SS may be obliged to cut benefits (or possibly raise them if the economy improves in the next 30-40 years) so that the Trust Fund runs out at the time essentially all the boomers have died. But at that point SS will have returned to normal as it was designed - it will not be "bankrupt" or "insolvent" and there is no need to cut benefits now to extend the Trust Fund past then.

I am not sure what the legal definition of the Trust Fund is, but when I say the Trust Fund will run out, I mean what Dean refers to as the surplus, now $2.5 trillion.

Hasn't the surplus already been spent? In other words, hasn't the surplus been gutted and in its place, is there not an IOU instead of actual funds?

An IOU backed by the US government has fair amount of value. If not, we are going to have a hard time continuing to sell treasury bonds - the are just IOUs.

Boy, every politician that looks at that Trust Fund, automatically start to slobber.

Dean: Is this more because such establishmentarian types hate Social Security recipients, or simply because they're angling to try to get those funds given to Wall Street?

It's beyond tone deaf and elitist for WaPo, or anyone, to advocate for cutting Social Security benefits. And that would be one ugly fight, with casualties all over the place.

Note the strategic use of the term "Trust Fund" in both the thing itself and articles that push for depleting it. That phrase comes with inherent baggage and using it serves the interests of those who want us to think it's an extra, frivolous thing that recipients probably don't deserve and must be protected from.

Words matter and maybe it's time to update the name to reflect the true purpose in a less derogatory way.

Remarkably, this piece alludes to plans to cut benefits without ever noting that older workers and retirees have just lost close to $15 trillion in wealth due to the collapse of the housing bubble and the plunge in the stock market Presumably this would be an important factor in any debate over reducing benefits.

Define lost. If I put $10,000 in and the value of my holdings rose to $20,000 and then fell to $10,000 how much did I loose?

In other words, hasn't the surplus been gutted and in its place, is there not an IOU instead of actual funds?

These "IOUs" are what in the financial world are called US Government Bonds and considered one of the, if not the, safest and strongest financial instruments in the world. The nutty claim that these government bonds are somehow not secure was promoted by GW Bush in his idiotic pantomine about Social Security, but in fact no one of any financial expertise believed him; the proof of this is that there wasn't a worldwide financial panic brought on by countries dumping their US government bonds, as they would if anyone with any brains thought they were worthless as IOUs.

Trying to push this nutball claim is one of the stupidest methods of the anti-Social Security crowd; don't join them in stupidity.

I cannot predict what the tipping point will be to rouse the people to make the change the country needs.

But I do know that americans are noticing that nothing substantive has been proposed to deal with the real economy.

El Cid, for most conservatives opposition to Social Security is rooted in the fact that they can't stand that a government program works and is popular. As you've no doubt heard, gummint can' do anything right.

Social Security and Medicare are painful examples to the contrary.

Dean: Remarkably, this piece alludes to plans to cut benefits without ever noting that older workers and retirees have just lost close to $15 trillion in wealth due to the collapse of the housing bubble and the plunge in the stock market Presumably this would be an important factor in any debate over reducing benefits.

floccina: Define lost. If I put $10,000 in and the value of my holdings rose to $20,000 and then fell to $10,000 how much did I loose?

Don't economists define wealth in terms of expected utility? So that if I have a rational belief that it is 9 to 1 that my rich uncle will leave me $1,000,000 in his will and he actually leaves me nothing, I have lost $900,000. ;)

Even if we grant that, is belief in the bubble value of assets rational?

I kind of think the Washington Post should just drop the charade and imitte Cato the Elder and just end each story and editorial with the following words: "Social Security Must be gutted, we mean reformed."

its also interesting that any other Government bond held by either wealthy people or foreing Governments, giving a hair cut would be consider the end of the world as we know it. For social security recipients, who are just peasants, not so much.

skeptonomist,

You are confusing the net asset position of the Trust Fund with the annual change in that position, which is an annual flow, which is and has been a surplus, more revenue than expenditures going out. As of last year that surplus stopped rising and began to fall.

The recession means that revenues are much lower, so that rather than doing better than the "low cost scenario," as we did more years than not out of the past decade (and under which the surplus would never disappear), we are now doing worse than the "high cost scenario" under which the surplus turns into a deficit much sooner. Much of the scary stuff in the story suddenly assumes that the recession will continue, which will hopefully not prove to be the case, and we will go back to more favorable scenarios.

Of course, the medicare fund is running a deficit and has been for some time. I would say that on this one, Obama really does seem to know what is going on. Buried deep in the story is that despite the loud yappings of people like AEI's Andrew Biggs (quoted at the end of the story), the Obama people have apparently canceled any commission to do anything to social security. They get it. OTOH, in his last press conference he repeatedly asserted (accurately) that getting health care costs under control is a top budgetary priority, but somehow WaPo does not seem to get that, nor all those Broderite columnists it has who yap on and on about "the entitlements crisis" and then start going after social security.

floccina said: Define lost. If I put $10,000 in and the value of my holdings rose to $20,000 and then fell to $10,000 how much did I loose?

If you were saving for retirement say in the 70's, 80's, 90's, and 2000's you lost a thousands of dollars in purchasing power. It's called INFLATION. Compare what $10,000 would buy in 1979 versus what it'll buy you today. INFLATION has eaten away at that $10,000 over that last 30 years.

You lost what would have been a nice, safe, 4% interest rate compounded over thirty years (social security invests in boring treasuries, right?)

Stocks for the long run? hahaha

IMO, the yapping Broderites are intentionally conflating the "entitlements crisis" and their calls for cutting Social Security. No one who is employable as a columnist or journalist can be thick enough to overlook that distinction.

I'm convinced that what we're hearing from Broder et al is not just intentional, it's mercenary. The majority of the corporate media class understand the difference, understand the damage they're doing to average Americans by ignoring it, yet persist in ignoring it.

It's amazing what money and the illusion of power can do to drown the vestigial morals of these over-compensated sociopaths.

The Trust Fund in once sentence:

If politicians wish the FICA tax to remain 12% for 60 years -- even though only 6% is needed at the beginning of that span and 18% will be needed at the end -- they can create a "trust fund" mechanism which can shuffle excess FICA revenue over to on budget spending in the beginning and at the end shuffle income tax revenue to make up for short fall in Fica.

A inequality side-effect of this revenue shuffling mechanism: folks who are alive at the beginning of the shuffle will pay into a less progressive overall tax system while folks alive at the end will pay into a more progressive system -- although folks at the end should enjoy well over double the average income thanks to presumed economic growth.

Average income growing twice the rate of population over time means Social Security retirement was never in trouble at all.

But as long as politicians don't need to raise the FICA rate for 60 years (the late end of the shuffle can even be covered by debt), politicians are happy.

Forgot to add to the above (which is just as well as I forgot to sign it):

The only genuine need for a trust fund is to have something to pay full retirement benefits without any discontinuity should FICA revenue fall short of benefit payouts (which has happened a couple of times) -- while Congress gets around to remedying the situation. A 5 year trust fund should serve the purpose. A 75 year trust fund just locks current tax payers permanently into a less progressive overall tax system than desirable.

I'm just amazed by all these seemingly intelligent people going on assuming that growth is the normal condition of an "economy." You guys and gals should read William Catton's classic Overshoot, just about every paragraph of which gives more insight into the world than 15 years worth of Dean Baker's (or any other economist's) columns. For example:

"The essence of the drawdown method is this: man began to spend nature's legacy as if it were income. Temporarily this made possible a dramatic increase in the quantity of energy per capita per year by which Homo colossus could do the things he wanted to do. This increase led, among other things, to reduced manpower requirements in agriculture. It also led to the development of many new occupational niches for increasingly diversified human beings. (Expansion of niches in Germany, America and elsewhere from 1933 to 1945 was, it now appears, just a brief episode in this long-run development.) Because new niches depended on spending the withdrawn savings, they were niches in what amounted to a 'detritus ecosystem.' Detritus, or an accumulation of dead organic matter, is nature's own version of ghost acreage.

"Detritus ecosystems are not uncommon. When nutrients from decaying autumn leaves on land are carried by runoff from melting snows into a pond, their consumption by algae in the pond may be checked until springtime by the low winter temperatures that keep the algae from growing. When warm weather arrives, the inflow nutrients may already be largely complete for the year. The algal population, unable to plan ahead, explodes in the halcyon days of spring in an irruption or bloom that soon exhausts the finite legacy of sustenance materials. This algal Age of Exuberance lasts only a few weeks. Long before the seasonal cycle can bring in more detritus, there is a massive die-off of these innocently incautious and exuberant organisms. Their "age of overpopulation" is very brief, and its sequel is swift and inescapable.

"When the fossil fuel legacy upon which Homo colossus was going to thrive for a time became seriously depleted, the human niches based on burning that legacy would collapse, just as detritovore niches collapse when the detritus is exhausted. For humans, the social ramifications of that collapse were unpleasant to contemplate. The Great Depression was, as we have seen, a mild preview. Detritus ecosystems flourish and collapse because they lack the life-sustaining biogeochemical circularity of other kinds of ecosystems. They are nature's own version of communities that prosper briefly by the drawdown method." (U. of Illinois Press, 1982, pp. 168-69)

Sometimes I wonder if it is better that people remain ignorant of the true nature of their "economic" arrangements, and just let nature take its course. Personally, that thought is just too painful, and so I continue to hope that they may come to understand it well enough to make the sequel a little less deadly.

The Post's motto must be: Never let the facts stand in the way of the agenda.

skeptonomist

there is no need to cut benefits to protect the trust fund.

that would be backwards. the trust fund was created to keep benefits stable and taxes stable over a longer period of time than straight pay as you go would have done.

as someone else observes there are winners and losers to that... but not by enough to be worth worrying about.

if and when the trust fund ever runs out of money, the "fix" will be to continue social security on a pay as you go bases, as it was designed.

there may be a need for as much as a 2% increase in the tax if we all are living much longer by then.

that works out to about 20 dollars per week on an income that will be 300 dollars a week more than we make today. and the money comes back to the taxpayer in the form of a benefit that will last for six more years than we get today.

Steve your point is fine. But it equally undercuts any argument for addressing a 'crisis' produced by a projected gap in labor supply and GDP or productivity growth as against the numbers needed to fund Social Security by resorting to Personal Retirement Accounts.

Dean is an economist and highlighted this fundamental problem with NELB-the No Economist Left Behind challenge and with his joint publication of the paper known as BDK with two guys you may of heard of (DeLong and Krugman). You could Google either NELB or BDK. Or listen to my wise ass summation:
If Privatization is Necessary, it Won't be Possible.
If Privatization is Possible, it Won't be Necessary.

I did kind of lose my bet this morning.

When I saw the combination of 'WaPo' and 'Social Security' I publically predicted that Dean would give Ms. Montgomery a serious drubbing for channelling Kevin Hassett's Bloomberg piece from Monday (without real attribution except via a quote from Andrew Biggs who seems to have been the bridge and links to both). But Dean actually let reporter Lori M down easy. (If not her editors.)

Uph! Much (more) ado about nothing! Yet again we see an artificial debate based on nonsensical notions masquerading as a rational debate over meaningful concepts, a bogus, distracting, and (insofar as it obstructs rational discusssion/debate over policy) harmful pseudo-debate that is perpetuated by hyperpartisans, some amateur and some (ahem) professional, some who are just obliviously conceptually-challenged and some who (ahem) know better but choose to mislead people for partisan and/or professional purposes.

Once again I'll explain that the size of the SSTF and the degree of SS "solvency" are irrelevant to the policy choice of whether or not to reduce projected SS spending (by reducing SS eligibility and/or projected benefit levels). The SSTF has no practical significance. Why? Because it is inconceivable (politically) that we would spend anywhere near as little as that $2.5 trillion balance of the SSTF on SS over then next couple of decades, let alone between now and eternity. Therefore, the obligation to essentially earmark for SS spending $2.5 trillion of revenues that will flow into the general fund from related taxes (and borrowing) is meaningless, since we would do it anyway.

An illustration (and please, jumpy hyperpartisans, don't jump in by pointing out elements of my illustration that are not analogous if those differences don't affect the conceptual point I'm making; such differences are just extraneous, by definition):

Joe has a daughter, Lisa, to whom he is committed (emotionally, as a matter of love, values, etc.) to providing support (food, healthcare, clothing, etc.) for the next ten years. Joe projects that he’ll spend $100,000 on such support. It is inconceivable that he’ll spend anywhere near as little as $5,000 over that time period on such support. Joe has borrowed from Lisa $5,000 (let’s say, from her amazingly high cumulative lemonade stand profits) and has given her a formal, legal contract to repay that "debt". Joe has spent this $5,000. So Joe must eventually repay this $5,000 to her, and he'll have to earn and/or borrow money to do so. But this $5,000 debt is meaningless -- it has no practical significance -- because all it means is that he must eventually provide at least $5,000 to her, and it is inconceivable that Joe will spend less than $5,000 on Lisa anyway. And the creation of that $5,000 intra-family debt does not mean that Joe must now spend $105,000 on Lisa rather than the $100,000 he planned to spend. In fact, it doesn't even mean Joe cannot spend much less than that $100,000. Again, all it does is establish an obligation to spend a minimum of $5,000 on Lisa. Now, if, over the next ten years, Joe forces Lisa's much older sister, Susan, who will be earning income during this period, to provide, say, $90,000 to support Lisa (let's call this the "Lisa FICA" tax imposed on Susan), then Joe must spend at least $95,000 on Lisa (the $90,000 from Susan plus the $5,000 from Joe, both of which must be dedicated to spending on Lisa). But Joe can choose to lower that "Lisa FICA" tax as much as he wishes, and thus he can lower his spending on Lisa to as little as $5,000 without defaulting on his obligation to Lisa.

The bulk of the funding for SS will come not from future use of general fund revenues to retire those special issue Treasury bonds of the SSTF, but from future SS FICA tax revenues. We can choose to change (increase or decrease) SS FICA taxation as we wish (and if we want such changes to be [unified] deficit-neutral, we can just offset those changes with revenue-neutral changes in other taxes in the opposite direction), and thus, even if we assume (as I do) that that $2.5 trillion will flow from the general fund to the SSTF and that funds in the SSTF must ultimately be used for SS spending (i.e., SS benefits) we could, if we wished, decrease all future (cumulative) SS spending to as little as that $2.5 trillion without defaulting on those bonds, simply by eliminating SS FICA taxation altogether (To be clear to the jumpy, not-so-bright hyperpartisans out there, I'm not advocating that we do so; I'm just illustrating my point). Or we could cut SS FICA taxation such that projected SS FICA tax revenues are cut in half and change SS eligibility and/or benefit formula such that projected SS spending is reduced by that amount. Etc.

And what happens if and when there is an SS shortfall -- i.e., when the level of SS spending that we, as a society, choose (based on economic implications and on our values and priorities) exceeds SS FICA revenues? One way or another, the gap is filled from the general fund, whether in the form of repayment of those special issue Treasuries held by the SSTF or just plain supplementation of SS FICA revenues with cash from the general fund, as we do with Medicare. Which brings me to a question I ask all to ponder: Why is it that, with all the discussion and debate over projected Medicare spending and the need to reduce it, the focus is not on the Medicare Trust Fund or on Medicare "solvency"?? Why is it that, when it comes to Medicare, everyone realizes that the size of the "trust fund" and the degree of "solvency" are largely irrelevant to our policy choices of how much we should seek to reduce projected spending and how to do so, but when it comes to Social Security the debate focuses almost entirely on those concepts, with the implication that the degree of SS "solvency" is a central (or even determining) factor in choosing whether or not to change SS to reduce projected spending (as part of our effort to reduce our overall long-term fiscal imbalance)?

Folks, read the above and really try to apply your brains to it. I assume some here will reply with just empty, hyperpartisanship-inspired and insecurity-inspired snark, baseless accusations, straw men, etc. rather than with anything actually responsive, relevant and logical, but hopefully some of you will actually think about it rationally.

Dean,

You write:
Remarkably, this piece alludes to plans to cut benefits without ever noting that older workers and retirees have just lost close to $15 trillion in wealth due to the collapse of the housing bubble and the plunge in the stock market

Yet the article quotes "Mark Lassiter, a spokesman for the Social Security Administration":
"There are some people who are, in fact, delaying retirement" because the plunging stock market took a huge bite out of their retirement accounts, Lassiter said.

What gives? Is your comment on the article's "remarkable" (supposed) omission accurate and fair? Is the full name of this blog "Beat the Press with a Bullsh*t Stick"?

Floccina:

It's true that the assets of pension funds and 401k's at the peak of the bubble(s) were in a sense imaginary. But there was a kind of bait and switch by those who wanted to convert from defined-benefit retirement plans provided by employers to 401k's, not to mention those who want to privatize Social Security. Having workers invest in the stock market with their own money pumped up prices to the immediate benefit of capitalists and executives with stock options, but left workers holding a larger share of the bag when the market collapsed.

Barkley Rosser and others:

Sorry if there was semantic confusion, but my point is this. Everyone talks about the year when the Trust Fund or the surplus therein (as you wish) will reach zero - this is somewhere around 2046, depending on which projections you use. SS opponents have convinced many people (some of them comment on this blog whenever Dean talks about SS) that at this time SS will be "bankrupt" and that SS is for that reason in a crisis now. Of course this is nonsense - the surplus is supposed to be zero then and it doesn't matter much exactly when.

According to the original and still-current basis of SS, what people receiving SS benefits get in 2046 when the "boomer surplus" expires will depend on SS taxes at that time. As Dean says this will depend on productivity increases as well as demographics. The SS administrators can adjust benefits to some extent so that there is no sudden discontinuity, and Congress can also change the SS tax rate as necessary and desired. But the idea that the surplus must be extended into the indefinite future beyond 2046 is completely false.

Also completely false is the idea that some drastic action (such as privatization) must be taken now on the basis of economic projections 40+ years in the future - economists and government planners can't even predict things correctly one year in advance. On the subject of SS, some economists fail to apply their own principles of discounting to predictions - 40-year projection should be essentially worthless today.

Dean hammers on these things regularly, but I have one minor bone to pick with him. Saying that SS "will be solvent until 2046" is to fall in with the premises of the SS opponents. SS will not be insolvent after 2046 any more than it was insolvent before 1983.

Dean,

Others calling Obama wrong and should nationalize bankrupt institutions.

JIM ROGERS
Terrible. They're making it worse. It's pretty embarrassing for President Obama, who doesn't seem to have a clue what's going on—which would make sense from his background. And he has hired people who are part of the problem. [Treasury Secretary Tim] Geithner was head of the New York Fed, which was supposedly in charge of Wall Street and the banks more than anybody else.

And as you remember, [Obama's chief economic adviser, Larry] Summers helped bail out Long-Term Capital Management years ago. These are people who think the only solution is to save their friends on Wall Street rather than to save 300 million Americans.

So what should they be doing?

What would I like to see happen? I'd like to see them let these people go bankrupt, let the bankrupt go bankrupt, stop bailing them out.

There are plenty of banks in America that saw this coming, that kept their powder dry and have been waiting for the opportunity to go in and take over the assets of the incompetent.

Likewise, many, many homeowners didn't go out and buy five homes with no income. Many homeowners have been waiting for this, and now all of a sudden the government is saying: "Well, too bad for you. We don't care if you did it right or not, we're going to bail out the 100,000 or 200,000 who did it wrong." I mean, this is outrageous economics, and it's terrible morality.

You have said Bear Stearns and Lehman (LEHMQ) would still be around if Greenspan hadn't bailed out Long-Term Capital Management in 1998. Can you explain?

Well, if Long-Term Capital Management had been allowed to fail, Lehman and the rest of them would've lost a huge amount of money, their capital would've been impaired, and it would've put a terrible crimp on Wall Street. It would've slowed them down for years. Instead of losing capital, losing assets, and losing incompetent people, they hired more incompetent people.

Should AIG (AIG) have been allowed to fail, too?

First of all, banks and investment banks and insurance companies have been failing for hundreds of years. Yes, we would've had a terrible two years. But you're dragging out the pain. We had 10 years of the worst credit excesses in world history. You don't wipe out something like that in six months or a year by saying: "Oh, now let's wake up and start over again."

What about Citigroup (C)? What about the car companies?

They should be allowed to go bankrupt. Why should American taxpayers put up billions to save a few car companies? They made the mistakes! We didn't make the mistakes! I'm sure they'll give them the money, but I'm telling you, it's a mistake. It's a horrible mistake.

I totally understand what you're saying, but the banks are under massive pressure.

They all took huge, huge profits. Who was the head of Citigroup? Chuck Prince? I mean, how many hundreds of millions of dollars did Prince take out of the company? How many hundreds of millions of dollars did other Citibank execs take out of the company? Wall Street has paid something like $40 billion or $50 billion in bonuses in the past decade. Who was that guy who was the head of Merrill Lynch (MERR)?

Stan O'Neal?

Right, Stan O'Neal. He got $150 million for leaving, even though he ruined the company. Look at the guy at Fannie Mae (FNM), Franklin Raines. He did worse accounting than Enron. Fannie Mae and Freddie Mac (FRE) alone did nothing but pure fraudulent accounting year after year, and yet that guy's walking around with millions of dollars. What the hell kind of system is this?

The article also plays on the Post's partisan "anti-deficit" theme. For example it says "The Treasury Department...could be forced to borrow an additional $700 billion over the next decade from China, Japan and other investors." In the first place, the additional $700B is not a consequence of SS policy, it is just a matter of reduced tax revenues because of the recession. The implication of the article is that this revenue should be made up by higher SS taxes, that is taxes on low income people, rather than higher income taxes on the upper brackets - this is certainly what the Republican Party wants and apparently the Post as well. In the second place there is no reason whatsoever why the investment must come from foreigners. In fact the rate of foreign investment in the US has declined sharply as the trade deficit decreased.

Is this the last bit of huffing and puffing until the inevitable retirement baby boomers are facing ... shortly?

I wonder why they would want to reduce the benefits due to ... them.

skeptonomist

i was one of those who misunderstood your first comment.

you seem to understand Social Security about the way I do.

next step is to tell the people.

i am afraid the Washington Post has a big head start, as you can see from some of the other comments here.

skeptonomist,

OK, I agree with Coberly that you seem to be more on top of it, but, yes, do not refer to "surplus" when referring to the accumuated balances. That term has a clearcut meaning, and it refers to positive balances on annual flows, period.

Of course, if the intermediate projection occurs, recipients after the "bankruptcy" sometime after 2040, will be getting well more than 100% in real per capita terms from SS than do current recipients. Bruce Webb used to call this "Rosser's Law," and when people hear that particular factoid, it is amazing how their view of the "crisis" and "bankruptcy" and all the rest of the perfervid language rather shifts dramatically. Not such a big deal after all.

James,

Jim Rogers is an ignorant moron. Why on earth are people suddenly quoting this guy on blogs as if he knows anything?

Barkley on what basis are we really trailing High Cost? Because its numbers are pretty dismal. Taking 2008 to 2011
Productivity: 0.1%, 2.6%, 1.8%, 0.1%
per BLS actual 2008 2.6%
Real Wage: -1.3%, 2.0%, 1.4%, -0.9%
Unemployment: 5.9%, 6.3%, 6.0%, 6.5%
per BLS actual 2008 4.9% to 7.2% with nine months below High Cost.
Real GDP: -1.0%, 2.7%, 3.1%, 0.2%

Near term their revenue estimate might be too high but the model already builds in a pretty serious double dip for 2008 (which we mostly matched) and again for 2011 (which hopefully we will dodge.

I can see the judgement 'on a par' but can't get all of the way to 'worse than' HIgh Cost once you extend your outlook past 2009.

By the way the premise of the article is somewhat off. The proximate source for Montgomery seems to be Hassett and the source for Hassett his AEI colleague Biggs with Biggs in turn relying on a tool from SSA that seriously under calls TF balances.
http://www.ssa.gov/OACT/ProgData/allOps.html
This tool shows the combined OASDI running a combined deficit with $500 million in OAS offset by a -$1.7 billion for DI. But a little cross checking showed it doesn't count for "Interest Receivable" which for OAS increased by $8 billion and for DI by $900 million. That is cash surpluses may have gone flat but total surpluses continue to come in. The Montgomery article gave the opposite impression.

I think Projection #1 of the price of tea in China is wrong and Projection #2 is right, so we should not change Social Security policy.

That is essentially the equivalent of all the discussion in which you guys engage and the arguments you make. Geez, Louise. I guess hyperpartisanship is a stronger force than reason, at least with some people

Brooks: Nothing is wrong with Social Security. The ONLY near threat to the Trust Fund is its association with Medicare/Medicaid. Medicare/Medicaid is NOT mentioned ANYWHERE in the Social Security Act and therefore easily separated, in the legal sense, should the need occur.

Mike Meyer,

Your statement, "Nothing is wrong with Social Security", and your apparent argument that we don't need to reduce projected SS spending because there is "nothing wrong with Social Security", pretty much encapsulates what I'm saying. You and others (on both sides of the debate -- those who argue that a projected shortfall or "insolvency" of SS means we should reduce projected SS spending, and those who argue that full or nearly full SS "solvency" means there's no need to reduce projected SS spending) have a nonsensical perspective with regard to the problem of our projected long-term fiscal imbalance and the role that SS plays in it. As I've explained, clearly, in many ways and on numerous occasions on BTP and elsewhere, despite SS being "off-budget", despite it having a dedicated tax, etc., SS revenues and SS spending are still part of OVERALL revenues and OVERALL spending, and it is nonsensical to speak, in the way you apparently have, of there being "nothing wrong with SS", and imply that SS "solvency" means (or would mean) that reducing projected SS spending could not reduce our projected (overall) long-term fiscal imbalance. Of course it could. I'm guessing you've already read at least one or two of my explanations of this point previously on BTP, so I don't expect that you'll understand, but if you want a link or two to my prior explanations, let me know.

Brooks wrote, ...and it is nonsensical to speak, in the way you apparently have, of there being "nothing wrong with SS", and imply that SS "solvency" means (or would mean) that reducing projected SS spending could not reduce our projected (overall) long-term fiscal imbalance. Of course it could.

Yes, Brooks, of course it could. The point, which you're too thick-headed to acknowledge, is whether it should.

For example, instead of merely trimming SS benefits, we could help the overall fiscal balance even more by (a) paying zero SS benefits, and (b) doubling the SS payroll tax. Your silly fetishistic obsession with fiscal balance doesn't inform as to whether that should be undertaken.

Similarly, we could improve overall fiscal balance by eliminating all military spending, yet leaving taxes unchanged. Your fetish has nothing to say about the wisdom of that, either.

Angry about Medicare Part D that does not help the middle class? You can do something about it.

I have a plan to fix the prescription drug benefit and more.

Get people to Send a free prewritten fax to Sen. Minority leader Mitch McConnell telling him to STOP EVERY REPUBLICAN FILIBUSTER, get the Employee Free Choice act enacted into law, along with single payer universal health care, a fix for the Medicare Prescription drug benefit, a 10 dollar an hour minimum wage, an end to the Iraq war and until that happens you will boycott some Republican campaign contributors.

You can go to http://write-congress.democratz.org and send Mitch McConnell a free prewritten fax. This web site appears completely noncommercial. I don't sell anything there.

We have to hit the friends of the GOP in their wallets. Oh and if you only send your fax, this will fail. You need to get friends to send the fax and have their friends send the free fax and so on.

Thank you!

PS the prewritten fax reads thusly:

Hello

I want the following actions taken
and legislation enacted into law.

Congress and the President must
enact HR 676 single payer universal
health care and set up a new
prescription drug benefit in
Medicare Part B covering 80% of the
cost of all drugs with no extra
monthly premiums, no extra yearly
deductible, no means tests, no
coverage gaps, and remove the means
test for Medicare Part B and until
that happens, I won't buy ANYTHING
from Republican contributor
Rite Aid Pharmacies.

The President must end the war in
Iraq and until that happens
I will not buy any products from
Republican contributor and War
contractor General Electric
Corporation.

Congress and the President must
enact a $10/HR MINIMUM WAGE
into law and until this happens
I will not go to any Republican
contributor Wendy's Restaurants.

In 2008 Brown-Forman of Kentucky,
the maker of Jack Daniels Whiskey
and Southern Comfort gave Mitch
McConnell money for his campaign.

SENATOR McCONNELL MUST NOT
EXECUTE ANY REPUBLICAN
FILIBUSTERS FOR 8 YEARS
DURING THE OBAMA PRESIDENCY
AND MUST GET THE EMPLOYEE
FREE CHOICE ACT ENACTED
INTO LAW AND UNTIL THAT
HAPPENS I WON'T BUY JACK
DANIELS WHISKEY OR SOUTHERN
COMFORT OR ANY OTHER OF THEIR
PRODUCTS.

Thank you.

Barkley Rosser,

You are wrong again, read Webb's insightful analysis.

Any response?

I was only talking about this year and maybe next. I am reasonably optimistic that we can get back on a better track down the road.

Hey, I am one of those who is sometimes hitting Dean over the head with a stick for his excessive willingness to go along with the CBO forecasts that say "bankruptcy" in 2047 so that he can look respectable in Washington and get quoted in the papers, which now happens not too infrequently. I am one of those who keeps pointing out the chances are really pretty serious that in the longer run we might beat the low cost projection and never even run a deficit.

But this year is going to be just plain awful.

That last one was me again. And, as Bruce and Dean and coberly and others know and have long argued, if in fact the more pessimistic scenarios come about, the stock market is not going to do all that well either, so the privatizers are not going to have much of a case.

Liberal,

Re: your 12:13pm comment, I don't know if you understand what you're saying and the implications of it, but have you told your fellow hyperpartisan Bruce Webb that you agree with me on that (obvious) point? Last I saw of him, he still didn't get (and passionately rejected my contention) that, even if SS were projected to be fully "solvent" forever, (1) SS spending would still be contributing to our fiscal imbalance, (2) reducing projected SS spending could reduce our fiscal imbalance, and (3) we could reduce projected SS spending without defaulting on the SSTF bonds, and (4) that the balance of the SSTF is, practically speaking, meaningless (since it's inconceivable that we would spend less than that amount, cumulatively, on SS anyway).

Seems like you are, in effect, acknowledging that all of the above are true (unless you're just confusing yourself, which wouldn't surprise me at all).

Hope you and Bruce and the rest of the support group can work out your differences. My guess is that you're going to now go with some illogical denial that you were agreeing with those enumerated assertions so your standing within the support group is not diminished.

Look could we make a law that says that if you have over 100,000 dollars in the bank or in a retirement account or any equity anywhere that is beyond or equaling this amount you do not and should not recieve Social Security checks? and is it possible to make a tax dredit for any one who donates his or hers acrued Social Security earnings to the welfare of others who may need it? Buy the way I'AM HOMELESS AMERICAN VETERAN. PLEASE HELP!!! Visit my webste at; homelessinamerica.bravehost.com to help. I have been Homeless and in the streets of America more than 20 years! I need food, work or $CASH$!!! NOW!!! I’am trying to raise 1 MILLION DOLLARS to retire from the street. All donations accepted $10, $20, $50, $100, $1000, $5000, or $10,000 or MORE. ITS EASY! JUST SEND YOUR PERSONAL DONATION TO ME AT MY CONFIDENTIAL AND SECURE MAILING ADDRESS. Your address and email will remain confidential and will not be sold, stored or saved for any purpose! Visit my website to find out how easy it is to donate at; homelessinamerica.bravehost.com
THANK YOU and GOD BLESS

Bruce,

Sorry I didn't check back. I agree that my argument applies equally to the "privatization" proposals, as I have said explicitly from time to time. I contend that both sides are immersed in the perpetual growth delusion, and we desperately need an alternative to it. Dean has always done a great job of exposing the inconsistencies with which standard economics is applied. But I believe the problems hidden by the growth delusion are so important that even those trained in economics cannot justifiably be excused from discussing them - the information described in my post does, after all go to the heart of what a modern economy IS.

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Sarah

http://grillsblog.com

Out of curiosity, does anyone here recieve a paycheck? I can't talk about 2.1% interest aggregate elastic trade multipliers, and my facts can't match the decidedly academic tone of the comments so far; but I know that I give $45 a week to a retirement fund I don't want to participate in.

I am reasonably poor. I am giving, against my consent, more to some mythical retirement fund (that I'd rather be responsible for) than I spend every week on food for my 3 year old daughter.

You can argue all day about the fiscal sustainability about the thing and how rationally supportable it is, but if it's perfectly fine by itself, why can't I opt out? I don't want to pay the money and I don't want to recieve it. Making social security optional is all privatization is.

>why can't I opt out?

Because if you wind up on the street destitute, too old to be productive, we *will* take care of you. That's human nature, and it's not fair to put us in that position.

BTW, what nobody ever mentions is that SS is the best investment people with only $2300 to spare could possibly get. Guaranteed payments until you die? Find out what kind of annuity AIG would sell you for $45 a week.

And wonder if AIG would actually be there to pay.

Hello
I hear a lot of talk about social security going broke.
I hear nothing about raising the cap to a higher level each year to clear up the problem. What is wrong with people. It is very simple,raise the cap as needed to keep social security solvent and both employee and employer will share in the amount paid.
Is that a problem?