Comments on: Karl’s Mighty Hammer

by: SG

Sun, 12 Jun 2005 06:55:10 +0000

Greenspan is an interesting case to the extent that he has largely managed to transcend politics– despite being essentially a political animal from the beginning. He is a fiscal conservative, so lately that has tended to distance him from what passes for conserviative politics in Washington, especially the “Neocon” element. It was hardly a ringing endorsement of the presidents plan, and conservative commentary has tended to steer clear of it where we just know they would be all over it like a rash if they could spin it as an endorsement. Note Greenspan’s use of the terms “assumptions” and “projections.” He only talks about qualified (reasonable) assumptions for spending, and the projections are based on the current circumstances as continued into the future. The projections of the key dates as prepared by the Congressional Budget Office and the Social Security Trustees both use very conservative assumptions. Some would say extremely conservative assumptions, about things like growth of the economy, the nature and size of the work force, inflation of wages and costs, etc. There is very little difference between the sets of assumptions used by the two offices, yet the projected dates are 10 years apart. Once specific assumption growth of the economy, was based on a recent period which included the current recessionary period. If they had used the average growth over, say, the last 20 years, the picture would be entirely different and the “crisis” dates could be beyond the visible horizon– 50 to 100 years from now. We have perceived similar problems in Social Security in the past, and have dealt with them well enough that the system has survived for 75 years. There may very well be problems in the future, but there is nothing in Social Security that really needs to be dealt with now. And you’ve hit another nail pretty close to dead on the head– fussing over the
“Social Security Crisis” does indeed distract our attention from other crises including but not limited to Medicare and a current budge deficit of hitoric proportions. The administration could be cleverly positioning itself to
wash its hands of these other problems with the exuse that “hey, we tried to fix Social Security but you wouldn’t let us. We’re outta here.” They’re buying time, and the bulk of these messes are going to be there for the next administration to deal with.

by: SG

Sun, 12 Jun 2005 06:35:26 +0000

Small man, you’ve obviously given this a lot of thought and your comments are appreciated, especially since they tend to support our point of view– that there is no crisis, but one is being manufactured by the Administration. Bush himself has said that the private accounts– oh, excuse us please– INDIVIDUAL accounts won’t fix the “bankruptcy problem.” So why are they pushing so hard for them? And another thing– we’re talking laws passed by Congress, and Bush has nearly absolute control of Congress, so why is he promoting his scheme to the public? Oh, excuse us again, we mean his hand picked audiences.
But we probably should gently correct you about the nature of the Social Security Trust Fund, which is a real fund, with real Trustees. It’s not the left hand borrowing from the right. If the government had not been able to borrow from the Trust Fund, it would have had to borrow elsewhere and that money would have been owed to someone else. Well, it probably wouldn’t hurt to refer you to the “Horse’s Mouth,” by which we mean the Trustees themselves. If we can get this link to work, it will take you to a summary of the 2004 Annual Report by the Trustees of the FOUR separate Trust Funds.
http://www.ssa.gov/OACT/TRSUM/trsummary.html
Please compare it to what the Administration is saying, and ask yourself why they are distorting the situation. Who benefits from the changes that the White House is proposing? How can they spend so much money and effort on a manufactured crisis, while ignoring the smelly naked elephant?
Thanks again for your comments!

by: small man in a big world

Sun, 12 Jun 2005 06:25:56 +0000

The Federal Reserve Chairman is actually speaking about the big elephant! Two quotes from Greenspan before the Senate Special Committee on Aging today. When speaking on Social Security he said “a review of current commitments to aging Americans was urgently needed and the government must give people time to prepare for the fact that they may have to work longer, save more and spend less.” Also he said “Under existing tax rates and reasonable assumptions about other spending, these projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years” He also gets to my point that the trust fund is not sufficient when talking about our inablitly in the future to meet current social security benefits expectations “Because benefit cuts will almost surely be at least part of the resolution, it is incumbent on government to convey to future retirees that the real resources currently promised to be available on retirement will not be fully forthcoming”
Please don’t take this as an argument in favor of President Bush’s agenda. But it may shed some light on the fact that at least the Fed Chairman thinks this issue should be debated and is urgent somewhat urgent. He made one further statement on the urgency “Something has got to give soon because we don’t have the choice of not resolving this issue because of the inexorable turn of the calendar” adding that “2008 was shaping up as a deadline year since so many baby boomers hit retirement age then”
Just some food for thought.

by: small man in a big world

Sun, 12 Jun 2005 06:25:11 +0000

I don’t disagree with the fact that using the word “Bankrupt’ is misleading. Bankrupt means total failure, and in 2042 or 2052, social security will still be able to pay out at least 73 cents on the dollar. It will not be in total failure. The use of the word is meant to scare people who are unwilling or unable to think about the issue for themselves.
But I do think calling the social security surplus a trust fund, is a bit misleading. Yes the surplus is invested in treasury bonds. The government takes the cash we pay to them for social security tax, they spend it, and then they give us an IOU called a treasury bond. These bonds are backed up by the full faith of the US government damn it, so they are as good as gold! One doesn’t expect the government to default on those obligations/bonds. But who really pays when those bonds need to be cashed in? The government does not and will not have the money to pay the bonds due to the budget deficit, so they are left with a few options. They can cut spending (not likely to happen), increase taxes (more likely to happen), or borrow from foreign countries (very likely to happen and thus increase our national debt). One would expect a trust fund’s money to be available for them when they have the need to turn it into cash. The only problem with the SS trust fund is, when we are ready to cash in the treasury bonds, we are going to have to reach out with our right hand, and pay ourselves with our left hand. I wouldn’t necessarily say that is a trust fund that works. Maybe we should fix the trust fund and make it work more like a true trust fund. Maybe one way to fix the problem is private investment accounts. Maybe it’s not. But it is a debate that it wouldn’t hurt for us to have.
Obviously the president is saying we have to fix social security now rather than later, because it is politics as usual. “Don’t hate the player, hate the game.” Tupac 1994. Seems to me that the real issue is our government’s lack of fiscal responsibility. Social Security is only a small percentage of our real national debt problems. Medicare is at least 4 times as big of a problem. Medicare is already running a deficit. But who is talking about that? Who is talking about the fact that within the next 20-50 years, every dollar we pay in taxes, will go directly to pay interest on our national debt. That to me is the really big elephant standing in the middle of the room, but nobody admits it is there. And yes, that elephant has no clothes and it smells really bad!

by: bill42

Sun, 12 Jun 2005 06:23:51 +0000

Craphammer. Love it! I think eventually we will find out that lots of conservative columnists are on the payroll from the whitehouse along with Rush Limburger plus everyone at Fox so-called-News. Nobody could believe that crap no matter how hard they hammer it. Hey, what is the difference between the Hindenburg and Rush Limbaugh? One is a flaming nazi gas-bag and the other was an airship