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View Diary: Social Security Chief Actuary: Super Congress cuts would hurt current beneficiaries (44 comments)

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  •  Still, still not quite right. (0+ / 0-)

    IntraGovernmental Holdings are not explicitly carried as a liability to the 'General Fund', not least because their main function is as a reserve and not an account payable.

    What people don't understand is that lifting the cap would equally mean relieving the federal government from ever having to redeem Trust Fund principal. In fact the very wealthy would SAVE a couple of trillion in net transfers from their pockets to Social Security by ACCEPTING a cap increase over the next few decades.

    The result is counterintuitive but it turns out that the cost of backfilling the projected gap between income and cost under the current benefit schedule is LESS than paying principal down to depletion in 2036.

    The top 1% just prefer to destroy Social Security anyway. Even if it costs then a trillion plus on net over the next 30 years. Man! They sure do nurse that grudge against 'class traitor' FDR.

    hmi you need to pay less attention to talking points derived from what seem to be plausible first principle 'crowding out' arguments and more to actual cash flow projections on annual bases over various future time periods. Because your argument scores 'Fail' when run up against year by year, decade by decade numbers. I mean it SOUNDS right. But---

    •  I've read the comments (0+ / 0-)

      and I've read your Social Security series, and so far I believe that what I've written is closer to the situation than what you believe. As for the cap, I didn't comment.  

      •  Better with numbers (0+ / 0-)

        Lots of people believe lots of things. Like Flying Spaghetti Monsters.

        Let me leave you with a tidbit.

        Per Stephen Goss, the Head Actuary of Social Security, a perfectly balanced Social Security Trust Fund under a Pay-Go system would be perpetually cash flow negative as a PORTION of Trust Fund Interest was paid out in cash to meet the roughly 1.6% gap between tax income and costs while the rest would need to be retained along with ALL the Trust Fund principal to maintain the 100% of next year cost that defines 'solvency'.

        That is once Socia Security hits a steady state of having one year of projected cost in reserve each year it needs to KEEP not just 100% of its principal but to AUGMENT it with enough of its accrued interest to keep pace with an ever increasing beneficiariary population coupled with a benefit formula that goes up with Real Wage. Meaning that in a healthy economy we would never need to redeem the Trust Fund and due to the requirement to retain some of its interest earnings to maintain a Trust Fund Ratio of 100 (one year of projected cost) would actually be paying a discounted rate on the face interest when measured in terms of assets extracted from the real economy.

        Yes it is odd that if we fix Social Security we never have to pay back ANY of it's current assets. But I have run these numbers by the biggest names in the biz and nobody disputes them.

        A fixed Social Security system, something that can be done by minor changes on the revenue front, transforms the Trust Fund into a discounted interest only loan. And so not really much of a debt at all. If you look at the numbers. Which I have done. You?

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