Thursday, July 28, 2011

Impervious to Facts

Crossposted at MyDD

Dean Baker wants to know if Thomas Friedman is impervious to facts.

The evidence suggests that he is. He gives yet another of his diatribes about the need to cut Medicare, Medicaid, and Social Security in order to advance his grand agenda for the country. Of course Social Security is financed by its own designated tax and is projected to be fully solvent for the next quarter century, so it is a bit bizarre to have this one on the list.
The Facts: The most pessimistic projections say Social Security isn't a deficit creator until 2037.  Current budget problems are the result of a housing bubble and, as Baker also points out, ongoing budget problems are (still) the result of a broken health care system and our solitary substantial investment of the past decade: war.

While the villagers clutch their pearls searching for the most creative plan to gut the social safety net, Republicans struggle to hold themselves together having won a majority by electing screaming ideologues, Democrats scramble to not screw the debt ceiling standoff up entirely, and the President does his best to reinforce 30 years of conservative deficit dogma, it's worth keeping one thing in perspective:

Our national discussion has become a national distraction, and it's sure to carry over into the 2012 campaigns.  No one is debating real solutions to actual problems.

Also: Jobs.

11 comments:

  1. Social Security is already a deficit creator. Check out table VI.F9 of the 2011 Trustees Report.

    http://www.ssa.gov/OACT/TR/2011/tr2011.pdf

    Social Security will spend $46 billion more in 2011 than it takes in taxes. In 2020, it will be $99 billion. And yes, this includes general fund transfers to offset the two-percentage point reduction in the employee share of Social Security taxes.

    The only way to make up for this deficit is the cut spending, raise taxes, issue more debt to the public, or ask Ben Bernanke to monetize it.

    Before you say "but there's interest from the $2.6 trillion trust fund that offsets the operating loss", keep in mind that this "interest" is simply an accounting mechanism because it's just government paying itself interest. The fund this "interest" transfer, you have cut spending, raise, taxes, issue more debt to the public, or ask Uncle Ben to monetize this.

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  2. In table VI.F8 of the same report, Social Security begins running a deficit by 2025 even if you include the fictional interest.

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  4. SS will NEVER run a deficit, it is already in current law that when SS runs out of money in the trust that and benefits will be cut to that of incoming tax revenue.

    Second SS has $2.7 trillion dollars in its trust fund, so no need to worry it will be a long time before SS reaches the point of cutting benefits.

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  5. RD is wrogn.

    SS is running an annual deficit and will from here on out unless it is changed. The data I cited in the SS Trustees Report confirms this. I think the trustees have a good idea how much money is coming in and how much is going out.

    The "Trust Fund" will be depleted after decades of running annual deficits. That's the only way the "Trust Fund" can be depleted. If SS were not running annual deficits, the "Trust Fund" would never be depleted.

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  6. Sorry, RD is WRONG, not wrogn :)

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  7. You say we have nothing to worry about until the trust fund is depleted. That is not correct. In 2020, the SS annual deficit projection is $99 billion. To finance that annual deficit with trust fund dollars, the government will have to raise taxes, cut spending, borrow more from the public, or monetize the debt. That's a lot to worry about.

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  8. Really I don't give a rip how the governments pays its debt to SS, no more then I care how it pays its debt to China, US citizens who holds US gov. bonds, Chinese banks who hold US gov. bonds, or anyone else for that matter.

    The government needs to pay all it's debt including ones held by the American people via SS.

    SS has its own income via the payroll taxes for a reason, and that is to compartmentalize it from the rest of the government.

    And I am right current law will cause SS to cut benefits when the trust fund is depleted, because it is ILLEGAL for SS to run a deficit. As I said in 2036 when the trust fund runs out benefits will be cut to income tax revenue. SS has never been and never will be a driver of our deficits.

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  9. Before you spout off about SS not legally running deficits, you should read the SS trustees annual report. SS will run a deficit this year according to the trustees own numbers. See table VI.F9.

    What you mean to say is that SS cannot deplete its "reserves" below zero.

    Apparently you don't understand the difference between deficit, debt, and surplus. SS can LEGALLY run a deficit if it has "reserves" to deplete. It's only after the "reserves" are depleted that it cannot run a deficit.

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  10. Of course, drawing from these reserves, trust fund, or whatever you want to call it, means you have to raise taxes, cut spending, borrow more from the public, or have the debt monetized.

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  11. nonsense,

    SS is no more running a deficit then I do when I pull money out of my savings account.

    You playing games here, who holds the governments debt is doesn't matter. If china, Individual Americans, European banks to whoever cash in their bonds then the US government is going to have to come up with that money somehow, SS is no different then any other bond holder in this regard.

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