Is This Crisis Going To Waste?

Jim Wheeler, Globe blogger and frequent commenter here, wrote a piece (Into The Abyss) in which he severely criticized Republicans and mildly rebuked Democrats for their failure to use “a threatened national default” as motivation to tackle entitlement reform.

In other words, Mr. Wheeler doesn’t want this crisis to go to waste.

Here is my reply:

Jim,

I’m glad you singled out the President as the only “adult” in this mess.

Mr. Obama said on Monday,

Now is the time to do it.  If not now, when? 

He also made to liberals what I consider to be a powerful argument in favor of entitlement reform:

…if you’re a progressive who cares about the integrity of Social Security and Medicare and Medicaid, and believes that it is part of what makes our country great that we look after our seniors and we look after the most vulnerable, then we have an obligation to make sure that we make those changes that are required to make it sustainable over the long term.

So the argument I’m making to my party is…if you care about those things, then you’ve got to be interested in figuring out how do we pay for that in a responsible way.

The problem with all that is that those on our side who respect Obama and Obama’s argument, don’t believe he is dealing with honest brokers on the other side.

Mitch McConnell has expressed several times his real priority, which is to oust Obama from office. John Boehner is too weak to make a deal, and Eric Cantor is after Boehner’s job and thus is motivated to thwart any genuine efforts on Boehner’s part to do the right thing.

That is why Obama’s position is a hard sell to liberals. We can’t fathom getting a “balanced” deal from the other side. We think Obama will have to cut way too deep and otherwise give away too much of what we value just to get Republicans to raise the debt limit. It’s last year’s hostage situation all over again, with more at stake this time.

And that is why I resent the use of defaulting on our debts as leverage to make a deal of this magnitude.  It’s not honest, as McConnell’s recent move revealed. Obama has made an unbelievably large offer that would cause him great difficulty among those who trust and support him, if Republicans chose to accept it.  But because Obama made the offer, because it came from his tainted lips, it is unacceptable. Republicans essentially want the cuts without giving anything in return.

Finally, if we believe in democracy, then we ought to let the people decide such large matters through elections. As I have argued before, both parties should cast the 2012 elections as a referendum on what kind of country voters want to live in.

Here are the choices on the domestic spending side:

Smaller government and lower taxes: Which means reduced Social Security and Medicare benefits and a rather severe reduction in Medicaid, reduced funding for education and infrastructure, etc.  Paul Ryan’s dissolution of the Medicare program for those under 55 is just one example of what the country would look like, if people choose this option.

Larger government with higher taxes: Which means making investments in education and infrastructure, etc., and tweaking Medicaid and Social Security to ensure their solvency. That leaves the real driver of long-term deficits and debt: Medicare. How do we fix it under this choice?  Well, more on that later, but suffice it for now to say this: Cost shifting of the kind Paul Ryan outlined is unacceptable; so, too, is perpetual tax increases, which could not keep up with the escalating costs.  Democrats will have to propose a fix along the lines of what Kevin Drum outlined:

We need something…that genuinely has an effect on healthcare costs. Something that reduces the amount we pay doctors, hospitals, and insurance companies. Something that provides incentives for difficult end-of-life decisions. Something that makes credible tradeoffs between the cost of new treatments and the likely benefits. And something that gives taxpayers and patients alike a reason to care about all this. 

I’m in tune with your desire to do something about entitlements, Jim, but I’m skeptical of using the threat to ruin our credit (which would increase our debt problems through the increased cost of borrowing) and reversing our barely-discernible economic recovery as the way a democratic nation solves its problems.

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27 Comments

  1. First, Duane, allow me to address your debt chart. Very pretty, but it may give some the idea that the crunch point only comes 5 decades out. What is not shown, of course, is all the other government spending, including the DOD, actually running the government, and all so-called discretionary spending.

    Now, entitlement reform. Hey, I don’t like operating under the threat of default either. Who would? But please name me one other thing that would motivate the people in Peoria to swallow entitlement reform? As I said in my post, all I can think of is some kind of Pearl Harbor war or an invasion by bug-eyed monsters.

    I think you can see by Nancy Pelosi’s unyielding intransigence on the Social Security and Medicare issues how the message resonates. Heck, even Anson seems to be terrified by the thought of diminishing his SS check. He even brought up the trope about deserving it because he had paid into it, thus ignoring the fact that he is statistically likely to get more back than he paid in.

    Rom Emmanuel was right – crises do have their uses. Bush II knew it too when he used the second Iraq War to assuage 9/11 anger and satisfy the public’s thirst for retribution. It’s all similar. Only in this case it would accomplish something that is vital to the nation’s future.

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    • Jim,

      The debt chart would confuse those, like Anson, who only “skim” and don’t follow the argument. The chart, as you know, only shows entitlement spending as a percentage of GDP, a useful tool when one is talking about entitlement reform (as we were).

      I disagree about Pelosi. She has made some careful statements (at least the those I have heard) that leave her some wiggle room. And she has praised Obama for his efforts, which leads me to believe that the entitlement deal is not as onerous as some think and would be sellable to liberals.

      Finally, as for managing in crisis mode, I will note for the record that the example you used–the Iraq War and 9/11–does not inspire in me confidence that the outcome in this debt ceiling crisis will be any better than the outcome involving the misguided war in Iraq.

      Duane

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      • Re Pelosi, Duane,

        You may have seen her at a different time than I, but she was before the cameras for the evening news yesterday (ABC or NBC, I forget which) and left zero doubt in my mind that she would tolerate any change in Social Security and Medicare. She considers it a covenant with her base. You might even call it a Sacred Trust.

        Jim

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        • Jim

          “You might even call it a Sacred Trust.”

          If Anson can call Social Security payments sacred and become its voice, then just about anything is possible.

          I know what your view is regarding entitlements so I’m curious as to what you think should be done with Social Security and Medicare?

          Are you suggesting means testing for Social Security? I think that’s a workable solution provided it doesn’t hurt the least of us. There’s no reason why individuals with sizable incomes should be collecting Social Security, unless of course their fortunes change.

          In regards to Medicare, it’s administratively and financially the most efficient healthcare system in America. Where money’s being wasted is in the fragmented delivery services of the private sector, and inflated healthcare services delivered by practitioners and hospitals.

          I would vote to see either of those entitlements changed as described above, but I would rather see debt continue to rise than place money over the health and security of Americans. Until we can resolve it to make that happen, nothing will be resolved, and the bills will continue to rise until it does happen.

          Anson

          I support your desire to save and secure Social Security for those such as yourself who’ve paid into over their lives.
          You’re also right that your checks should never be held back without reasonable notification. After all it’s a trust that you’ve earned.

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  2. ansonburlingame

     /  July 13, 2011

    To both of you,

    I am so mad right now over the SS checks issue that I can hardly write. But I dare you Jim to show where I ever said I “deserved” SS because I paid in to the fund. NEVER have I thought that and I will slash my wrists (figuratively) if I ever wrote such trash. SS is a TAX not a Right simply because I paid a tax.

    Now go read, both of you, what I just posted about NO SOCIAL SECURITY IN AUGUST. That is a violation of a SACRED TRUST to every American now over 65 years of age and we are given two weeks notice to “adjust”, MAYBE.

    I have NO inherrent RIGHT to SS. But I sure as hell should be able to TRUST my federal government. Pull that rug out from under me and a few more million older folks with TWO WEEKS NOTICE, well…. defend that if you can.

    Anson

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  3. Randy

     /  July 13, 2011

    Wanna keep medical costs down? THAT IS SIMPLE. Health care insurance should be more like car insurance. You only use it for catastrophe – not for routine maintenance and door dings. The reason health care costs so so much is because we have essentially removed “free market competition” cost restraints from the equation. No mater what my doctor does to my I pay a 15 dollar co-pay. No matter how much my pills cost, I pay 12 dollars. What does that produce? A lazy “sure I’ll take two of those and why don’y you look at my hang nail why your at it?” consumer who does not shop, does not ask “is there a cheaper way?” does not ask “do I really need this?” etc.

    So universal insurance will only make matters worse, not better. Unless it were like car insurance.

    Obama is the adult? Obama is playing cards and he knows he has a great hand. It’s all about the re-election. You so much as said so yourself a couple days ago. Republicans are trying to address the real problem without playing politics (symbolic tax hikes) – the real problem which WE ALL agree on – spending (entitlements, etc). Obama can’t touch that without losing re-election, so he’d rather play poker.

    Think about it Duane.

    Randy

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  4. “Wanna keep medical costs down? THAT IS SIMPLE. Health care insurance should be more like car insurance. You only use it for catastrophe – not for routine maintenance and door dings.”

    Do you have any idea just how silly that is? “Routine maintenance” is what actually keeps the cost down and what we don’t have right now. Without “routine maintenance” you would see a massive increase in people seeking medical assistance with full blown illnesses. Preventative medicine always more cost effective than trying to cure late term “catastrophes.”

    “consumer who does not shop, does not ask “is there a cheaper way?” does not ask “do I really need this?” etc.”

    When friends of mine go computer shopping they always ask me because of my broad experience with building them and with technology in general. When I need some electrical work I often seek advice from friends or family members who are electrician’s or at least skilled in that area. The thought of the average American consumer shopping for medical care to save money is absurd, because it takes a level of knowledge that most people are not in possession of. It would also require doctors to diagnose and evaluate for free, feed back the data to the potential client, and then expect them to understand it all.

    “Obama is the adult? Obama is playing cards and he knows he has a great hand. It’s all about the re-election.””

    Obama is just playing the hand that he was dealt by republicans, and “they’re all about “re-election,” right and left.

    “Republicans are trying to address the real problem without playing politics”

    Playing game with the economy to gain political points from Tea Party fanatics is not only politics but politics at its worse.

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  5. ansonburlingame

     /  July 13, 2011

    To everyone,

    Not only did Jim accuse me of being “fearful” over the possibility of my SS not being deposited he said I thought it was a right. Go read above.

    Then he more or less repeated that accusation on my own blog. Here was my response just in case anyone here gives a damn about my point of view.

    “ansonburlingame Says:
    July 13, 2011 at 2:48 pm | Reply edit
    Where have I ever called SS a RIGHT. NEVER, because no tax paid guarantees a right.

    But failure to pay SS on two weeks notice for political purposes is a VIOLATION OF TRUST. We even call the damn thing a TRUST fund, do we not.

    If Duane’s union’s pension fund went broke and he was given two weeks notice of default AFTER being told as was “fine” until ten years in the future, what would HE do. I know, attack Republicans!!!

    Absolutely ridiculous.

    If the federal government defaults on Medicare, my military retirement, etc. then that is one thing. But if they default on SS for everyone, that is an entirely different matter, a matter of sworn TRUST in that government.

    And I am NOT FEARFUL as you accused me of being. I am just madder than hell over the violation of a TRUST provided by every government in my lifetime and now withdrawn with two weeks notice.

    God almighty you are just blind if you read what I say differently.

    Anson”

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    • Anson,

      I regret that you have chosen to take my choice of words personally. As I recall, you had a similar reaction once before when I used the word “laughable” in the context of my thinking an assertion of yours wasn’t supportable. Now you have taken offense at “fearful”. By fearful, in this case, I was referring to your outspoken anger over the issue and your terming Social Security a “Sacred Trust”. I had no indication that you were running in fear from it, but rather intended it, as my thesaurus indicates, to mean concerned, apprehensive, uneasy, unhappy or alarmed. Pick your adjective. But since I intended no slur on your character or your courage and now that I have made that clear, I do not see that an apology is warranted.

      I agree that the American people view, as you do, Social Security to be something they can count on, and I have every confidence that we will all be able to do so in the long term. I can not find any specific comment of yours in my posts and I don’t think I can search comments in your posts or those of others. But anyway, I was not recalling specific words of yours but the meaning that I attributed to some of our past exchanges. And when you referred to Social Security as a “Sacred Trust”, I took that as an opinion that it was somehow guaranteed. Wouldn’t that place it in a category similar to an “entitlement”? I thought it did and that you were thinking of it that way because of “Sacred Trust”.

      The August 2 crisis involves what I would call a “cash flow” problem, one forced upon us by the Republican Tea Party. The debt limit has, as you know, been raised many, many times for past presidents of both parties. The fact that this unprecedented cash flow problem has now been forced on the Obama administration is due to the decision of House Republicans, under pressure from Tea Party members, to take a unilateral stand on the tax issue. I think that’s unreasonable, and so do David Gergen, the USA Today editors and neutral-corner experts in another country going through similar tough times, Great Britain. I think that Obama, by saying he isn’t sure what checks will be cut and which won’t on August 3, is simply being honest with people. And I’m wondering how come you are so sure. Should your Social Security check have priority over those of the active duty military in Afghanistan? How about checks to mentally handicapped people in group homes? How about VA hospital expenses? How about the INS people guarding the Mexican border? Just how much money will be available on August 3? I don’t know, do you? Do you think maybe, just maybe, you might have over-reacted on this issue?

      I do regret that you made my choice of words personal and I repeat that it was not so intended. I hope you can come to terms with that when you cool down.

      Jim

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  6. This is amazing. The deal of the century is on the table, maybe the future of the country.

    All the while, hard right and left leaners are willing to throw the public under the bus for their own gain. And those so willing are not going to lose one penny, or apparently a moment of sleep over this.

    JESUS WEPT….

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  7. BTW, Anson. If you do think Social Security is a “Sacred Trust”, wouldn’t that be pretty close to being a “right”? I thought so, but that’s just me. And as long as you like to take words literally, what is this religious aspect you see in Social Security?

    – J

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  8. ansonburlingame

     /  July 14, 2011

    To anyone still listening,

    1. I do not think nor have ever written or said that SS is a “right”. LIfe, Liberty and the Pursuit of Happiness, I agree are “rights” as defined in the DOI. I have a “right” to free speech (per the Bill of RIGHTS), etc.
    2. A tax payment does not extablish a “right”. Nor does it usually establish a Trust or “sacred trust”.
    3. BUT, when a specific TAX is established to only pay ONE THING, and that money is placed in a TRUST FUND to only pay that one thing, AND we the people are told the TRUST FUND is fine until sometime long into the future (at least 10 or so years), then we the people have an expectation, I call it a trust, that the government will use the money ONLY for purposes intended, like the SS trust fund, only to be used to pay SS, along with relatively small amounts authorized in law by Congress to “borrow” from the trust fund for “other government business” from time to time.

    Has ANYONE EVER HEARD the President of the United States say that he could not longer guarantee the payment of SS three weeks into the future? EVER? And why should he make such a statement?

    Does that mean there is no money in the SS TRUST fund or his Secretary of the Treasury just cannot find the correct check book for the correct account upon which the money can be withdrawn from the TRUST fund (instead of the general fund).

    I also know that each month, probably each day, $ Billions flow into the government’s general fund for purposes other than SS payments. $ Billions also flow into the separate SS Trust fund each month.

    Have we not been told that 2 workers SS payments each paycheck pay for 1 SS receipient? Yes, we have high unemployment, cause by a disasterous attempt at a recovery funded by government, but we still have enough workers paying into SS to fund monthly SS payments, or so I have been told by every politician around.

    So either the President was misinformed by members of his administration that the money was not available, OR the money in the TRUST fund is in fact not there, as we have been assured now for years, or his statement was no more than a very cheap, despicable political trick or maneuver, or you pick the reason for his statement.

    Has someone misappropriated funds from the SS TRUST fund? Has any investigation been launched into so matters based upon the PRESIDENT’s statement?

    Am I the ONLY one around here that feels like either the President was very wrong in his statment or worse that someone, including the President has LIED about the solvency of SS for the next few years?

    When all is said and done, it sure sounds to me that there is NO SS TRUST fund. To me that means MONEY IN THE BANK TO PAY THE BILLS. Instead it seems that such a TRUST fund is really accounting smoke and mirrors by GOVERNMENT to live hand to mouth, month to month in order to pay SS and in fact SS is NOT solvent, month to month as stated by EVERYONE for years now.

    This has NOTHING to do with payments out of the general fund, such as military retirement, Medicare, welfare, active duty pay, etc. etc. WE KNOW that is month to month money. But SS I always thought was DIFFERENT.

    How about any of you liberals.

    I have said much of the above in my own blogs over time which Wheeler reads and comments upon from time to time. MIsrepresentation of such views is bad, if not dirty politics.

    But all is fair in love and war and this issue over debt and deficits is the biggest political war in our history, other than the debate over slavery, which lead to a real war.

    Withold SS checks in August for ANY reason and we could have another “war” at least in the streets. And it would not be because of the money, at least on my part. It would be over the faith and trust that the federal government will clearly violate if checks do not go out for SS in Aug and beyond until the TRUST fund has no money in it.

    And two or three weeks notice is not enough notice for me or anyone else relying on SS.

    Anson

    Anson

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  9. Anson,

    You said,

    BUT, when a specific TAX is established to only pay ONE THING, and that money is placed in a TRUST FUND to only pay that one thing, AND we the people are told the TRUST FUND is fine until sometime long into the future (at least 10 or so years), then we the people have an expectation, I call it a trust, that the government will use the money ONLY for purposes intended, like the SS trust fund, only to be used to pay SS, along with relatively small amounts authorized in law by Congress to “borrow” from the trust fund for “other government business” from time to time.

    Therefore, if I understand you here, you believe there is money being held for SS payments in the treasury. However, the truth is that there is nothing in the federal vaults for this except IOU’s from the government to itself. These IOU’s are in the form of Treasury securities. Here is an excerpt from the Wikipedia page on the subject:

    These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense…. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. (from FY 2000 Budget, Analytical Perspectives, p. 337)

    I submit then that this is why the president is having some trouble deciding what checks to cut and what checks he can’t. If I am wrong here I’m sure someone will tell me.

    Jim

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  10. ansonburlingame

     /  July 14, 2011

    EXACTLY MY POINT. In FACT, SS is NOT solvent, is it, even on a month to month basis, much less the YEARS that we have been told that it would remain solvent!!!.

    Well if SS in NOT solvent, month to month, then of course NOTHING federally is solvent? We the people are now living hand to mouth, month to month with NO RESERVES whatsoever for ANYTHING.

    Does THAT inspire “faith and trust” in the government?

    Not here for sure..SOMEBODY has been lying. Is it HIM, or someone else?

    OH, I forgot where I just wrote that last sentence. Obviously it is only Republicans that have been lying, right???

    Anson

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  11. “Therefore, if I understand you here, you believe there is money being held for SS payments in the treasury. However, the truth is that there is nothing in the federal vaults for this except IOU’s from the government to itself. These IOU’s are in the form of Treasury securities. Here is an excerpt from the Wikipedia page on the subject:”

    Anson, Jim is completely right about the government IOU’s. Many believe including myself that this the primary reason that Republicans are trying to kill SS in order not to payback money borrowed by the government.

    “EXACTLY MY POINT. In FACT, SS is NOT solvent, is it, even on a month to month basis, much less the YEARS that we have been told that it would remain solvent!!!.”

    Social Security is solvent or at least would be solvent except that the government used it as a private piggy bank, and has been doing so since it was first put into place. The government not only is expected to pay back what it borrowed, but it will also have to pay accrued interest as well.

    This is from Social Security Online:

    “As stated above, money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary.

    Far from being “worthless IOUs,” the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.”

    Anson:

    “OH, I forgot where I just wrote that last sentence. Obviously it is only Republicans that have been lying, right???”

    Where Democrats and Republicans disagree is what to do with SS. The Republicans want to put an end to it which really means they want to burn those IOU’s and not have to pay them back. The republicans don’t want to raise taxes on the rich but they’re willing to collect the accrued taxes (SS Trust Fund) collected over 70 years from the hard working members of the middle-class.

    Democrats on the other hand feel that the government has an obligation to pay off those IOU’s, and are bent on protecting SS so that hardworking retired American’s can put food on the table. Now if you took out a loan to purchase a car then you’re expected to pay it back. You can’t decide later on to rewrite the conditions of that loan so that you are resolved of all debt and still keep the car.

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    • Thanks, HL, for your well-reasoned comment above. (I was beginning to feel a tad alone out here on this limb.) :smile:

      The only thing I would add, and please excuse the redundancy, is that having SS as an unfunded obligation would appear to me to put it in the same category as the government’s other unfunded obligations, things like military pensions, payrolls of the various departments of government, active duty pay, military retirement pay, public health services, and VA benefits. Hence the point I was trying to get to about which to pay first in the event of a default. I don’t believe there are any rules to establish a priority for that.

      Jim

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      • Jim,

        You are correct. There are no rules to prioritize spending under a failure to increase the debt ceiling (unlike government shutdowns). The government would immediately face a 44% shortfall in August, a reduction in GDP of around 10%, which would essentially throw us into another recession.

        Not to mention the loss of confidence worldwide, which would not only cost us more in debt service, but would likely depress the world’s economy and thus reduce our exports.

        And on and on.

        That’s why I believe it was misguided (and Republicans are starting to admit as much now) to use the debt ceiling as a wedge to make a controversial and difficult debt deal.

        Duane

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  12. ansonburlingame

     /  July 14, 2011

    Well, Jim, you and HLG are now both on a limb, and I am cutting away right at the trunk.

    SS is “the investments held by the trust funds are backed by the full faith and credit of the U. S. Government.”

    NOw the President says no guarantee for SS in three weeks. So I ask why should I have “full faith and credit of the U. S. Government”.

    Now if we default on debt payments to China we lose the full faith of Chinese. If I want to do business, anywhere, I want to do all that I can to sustain “full faith” in everyone. Actually, I still think we can pay all of our monthly debt payments without an increase in debt limit. BUT we would NOT be able to pay for ???? (CDC radiation protection???) and other non-TRUST FUND issues.

    But if my business is so screwed up that I HAVE to default I will pick Chinese over Americans any day. But when you lose the “full faith” of the American people, well we lost such faith in Great Britain and wrote a DOI and followed it with a revolution. No Chinese there I don’t believe.

    Now with your mutual twisted logic trying to “explain” all of this with a damn dictionary, please define the world SOLVENT, financially, not chemically. What does that mean to you?

    And if you thought you were going to become insolvent with the American People, what would you do about and how much notice would you give them before you became insolvent? Three weeks??

    Now you and I both know that SS will go out for the rest of 2011. It is what else will go down the tubes if we do not raise the debt limit. My military retirement MIGHT be part of it. Fine I will address that issue if it happens or is forecast. But this SS think still is beyond the pale and threatens at least my ‘full faith” in government. I have yet to add allegiance to that statement, but it is lurking for damn sure.

    Anson

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    • Anson,

      Having come to this exchange late, I can’t believe what I have read. Social Security is conceived as “insurance.” One pays lifetime “premiums” in exchange for future retirement benefits. The pool of money to pay those future benefits still exists, except it exists in the form of bonds, payable just like the money was borrowed from China. Thus, any default on debt naturally includes defaulting on payment of Social Security benefits. But whose benefits and when? That would be the only question.

      I might agree with you that the first folks who should get paid are current beneficiaries, but it is a matter of priorities. Would it be more prudent to pay our obligations to the rest of the world to prevent default that would certainly drive up debt service costs and ruin the economy? You tell me. Nobody knows what to do because it has never happened before. You know why? Because we have never had a crop of nuts in office comparable to the crop we have in the House Republican caucus. It’s that simple.

      The point is, that no matter what you may have read or heard in the right-wing press, there isn’t enough money to pay all the monthly obligations of the federal government. That’s all Obama was getting at with his comment to CBS News. He can’t “guarantee” that the Social Security obligations will be paid, which is the only thing he can say. What do you expect? There are no rules for this sort of thing.

      If you want to get pissed off at somebody, you should be calling Billy Long’s office and tell him to go straight to hell for being part of the Tea Party mess in the House. Then hang up and call Roy Blunt. Those are the folks responsible for the crisis.

      Duane

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  13. “Well, Jim, you and HLG are now both on a limb, and I am cutting away right at the trunk.”

    At least we’re not on a “Limb-augh,” and it’s going to take more than a chain saw to cut through his bulbous trunk.

    “SS is “the investments held by the trust funds are backed by the full faith and credit of the U. S. Government.”

    NOw the President says no guarantee for SS in three weeks. So I ask why should I have “full faith and credit of the U. S. Government”.”

    If you could get your boys out of the way you would have your check. He can’t pay with what he doesn’t have and it was the republicans intent for him not to have it. We all knew that if something didn’t change that this would be the outcome.

    Solvent doesn’t mean cash in hand, it means capable of meeting financial obligations, which the government is if the republicans would put an end to their partisan impediment in the congress. Remember it’s the congress that “holds the purse strings,” not the president.

    “Now you and I both know that SS will go out for the rest of 2011. It is what else will go down the tubes if we do not raise the debt limit. My military retirement MIGHT be part of it. Fine I will address that issue if it happens or is forecast. But this SS think still is beyond the pale and threatens at least my ‘full faith” in government. I have yet to add allegiance to that statement, but it is lurking for damn sure.”

    Anson, it’s a little late to begin bemoaning having voted republican. What you’re experiencing is the difference between policy through talking points and genuine consequences. Over the last 52 years the American economy has fared decidedly better under democrats than republicans.

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  14. ansonburlingame

     /  July 15, 2011

    To all,

    Duane had the most reasonable observation, with which I agree 100%, above. He said, “…there isn’t enough money to pay all the monthly obligations of the federal government.”, meaning IF there is no debt limit increase by Aug 2nd. THAT is of course and obviously correct. Some things, big things must “go” until the Treasury can borrow more money, on a daily basis it seems.

    My ONLY point in this whole string of comments and blogs over SS is that is one of the LAST things that should, even CAN go, without destroying whatever “faith and trust” I have in the government.

    Frankly I was NOT aware that SS payments each month depended on borrowing each month, until this crap hit the fan. That seems to be true NOW, to me and was reinforced by Speaker Boehner’s comment last night on Fox (first time in about a month that I watched Fox) when he said “in the end it all comes out of the general fund”. Frankly, again, I did not know that related to SS.

    I knew there were IOUs in the SS trust fund but I also and incorrectly believed that some reserves in real money were still there. Evidentally, turning SS trust fund to ONLY IOUs started with Johnson to pay for the Vietnam War. Am I the only one that did not know that, that the SS TRUST fund is NOW ALL IOU’s?

    With that being the case now, why, again, have we been assured that SS was SOLVENT for now years, until…. What we should have been told long ago is that SS is SOLVENT only if we can keep on BORROWING money, daily or monthly. Anyone ever heard any politician say that over the last few years??

    OH, by the way Duane, there is still PLENTY of monthly money coming in to the federal government ($200 Billion per month or so) to pay SS, Medicare, etc. But SOMEONE must now prioritize the use of that money, month to month if we do not raise the debt limit. And NO politician wants to have to make such choices.

    anson

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    • Anson,

      While it is true that Social Security surpluses have been loaned to Treasury, it is not true that current benefits are paid out of the general fund. Most of the current benefits are paid out of payroll taxes dedicated specifically to Social Security benefits for current beneficiaries. It was only recently that some money was needed from the “IOUs” or the trust fund to pay current benefits. That situation can theoretically go on for another 25 years or so, and then after that I believe current payroll taxes will only be able to pay for about 75% of benefits.

      Duane

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      • “That situation can theoretically go on for another 25 years or so, and then after that I believe current payroll taxes will only be able to pay for about 75% of benefits.”

        Anson, I wouldn’t worry about it too much since most of us “baby boomers” will probably be gone in 25 years. By then the ratio of young workers to old fellas should start leveling out which should correct some of the disparity. Of course if life span continues to increase then the issue may still exist. I have no idea why they just don’t do a little means testing and task us all to pay a little more toward SS to insure that America’s elders will be cared for. Something like 40% of America’s retired person depend on SS to keep them above the poverty line. Then again the republicans could point out the economics of eating dog food and cat food, and faith healing medical services.

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  15. What Duane says above is true, but never forget, Dear Reader:

    1. Money is fungible. Fungible.
    2. The SS trust fund contains nothing of tangible value, such as something that could be sold. Nothing.

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  16. ansonburlingame

     /  July 16, 2011

    To all,

    Let me repeat what the Speaker said on TV (Hannity) a couple of nights ago. He said “… in the end it all comes out of the general fund”. I think I have that quote exactly right and he was refering to SS in saying it. Is he “lying”, wrong, misleading, or what exactly?

    Obviously we MUST borrow money to sustain SS in Aug (UNLESS someone prioritizes the money coming in in revenues each month and pays SS out of that incoming money). Obama cannot guarantee SS in Aug because, evidently he or his SecTreas cannot so prioritize. Something else must be more important than SS I suppose. Wonder what it is exactly?

    Anson

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    • “I think I have that quote exactly right and he was refering to SS in saying it. Is he “lying”, wrong, misleading, or what exactly?”

      Id be loathe to accept anything from a Republican that aired on FOX. The reason that so many republicans speak on FOX is that they are never cross examined and the audience is preselected by through support.

      “Obviously we MUST borrow money to sustain SS in Aug (UNLESS someone prioritizes the money coming in in revenues each month and pays SS out of that incoming money).”

      Initially the government began borrowing from SS to avoid have to borrow money from foreign countries, but they did so often that the debt to the Trust Fund grew far to large to continue. Had they left it alone SS would have been directly funded until 2037.

      As I’ve previously stated, the republicans’ motive to privatize SS was to legislate a means to throw out SS IOU’s that have accrued over time. This would immediately erase huge portions of our debt, but on the backs of those who need it such as yourself. Imagine if SS had been privatized four years ago under GW, and the money had been indirectly invested in Sub-Prime mortgages? As much as 60% of the total assets would’ve been wiped out while at the same time filling the pockets of rich speculators.

      Prior to 1983 Social Security was funded by a “pay as you go basis”

      “In May 1981, the Reagan administration proposed a package of policies designed to address the financing problems.

      Following this failed effort, President Reagan appointed a bipartisan commission—the National Commission on Social Security Reform, also known as the “Greenspan Commission”

      This might not work since I’ve never tried BB codes in this blog or they could be disabled.”

      [img]http://people-press.org/files/2011/07/entls-1.png[/img]

      Trying to find information on when borrowing from Social Security began is no easy task. I’ve emailed the government and Social Security looking for an answer. If my request is actually given consideration then I’ll post the results here. Apparently we’ve been borrowing in one form or another since the program first began.

      A little borrowing history.

      “The Treasury Department “borrows” surpluses in the Social Security trust funds for use across the federal government. As a practical matter, the amount of money borrowed equals the balances in the trust funds after benefits are paid out.

      Two funds exist: one for disability benefits and a much larger one for retirement benefits. The surplus in those funds at the end of fiscal 2007 (Sept. 30, 2007) was about $2.2 trillion, all in non-marketable U.S. Treasury bonds.

      The bonds now earn about 5 percent interest. Last year the government paid $110 billion in interest to the trust funds.”

      This practice began in 1937 with the creation of the Social Security system during Franklin D. Roosevelt’s administration. That first year the government paid $2 million in interest on money it borrowed from the retirement trust fund.”

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