"Fixing" Social Security...

[Bigmack]

... isn't it great that the Rethugs can have all those neat "codewords" to use with each other?

"Fixing" Social Security, of course, means killing it. Just like "ending dependency on oil" actually means making Big Oil even richer.

But I wanna talk about Social Security. I'm re-reading "The Plot Against Social Security" by Pulitzer Prize-winning financial author Michael Hiltzik, and he says SS is anything but insolvent. All the "borrowing" from SS by the FedGov is backed by Government Bonds... trillions of dollars worth. If those bonds are "meaningless IOU's" like the Rethugs say... we are truly in deep shit! China won't keep on funding our debt if those bonds are worthless.

If we start redeeming those bonds in the 2020's, according to Hiltzik..."On average, the total redemptions... will come to less than one half of one percent of GDP per year...... as a percentage of the Federal Budget, they will range between 6 and 7 %..... if Bush's tax cuts were rolled back, the revenue gained to the government would cover the cost of redeeming the bonds with perhaps a little left over." (pgs 111-112)

Every time you hear people - especially young people piss and moan about SocSec, remind them of the above facts. SS only runs out of money for the young folks if the gov't defaults on it's bonds, and we can easily afford to fund those bond redemptions. We may have to cut back on the tax cuts for the rich and the military adventurism a taste, though.

[badcau]

1. My way to fix

Just tell all the foreign governments that we give hundreds of million of dollars to, just who made it possible for them to get all that money. The elderly that are now drawing SS and the workers that are still the tax paying citizens. So when they get their check would they kindly show their appreciation by depositing 25% to our Social Security program........

[Yupster]

2. The bonds are meaningless only because

they don't make any tangible difference.

Look, social security recipients, present and future are promised a monthly benefit derived from a formula using bendpoints. What backs that promise is the faith and intent of the congress.

If the congress wants to, it will pay each recipient forever and it will get the money from the general funds of the treasury whether that means they have to raise taxes, print dollars, or cut other spending to do it. If congress wants those benefits to be payed, then they will be.

If congress chooses someday not to pay the promised benefits, then they will simply change the law figuring the formula and recipients will get less. Congress can change the law at any time of course.

That's the way the system works, and notice what's not included in it is the bonds.

They really don't matter at all. If congress wants to honor their payout promises, they will, if they don't they won't.

So what about the bonds?

Here's the closest analogy I could come up with. You decide to go on a vacation so every month you put $ 50 in your underwear drawer for your vacation. Sixteen months later you blow a gasket on your car and need $ 1,300 (what it's costing me right now) to get it fixed. You hate to do it, but you have to use your vacation money to repair your car. In return though you put a bond (IOU) on a piece of paper and tuck it in your underwear drawer saying "Owe vacation fund $ 800".

So, are you going to repay that IOU to your vacation fund? Maybe, or maybe not, but really whether you do or not has nothing at all to do with the bond in the drawer. You will if you feel like it and you won't if you don't want to. The IOU is nice, but kind of meaningless.

Now what of your other creditors if you don't repay your loan to yourself? Will your mortgage company care if you don't repay your vacation fund? Will your car financing company? No, they couldn't care less how you do your internal bookeeping. They will consider it cute that you borrow from your vacation fund to pay your car fund and leave a little note in your drawer, but it doesn't concern them and they won't care whether you pay your vacation fund back or not.

Same with the Chinese. They won't care flip whether we pay back one of our departments from another one of our depertmants. That's all internal stuff. As long as we pay their bonds when they mature they will be just as happy as your mortgage company as long as you send in your monthly payment on time.