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August 16, 2010 05:38 PM UTC

More about Social Security

  • 10 Comments
  • by: jpsandscl

Krugman hgas it right again (as usual):

Attacking Social Security By PAUL KRUGMAN

http://www.nytimes.com/2010/08…

He doesn’t go as deep into the funny accounting gimmicks the right likes to use to obfuscate about their real agenda regarding social security, but nevertheless he still demolishes these straw-men arguments the “fiscal hawks” keep making.

It is so good to see that the pragmatist in chief is reaching across the aisle yet again to pander to people who have absolutely no resppect for him and to do their bidding on social security. When will he grow a pair and actually stand up to these cretins? (Or is it more technically correct to use the term idiots? or morons?)

Comments

10 thoughts on “More about Social Security

  1. Sorry, I think he’s a lunatic.  When he decided to view economics through political rather than economic glasses, he lost whatever greatness he might have had.

    To wit:


    Actually, it’s Krugman who is trying to have it both ways here; I leave to the reader whether the Nobel Prize winning economist is actually this ignorant of basic finance or whether he is yet again attempting to deliberately mislead his readers. As Krugman himself notes, the program has run an operating surplus in the past, which is coming to an end. In the near future, Social Security begins running an operating deficit, which requires it to draw down its ‘savings’ in the “trust fund.”

    But what are those savings? The problem, as I have explained previously, is that the trust fund’s only assets are IOUs from the federal government. If we stay for the moment with the fiction of treating Social Security as indeed an independent entity, that means that for years it’s been lending money to Congress that was used to prop up the budget at no real economic cost (it’s not like the federal government needed to lay out money to pay interest on those debts – all it did was make accounting notations). Whereas now, Social Security will begin asking for its money back – and all of a sudden Congress in one fell swoop both loses a cost-free source of funds and has to start laying out cash from the general budget to repay those debts so that Social Security can make payments to beneficiaries. That’s not “aid,” it’s precisely how the trust fund mechanism is designed to work. And it’s going to take a ferocious bite out of the budget. Saying this is not a problem for Congress is like saying your fortunes haven’t taken a turn for the worse when your interest-only mortgage suddenly starts requiring principal payments, or when you’ve been borrowing from a loan shark and spending the money for living expenses and suddenly have to start repaying him. Basically, Congress took the money and spent it, and now it has to tighten its belt to repay it. You’d go broke very quickly trying to follow Prof. Krugman’s financial advice.

    1. the art was known as “political economy.”

      I still like the term.  Whatever abstract theory dictates, in a democracy public opinion (thus, politics) has to be considered.

    2. Dan Mcluaghlin? And he also has a Nobel Prize in economics? No? Didn’t think so.

      Always the right tries to equate household economics (the stuff you learn in high school home ec classes) with a 14 trillion dollar economy. No wonder you guys always crash and burn whenever you get your hands on the reins of the economy.

        1. Social Security was and is prohibited by law from investing in anything other than US Treasuries (thank God!). As the trust fund draws on those treasuries, they will be repaid as they would in any case by the US Treasury. The US Treasury has never defaulted on a payment ever in its history, and hopefully will never. God we hope this will continue to be true, but the lunatic fringe of which you are a part has posited that maybe it should.

          Therefore, the investments in the trust fund will now be used to pay the retirees. This debt has matured and will continue to mature in regular intervals since it was issued. It is always paid and new issues of Treasuries are made to provide the capital the government needs in excess of taxes raised.

          This would be a moot point if your last Republican President hadn’t squandered an enormous surplus which would have retired the national debt by now. A surplus left him by the previous Democratic President.

          It is cranks such as what’s his name? Dan Mclaughlin? Who is he again? And such as yourself who try to make the outrageous claim that maybe the US government’s debt isn’t as sacrosanct as everyone in history has always held it to be. God help us if you and your kind ever get into power. We will be sold right down the drain.

          1. The Sicilian is Vezzini.  He is representative of Krugman, and in this thread, you.

            Now, as I understand it, here goes.

            You have two containers, $100 bills, and Monopoly money.  One of the containers is the US Budget, and the other is Social Security.  While the budget container (especially now with Dem control of Congress and the White House) often runs out of money and has to use monopoly money to pay its bills, the SS container has always had a surplus.  Often, that surplus is given to (or taken by) the Budget container to help meet the budget.  When the money comes from the SS container to the Budget container, it turns into monopoly money, because Monopoly money represents money that’s been borrowed.

            The SS container has always met its responsibilities and generated a surplus that has been ‘borrowed’ by the Government.  That is no longer the case.  I believe that starting this year, the SS bucket won’t produce a surplus, and will begin needing to cash in some of the iou’s it received from the budget bucket when it loaned the money.

            This is a problem, because the Budget container will now have to start borrowing other money to pay back the Monopoly money it has taken from the SS container, and it faces the double whammy of not having the excess from SS to augment the insane spending that’s been going on the last two years available to it.

            Krugman thinks this is no problem, I disagree.  I don’t have a Nobel prize, but I wasn’t born yesterday, either.

            Did that make sense?

            1. but I understand what you’re saying and why you think that way. It’s just not quite right.

              The chits (US Treasury securities)in the trust fund have always had to be paid back. They have always been paid back. Part of the budget process the US uses accounts for the repayment of the previously borrowed funds and the issuance of new debt to cover any current shortfall.

              The only issue I see with the trust fund running a marginal and temporary current account deficit right now is that it won’t be buying as much of the US’ debt as it had and therefore the markets will have to sell the debt to another bidder rather than the trust fund. To date, the government hasn’t had any problem finding someone to buy it’s debt issues. Indeed it has been easier since the Great Recession in some respects as major buyers have fled to security, and there is nothing safer than US government debt. Thus our amazingly low rates.

              And it is most interesting that you completely ignore the great reason for this problem in the first place- the squandering of the greatest surplus in our nation’s history by the second Bush administration. This subject would be moot if not for those damned tax cuts and the two unfunded wars.

              1. Is a fart in the win compared to what we’ve spent in the last 18 months.

                Remember, we were attacked on 9/11 and had to create brand new, huge governmental agencies. It wasn’t all war spending.

                Although I’m good with the war spending, and I’m sure we will disagree.  

                1. Large bureaucracies are only ok if they are Republican creations. I see! Way to go fiscal conservative.

                  And Clinton’s surpluses were in the hundreds of millions per year. Enought to retire the national debt in less than a decade until GWB came into office and squandered it all.

                  And I have no essential qualm with defense spending. I was in the military for seven and a half years during Reagan and Bush I administrations. I do have a problem with spending these enormous sums and getting so little in return for it. We still can’t even find Osama after all these years and the countless dollars spent on the war and on all the intelligence and security apparatus in this country? We’ve become pathetic!

                  Shit, I bet we could just drop a cool hundred million or billion in some tribal leader’s hands in Waziristan and we’d have Osama already! Much more cost effective.

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