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Oddly enough this is a serious question. People who track my diaries closely (and thanks to both of you) will recognize that the Black Hole of Social Security is Low Cost. Low Cost purports to be the upper range of reasonable economic performance but that is not what it is in reality. Low Cost for a decade and more has been that set of economic and demographic numbers that produces a fully funded Trust Fund with no changes in payroll tax, benefits or retirement age. It isn't a projection, it is a target. What is the Low Cost Alternative

What would we do in a world where everyone accepted that Low Cost was Low Balling the economy. What if in fact Social Security is not broke: by the numbers. What then? Flip me baby.

Once we understand that Low Cost is a target and not the upper end of a possible range of economic outcomes we can eliminate some serious distortions.

The standard economic model that produces the famous 2017 and 2041 dates is called Intermediate Cost. When the Three Alternatives are presented as a range then naturally Intermediate Cost must come in below more optimistic Low Cost. But over the last five years this has only been accomplished by accepting really really pessimistic numbers for productivity going forward Economic Assumptions under the Three Alternatives

Time to break on through to the other side.

Low Cost is a valuable tool. It is the baseline, it is the test, what would it take to rescue Social Security if we did nothing at all. And the answer is "not much" 2.0% productivity saves the day. So what now?

Well we keep Low Cost and recalculate it each year depending on actual economic results. But we cut it lose from any notion it is predictive, it just is what it is, a model that produces a fully funded Trust Fund. We then produce three new Alternatives: Medium, Good, and Poor. Medium assumes that the economy will do just about as good in the New Year as it did in the Old. And absent positive signs of slowdown this seems reasonable. Good would have an outcome up from Medium, Poor an outcome down. (Economists can have a field day debating the proper range).

Each year we take Medium and measure it against Low Cost. If it projects too much income over the seventy five year window we divert that percentage of payroll tax somewhere else. And repeat each year as necessary. The changes end up being fractional, you would never see it in any given paycheck, particularly if it was being diverted to Medicare.

But the fact remains, given ordinary economic growth Social Security is overfunded going forward, and we need to redirect that money somewhere.

Originally posted to Angry Bear (contributer) on Mon Jan 02, 2006 at 08:33 AM PST.

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Comment Preferences

  •  Well, Mr. Bruce Webb, you can have (none)
    all of mine.

    I hereby give it to you, every penny.

    Before you accept, you might want to consider exactly what you are being given.

    "given ordinary economic growth" What is that? How does it come about?

    •  I'll take it (none)
      Ordinary growth has historically averaged 2.6%. Low Cost requires 2.1% in 2005 and 1.9% long term. Intermediate Cost projected 2.0% productivity and 1.6% long term.

      Please endorse the checks "payable to Bruce C Webb"

      Before doing so you might want to examine the discussion on p. 83 of the 2005 Report:

      "For the intermediate assumptions, the annual change in productivity is assumed to decrease from 3.3% for 2004 to 2.0% for 2005, then to an average of 1.8% for the years 2007 to 2009" Note the total absense of any 'whys' to explain a pretty shocking slow down. Keep in mind Intermediate Cost is supposed to be kind of neutral. A slowdown in growth to 60% of 2004's rates didn't make sense at the time and given what the papers are reporting doesn't make sense now.

      If you really believe the long term growth potential of the US is sub 2.0% then buy gold. And don't forget to endorse those checks.

  •  The Phony Crisis (none)
    The so-called Social Security crisis is yet another example of Rightist propaganda and Norquista disinformation, correlative to supply side economics, both of which are bogus economic theories aimed at creating a political perception in the country amenable to ending social programs and "entitlements" so that the savings can be transfered to more "productive" use, which, according to trickle down theory is the pockets of the super-rich. for details see the "confessions" of David Stockton, Reagan's former and now reformed budget director.
  •  strains my brain to think in abstract numbers... (none)
    ...but are you saying that because the govt measures the financial status of the trust fund using higher risk predictions than is needed and thus always over states its funded status?

    Our nations quality of life is based on the rightousness of the people.

    by kalihikane on Mon Jan 02, 2006 at 08:43:37 AM PST

    •  Not always (none)
      The 1997 Report was fairly honest. It required productivity in 1997 and each following year to equal what was then considered to be a pretty good 1996 number. And that fairly could be termed "optimistic". But each and every year that the actual economy returned better numbers than 1996 then the bar got lowered. 1997 Report. The bar got so low in 2000 that they were forced to switch their lead number for 2001 to Productivitity (which no one understood) from GDP (which a whole bunch of people are familiar with) just to pass the laugh test.

      There was a lot of gaming in the 2001 to 2004 Reports (infinite future projections, wild adjustments in second year numbers based on nothing at all) until the 2005 Report when they simply surrendered. Officially 2.1% productivity, a 60% slowdown in growth, was the best possible reasonable outcome.

      Based on what? Certainly not the economic numbers coming out at the time and since.

  •  Newsflash (none)
    Americans have been paying more into the Social Security system than benefits have been doled out each year since 1983 -- when the reform was enacted.  This is so we can build enough reserves such that Social Security can pay the full benefits to beneficiaries even in years when Social Security payouts exceed payroll tax revenues.

    So where have we redirected the excess payroll taxes?  The general revenue fund is where we have redirected the funds.  The general revenue fund must repay Social Security the money it has borrowed.

    That said, as an actuary, I agree with the diarist that the "optimistic" projection tends to be the most accurate one.  Seldom in America is our GDP growth rate below two percent, and that is what the medium cost projections assume.  Still, we want to be cautious since real humans depend on Social Security, and the medium projection has  greater than a 50 percent chance of yielding a more optimistic projection (and the high-cost projection would just be far too much a strain on the American people).  Medicare Part A, where benefits have already exceeded payroll taxes or come close to doing so, is where the focus should be.

    The quest for freedom, dignity, and the rights of man will never end. - Justice Brennan

    by jim bow on Mon Jan 02, 2006 at 08:54:47 AM PST

    •  End Result (none)
      The end result is that there is a lot of unclaimed money sitting around in Social Security.  Can someone tell me why this shouldn't be given to the rich?

      "We need a war to show 'em that we can do it whenever we say we need a war." -- Fischerspooner

      by bink on Mon Jan 02, 2006 at 09:02:53 AM PST

      [ Parent ]

    •  If we hit Low Cost we don't have to pay it back (none)
      That is my larger point. Low Cost produces a flat trust fund ratio, which is to say a Trust Fund whose principal never has to be paid back. Which is fine as far as it goes. And if you poke around in the numbers you see that the General Fund has to start paying back about 12% of the interest then owed to the Trust Fund in 2023 and a gradually rising amount after that.

      But if the economy does in fact exceed Low Cost then the Trust Fund explodes. We will be faced with a damned if we do, damned if we don't scenario. We can't just say the Trust Fund and its accumulated balances are not real (well I can't because on balance I am an honest man) yet how can we continue to collect payroll tax when interest on interest more than covers the tab?

      We need to address the overfinancing before it gets out of hand, and that comes some point before 2011. Check out figure II.D7: Trust Fund Ratios and then take a look how that plays out in Current and Constant Dollars Tables VI.F7 & VI.F8

      •  So basically what you are saying ... (none)
        ... is that we need to reduce the payroll tax rate now out of fear that the Social Security surplus will become too large?  I'm not sure I'm where you are.  I'm much more cautious in my assumptions than you are.  I don't think it's prudent to assume that Gross Domestic Product (GDP) will grow on average 3.3 percent annually over the next 9 years, which is what the low-cost projection assumes (see part 6), even though that is what has happened over the last 40 years.  While I don't like shoving Americans with such high payroll taxes, there is just too high a risk to make such an optimistic assumption.

        The quest for freedom, dignity, and the rights of man will never end. - Justice Brennan

        by jim bow on Mon Jan 02, 2006 at 07:29:12 PM PST

        [ Parent ]

        •  Not now, but perhaps soon (none)
          And you don't have to reduce it, intsead it is probably sounder to divert it to Medicare.

          Don't underestimate the compounding nature of interest. Low Cost is really a pretty sound target. The key is the flat trust fund ratio. However if you get growth sufficient to keep that chart pointing upwards at some point you get to an unsustainable trust fund ratio, a point at which it doesn't make sense to continue to pile up interest on interest.

          At that point you have a dilemma. The only way to lower the Trust Fund ratio is to pay all of the interest due and some of the principal, which means keeping income less interest less than cost. Which means payroll tax cuts, and the longer you wait the more extreme the needed cuts. People might like those tax cuts, but they are going to hate paying for them out of general funds. One big key to Social Security popularity is that it is for the most part pay-go. And it is healthy for the system to keep it that way.

          So ideally you want to adjust tax rates around Low Cost, you let the standard 75 year window be your guide. Tiny adjustments at the front end have some pretty big effects at the back end. You might not have to tweak much but all the data said that over the next few years we will need to tweak payroll rates down. Perhaps later they would have to be tweaked back a little.

          But it makes total sense to pick an ultimate outcome and adjust taxes to that. People just have to get their minds wrapped around the fact that given current rates of productivity going forward, the Trust Fund looks to be fully funded.

          •  Except (none)
            All the cost-assumptions do not yield a deterministic outcome.  Each cost assumption assumes there is a 50 percent chance of experiencing a more optimistic outcome (an even larger trust fund than what is projected under the corresponding cost assumption) and a 50 percent chance of experiencing a more pessimistic outcome (a smaller trust fund than what is projected under the corresponding cost assumption).  The low-cost assumption, for example, has a 50 percent chance of yielding a more pessimistic outcome than the Office of the Actuary projects.

            I very much appreciate your links to the SSA and the Office of the Actuary.  They are quite useful.

            The quest for freedom, dignity, and the rights of man will never end. - Justice Brennan

            by jim bow on Tue Jan 03, 2006 at 07:27:24 AM PST

            [ Parent ]

            •  Thanks, but I am not sure about that 50% (none)
              The different cost assumptions are supposed to represent a range of outcomes. Assuming a normal distribution you would expect fifty percent of all outcomes to occur on either side of Intermediate Cost. The same is not true for Low Cost or High Cost. Under standard statistical practice you would instead assume a 5% chance of the economy performing better than Low Cost and a 5% chance of it performing worse than High Cost. Or whatever your confidence interval is.

              For you formulation to work at all productivity would have to be a freely floating variable.

  •  Try these sites, you might learn something (none)  This link gives you this: So You Think
    You've Got a Trust Fund With Your Uncle Sam By John Attarian

    Consider this, today, people over 65, as powerful an electoral bloc as they are, represent only 17 percent of the voting age population. By the time you retire in 2023, the bulk of Baby Boomers will be in the 65–80 age bracket, retirees will represent 25 percent of the voting-age population, an increase of 45 percent in their relative voting power.

    If those aged 55 to 64 are added into the equation—a reasonable assumption, since people who reach 55 are starting to think about their retirement and tend to vote more in line with the interests of actual retirees—the elderly and near-elderly will represent 40 percent of the electorate.

    Older voters actually vote, Bruce. We have a better percentage of voting than any other age group. You are going to retire to a revolution that will finally demand accountability of the elected politicians in Congress.

    If you begin your education now, Bruce, you can be involved in the solutions that will be forthcoming.

    BTW, Cato Institute isn't your friend.

    •  I started my education in 1997 (none)
      When I downloaded from a little known website operated by the Chief Actuary of the Trustees of Social Security.

      And if you had actually read my diary you would have seen I am predicting an overfunded Trust Fund. I turned 49 yesterday and I don't really need to be patronized by someone who clearly does not understand the issues here.

      I am not new, neither to dKos or the Social Security issue.

      I know that Cato is not my friend, which is why I have been blasting them and their weasel logic in every Economics blog I can find. Perhaps you have not read the Fall 1983 Cato Journal entitled Social Security: Continuing Crisis or Real Reform? and seen the assault on Social Security laid out in bare terms, particularly in Butler and Germanis's "Achieving Social Security Reform: A "Leninist" Strategy". But I have.

      Social Security is not broke. At all. And exactly no one from Left or Right has been to show that it is. Not working from official numbers anyway.

      •  Links to every Report from 1942 to 2005 (none)
        On my website. Plus commentary. With date stamps starting November 2004 when Bush first started spinning this one.

        Have fun, add what commentary you like here, I am going out. But on this topic I am not new. Whatever Ohio thinks.

      •  I read some of your work at your (none)
        web site. When you write sarcasm you might want to explain it for dim witted people like me.

        As to, "I don't really need to be patronized by someone who clearly does not understand the issues here.'

        I think I know the issues a bit better than you but in fairness, let's continue.

        You wrote, "Social Security is not broke." and of course, you are correct. I agree. 100%.

        Now then, Bruce, how do we explain our collective ignorance to these dolts?

        "The truth is that the Social Security Trust Fund has already been stripped bare. There is no
        trust and no fund. It is a lot like the S&Ls. The savings and loans had a lot of real estate on the
        books, a lot of property, a lot of shopping centers, a lot of deposits, and everything else, until you looked inside and found out there was nothing there. The assets were mostly on paper....
        Meanwhile, the Social Security cupboard is bare." Senator Ernest "Fritz" Hollings (D-SC)
        Congressional Record 4-24-91

        And again in January 29, 1998 when the good Senator had it placed into the Congressional Record.

        Maybe you don't care for Senator Hollings? How about a former President of the United States?

        In the Analytical Perspectives Section of hit fiscal 2000 budget proposal, President Clinton said:
        "Trust Fund balances are available to finance future benefits...but only in a bookkeeping
        sense...they do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes or borrowing."

        You seem to appreciate the US Treasury, try this statement by a Secretary of Treasury when he issued it.

        "We have no positive assets in the Social Security Trust Fund." Secretary of the Treasury, and one of the Social Security trustees, Paul O'Neill, June 19, 2001, at a luncheon speech to the Coalition for American Financial Security in the Sky Room of the World Trade Center and later
        to Sam Donaldson on This Week, Sunday, June 25, 2001.

         "Cato Journal entitled Social Security: Continuing Crisis or Real Reform?" Yeah, I read it, copied it, replied to it, discussed it with a number of people including an economist at Brookings.  That's one reason I said Cato is not your friend.

        Now then, "Social Security is not broke. At all. And exactly no one from Left or Right has been to show that it is. Not working from official numbers anyway."

        Elwood Dowd, I started a few years before that but then again if a ten year old kid started last month doing research on social security, couldn't he be qualified enough to offer an opinion?

        Bruce, you keep doing the same one trick pony over and over. You keep writing about the growth in the economy like that's the only factor involved in social security and its outcome.

        You say we need to do something with the "extra" money, I ask where is it? Show me. Please.

        Congress spent it, every penny. Even the moron we have as a President knows that. It's gone.

        The trust accounts, all 150 of them, are full of Government Account Series securities. If you read the definitions that SSA provides you'll know these are non-marketable. You'll know that any interest earned is paid in additional non-marketable GAS securities.

        Congress spent it.

        I'm retired. You work for a wage. You will pay me my social security check from the money that deducted from your paycheck. THANK YOU!!!!

        But you are getting robbed, Bruce. All I'm saying is read more, expand.

        •  Full Faith and Credit of the United States (none)
          I am funny that way. When the Chinese Banks invest in US Treasuries I assume that our credit is good. When the Trustees of Social Security buy bonds I assume our credit is good.

          Somehow you are assuming and stating that the future governments of the United States of America are a bunch of theives and liars.

          Hope you sleep well knowing that. Me, I believe in America. Weird I know, but that is my starting point.

    •  Ohio: you're late to the game (none)
      I see from your diary list that you started seriously looking at Social Security around November 2005. Bruce was posting detailed analysis here while the Bush SocSec offensive was in full force.

      It's more than a bit presumptuous for the newbie to lecture the veteran here.

      •  Hello, Elwood. (none)
        Been a newbie for 66 years. If a kid ten years old researches any subject for ten minutes, isn't he entitled to offer an opinion?

        "Presumptuous?" Nah, I don't think so, read all the comments.

        •  In some societies... (none)
          ...age by itself carries an assumption of knowledge and wisdom. (Maybe I can find one of those places before much longer.) But your earlier diary:

          Social security truths?
          by 0hio [Subscribe]
          Fri Nov 25, 2005 at 03:31:02 AM EST

          Greetings! Been doing a lot of research on social security in order to establish a one stop diary re truths, lies, etc...

          shows that you have come late to this discussion.

          Which is fine, welcome! But you would do well to hold off on "you might learn something" trash talk for a while.

          •  No trash intended, sorry to Mr. Webb. (none)
            Some truths re-visited
            by 0hio [Subscribe] [Edit Diary]
            Sat Apr 23, 2005 at 06:33:27 PM PDT

            Social Security
            by 0hio [Subscribe] [Edit Diary]
            Tue Apr 26, 2005 at 01:10:07 PM PDT

            Knowledge is power
            by 0hio [Subscribe] [Edit Diary]
            Sun Apr 10, 2005 at 01:20:54 PM PDT

            But what difference does it make?

            You made your point, Elwood. I stand corrected and evidently you do also, big deal.

            In 1985 James Baker 111, the Secretary of the US Treasury sold off the valid marketable US Treasuries that belonged to the social security fund and represented $35,842,000,000.00 of payroll tax surpluses. Baker then put Government Account Series securities in the trust account.

            Read what I just wrote, Elwood. Do you understand it?

            In 1985 there was $35,842,000,000.00 in the social security fund in the form of US Treasury bonds. Marketable US Treasury bonds.

            How much money did Congress in collusion with Secretary Baker have to spend after the bonds were sold?

            Try $71,684,000,000.00 on for size.

            $35,842,000,000.00 paid in payroll taxes
            $35,842,000,000.00 received from the bonds

            Now, instead of telling me what I know or not, tell me who paid the original money and who pays the money to retire the IOUs and who pays the fucking interest on $71,684,000,000.00 until the bonds are retired?

            Consider this, Americans that earn a wage paid the money that created the surplus funds. The surplus money was invested in US Treasury bonds.

            The US treasury bonds were sold by Baker and the cash was put into the general fund along with the original cash.

            Baker issued GAS securities to the social security fund.

            We paid $35,842,000,000 in payroll taxes.
            We will pay another $35,842,000,000 when the original bonds are retired.
            We will pay another $35,842,000,000 when the GAS securities are retired.

            In the mean time we pay interest earned on $71,684,000,000 AND WE DON"T HAVE ANY CASH IN THE SOCIAL SECURITY FUND.

            Now then, my new found friend Elwood, there are 150 trust accounts that the US Treasury manages.

            Social security is one of the 150 trust accounts.

            $3,373,194,204,362.08. As of 12/29/2005.


            Not my made up numbers, not a figment of my imagination.

            I didn't steal it, did you?

            I didn't steal it twice, did you?

            I wonder who is going to pay it all back? I'm retired.

            Are you retired, Elwood?

            Gee, I can't wait until you respond. Hurry....

            •  A few points (none)
              1. You continue to sound like you're picking a fight here, and I don't know why.
              2. I did not engage in 'telling me what I know or not' to you.
              3. I'm not retired -- I am in my mid-50s.

              and to the substance:

              1. The $36 Billion in the 1985 transaction is small potatoes in the Social Security discussion. The surplus at that time was almost accidental: it was the Greenspan Commission appointed by Reagan that changed the payroll tax numbers so that a huge surplus would be built up over time. The Trust Fund now holds about $1.8 Trillion.

              2. 'We' -- meaning wage-earners -- paid about $36 Billion in payroll taxes to create the 1985 surplus. 'We' also paid another $1.4 Trillion or so in payroll taxes since then, to create the current surplus.

              3. Under current law, 'we' -- meaning wage-earners -- are only partly responsible for paying back the money borrowed from the Trust Fund. In addition, corporations and investors, and other people and things paying income tax, are responsible. That makes sense -- although Bush tries to obscure this -- because the money was borrowed for General Fund purposes: supporting the military, building highways.
  •  Does anyone remember (none)
    the idea of a "locked box"?  

    Quite frankly, I hope the Bush Administration keeps on believing that its underfunded....if they hear a breath about "overfunding" they'll insist on handing it over to the same list of millionaires that have already received most of the "overfunding".

    •  They are already counting on that (none)
      None of this is a secret to privatizers. They know full well all the numbers in the tables, they just don't want you to know.

      Try the various plans floated by Professor Samwick of Dartmouth. All of them rely on diverting about 3.0% of Social Security to private accounts and then getting historic returns on stocks. But the No Economist Left Behind debate conclusively showed that to get those rates of return productivity would have to be higher than the Social Security models, if you just turn around and stick the productivity numbers needed for your private account to work, Social Security is majorlly overfunded anyway.

      The plan was to keep the public portion of the Trust Fund underfunded while giving all the credit from productivity that was going to happen anyway to the private account portion. Whereupon they suggest an increased diversion. Classic accounting technique to disguise the actual health of the frachise.

      Nobody seriously believes in the 2.0% used for 2005, Noboby believed in it back in March when the Report came out. Certainly not one person has made a single attempt to defend it. Privatizers are cynically attempting to make you pay commissions on your money and expecting you to thank them for the rescue.

      Tell them to go away, it is all a scam to get ahold of the biggest stream of money left out of Wall Street control. The Bush Administration does NOT believe that Social Security is underfunded. They are lying to you. Again.

  •  You wrote that you visited (none) to secure your knowledge. I visited the same site and secured my information.

    You mentioned (redundantly) ASSUMPTIONS AND METHODS UNDERLYING ACTUARIAL ESTIMATES. Ok, I agree with all that but what happens if the economy doesn't grow? What happens if wages are less than projected? What happens if reality is somewhat different than the information you so gladly embrace?

    How do you explain this,

    Is this diary by BondDad in touch with reality?

    If there are fewer jobs, and the jobs pay less, how do your projections fare?

    Even if there is 100% employment and everyone gets a 25% raise in pay, how does that increase the money in the social security trust fund?

    There isn't any money in the fund. Only GAS securities. Non-marketable, non-negotiable GAS securities.

    Go back to and visit the links, ascertain the definitions, learn.

    snip> Investment Holdings
    Updated March 21, 2005
    The Social Security trust funds, managed by the Department of the Treasury, are the Old-Age and
    Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds. Since the beginning of
    the Social Security program, all securities held by the trust funds have been issued by the Federal

    There are two general types of such securities:
    special issues—securities available only to the trust funds; and public issues—securities available to the public (marketable securities).
    The trust funds now hold only special issues, but they have held public issues in the past. <snip</p>

    In spite of the law, Congress and the government continue to loot the SS Trust Fund and 149
    other trust funds. The audit firm Price Waterhouse annually buys off on this deception, which started in 1985 under President Reagan and Treasury Secretary James Baker. See minutes of the
    Congressional meeting on Oct. 30, 1985: “Hearing on Disinvestment of the Social Security
    Trust Fund to Finance Public Debt” (47 pages in the Congressional Record).

    As of 12/29/2005
    $4,714,163,354,643.77 Debt Held by the Public
    $3,373,194,204,362.08 Intragovernmental Holdings
    $8,087,357,559,005.85 Total National Debt

    The link,

    Go to it, look up Intragovernmental Holdings on the US Treasury's site and it gives you a definition, to wit: Intragovernmental Holdings -- Government Account Series securities held by Government trust funds, revolving funds, and special funds; and Federal Financing Bank securities. A small amount of marketable securities are held by government accounts.

    The special issue bonds, aka GAS securities, aka IOUs, aka markers, aka accounting entry method, etc.  In corporate America it's known as "cooking the books", Bruce.

    No matter how well the economy performs if Congress spents the payroll taxes as it comes in and the Treasury puts IOUs in the social security fund, there is no excess of money.

    •  "If privataization is necessary ..." (none)
      "but what happens if the economy doesn't grow? What happens if wages are less than projected? What happens if reality is somewhat different than the information you so gladly embrace?"

      I came up with a slogan back in 1996 "If privatization is necessary it won't be possible, if privatization is possible it won't be necessary". You can come up with all kinds of doomsday scenarios. What you can't come up with is a doomsday scenario that allows private accounts to work better than Social Security.

      There was a whole debate on the Economists' sites called the "No Economist Left Behind challenge." It showed pretty conclusively that you could not get historic stock returns given the economic numbers of Intermediate Cost. Sure there are scenarios under which we are seriously screwed, but none of those support private accounts as any kind of savior.

  •  Good Contribution (none)
    Even though the debate has subsided briefly on the Social Security Issue, your thoughtful analysis is welcome. "They will be back." Conservative forces will revisit the Social Security issue in the future and we must be prepared.

    You are correct, the government's Social Security estimates are pessimistic. We have been using the overpayments to pay for regular government programs so our real deficit in probably $200 billion higher than the reports $310 billion.

    It is disturbing that a so called conservative Republican goverment:

    1. Backs tax cuts for the well off.
    2. Increases federal spending.
    3. Uses Social Security overpayments to fund 1 &  2.

    I am hesitant to cut payroll taxes. I think a more conservative approach would be to invest the excess payroll taces in other Financial instrunments. This would give us insurance just in case the pessimistic estimates become true. It would also serve the purpose of exposing the Republicans for the crushing deficits the Republicans are causing with their risky policies.

    Politically speaking, cutting payroll taxes would be a winning issue. This could be an alternative to the Republican tax cuts for the rich. (reverse "class warfare")

    •  Yeah, That's what Bruce wants (none)
      to do and I'd kind of like to see it happen so the workers of America would get a break.

      Problem now at this point, we are all screwed big time.

      By neglecting our duties and responsibilities as citizens, by allowing others to manipulate us based upon unwarranted fears , by failing to control our own destinies, and by failing to understand that the rights we demand for ourselves are subject to such expense of personal time, money and/or effort, we have collectively brought this impending crisis upon ourselves.

      I discussed this issue with my kids that are a lot smarter than their Dad and they are in their thirties. I asked them what they thought and they both said, "Why do you hate us, Dad?"

      Little humor..... I hope. Anyway, they don't want to treat their kids to the same mess. Congress has imposed enormous debt upon our kids and grand kids.

      Things are going to have to change, John. Hopefully, for the better.

      •  agreed (none)
        The alternative of giving back the payroll tax surplus is not my favorite.

        Investing the surplus in other financial instruments is my preferred alternative. The social security surplus would have value.

        This would be an uphill fight politically even though it a highly defensible position.

        Politicans could not use payroll taxes to fund deficit spending or tax cuts for the well off.

        •  School bonds (none)
          and other Municipals.

          You got ahead of me.

          We could lower the borrowing costs of school districts by tons just by investing excess Social Security funds in school bonds. And is so doing tap into the equity of the wealthy who are over invested in housing to begin with.

          Though I expect the more politically viable course will be diverting the funds to Medicare.

          •  afraid (none)
            My only problem with investing in "financial instruments" is it has a potential of political involvement.

            Since this is the public's money, we have to make sure the investments are purely economic - gain in economic value not political interference.

            Your suggestion of purchasing school bonds even though it is a good end state to open the Pandora's box of politicizing the purchase of securities. If it's alright for school bonds why not other special interests? Who is going to make the decision - the Philosopher King?

            That's why a set of index funds either domestic or international would take the politics out of the trust fund.

            I am also afraid of diverting the surplus to Medicare. Right now the Republicans are linking the two (2) separate programs making Social Security look like a crisis when it's really Medicare.

            In my opinion, we need to solve the Medicare (Healthcare) issue separately.

            Keep the Faith

      •  Let me restate... (none)
        What is really meant to say was either:

        1. Invest the surplus payroll taxes in other financial instruments.


        2. Cut the payroll taxes so there is no surplus to be used to pay for other federal programs such as defense, FBI etc.

        I would prefer # 1 which would be a conservative financial position.

        This set of alternatives would be compelling to the average voter. Either "save" my payroll tax using a financial instrument which has value or let me have my money back.

        This would put politicians in a bind. They would have to either raise taxes, cut government programs or a combination of the two(2)to balance the federal budget.

        Your alternative of using the excess funds to help in the real crisis of future Medicare deficits is an interesting alternative. I would prefer separating the issues and take one on at a time.

  •  Bruce, contact me when you can (none)

    It would be great to discuss this subject with more time.

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