Yakk

What in the hell do you think money is?

Almost all money in the American economy is derived from IOUs. That is how modern monitary policy works.

Some buisiness, corperation or individual borrows money, and hands it to someone else.

The money supply is a complex and huge chain of IOUs. Social Security accounts are no more an accounting trick than your bank account, any government bonds you own, or a corperation's cash on hand.

If you want to tell me that the Federal government has been running massive operating debts and hiding it using SS, I'll believe you. The Bush administration is burning money like there is no tommorrow. Clinton did it to a lesser extent -- what saved his financial policy from being completely idiotic was the dot com bubble and the tax revenues thereof.

Accounting 'tricks' and numbers in ledgers are what the American monitary system runs on.

In the 80s, to delay the social security balance sheet problem, they increased the tax used to pay for social security.

States cut taxes in the 80s, then ratchetted them up in the early 90s. They cut progressive taxes, and then ratchetted up regressive or less progressive taxes.

The end result was an increase in the tax burdin for families at the lower end of the income scale. Note that most tax cuts are aimed at the wealthy.

Because of how words are defined. If SS isn't a tax, then for one thing the tax burdin on the working poor didn't go up as much.

Moving money to private investments doesn't solve this. The number of people working who have to support the number of people retired doesn't change.

If you want to solve this, up the SS payout age, or reduce benefits. I shot out the idea that you fix a certain percentile of the population as SS benefitiaries, with a max-rate-change to provide some security for future planning. It makes SS more practical and viable in the long term, come what may.

Second, the US government already owes the SS system a huge amount of debt. Use that debt to pay off SS expenses. With a small amount of courage and mild changes to the system, it will survive in its current form this way until 2050. With no changes, the debt doesn't run dry until 2038. Using Bush-style economic projections, it doesn't run out until 2075 or later!

Does this mean that Bush has been running massively unsustainable economic policy, and is burning money and/or handing it to the richest 1% of America willy-nilly? Why yes, yes it does.

Those trillions of dollars he needs to 'save social security'? That's actually trillions of dollars he needs to cut taxes, mainly on the rich.

A system that is tight on money. And he's planning on taking the money out of it. Sounds like the obvious solution.

Bush's tax cuts come to 170 billion/year, when they finally come online.

This is about the same as the expected social security deficit.

Bush's tax cuts where described as 'small' by Alan Greenspan. Doesn't this mean that the social security deficit is 'small'?

Of course, it could be that Bush's tax cuts where huge and will and have had devastating impacts on the fiscal health of the US government.

(please note, most of Bush's tax cuts are 'sleeper' tax cuts. The latest one I am aware of matures in 2010 -- the removal of the 1+ million dollar estate tax.)

You could. Do you understand risk?

Did you notice how many people lost alot of money? You could make alot of money. I know a poker player who has doubled their stake in a night! We should put social security money into poker.

You could make alot of money on the stock market. You could lose it all. If you use individual humans to decide, many of them will make poor decisions. And their social security funds will go poof.

The point of 'social security' is 'security'. Knowing you'll be able to feed yourself after a lifetime of labour, in case your plans go sour.

This (the returns on the stock market) is a long-term historical fact, not a law of nature. Understand why the stock market has had a better rate of return, don't worship it as a god of money-making.

Given the current valueations of the stock market and the underlying economics (which are unprecidented after the collapse of a bubble), your faith in the stock market may not be sustained into the future.

I've seen economists justify the current index values, for example. They managed to do it by assuming good long-term economic growth, and that every company in the index would grow faster than the economy, and that none would die. Over half of the 'value' of the stocks where based off post-2075 performance.

In the 1990s, there was a stock market bubble. It still isn't over.

Tossing another tonne of money willy-nilly into a stock market (say, by partially privatising social security) will have the wonderful effect of inflating prices. When the money comes out, it will have the wonderful effect of deflating prices. Now, what does this do to your return on investment?

SS isn't an investment. SS itself does invest money (nowadays), but it isn't an investment.

SS ran up huge debts via obligation by underfunding itself. This was stupid. In the 1980s, they upped SS payments in order to provide a large source of funding.

Do you know what debt is? Debt is promises to pay something to someone in the future. The SS system has a bunch of assets (US government bonds), and a bunch of liabilities (future SS payments). In the past, SS has had a great 'rate of return' because, like most things Americans vote themselves, it built up piles of liabilities without assets to balance them.

Since 1980, SS has been building up assets to balance out it's future liabilities. This is known as balancing the books.

The fact that the last round of tax cuts peak out at about the same level as the social security deficit does is rather interesting.

Or encourage immigration of young'uns. Or reduce the number of benefitiaries. Or reduce payouts.

Please note, a nation with quite simular demographics (Canada) has managed to balance their government retirement plan into the foreseeable future with a small bit of actual effort and political will. It has lower Birth rates, but higher Immigration rates.

As an aside, a solid social security system is apparently a strong predictor of birth rates. People apparently have kids in order to feel secure.

In 10 or more years, social security has to start drawing money from the massive debt the US government owes it. This isn't a crisis.

Either
a> Social security is seperate, in which case the US government owes it enough money for it to keep functioning, debt-free, until 2038, and possibly beyond
b> Social security is part of general revenue, in which case spending more on social security than comes in on social security taxes is not a crisis.

I'm aware Bushonomics likes glossing over details like that.

Companies actually run on debt. And the existance of federal government bonds is a very useful finantical tool (it represents the value of 'zero risk' investments).

I'm well aware there are far-right think-tanks which publish data that support and define Bush's finiantial and tax policies.

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.