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View Diary: Social Security Trust Funds & Ten Year Deficit Scoring (15 comments)

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  •  thanks for the info. (3+ / 0-)
    Recommended by:
    phonegery, whaddaya, vigilant meerkat

    I try to keep it simple.

    I look at SS as a separate entity from the US General Fund,which it is.
    Tell me if I am wrong.

    As a separate fund, we pay into it,and as it grows, we invest those funds in US bonds.
    When we need to pay benefits,we either pay out of current cash flow or if necessary we cash in bonds.

    I am struggling to see how the Trust Fund and SS have any impact on deficit or debt,outside of the debt the general fund owes thru the bonds.

    I do not see how it reduces the deficit or increases it.

    Certainly I agree that it does not belong in any deficit or debt discussions, and that any increase or decrease in benefits simply impacts the life of the reserve by shortening it or lengthening it.

    I am all for finding efficiencies that can stretch the trust fund dollars out further, mainly in medicare, but am really struggling how reducing benefits ends up impacting the deficit in a positive way.
    Can you explain the accounting?

    •  Social Security is legally 'off budget' (1+ / 0-)
      Recommended by:
      whaddaya

      Social Security surplus/deficits are nonetheless included in the most widely reported measure of 'federal budget deficit'. As it happens since 1983 SS has by that measure been in surplus and so lowered the 'unified budget' deficit. Even though by some standards there is no such thing as a 'unified budget'. Which doesn't stop CBO and OMB and JCT from using it as their topline number.

      As to debt. All US bonds score as part of Total Public Debt. As they should. This includes the Special Issues held by Social Security as well as all the other holdings shown in the Table above which in turn make up almost all of Intragovernmental Holdings, itself about a third of Total Public Debt. Moreover Intragovernmental Holdings also count against Debt Subject to the Limit.

      Whether as a matter of equity SS and Medicare should be included in these calculations in a way that draws them into what should be separate discussions seems to have an easy answer to me: No they shouldn't. Which doesn't change to fact that when you crack open CBO and OMB Reports they are, at least in some tables and for some purposes.

      As to your final question. Trust Fund assets increase precisely by the amount that income from all sources exceeds cost. That asset increase scores as a surplus for deficit calculations. Any positive change in income or negative change (cut) in cost arithmetically increases year end balances and so reduces overall deficits. And the major source of SS cost (99%) is benefits. Cut benefits = reduce 'unified budget' deficits. By cutting cost and so increasing SS surplus.

      The math is simple. It only becomes nutty when you put it into human terms. Like starving grandma to 'save' Social Security. The numbers work fine, the accounting is a piece of cake. Of course grandma can no longer afford cake. Or day old donuts for that matter. Or heat. But Glory Hallelujah we saved Social Security By Gum!!!! (per the spreadsheet).

      socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

      by Bruce Webb on Mon Jan 07, 2013 at 02:36:09 PM PST

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