valid, but correcting people on a fundamental conceptual/analytical error on which they are basing their position (and policy advocacy) on a very important public policy issue, well, say so (however absurd).

By the way, I forgot to mention that you also have a habit of grossly misrepresenting past exchanges I've had with you and with others. In the past, on several occasions, I went to the trouble of demonstrating your misrepresentations via quotes, links, etc., but I don't wish to spend my time doing so again.

As for why you were asked to host a SS series on AB, I suppose it never occurred to you that it's because you've collected a lot of data that you throw out to support (via arguments often lacking analytical, conceptual, and/or logical validity) a position favored by a hyperpartisan site with (for the most part) a hyperpartisan audience. The fact that you don't even consider even that possibility, and instead view your invitation to contribute on AB as some sort of proof that you have expertise indicating that are right about aspects of the SS debate generally or regarding my point in particular says much about your mindset.

Now, how about engaging me substantively regarding the point I've made, or finding something else to do, unless you are so consumed by fear and/or some neurosis that compels you to persist with rhetorical comments devoid of substance.

Bruce / ALL

CORRECTION: Sentence in first paragraph of my comment should read:

If you think it's valid, but that correcting people on a fundamental conceptual/analytical error on which they are basing their position (and policy advocacy) on a very important public policy issue is unimportant or without any value, well, say so (however absurd).

I contend that AMERICA would continue paying a SOCIAL SECURITY TAX whether they got a penny's worth of benefit or not.

Dean,

What Brooks is telling you is simply that, as a taxpayer, he regards USG as a single entity with one consolidated balance sheet.

Thus, he is netting out obligations from USG to itself. This renders irrelevant the fact that (a) SS has a designated revenue stream, and (b) that SS holds obligations issued by Treasury.

Consolidating the balance sheet is exactly the same technique that an external creditor would use to analyze any complex instutition. Let's say that Ford, for whatever accounting purpose, chooses to separate out its pension plan on a separate balance sheet. Ford funds its pension subsidiary (Ford Security, FS) by promising it 10% of all car sales, and also issues it a number of Ford bonds.

Why would Ford do this? I have no idea. Perhaps it's a good tax dodge. But from the perspective of a Ford creditor, it changes nothing. Ford and Ford Security are still best analyzed as a single entity. Thus, the pension liabilities are liabilities of Ford, not FS, and obligations between internal operating units are completely irrelevant.

Therefore, it is up to you to explain to Brooks (a USG creditor) why USG's internal accounting structures are even slightly relevant to him. I don't believe you've done so.

Mencius,

the point is simple. Under the law, we raised SS taxes to pay for SS. This is the law and the people who vote every right in the world to expect that it will be followed.

No one said that they were raising SS taxes to pay for the pentagon. If the bonds held by SS are not repaid, then we did raise taxes to pay for the pentagon.

For the record, Ford actually does have different obligations, one of them being its pension. No creditor will get a penny until its pension obligations are paid in full.

Debts are segregated all the time in the private sector. I have no idea why so many people run around thinking that the government alone can't segment or prioritize its obligations.

People are welcome to say such things, but they happen not to be true.

Dean,

You write (in reply to Mencius):
the point is simple. Under the law, we raised SS taxes to pay for SS. This is the law and the people who vote every right in the world to expect that it will be followed.

No one said that they were raising SS taxes to pay for the pentagon. If the bonds held by SS are not repaid, then we did raise taxes to pay for the pentagon.

Dean, I ask you yet again to please stop repeating this misrepresentative and misleading straw man. I did not suggest even the possibility of defaulting on the bond in the SS Trust Fund, nor have I suggested even the possibility of using SS FICA revenues for any purpose other than spending on SS benefits. I say yet again, and again very explicitly, the bonds in the SS Trust Fund must be repaid and the money spent on SS benefits, and all SS FICA revenues must be spent on SS benefits. I can’t be any clearer than that. Please dispense with this straw man reply of yours.

It would be great if you would actually address my actual point at some point, rather than persisting with comments that indicate either that you’re not really reading my comments (just glancing at them, getting what you think is some vague sense of what I’m saying, and posting a reply that misses the point entirely) or you are deliberately avoiding addressing my point and instead erecting straw men, etc. as an evasive and diversionary tactic (I suppose it’s possible that you simply don’t understand my point, but I don’t think that’s likely).

And since I don’t know if anyone/everyone is navigating to my blog entry (diary) via the link in my initial comment upthread, I’ll copy & paste my “Defense Tax” illustration here:

The "Defense Tax" Illustration:
Let's assume, arguendo, that you favor cutting Defense spending as part of the solution to our long-term fiscal imbalance. Now let's assume that tomorrow a "Defense Tax" is put in effect, with revenues dedicated to the Defense budget, projected to fully provide for a continuation of the current level of Defense spending every year for the next several decades, and let's assume that some other taxes that go into the general fund are lowered such that all the changes end up revenue-neutral. Now, all of a sudden, presto! -- Defense is "solvent" (and without a net tax increase). Would you now say "Well, it doesn't make sense to look at cutting Defense spending as part of the solution to our fiscal imbalance, because Defense is "solvent" ????? Hopefully you would NOT say that, because that would be nonsensical. We can adjust the Defense Tax rate up or down as we wish, in accordance to any increases or decreases we choose to make in Defense spending, and if we choose to reduce projected Defense spending, we can reduce “Defense taxation” and offset that revenue loss with increases in other taxes, thus lowering projected overall spending, keeping projected overall revenues unchanged, and thus reducing the projected overall fiscal imbalance (without a net tax increase). And the same applies to SS.

Again, I encourage all to read the entire diary at http://theforvm.org/diary/brooks-and-b-rational/social-security-solvency-and-irrational-partisan-rhetoric

Dean,

You write: This is the law and the people who vote [have] every right in the world to expect that it will be followed.

No, they don't. I'm sure you're familiar with Flemming v. Nestor. If this isn't the law of the land, what is?

According to Flemming, no one has the legal right to expect anything from Social Security. They may have a moral right, of course. But surely this isn't what you mean when you talk about "the law."

Debts are segregated all the time in the private sector. I have no idea why so many people run around thinking that the government alone can't segment or prioritize its obligations.

Ford's seniority structure is meaningful because it is enforced by a higher authority - USG. Since USG is sovereign, it has no provision for bankruptcy or bankruptcy enforcement. Thus its obligations carry no meaningful seniority structure.

Another way to see this is that if Ford makes its obligations to Ford Security senior to all its other debt, this promise is enforced by an entity other than Ford. (Thus, for example, we can observe yield spreads corresponding to the seniority structure.)

Moreover, thanks to Flemming, the obligation structure of Social Security is actually the reverse of Ford's: SS entitlements are junior to Treasury bonds. Oops.

Not that it really matters, of course. I agree with your overall point that an SS default, in any century, is implausible. But this is due to (a) political forces and (b) the Fed's power to print dollars. It is not due to (c) internal accounting structures, which is the reason you cite. One is generally most persuasive when one gets the right answer for the right reason.

Moreover, at a higher level: Ford is perfectly free to segment its balance sheet, use off-balance-sheet entities, set up quasi-independent subsidiaries, etc, etc. (Although it always amuses me that it's the same people who talk such a long game about regulation, who are also such big believers in 1930s-era financial engineering.)

However, if Brooks is considering whether to invest in Ford (or whether to become an employee, thus accepting its pension obligations), he is also entirely free to construct and peruse Ford's consolidated balance sheet. And I imagine that not a few analysts who follow Ford do exactly that.

But your case is that Brooks's perspective is somehow illegitimate, because of a law which Congress passed and could un-pass tomorrow. You may have a legitimate defense of USG's accounting, but it is your side, not his, that needs defending.

This is especially the case because Brooks is basing his lack of faith in SS on his view that USG, as a fiscal sovereign, is not pursuing sound and sustainable policies, and is headed for some kind of Argentina-like fate. While I'm not sure I agree completely with Brooks on the diagnosis, surely internal balance-sheet structure can makes no meaningful difference to the outcome of any enterprise, whether it is sovereign or not.

This is so especially because the only way in which the SS/USG division could matter is the case in which SS defaults but USG does not - the possibility opened by Flemming. But, since this is politically implausible, SS entitlements have the same practical seniority as any other USG obligation and should consolidated on one balance sheet.

Of course, you could argue from authority (knowing Washington) that it is indeed politically conceivable for SS to default, without USG defaulting. And (not knowing Washington) I would have no choice but to defer. But I'm not sure this is the point on which you want to hang your case!

Brooks, first you must argue with the U.S.government and the NYTimes, before you come here. Here is why: Dean's post at the top reports that the NYTimes article said that Social Security is unsustainable. That happens to be incorrect, according to the terms that THEY THEMSELVES are using. Because on the basis upon which our government of laws has constructed and understands these terms, Social Security is sustainable. So go argue with the U.S. government and the NYTimes, and tell them that Social Security's sustainability ought not to be a real issue, with regard to whether or not we honor it.

Now, on the real and actual issue that contributes by far the most to the so-called long-term fiscal imbalance -- i.e., the medical system -- Dean Baker's voice has been loud and clear on reform.

I hereby promise you that once you have gotten the U.S. government and the NYTimes to frame the issue in the conceptual way that you require, then it is almost certain that intelligent people will adjust their rhetoric upon the reform of Medicare accordingly.

Mencius, Flemming v. Nestor does not invalidate anything Dean wrote. In fact Flemming vs. Nestor relates narrowly to the right as accrued property claimed by a single appellant, and there are probably a dozen other ways to try to sue as an individual for Social Security... But all of this are beside the point, because any attempt to deny Social Security to society as a whole would end in the bums being voted out of office. That IS the law of the land. Therefore the people who vote, do retain the necessary and sufficient right to expect that it will be followed -- exactly what Dean is referring to.

Mencius,

I'm enjoying your comments and finding them interesting and informative.

Re:
Brooks is basing his lack of faith in SS

I'm not sure what view you are attributing to me, but to be clear, the point I'm making is not that we may default on bonds held by the SS Trust Fund; my point does not involve even that possibility, but rather presumes that these bonds will be honored. Nor does my point constitute policy advocacy (whether or not to spend less than currently projected SS spending). I'm simply correcting a fundamental conceptual/analytical error people are making and on which they are largely basing their policy preferences on this matter (nonsensically basing their preferences largely on the degree of SS "solvency" under current SS policies).

So I'm not sure what you mean by my having a "lack of faith in SS", unless what you're saying is that I'm suggesting at least the possibility that, once the trade-offs associated with different policy alternatives are identified and quantified, it may be that most Americans would prefer some reduction in projected SS spending (e.g., via means testing and/or raising the age of eligibility) to maintaining current policy on eligibility and benefit levels and making greater sacrifices elsewhere (lower spending elsewhere in the budget and/or higher taxes, ceteris paribus), which I certainly am saying is a possibility.

Perhaps you can clarify what you meant so that I can provide any further necessary clarification from my end.

Lee,

You are demonstrating the kind of fundamental conceptual/analytical error that I'm seeking to correct.

It is simply nonsensical to say that "Social Security is sustainable" based on the premise that SS is projected to be largely (or even fully) "solvent" based on projected revenues from SS FICA as currently structured (current tax rates and applicable income). To speak of any one program as sustainable or not in isolation, just because it is funded by a dedicated tax (let alone a dedicated tax whose structure can be changed to generate higher or lower revenues), makes no sense.

We need to decide how much we want to spend OVERALL on what, how much we want to tax OVERALL via what tax structure, and how large we want our OVERALL deficits-to-GDP and debt-to-GDP to be. In other words, it is only sensible to consider fiscal policy choices in a comprehensive context and establish priorities among the alternatives.

When you say that "Social Security is sustainable", what you're really saying is that you think that SS FICA as currently structured will generate enough tax revenue to fully fund SS benefits as currently structured. And I say: ok, so what? Even assuming, arguendo, that your premise is valid regarding this "solvency", what does that have to do with our decision of whether or not to reduce SS spending vs. the projected spending? Answer: nothing.

Lee,

The first sentence of my third paragraph should start:

We need to decide how much we want to spend OVERALL and on what, ...

Lee,
Above was me.

But all of this are beside the point, because any attempt to deny Social Security to society as a whole would end in the bums being voted out of office.

I agree. However, when you take this position, you are saying that SS entitlements are practically equivalent to Treasury obligations - which makes Dean's debt-structure argument invalid.

If Dean takes the converse position, the debt structure is meaningful (if not in the right direction), but it requires Dean to argue that SS can default. Which he ain't gonna want to do.

For the record, the way I would close out SS is to sell Treasury obligations comparable to SS's expected payouts if new contributions cease, and use the proceeds to buy private annuities equal to earned SS benefits for all participants. This is zero-sum, cleans up the accounts, does not change anyone's benefits, and eliminates the nasty, nasty, nasty vote-buying aspect of SS, which is of course the reason we wound up with this stupid program in the first place.

That IS the law of the land.

No. Despite y'all's best efforts, politics and law are not quite the same thing. Not in this country, anyway.

Sorry, dat was me.

Brooks, I don't see anything you're saying that I disagree with. As I see it, your claim is that the US of the future, with its outlays permanently in excess of its revenues, may choose to adjust SS payments in a downward direction - just as it may choose to adjust defense spending in a downward direction. Presumably this scenario would only occur if the alternative was, in some sense, Argentinian.

Frankly, I can't see our present system of government growing anything like the testicles required for a true austerity program. I think USG would just head over the cliff into Argentina. Or perhaps '70s Brazil, with their craze for indexing and their bureaucratic "maharajas," is a better example.

Brooks, you didn't read what I wrote. You said I am demonstrating a fundamental conceptual/analytical error, and I am saying that "No, it is not me, the U.S. government and the NYTimes are." YOU want to discuss what the U.S. government and the NYTimes might call (1) the size of the deficit in the future, " and (2) "the reasons for the existence of the Social Security program, and all the other items in the budget, in the first place." That's perfectly possible, including under the terms of your conceptual/analytical correction. Because it doesn't depend upon the reason of sustainability in the first place. So start putting out ideas about the dollar size OVERALL, and about the reasons for the existence of all of these programs in the first place.

Mencius, all the nasty "vote buying" you worry about has in fact led to payroll tax increases... But your plan to "close-out" Social Security is NOT a zero-sum plan, it will cost much more, because (1) it front-loads to the present a huge transition cost that will be more easily amortized by future productivity increases; (2) it reduces the benefits in the future by the amount of administrative overhead in the private markets; (3) it increases the individual transaction costs in dealing with the new privatized system; (4) it increases the disparity in the distribution of wealth and income because the interest on the new Treasuries will go disproportionately to the top quintile; (5) it will lead to more taxation and politicking to cover the welfare needs of the people who lose money in the markets; (6) it ignores the periods, such as the present, when the markets are underperforming (to put it mildly;) and (7) it doesn't consider that people will find it politically possible to withdraw the funds prematurely in lesser downturns, causing another final welfare need. I haven't done the calculations, but I'm guessing that all of that will cost a LOT more than the present shortfall under the middle-range scenario. Social Security is just a really simple transfer, to cover baseline expenses of retirees in any station of life whatsoever with almost no overhead, thereby avoiding an enormous amount of additional need and costs to society as a whole. It's almost the perfect way to do it, when you consider all the other scenarios.

Lee,

I don't see why you think I didn't read what you wrote or why you think my characterization of it is erroneous.

You wrote (bolding mine):

Dean's post at the top reports that the NYTimes article said that Social Security is unsustainable. That happens to be incorrect, according to the terms that THEY THEMSELVES are using. Because on the basis upon which our government of laws has constructed and understands these terms, Social Security is sustainable. So go argue with the U.S. government and the NYTimes

You seem to be asserting that SS is indeed "sustainable" based on the premise that it is largely "solvent" based on projected SS FICA revenues (plus repayment of the bonds in the Trust Fund). I'm saying that such an assertion is nonsensical.

Similarly, the NYT is saying that SS is "unsustainable", presumably on the same bases, writing:
The programs [SS and Medicare]...threaten to grow so large as to be unsustainable in the long run.

If the NYT means "these programs" individually, and if they are basing that statement on the premise of a lack of SS "solvency", then they seem to be applying the same nonsensical framework as you seem to be applying. It makes no sense to say that SS is "unsustainable" on the basis of some projected lack of solvency based on revenues per the current SS funding structure. If we choose, based on our priorities, to spend the projected levels of SS spending, we can increase SS FICA taxation or supplement it from the general fund. Simple as that. So what does it mean for someone to say that SS is "unsustainable" based on currently projected SS revenues? It's nonsensical, just as it's nonsensical for others to base their argument against spending less on SS on the premise of SS "solvency". Again, SS "solvency" is irrelevant to this decision.

If I somehow misunderstood your comment -- if you are agreeing with me that it is nonsensical to say that SS is "sustainable" on the basis of projected SS revenues per the current SS FICA tax structure -- please let me know.

Mencius,

Re:As I see it, your claim is that the US of the future, with its outlays permanently in excess of its revenues, may choose to adjust SS payments in a downward direction - just as it may choose to adjust defense spending in a downward direction.

Correct.

Presumably this scenario would only occur if the alternative was, in some sense, Argentinian.

Not necessarily. We could just decide that sacrifices (to mitigate the fiscal imbalance) should be distributed a way that includes some reduction in projected SS spending so we can avoid greater sacrifices elsewhere and by others. For example, we could decide that ensuring that all millionaire seniors receive the full amount of their SS check per the current formula and eligibility (or the same amount after tax) is not our highest priority if an alternative would be, say, lower taxes on middle/low-income workers, and we thus may opt for some degree of means testing of SS benefits (either directly or via higher taxation of the SS benefits received by those millionaires).

Mencius, I invite you to join www.SwordsCrossed.org and participate in discussion/debate there. I think you'd be a good addition to our group.

Brooks, the reason I think you didn't read what I wrote is confirmed by the fact that you're still not reading what I wrote. I didn't say (and in fact I don't care) whether Social Security is "sustainable" by anybody's definition, or whether such definitions are sensical or nonsensical. Doesn't concern me in the least. But if you want to take your argument to its real next point HERE, which is the dollar amount you think the fiscal deficit should be, and what you propose to do about it, then write back. If not, forget writing here, and go argue semantics with the NYTimes.

Lee,

Again, you wrote:
on the basis upon which our government of laws has constructed and understands these terms, Social Security is sustainable.

Again, you seem to be asserting that SS is indeed "sustainable" based on the premise that it is largely "solvent" based on projected SS FICA revenues (plus repayment of the bonds in the Trust Fund). I'm saying that such an assertion is nonsensical. And again, if I somehow misunderstood your comment -- if you are agreeing with me that it is nonsensical to say that SS is "sustainable" on the basis of projected SS revenues per the current SS FICA tax structure -- please let me know.

In other words, either you were, as it seemed, contending that SS is sustainable based on projected SS revenues or you were not making that contention, despite appearances. You are saying now that you were not making that contention, which is fine (although how that squares with your initial comment -- the quote above -- is still unclear to me). I asked you if you agree with me that such a statement would be nonsensical, and you apparently don't want to answer that question (I could speculate as to why, but I'll leave it up to you to explain, if you wish, why you would want to avoid taking a minute to answer that question).

if you want to take your argument to its real next point HERE, which is the dollar amount you think the fiscal deficit should be, and what you propose to do about it, then write back. If not, forget writing here, and go argue semantics with the NYTimes.

You are apparently confused. Neither my point regarding SS "solvency" nor my narrower point regarding "sustainability" are semantic in nature. I am correcting fundamental conceptual/analytical errors on which people are largely basing their positions on this important issue. And you either are not distinguishing between making a correction of a fundamental conceptual/analytical and advocating a particular policy (or policy goal or standard), or you are failing to see the (obvious) value of the former. Sure, of course it's important to consider, discuss, propose and debate optimal targets for our debt and deficits, optimal spending levels and allocations, and optimal levels of taxation and tax structures, but it is absurd for you (1) to imply that it is not worthwhile to correct a pervasive, fundamental error many are making in the analytical framework they are applying to discussion/debate of this important issue, (2) to mischaracterize such a correction as "arguing semantics", and (3) for you to tell someone not to offer (or to cease trying to get others to understand) such a correction, telling him instead only to advocate particular policy or specific policy goals.

I'm seeking to get people to drop this nonsensical "solvency"-based approach to the SS spending debate. Clearly many do not understand and recognize the error I am pointing out and explaining, and some probably realize I'm correct but are nevertheless disingenuously using "solvency"-based (including "insolvency"-based) arguments to pursue political and policy objectives (and personal professional objectives) via arguments that they know are nonsensical. Whether you think so or not, insofar as correcting people on this matter is achievable, pursuing it is certainly worthwhile, so you'll just have to excuse me if I keep trying.

I asserted no such thing. The NYTimes asserted it, based on legal constructions by the United States Congress. Go argue with them.

All concepts are semantic if they have meaning. Your semantic reorganization of the problem, however, remains meaningless -- because you ASSERT that it has "obvious value," but never PROVE that it has obvious value. Saying that it is absurd not to see it, is NOT proof.

You won't go argue with them, because they will ask you, "what difference does it make?" and you don't have an answer except to say that it must make a difference. You don't have anything else.

Lee,

I'm done with this silly exchange and your apparent desire to carry on about nothing (as well as your strange use of language, such as belittling a point as a matter of mere semantics, then apparently equating semantics with concepts).

If you have anything substantive, relevant, and sensible to say, particularly concerning the point I've made but also of the SS spending issue or fiscal imbalance issue generally, I'd be glad to discuss.

As soon as you explain what difference it would make to adopt your "conceptual/analytic" reconstruction, I will happily oblige.

Time to raise the age of social security. It is the most sensible and cost effective means of absolving this mess. As known by many, the system age was determined during a time when not many lived to 65 or much beyond it.

RFB,

we did raise the retirement age. It's now 66 and it will rise to 67 by 2021. This is one reason that the baby boomers get a relatively low rate of return and would be likely to lynch any politician who proposes defaulting on the bonds held by the trust fund.

Lee,

Geez, Louise, are you kidding me? "What difference it would make" to replace a completely nonsensical approach to the issue and choices with a rational approach? I can't believe that requires explanation, particularly after all I've said on just this thread, let alone in past discussions with you and with others on threads on which you've participated.

Those who are stuck in the nonsensical, "solvency"-based framework generally think that if SS is largely or fully "solvent" based on projected spending vs. projected SS revenues, then (and the following are invalid conclusions) (1) SS spending is not contributing (or not contributing significantly) to the overall fiscal imbalance, and (2) there is little or no need to reduce projected SS spending, nor much if any benefit from it in terms of reducing our overall long-term fiscal imbalance. Many also contend, again erroneously, that full SS "solvency" means that we could not reduce projected SS spending without defaulting on the bonds held by the SS Trust Fund, which is obviously untrue, as I've explained. So, given that folks with such a fundamentally flawed conceptual/analytical framework would see essentially no benefit to reducing projected SS spending if SS is largely/fully "solvent", they will almost automatically oppose such spending reductions (vs. projections) upfront (why doing something that has a cost but no benefit?). The truth (obviously, at least to those applying reason) is that we could indeed reduce our overall fiscal imbalance by reducing projected SS spending, even if SS is or were fully "solvent". We could implement policy changes (e.g., means testing; raising the eligibility age; changing the benefit formula) that reduce projected spending, lower SS FICA taxation (the tax rate or applicable income) to avoid perpetual SS surpluses, and offset that SS FICA tax reduction with an increase in other taxes in an overall revenue-neutral way. The result would be lower projected overall spending, no change in projected overall revenues, and therefore lower projected deficits.

Similarly, some who believe that SS faces a substantial long-term shortfall (lack of "solvency") argue on that basis that we must, therefore, cut projected SS spending. That conclusion -- the "must" part -- is invalid. As I've said (repeatedly because it's not sinking in with some people), we could spend per projected SS spending and fund it via increased SS FICA taxation or supplemental funding from the general fund.

So SS "solvency" not only should not serve as the basis for one to automatically adopt the position that we shouldn't reduce projected SS spending or that we should do so, but it is IRRELEVANT, other than as an administrative matter. As I've said, we should abandon that nonsensical approach and instead apply economics to identify and quantify the trade-offs (various benefits, costs and risks, and to whom, respectively) associated with policy alternatives, and then apply our values and priorities to choosing among those alternatives (in effect, making choices among those alternative trade-offs).

So to answer your question in a nutshell, "the difference it would make to adopt" a rational approach (which I'm encouraging) would be to replace positions on this very important issue that have been arrived at via completely invalid logic with consideration, discussion, debate and adoption of policy choices based on reason (i.e., via a rational approach). Is that enough of a difference for ya'?

Brooks, the policy debates both within and outside government have been framed for years around the questions of whether or not to reduce Social Security payments, or else increase taxes (of one sort or another,) to cover the other budget shortfalls. Everybody already understands basic accounting and absolutely nobody is fooled. Your insistence on making a new conceptual/analytical distinction adds nothing to this ongoing discussion. So what difference does it make? Do you have something more?

Lee,

As in the past, you just don't get it, either conceptually or in terms of what people are arguing and the underlying premises and logic (or lack thereof). I think I've done all I can to help you understand, but you are apparently unable or unwilling to do so.

I don't say the above out of malice or any animosity toward you. It's just that there's nothing more I can do for you, and apparently the probability is low that further effort on my part to explain this matter to you will be fruitful. So I see no reason to continue this dialogue, but I wish you luck in developing a better understanding of what I've been saying at some point.

No. It is time for you to go beyond this. You contend above that if people understand that Social Security is part of a unified budget, without being misled by solvency, then:

(a) they will see that SS is contributing to the overall fiscal imbalance;

(b) they will see that there is a need to reduce projected SS spending; and

(c) they will not automatically oppose such spending reductions upfront.

But NONE of these things follows logically.

For example, they may instead decide, upon review of the real evidence, the following, in the same order:

(a) SS spending is not going to increase the size of the deficits going forward, and all projections show that its share of the long-term deficits remains nearly constant -- indeed its percentage-share of those deficits will FALL;

(b) there is therefore a need to look FIRST to what is going to make the deficits explode, i.e. healthcare, after which it is likely that the whole issue of unmanageable deficits will vanish; and

(c) SS spending reductions would incur a whole host of OTHER economic, social and political costs which people seem to have forgotten about, since they are no longer with us, having been solved by Social Security.

There: ALL done, without recourse to the irrelevant concept of "solvency/insolvency." In other words, without being stuck in the nonsensical, "solvency"-based framework, I have presented counter-arguments.

And as such, these are discussed continuously here by Dean and the commenters, although upon too few other intelligent websites. You are of course invited to contribute.

But again, your conceptual/analytical distinction is unnecessary, in fact it is already understood as a matter of accounting, and I would advise you to learn more about the rest of the subject, so you will be ready for the discussions that will really matter.

Lee you are getting off easy. Normally Brooks drops the 'arguendo' and 'ceteris paribus' bombs on us peasants who dare to ask why purely conceptual claims have any policy implications.

I do think that the SS tax on lower income young people should be much less.

The EITC already refunds FICA tax: it could easily be extended to help low income singles, vs. a restricted, tiny benefit now.

I think that SS is not and should not be a retirement program but a welfare program for the old.

Because welfare programs are so popular now, and don't stigmatize their recipients.

The rich and middle class should NOT get any more in retirement from SS than the poor get.

I've a simpler proposal to raise funds: raise income taxes on the rich, which would raise a lot more money vs. 'means-testing'. It would also increase the marginal tax rate on Social Security benefits for higher income retirees.

Strange that the fear-mongers, like hedge fund overlord Pete Peters, haven't thought of that.

Lee,

You are quite confused on a number of fundamental aspects of this discussion and of this issue.

you contend above that if people understand that Social Security is part of a unified budget, without being misled by solvency, then…(b) they will see that there is a need to reduce projected SS spending

Simply incorrect. I did not make that assertion at all. And quite the contrary: there is no need in any absolute, literal sense to reduce projected SS spending, and some who adopt a rational framework will prefer not to reduce projected SS spending. It’s just amazing to me (and sad) that someone can (presumably) read what I’ve written and still confuse what I’m actually saying with something categorically different and even contradictory to what I’m saying.

they may instead decide…(a) SS spending is not going to increase the size of the deficits going forward, and all projections show that its share of the long-term deficits remains nearly constant -- indeed its percentage-share of those deficits will FALL

Hoo boy. You really just aren’t getting it. ANY spending increases the size of the deficit. Do you know how much $1 of spending contributes to the deficit? Exactly $1. Ok, not really exactly $1 net of feedback effects that come from any government spending or tax cut, but hopefully you see my point (although I’m certainly not counting on it, but perhaps it will click with other readers who are having trouble getting my point). Again, our OVERALL fiscal balance is what matters, and that OVERALL fiscal imbalance is the difference between OVERALL revenues and OVERALL spending. If we spend more in any category of spending (and this spending doesn’t somehow “pay for itself” via at least 100% revenue feedback effect, which would not be expected to be the case with incremental SS spending or transfer payments generally), and if revenues are unchanged, deficits go up. It’s very basic algebra. And the fact that some of the overall tax revenue is collected via a dedicated tax to fund a particular program doesn’t change the above, which is why the “solvency” argument for not reducing projected SS spending is nonsensical. But I guess if you still don’t get it after our exchange here thus far, plus exchanges in the past, you probably aren’t going to no matter how clearly and in how many ways I explain it.

(b) there is therefore a need to look FIRST to what is going to make the deficits explode, i.e. healthcare, after which it is likely that the whole issue of unmanageable deficits will vanish

We certainly should be looking at ways to reduce projected Medicare and Medicaid costs. It does not follow, though, that we should not consider reduction of projected spending in other categories of spending (or not consider tax increases) as potential parts of the solution to our fiscal imbalance until after trying to sufficiently reduce our long-term fiscal imbalance entirely via reductions in projected spending on Medicare and Medicaid. Although I suspect you are making some very dubious assumptions regarding the extent to which we could solve our long-term fiscal imbalance soley via reductions in projected Medicare and Medicaid (and other government healthcare-related) spending without causing harm that would lead you to prefer distributing the sacrifice more broadly, I can’t rule out the theoretical possibility that you would indeed find such a solution optimal. In any case, that’s certainly an important matter to consider and discuss, and of course it is indeed much discussed. But again, it doesn’t follow that one shouldn’t also consider other spending categories (and tax increases), and in fact, assuming that reductions in Medicare and Medicaid spending of the magnitude needed to adequately reduce our fiscal imbalance would not be pain-free (at least some patients and others would be made to sacrifice in some substantial ways), it is only rational and moral to look holistically and comprehensively at fiscal policy alternatives to such a solution, to identify, quantify and compare the trade-offs associated with these policy alternatives and then choose according to our values and priorities.

(c) SS spending reductions would incur a whole host of OTHER economic, social and political costs which people seem to have forgotten about, since they are no longer with us, having been solved by Social Security.

Of course reductions in projected SS spending (via reductions in eligibility and/or benefit levels vs. the current formula) would cause harm, as is generally the case with lower government spending of one sort or another, or with tax increases. I don’t know if you’ve noticed, but I’ve been speaking of a rational decision-making framework that identifies, quantifies and compares “trade-offs”. Who would be harmed and how much under what type and level of reductions in projected SS spending would be something to determine and weigh against whatever positive and negative impact we would expect from alternative policies intended to solve our fiscal imbalance problem.

There: ALL done, without recourse to the irrelevant concept of "solvency/insolvency." In other words, without being stuck in the nonsensical, "solvency"-based framework, I have presented counter-arguments.

Yeesh. You still – somehow -- don’t even understand the arguments to which you think you are presenting “counter-arguments”, and what you have said ranges from irrelevant (to my actual argument/point) to nonsensical itself.

I don’t know what to tell you, except that you may wish to present this thread to someone whom you consider very strong analytically/conceptually and who has no axe to grind (i.e., is reasonably impartial or can be reasonably objective, and who is likely to be frank with you even if it means telling you I was making perfect sense and you just weren’t getting it). Oh, and I would suggest not depending on someone in a hyperpartisan "echo chamber" blog for this purpose.

Brooks, you are making two fundamental mistakes. Please read this whole following comment before composing a response.

Let's get a couple of minor things out of the way: If I had written, "(b) they will see that there MAY be a need to reduce projected SS spending," then that would comport with what you had written, and discards your first objection.

And: ANY graph of SS spending in the long-term shows that its annual portion of the deficits grows very very very slowly for a few decades, and then starts to subside. It is just not a big deal.

Much more important however is the rest of your comment. Because as your argument goes on, you have revealed a couple of basic misconceptions.

YOUR FIRST MISCONCEPTION is that fiscal imbalances are bad. But there is NOTHING WRONG with a long-term fiscal imbalance. Indeed, fiscal imbalances have a proper instrumental function for general economic policy. See any introductory economics textbook.

We just DON'T want an exploding one.

So what's exploding? We look to the other spending categories.

Here your comments reveal YOUR SECOND MISCONCEPTION: You are supposing that reductions must cause harm, and want to spread that harm around, to spread the sacrifice.

But that isn't necessarily true. We don't know beforehand whether spending reductions must necessarily cause harm, at all. We have to look at each component, before jumping to this that conclusion.

In fact, we know that Social Security should be INCREASED a little.

But on the other hand, spending on healthcare might be REDUCED in the long-term, so as to make the system more efficient and have BETTER outcomes, not worse. Everybody who has studied it thinks that this is very possible, indeed likely. The healthcare system needs a major overhaul. We just need a plan and the initiative.

In short, major change in spending might occur without the need for trade-offs.

So, IF: (1) you look at a graph of the projected components of the federal deficits, (2) you understand why deficits are not to be removed, only lessened, and (3) you realize that some programs might be reformed without causing harm, THEN: your objections evaporate to the proper cautions, which we have already understood.

YOUR FIRST MISCONCEPTION is that fiscal imbalances are bad. But there is NOTHING WRONG with a long-term fiscal imbalance. Indeed, fiscal imbalances have a proper instrumental function for general economic policy. See any introductory economics textbook. We just DON'T want an exploding one.

Why do you keep putting words in my mouth just to set up straw men you can knock down? Where did I say that fiscal imbalances are inherently bad?? Deficits are desirable at times, particularly in at least some recessions, and carrying debt on an ongoing basis and even running deficits every year can potentially be desirable if debt-to-GDP is kept under control and at a level at which the deficits and debt are worthwhile in terms of GDP growth or other objectives. You really should stop attributing arguments to me that I haven’t made (and which are actually opposite of my beliefs) and then calling them misconceptions on my part. It’s just lame.
As for spending reductions causing harm, you are confused here, too, again misunderstanding a basic concept that I’ve discussed.

YOUR SECOND MISCONCEPTION: You are supposing that reductions must cause harm, and want to spread that harm around, to spread the sacrifice.

But that isn't necessarily true. We don't know beforehand whether spending reductions must necessarily cause harm, at all. We have to look at each component, before jumping to this that conclusion.

Again, not a misconception of mine, but rather a misunderstanding on your part of what I’ve said (ironic that you keep asking me to read your entire comments before responding, since you don’t seem to be reading my comments closely at all). As I’ve indicated, there can be some win-win decisions/actions/policies that can reduce projected overall spending to some extent without causing harm to anyone (for all intents and purposes). A classic example is that covering (paying for) some forms and levels of preventive care could potentially save money for a healthcare insurer (public or private sector). Perhaps the same applies to digitizing medical records and to analyses of treatments/procedures/drugs/etc. that discover that we would be better off discarding some even if they were free. But I am very skeptical of the notion that such win-win, no-harm changes to our healthcare system can produce enough savings for the federal budget to sufficiently reduce our long-term fiscal imbalance, as opposed to some reduction in beneficial quantity, access, timeliness, quality, beneficial choice/flexibility, etc. in healthcare, which may be worth the benefit of reducing our fiscal imbalance, but which would cause some harm. Moreover, I do not “jump to this conclusion”, although I think it is highly probable. Quite the contrary, my suggestion that people take a rational approach to deciding how to solve our fiscal imbalance problem is largely intended to preclude the a priori conclusions (presumptions) and positions of those who want to declare this or that program (or tax increase) off limits right from the start, presuming that sacrifices elsewhere will be either unnecessary or at least preferable. If we could sufficiently reduce our long-term fiscal imbalance without causing anyone harm, that would obviously be wonderful, but that is a case that must be made.

Also, you seem to be implying that we should solve the fiscal imbalance problem necessarily through savings in the budget areas that are projected to grow disproportionately. Not necessarily. Just hypothetically, If we had been spending, say, 30% of the budget of Defense in each of the last several years, and the same were projected for the future, would you necessarily say that we should necessarily focus our long-term deficit-reduction efforts on the programs that were growing as a percent of the total budget, such as Medicare, as opposed to asking the “guns vs. butter” question? Growth in spending in one category of a budget can often indicate a problem (some adverse change or trend) and that spending category can often be a good place to look for solutions to an overall budget problem, but that spending category is not necessarily the one on which to focus or the one in which all or even most of the solution lies. Also, Social Security is indeed projected to grow substantially as a percentage of our budget and as a percentage of GDP over the next couple of decades (then level off), but even if it weren’t, my point above holds. Medicare (or Medicare and Medicaid combined) is certainly the program projected to grow the most, but that doesn’t mean we should necessarily focus solely (or nearly so) on that/those areas as we seek solutions to our fiscal imbalance problem.

Lee / ALL,

Below is CORRECTION to my comment above. Corrected part bolded:

"my suggestion that people take a rational approach to deciding how to solve our fiscal imbalance problem is largely intended to preclude the a priori conclusions (presumptions) and positions of those who want to declare this or that program (or tax increase) off limits right from the start, presuming that sacrifices elsewhere will necessarily suffice or are at least preferable."

But no one makes that a priori assumption. All the rest of the concerns about the sorts of restructuring of healthcare and whether Social Security needs a "fix" can be performed, and are performed, without your conceptual/analytical distinction. You must make the case that reductions will cause harm. You are "very skeptical?" Is that what this whole thing is based upon?

Lee,

You are apparently either not paying attention or still just not getting it.

Many people on both sides of the issue -- advocating cutting projected SS spending and advocating against it, respectively -- are basing their positions and arguments on the degree to which SS is "solvent" as currently structured. I am merely encouraging people to discard that nonsensical thinking and instead adopt a rational approach. This "solvency" is irrelevant to the choice of whether or not (or how much) to reduce projected SS spending, as I've explained repeatedly in a variety of ways, trying to get you and some others to understand. The only relevance of SS "solvency" is as an administrative matter: how we should fund however much we choose to spend on SS; it's not relevant to the decision itself, except insofar as SS revenues and SS spending are part of the overall budget and impact the overall balance.

If you somehow still don't get the above by now, I really don't think I can help you, but if you show some signs of starting to get it, perhaps I'll continue trying (I may also continue to correct your erroneous statements and implications for the benefit of other readers, even if it continues to seem improbable that you will understand what I'm saying).

I don't mean to be rude; it's just that I think I should be frank and point out to you that you just aren't getting it and I don't have an infinite amount of time to trying to get you to understand, particularly given the low probability that such would be the result anyway. Again, I encourage you to share this thread with one or two others of the type I described in an earlier comment, and perhaps you'll listen to them more effectively (giving more thought to their explanations) and/or perhaps they will explain it to you in some different way that you'll understand. I'm not saying that to be snarky; it's a sincere, well-intentioned suggestion.

Okay, so you believe that, because people are arguing about the solvency of Social Security, they hold it as an "a priori" condition of the argument, and it prevents them from seeing what to do.

I'm here to tell you that isn't true. This is your real misconception.

Because people who want to end or amend Social Security because they say it's "insolvent," are actually just using "insolvency" as a political excuse to keep more tax money for themselves, and to influence the boneheaded voters who aren't paying attention. These people don't give a shit about the long-term budget deficit -- they just ripped everybody off in the financial markets, and they want more more more.

And the people who argue back that you should leave Social Security alone because it's "solvent," understand THAT WORD IS ENTIRELY TRUE IN THE TERMS OF THE DEBATE THAT THE PRIVATIZERS ARE USING. In other words, Social Security is NOT "insolvent" (in quotes,) it is "solvent." They realize that the boneheads who want to cut back Social Security are just using "insolvency" to blow smoke up everybody's ass, and they're not going to get away with it.

Now that we have that solved, what do you really think is going to happen to Defense spending over the next 75 years?

Lee,

Your characterization of what people have been saying is simply wrong. I’ve heard this one before from your side of this issue – essentially “We’re just debating SS solvency because the guys on the other side are making invalid claims regarding a lack of solvency and advocating cutting SS on that basis.” But that simply isn’t true. I have read and heard enough arguments (in articles, columns, blogs, etc.) to tell you with great confidence that people on your side are indeed basing their arguments on the premise that SS is fully or largely solvent, as I described in an earlier comment on this thread addressed to you. Forgive my copy & paste, but as I said:

Those who are stuck in the nonsensical, "solvency"-based framework generally think that if SS is largely or fully "solvent" based on projected spending vs. projected SS revenues, then (and the following are illogical, invalid conclusions) (1) SS spending is not contributing (or not contributing significantly) to the overall fiscal imbalance, and (2) there is little or no need to reduce projected SS spending, nor much if any benefit from it in terms of reducing our overall long-term fiscal imbalance. Many also contend, again erroneously, that full SS "solvency" means that we could not reduce projected SS spending without defaulting on the bonds held by the SS Trust Fund, which is obviously untrue, as I've explained. So, given that folks with such a fundamentally flawed conceptual/analytical framework would see essentially no benefit to reducing projected SS spending if SS is largely/fully "solvent", they will almost automatically oppose such spending reductions (vs. projections) upfront (why doing something that has a cost but no benefit?). The truth (obviously, at least to those applying reason) is that we could indeed reduce our overall fiscal imbalance by reducing projected SS spending, even if SS is or were fully "solvent". We could implement policy changes (e.g., means testing; raising the eligibility age; changing the benefit formula) that reduce projected spending, lower SS FICA taxation (the tax rate or applicable income) to avoid perpetual SS surpluses, and offset that SS FICA tax reduction with an increase in other taxes in an overall revenue-neutral way. The result would be lower projected overall spending, no change in projected overall revenues, and therefore lower projected deficits.

You see, folks on your side are not saying “Those guys’ numbers are bad and their conclusion regarding SS solvency is invalid, but SS solvency is irrelevant anyway (since even if there were a large shortfall, we could fund the full projected spending via higher SS FICA taxation or supplementing it with revenue from the general fund)”. Rather, folks on your side are generally saying “Those guys’ numbers are bad and their conclusion regarding SS solvency is invalid, and the truth is that SS is largely solvent and therefore SS is not contributing to our fiscal imbalance problem and reducing projected SS spending cannot (or should not) be part of our effort to reduce our long-term overall fiscal imbalance.”.

And let me ask YOU: Do you understand and will you acknowledge that the degree of SS solvency is irrelevant to (i.e., should not be a factor in) our choice of whether or not to reduce projected SS as part of our effort to reduce our long-term fiscal imbalance, and that even if SS were projected to be fully solvent forever, we could still reduce our overall fiscal imbalance by reducing projected SS spending, and that we could do so without defaulting on any bonds in the SS Trust Fund?

Hmm? Can I get a “yes” from you on the above? Or are you going to try to have it both ways (as some in the blogosphere do when I make this point) – (1) claiming that people are not making the conceptual/error that I am attributing to them and are not disagreeing with my point, but (2) refusing to acknowledge the validity of my point yourself?

Brooks wrote, and that even if SS were projected to be fully solvent forever, we could still reduce our overall fiscal imbalance by reducing projected SS spending, and that we could do so without defaulting on any bonds in the SS Trust Fund?

Sure.

We could also do even more for the general fiscal balance by doubling the SS payroll tax and ceasing all SS payments forever. And whenever SS bonds came due, we could just roll them over.

Problem is that it would be inequitable. Which is something you're either too stupid or too evil to admit.

Brooks wrote, The only relevance of SS "solvency" is as an administrative matter: how we should fund however much we choose to spend on SS; it's not relevant to the decision itself, except insofar as SS revenues and SS spending are part of the overall budget and impact the overall balance.

LOL!

Shorter Brooks: "I'm too stupid to understand why revenues from Social Security taxes should not be used to purchase useless weapons systems or cut the income tax paid by wealthy people."

Liberal,

Not that I expect you to really listen or engage rationally, but...

I explicitly stated that I was not even suggesting the possibility of defaulting on the bonds held in the SS Trust Fund, nor was I suggesting any other kind of avoidance of funding and payments of SS related to those bonds (rolling over or whatever). I have similarly said that SS FICA revenues must not be used for any purpose other than for SS benefits. And such theoretical possibilities are unrelated to the point I've been making, which is not even policy advocacy at all -- it's just a correction of a conceptual/analytical error, akin to correcting your math -- but that doesn't stop you from saying that I'm advocating something that shows that I'm either stupid or evil.

But I must admit: I am BOTH evil and stupid. You read me like a book, Liberal. (I hope you find such baseless, erroneous labeling -- and the avoidance of critical thinking as a solution to the discomfort of cognitive dissonance -- cathartic and helpful as a coping mechanism).

Your position is that the long-term fiscal imbalance is unsustainable, and Social Security reductions might be considered as part of the solution.

But you don't know what's really going to happen, in Defense or healthcare or any other spending category. So you also don't know what the real deficit is going to BE. It's ALL half-cocked projections -- as everybody up to the President understands, quite cynically too. It's politics.

So, insisting upon a new conceptual/analytical framework isn't worthwhile. You can be "very skeptical" about this, that, or the other thing, but nobody really cares -- because they see that you are not studying the social problems addressed by the spending. Adopting a unified framework hasn't moved you one inch on doing your homework.

What the U.S. is going to do is what we always do: take each spending category and figure out how to match the needs to the costs. That takes a lot of study and debate, and even much longer to see the real results. We already do trade-offs, and we change things as we go along. Quite boring, really.

As for myself, I have ALWAYS maintained that SS solvency is IRRELEVANT. I am the only one. Ask anybody. I am a true nut in this regard. We should in fact spend MORE on Social Security because it is a very good program, and not worry about it. The rest is intellectual nonsense. So far, no one has ever successfully defeated my premise, and you aren't even close.

So, what do you think is going to happen to Defense spending over the next 75 years? Please answer this.

I don't like speaking for anyone else, but I daresay people have better things to do, and no one would debate SS solvency unless it were brought up. It is only brought up as "insolvency" by the side wishing to privatize it. There is no question that this is a major mode of attack upon SS -- Dean's voluminous documentation of newspaper coverage proves it, and proves it again today (see his new item on today's Washington Post.)

In fact of course, even if someone did think from the "a priori" Kantian category that solvency is the primary determinant, it wouldn't prevent them from thinking correctly about all the other spending categories. This really is your misconception. Indeed, it would make them think more correctly, because they would tend to think they should all be solvent, too. Which is what you think, except for the fact that you think pain and tradeoffs are involved. Which I think is a lot of nonsense, as aforementioned.

By the way, name some of the main people who insist that Social Security is "insolvent." Please do it now. I'm not convinced you're doing your homework.

Lee,

I must say that I've spent a good chunk of time trying to set you straight on several misunderstandings you apparently have, and even though I'm tempted to continue to do so for the benefit of other readers, I have to stop at some point, and you keep supplying an apparently unending flow of logical errors, misrepresentations, etc. If what you're doing is trying to "win" some war of attrition with me, well, good strategy, but I hope/wish you are/were interested in applying reason to this issue rather than just appearing to "win" some "debate". I can't speak to your intentions, but if you are sincere, then you are very confused on a number of key points related to what I'm saying and to this issue generally.

And one thing I must say -- and which perhaps was the last straw for me in this exchange -- was your comment that "insisting upon a new conceptual/analytical framework isn't worthwhile". What "new conceptual/analytical framework" are you saying I'm insisting on?? I'm just urging folks to replace an utterly nonsensical approach with a rational approach?? It really seems that still, even at this point, you have little to no idea what I'm saying, in addition to not understanding what others -- even your fellow blog participants on your side of this issue -- are saying.

I know that in the past I tried to explain this stuff to you. You didn't get it then and you don't get it now. I wish you luck in somehow acquiring an understanding, but I don't think there's more that I can do to try to help you.

Brooks, Stop the picayune sufflaminations. You would have to seriously address my points, instead of calling them "misunderstanding, logical errors, misrepresentations, etc." You haven't addressed them, not substantively. You infer that I am unreasonable but you don't prove it. Repeating your same arguments over and over doesn't cut it.

I pegged you in the first sentence of my last comment: "Your position is that the long-term fiscal imbalance is unsustainable, and Social Security reductions might be considered as part of the solution." That's all there is. And everything else I wrote after that still applies. You haven't moved the discussion forward. And you haven't proved that people who worry about the solvency of SS are holding the discussion back. You only SAY that they are, which isn't a scientific proof.
Saying you are rational and that others are not, doesn't make it so.
Yet you refer to your approach as a "a rational conceptual and analytical decision-making framework;" a "rational framework;" and "rational approach to deciding,"

in your comments #8, #23, #24, #26

(January 10, 3:20 pm; January 12, 1:09 am; January 12, 1:44 pm; January 12, 2:54 pm)

and you oppose it to, or are attempting to "correct," a "nonsensical," "erroneous," or "fundamentally flawed," "analytical and conceptual framework" or "conceptual/analytical framework" or "conceptual/analytical error"

in your comments #1, #2, #8, #10, #13, #14, #17, #19, #21, #27, #28.

(January 10, 2:26 am; January 10, 7:44 am; January 10, 2:10 pm; January 10, 4:25 pm; January 11, 2:39 am; January 11, 11:50 am; January 11, 4:20 pm; January 11 5:29 pm; January 12, 4:14 pm; January 12, 4:44 pm)

and that of course is why I called it your "new conceptual/analytical distinction." Because that is indeed the rhetorical pose of your comments.

But there is nothing nonsensical about the approach other people are using. "Solvency" is a legitimate and indeed highly useful way to approach spending on a case by case basis, as well as overall, and it does not prevent people from thinking about anything.

In truth, you haven't said anything new since your comment #1, and you have scientifically proven nothing.

Lee,

As I've said, throughout our exchange your comments have been filled almost entirely with errors and misrepresentations of various sorts related to the essence of the matter I'm trying to discuss with you (relating to my original point and branching off into errors in and misrepresentations of the arguments that you, I, and others have made), and each time I've taken the time to correct you and explain to you. Your most recent comment 10:45 is by no means an exception to this consistent flow of errors and misrepresentations, and I am resisting my natural urge to spell out exactly what is clearly, fundamentally wrong with numerous assertions in it. I simply cannot (ok, will not -- since it ain't my day job and I do have other interests) devote an infinite amount of time to continuing to try to explain the errors you repeat and the new ones you introduce with each comment, especially since you seem to not have much of a learning curve.

I know the above is insulting, but it's not my desire to insult you, and I bear no ill will toward you. I'm just being frank. You're not getting it, you never have gotten it, you don't even get that you're not getting it, and it seems likely that you won't get it no matter how much time and effort I put into correcting your errors and explaining it to you. Hopefully you can understand, at least in general (even if you don't think/realize it applies here), that a person could come to conclude that continuing with someone under such circumstances is far from worthwhile and decide to stop.

I don't want to continue having a meta-discussion either, because it, too, will likely be unproductive in any sense.

Now you can reply erroneously (again) that I have or haven't said this or that or haven't proven this or that, but it's very clear that you don't understand much of what I've said nor much of what has transpired in our exchange. But if it makes you feel better, go ahead, and I'll try to resist responding regardless of the number and degree of errors and misrepresentations so we can be done with this unproductive exchange.

Brooks, I'll make it easy for you. Here are my arguments against your position in outline form. Think about these for a few weeks, then get back to us with genuinely reasoned replies:

(A) YOUR APPROACH TO FISCAL IMBALANCE IS USELESS, IMPOSSIBLE, AND UNNECESSARY, BECAUSE:

(1) We can't know what long-term economic growth and fiscal growth really will be like, so we really don't know how much to spend overall, nor how much to cut.

(2) You say we should use economics to help us identify the types and levels of trade-offs associated with policy choices, but you haven't initiated a program of it, yourself. HOWEVER: don't bother trying, because:

(3) You do not know the scientific finding that in any "complex adaptive system," all trade-offs cannot be found or even enumerated; the tradeoffs cannot all be identified and quantified; in this case, although it is about economics, many of them are not monetary. So first, you would have to define both categories of definition and then a cutting-off point in that investigation, and there is no standard way to do that.

(4) Therefore your main contention that sacrifices or tradeoffs will be required is substantively unwarranted (from #1 and 2,) and there is no objective way to determine when the list is "complete enough" to begin the calculating (from #3.) Therefore, your approach is not technically "rational."

(5) In addition, you talk about values and priorities without identifying any moral preferences, yourself.

(6) Therefore your sincerity has been questioned, because you won't step up to the plate and actually make any moral judgements -- you slip it behind this idea of making the (scientifically-methodologically impossible) list of trade-offs, first.

(7) You maintain, without proof or study of the issues, that the reform of healthcare and other programs, leaving Social Security alone, is unlikely to make the budget crisis manageable. But "very skeptical" doesn't cut it.

(8) You insist, without a genuine rhetorical and psychological analysis, that the use of "solvency" causes an "a priori" roadblock within peoples' thoughts.

(B) THE USE OF "SOLVENCY" IN A DISCUSSION ABOUT THE INDIVIDUAL COMPONENTS OF GOVERNMENT SPENDING IS RELEVANT AND SENSIBLE, BECAUSE:

(1) A breakdown of income and outgo by category is a very good and time-honored way to run any institution.

(2) Making programs separate and transparent is a very good way to maintain political support for the programs and to gather public and expert inputs for ongoing review and correction.

(3) People who defend an attack on Social Security by clowns claiming "insolvency" are NOT required to point out whether or not that question is relevant.

(C) YOUR GRASP OF THE SITUATION IS QUESTIONABLE, BECAUSE YOU HAVE MADE MISINTERPRETATIONS AND MISREPRESENTATIONS:

(1) Supposing that when somebody writes "Social Security is paid for," they don't really mean that by law payroll tax has been dedicated to it into the future. This meaning is clear and no one else misunderstands this rhetorical convention but you.

(2) Suggesting that low and middle-income workers might have to pay higher taxes in order to give SS checks to millionaires.

(3) Responding to my true statement that "all projections show that [Social Security's] share of the long-term deficits remains nearly constant" with the irrelevant statement that "ANY spending increases the size of the deficit" -- as if anybody didn't know that, by definition.

(4) Not knowing the definition of "semantics."

(D) YOU WILL NOT ANSWER THE QUESTION WHETHER OR NOT YOU WANT to CUT SOCIAL SECURITY.

I say, don't cut it. You keep avoiding the issue. Tell us NOW.

Think about these separately for a few weeks, and get back to us. Do not use even as much as one sentence from your previous 30 comments. They do NOT suffice to meet these objections.

Never has so much effort been made to say so much that made so little sense as the comment you've just posted.

Yet again, you reply with a comment filled with numerous errors of logic and misrepresentations.

Again, it seems probably that I could spend much more with you, correcting your errors, then correcting the errors with which you respond to my correction, etc., ad infinitum.

Believe it or not, I've been trying not to end this exchange without being any more insulting than necessary to communicate why I don't wish to continue. But I must add the following explicitly: Your capacity for logic and for making necessary conceptual distinctions is apparently insufficient (1) for you to get anything I've been saying, including my main point and all the points that have flowed from it, or (2) for you to make sense yourself on this topic. That being (apparently) the case, I really don't want to engage in an endless and most likely fruitless exchange. I regret any hurt feelings, and I really was trying to avoid saying the above, but your persistence and attitude seem to justify even greater frankness on my part at this point.

Short version: You just aren't likely to get it, and I don't want to continue spending time correcting all your errors and trying to explain this stuff to you.

Lee,

Correction: Sentence should have read:

Believe it or not, I've been trying to end this exchange without being any more insulting than necessary...

Brooks wrote, I explicitly stated that I was not even suggesting the possibility of defaulting on the bonds held in the SS Trust Fund, nor was I suggesting any other kind of avoidance of funding and payments of SS related to those bonds (rolling over or whatever). I have similarly said that SS FICA revenues must not be used for any purpose other than for SS benefits. And such theoretical possibilities are unrelated to the point I've been making, which is not even policy advocacy at all -- it's just a correction of a conceptual/analytical error, akin to correcting your math -- but that doesn't stop you from saying that I'm advocating something that shows that I'm either stupid or evil.

Yes, it shows you're stupid, because you can't on the one hand say we should primarily view things in terms of the balance of the unified budget and on the other hand say that SS tax revenue and SS assets (trust fund) should only go towards SS spending.

Brooks wrote, Your capacity for logic and for making necessary conceptual distinctions is apparently insufficient ...

Pretty funny, for someone who whines I hope you find such baseless, erroneous labeling -- and the avoidance of critical thinking as a solution to the discomfort of cognitive dissonance -- cathartic and helpful as a coping mechanism).

LOL! What a jerk.

The funny thing about Brooks is that he whines about the contribution of Social Security to some far off fiscal imbalance (I'm sure he'll pounce on my comment above at January 13, 2009 6:50 AM by claiming that SS is indeed projected to run a deficit, even if we honor the trust fund...yet that time is decades away), he thinks it fit and proper that the US throw $700B down the military rathole, without any whining about its impact on the overall fiscal balance.

Brooks wrote, ...and I don't want to continue spending time correcting all your errors and trying to explain this stuff to you.

That's pretty rich, coming from a guy who has in the past insisted the onus was on his debating opponents to do his math for him. (Referring to the question about breaking down future medicare spending on increases in health-care costs vs the aging of the population.)

Brooks wrote, I regret any hurt feelings, and I really was trying to avoid saying the above, but your persistence and attitude seem to justify even greater frankness on my part at this point.

LOL! Yeah, you're so reluctant to make nasty attacks on your opponents. All that hand-wringing...better get some hand lotion!

Liberal,

Again, I know from past experience that you're not interested in rational discussion, and I also know that you're not likely to change your modus operandi no matter how many times your assertions are refuted, but just to give you another chance to get a clue (not that I'll keep doing this forever):

1) You write:
you can't on the one hand say we should primarily view things in terms of the balance of the unified budget and on the other hand say that SS tax revenue and SS assets (trust fund) should only go towards SS spending.

Not sure if this is your confusion about what I've said, but obviously I'm not denying that SS surpluses have been essentially borrowed by the general fund (or, put differently, borrowed from future SS recipients to fund other parts of the budget today), but the resulting bonds held by the SS Trust Fund must be paid, so ultimately that SS tax revenue will (and should) indeed go toward SS spending. There is nothing inconsistent in what I've said, any and all misunderstandings on your part notwithstanding.

2) As for my remark to Lee about his capacity for logic and making conceptual distinctions, it is, to say the least, lacking perspective and oblivious of context for you to equate that remark, which came after a lengthy exchange that I was trying to end without such commentary (but ultimately felt it appropriate and justified based on the persistence and tone of the other party) with your immediate, baseless labeling of me as either stupid or evil (due in part to your own apparent confusion and/or to some reflexive emotional response you have to anything that seems potentially threatening to your beliefs and policy preferences)

3) You write:
the funny thing about Brooks is that he whines about the contribution of Social Security to some far off fiscal imbalance (I'm sure he'll pounce on my comment above at January 13, 2009 6:50 AM by claiming that SS is indeed projected to run a deficit, even if we honor the trust fund...yet that time is decades away), he thinks it fit and proper that the US throw $700B down the military rathole, without any whining about its impact on the overall fiscal balance.

(a) "Some far off fiscal imbalance"?? Yes, I'm primarily concerned about the long-term fiscal imbalance, but if you think we don't already have a fiscal imbalance, or are unaware that everyone projects enormous and literally unsustainable (unless we print money like crazy) deficits and debt-to-GDP if current policies are continued, then you've been living in a cave.

(b) And if you are saying that SS spending does not and will not conribute to our fiscal imbalance until decades from now, you are demonstrating that you just don't get the point I've been making. Every dollar of spending on any program (SS or any other) contributes to our fiscal imbalance (unless it is some exceptional form of spending that has a positive NPV in terms of revenue feedback effect, which I'm pretty sure would not apply to incremental SS spending generally). Some program having a dedicated tax funding it (as opposed to that tax revenue going into and coming out of the general fund) doesn't change that fact. For the millionth time, the deficit is the difference OVERALL spending and OVERALL revenues.

(c) he thinks it fit and proper that the US throw $700B down the military rathole, without any whining about its impact on the overall fiscal balance

Go ahead and try to substantiate that claim that I've expressed the position that you've just attributed to me. Sure, I could go around putting words in other people's mouths, too, and then criticizing things they never said or implied (or that even run contrary to things they've said), but I don't, because I have integrity.

4) You refer to me as:
a guy who has in the past insisted the onus was on his debating opponents to do his math for him. (Referring to the question about breaking down future medicare spending on increases in health-care costs vs the aging of the population.)

Yes, about a year ago, Dean posted an assertion (based on CBO's analysis) that demographics were essentially only a small factor in the projected growth of Medicare and that excess cost growth was the real driver. After having read the CBO analysis and Dean's post, I pointed out that CBO's (and Dean's) categorization of the growth factors into demographics vs. excess cost growth seemed to overlook the interaction between the two -- the eventual aging of the Medicare population (which I later discovered that the Concord Coalition called "the aging of the aged" in their analysis which does break out this factor) impacting costs because healthcare for older seniors costs more than for younger seniors. So I asked Dean if he knew how much this factor which had been incorrectly categorized as solely "excess cost growth" (as opposed to demographics) contributed to the growth of Medicare (again, I was initially unaware that Concord had published an analysis with such a breakout. And when I discovered Concord's report, I asked Dean and others to tell me what, if anything, they considered incorrect about Concord's analysis). Based on the phrasing of your question, I am not at all sure you understand what I'm talking about above, but in any case, it was a very reasonable and important question, and it's quite odd that you would criticize someone for asking it.

Brooks, stop avoiding the obvious. Your insistence that talking about SS "solvency/insolvency" is an "conceptual/analytical error" is itself an error.

You can't even list beforehand all the trade-offs that would have to be calculated; it is scientifically impossible.

Lee,

I think if you were deliberately trying to consistently post comments filled with nonsensical statements and misrepresentations of others' arguments (particularly mine), you couldn't do better than what you've done in this exchange, particularly in your last few comments. It's actually quite amazing.

There are over a dozen statements of yours from your last comments that I could expose as clearly wrong (and quite absurd in some cases), but I know at this point what would happen: You wouldn't understand, you wouldn't learn, and you'd keep generating more clearly erroneous statements and implications. It's like a perpetual motion machine.

But I really should resist responding to you at this point.

We are sitting in a deep hole and (some of) our economic geniuses tell us we should really be concerned about a minor bump in the road that is projected to appear 20, 30 or even 40 years from now. That is not grotesque any more, that is insane.

This is a country that is squandering, with virtually no debate, trillions of dollars on pointless military adventures, we are pouring hundreds of billions into subsidizing the failed, inefficient financial industry, and here we are debating for the zillionth time a government program that is efficient, well-run, and well-funded. That is not grotesque any more, that is insane.

The whole business of predicting the state of the SS trust fund decades in advance is ridiculous. Just a few months ago, most "experts" in this country believe the economy to be in a reasonably good state. They can't see a depression-size crisis a few months in advance but they pretend to be able to accurately predict all the demographic and economic variables that will affect SS over the next *75 years*? That is not grotesque any more, that is insane.

One more. So the CBO expects a SS shortfall of $6.8 trillion *over the next 75 years*. That figure, 6.8 trillion, is about what the stock market crash has destroyed *within 3 months* (and that doesn't count the disappeared real estate wealth). Many people hoped to pay for their retirement out of their stock market investments. A large chunk of that retirmenet money disappeared *within 3 months*. But our Voodoo economists relentlessly repeat their right-wing talking point - Social Security is the "real problem". That is not grotesque any more, that is insane.

Brooks, I want to thank you for helping me to understand something. I have finally understood why your proposal cannot work.

It is not because we can't think of making a unified budget for tradeoffs -- we can do that in many cases, such as deciding whether to buy popcorn or ice cream at the movie theatre, or putting together a budget for a business project. It is that your proposal cannot work for social spending.

This is because we can do the first part, but not the second part. In other words, we can decide to consider things together in a unified budget, but we cannot list beforehand (or "finitely prestate") all the trade-offs in society-wide projects. Economists SAY we can do it when they are teaching you in the classroom, but they never actually do it in real life. Because it cannot be done.

In fact there are actually two problems. The first is that you can't "finitely prestate" all the tradeoffs and adaptations in the future of a whole society. In the field of meta-mathematics and computers, this would be called the "Turing machine halting problem." Google it. Then another problem is, even if think you have gotten a pretty complete list, you don't know whether your calculations using it are accurate, due to the "n-body problem." Google that too. It was originally about planet orbits, but it refers to any big set of calculations whatsoever.

So I want to thank you for making me realize it. In fact, it even goes further, although not in the direction you would like. Because you have made me change my mind about "solvency." Before I thought solvency was irrelevant. Now I see that it is completely relevant -- but not for the reasons anybody has said. Solvency is relevant because it is a way to tie people's expectations about what they paid for, to what they are getting -- in other scientific words, it ties their contingencies together, and solves some of the tradeoffs in the future, automatically.

You have made me understand that this is another aspect of institutions. You see, economists who have only learned half of their subject, such as libertarians, think that markets will solve all problems. They don't look at the institutions which exist side-by-side, and solve a lot of the standing problems. (Markets are in fact another "institution," but we can leave that meta-logic aside, for now.) The standard economics (Coasian) definition of institutions is that they exist to reduce "transactions costs." One thing you have made me realize is that this function of institutions includes solving future tradeoff problems.

Of course, one downside of institutions is that they may cause "path-dependece" (Google that too,) and become obsolete. The way to deal with that is to make them "transparent," which means that you can understand how they work inside, and where all the money is coming from and going to, and can make your own better criticisms of it.

"Solvency" + "transparency" = a brighter future! Thank you!

By the way, if you Google "path-dependece," it corrects this spelling error! Another tradeoff obviated!

Lee and piglet and liberal.

Whack-a-mole is fun enough at the County Fair and heck I am not going to get in the way of your playing it. But no amount of mallet application is going to get through to Brooks. Trust me on this one.

Bruce,

Wow, you probably won't believe this, but I was going to use the exact same metaphor (whack-a-mole) if Lee had persisted in pushing for responses his latest invalid statements (Could apply to Liberal as well, of course, but I'm not at all sure Liberal is even trying to think rationally, whereas I think Lee is probably making a genuine effort). Perhaps I should be scared that your mind and mine had something in common, even something that inconsequential.

Bruce, as always, you respond to me only with rhetoric (and on rare occasions a few brief stabs at something quasi-substantial) but you never engage substantively and responsively on the arguments. Not surprising why, considering that my point proves that you've spent so much of your time and effort presenting invalid arguments. Either you don't get it (possible) or you do but are too embarrassed to admit it and lack the integrity to force yourself to admit it.

As always, I invite you to address my point, but I don't expect you to do so. All you've ever done is to vacillate between (usually) claiming my argument is completely invalid and (contradicting yourself) saying that it is obviously valid, but unimportant, almost never providing actual arguments to support your claims, and never providing arguments that are logical, substantive, relevant and directly responsive to my actual point and arguments.

But again, if you have something substantive to say regarding my point about SS "solvency" being irrelevant to our choice of whether or not to reduce projected SS spending (per my explanations above), go on ahead -- let's hear it.

Anything? Anything? Or just more empty rhetoric? Probably the latter, because you are the biggest phony in your small little insular corner of the blogosphere. The last thing in the world you want to do is engage me substantively on this matter, as your long history of evasiveness strongly indicates.

Brooks,it is not an invalid statement. Your suggestion is scientifically impossible. You CANNOT MAKE a list of all the tradeoffs in the future.

Try to do it yourself! You will find that you cannot make the list stop. (That is called the "halting problem.")

And that means that you can't compute the tradeoffs, without being arbitrary.

And in turn, that means that your conceptual/analytical correction, which you propose in order to do the tradeoffs, is unproductive.

It also suggests that it is wiser or more efficient to consider each program separately -- with regard to both its reason for being and its funding (i.e. solvency.)

Lee,

What you are saying about trade-offs (etc.) (and what you are saying are the implications regarding my point) is utterly absurd.

Again, I've put in a good amount of time with you, pointing out and explaining what is fundamentally invalid about numerous statements you've made, but you keep coming back with more each time (and showing no indication of understanding anything), and I just have to (ok, I choose to) stop at some point.

It's not absurd, at all. It's accepted in every other science of complex systems. You can't list the tradeoffs without stopping the list by using an arbitrary criterion. Otherwise it goes on forever. Try to do it, yourself. You'll see.

And your reason for pointing out that solvency is irrelevant, is to put everything into a big pot to reduce spending by looking at tradeoffs. But that list is endless. So it's much more efficient to look at each program separately, determine what it does and what it doesn't do, eliminate task duplications, and find the funds to allocate to it, i.e. "solvent."

Lee,

lol. Just lol. And I mean I did literally laugh out loud to see that you are persisting with this goofiness. Frankly, I can't even rule out the possibility that you're pulling my leg. In any case, it's just so absurd I'm not going to spend time on it.