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View Diary: Hell, No! Social Security Contributes Nothing To Deficit (119 comments)

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  •  There is a disconnect between what you write (0+ / 0-)

    and what I understand , so help me out here please because I'm sure I'm not the only one that doesn't get it.

    I think you and I are in agreement when it comes to what happens when the SS system generates an excess over what is required to pay current beneficiaries.  In your words the excess

    can and do(es) reduce (the deficit) by precisely the amount that total income including interest exceeds cost.
    I phrase it slightly differently but it basically amounts to the same thing.  I tend to say that the SS surpluses are used to pay for then-current spending.  Since much of our spending is deficit spending in essence we just have to borrow less money and thus the SS excess reduces the deficit in the short run.

    Are we in agreement on that point?  It seems that we are in agreement even though we phrase it slightly differently.

    The point where we seem to disagree is when the SS system is running a deficit.  I do take the common sense approach which you describe thusly:  

    that a $48 billion cash flow negative flow from Social Security equates to a $48 billion dollar deficit which has to be financed by $48 billion in borrowing. Nothing could be simpler.
      That is exactly the net result.  Now, how the government technically conducts the transactions (which is what you are trying to track down) is interesting to a point, in much the same way as it is interesting how to accurately (according to GAAP) create a new balance sheet when you merge two companies.   The point is, there are rules about how to do each but they really don't change the result.  In the case of SS they need to come up with an additional $48 billion and that will come from the general fund or via new debt and for the company they will now be operating as one new entity.

    To cut to the chase, let's say that for each of the next ten years we knew that the SS system was going to run a $100 billion deficit per year.  "Fortunately" we have the "trust fund" to dip into that shows a couple of trillion dollars worth of assets.  While they are an asset to the SS system they are a liability on the government's books and the government will end up paying an extra $100 billion into the SS system to pay out the promised benefits.  Is that correct?  And, if so, where does the government get that $100 billion?

    You seem to be looking at the technical aspects of how the transactions occur on a monthly or weekly basis to make up the short fall.  I look at it on the macro-level and it seems the easy, correct answer is that the government will simply borrow that money.  Is that wrong?

    We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

    by theotherside on Tue Apr 09, 2013 at 10:28:33 AM PDT

    [ Parent ]

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