President Obama And The Lame Duck Congress
http://thedianerehmshow.org/shows/2012-11-26/president-obama-and-lame-duck-congress
Diane and her guests talk priorities and prospects for compromise on tax rates, spending cuts and other key policy decisions in the final weeks of the lame duck Congress.
Guests
Ron Elving
senior Washington editor for NPR.
Amy Walter
political director for ABC News.
Julie Hirschfeld Davis
congressional correspondent for Bloomberg News.
Comments
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Monte, disagree but giving up on it since my comment on how benefits are skewed based on amount paid in was an aside. The central point i was making is that SocSec and Medicare were created and promoted as self-funding, stand-alone programs that would collect funds to cover the benefits. The fact there are specific benefits (funds paid out) make it harder to fix than income taxes where increasing amounts paid in go into one big black hole without requiring any increased outflow.
Jack, will offer a reply, so please check back today or tomorrow. (Did not mean to offend!)
Jack,
First, "pilfered"? Probably a little harsh, because it implies motive. But the end result is still the same. I have heard the argument you make before. A parallel argument goes something like, "businesses borrow like this all the time to grow and the only hope the lender has of recovering its money is the financial stability of the borrower". Thats true. It's also true that the FG is the most stable borrower around. That's true too. But the FG is not a buisness. When a business borrows money to expand, it does so with the expectation that it will use the money to produce a profit and pay its bond holders back. Governments don't. When you borrow money from the SS trust fund to pay for social programs, or even build a bridge or pave a road, that is NOT an investment. You don't get a finaincial return that you can spend. It may be that some of those things may allow businesses to improve their returns but that is a stretch, and there's no way that buying cell phones for unwed mothers (frivolous example) is ever going to create a return. So the money, whether you think it is well spent or not, is gone ... spent, not invested as you would with a business. So the 2T+ that SHOULD be sitting in the trust fund, is only represented by debt instruments that must be turned into cash in order to pay the recipients once SS receipts/expenditures turns upside down as it is now in the process of doing. So 2T+ has been spent with no hope of return and now we must come up with another 2T in actual dollars, not debt, to pay retirees.
ecgberht, you are mixing too many things together. First, come up with an answer to my previous question: where do you think your SS trust funds should have been kept and who responsible for them? Let me assume for now you will say the fed govt; and let me call that trust fund the fed govt's left pocket. Now accept that we are deeply in debt so bonds are issued and the proceeds are placed into the fed govt's right pocket. Two pockets, same govt, same responsible party. There is (sadly) no safer place for those funds than the fed i.o.u. Let's say you are the fed govt and i am SS; i gave you $1k and you have kept the cash in a safe place. But you happen to owe Guido and Huan each $5k, and your cash flow won't cover your loan pymts to them. Is your cash really safe?
I agree with you that our debt is way too much, and that we should operate breakeven, with small deficits created during recessions quickly repaid during recoveries. Our incompetent politicians , and their greedy, ignorant constituencies created this mess. But the historical deficit funded by debt and our continuing operating deficit funded by more debt is a separate issue from SS. Further, since interest rates reflect supply/demand factors, if the SS trust fund had been buried in the ground, our borrowing more from others would have raised rates on all fed debt which you and the rest of us would have been burdened with via higher taxes (or more debt). So be glad, not sad ! Actually, dems, repubs and the fed reserve have agreed in recent yrs to increase debt to stimulate the economy which is tantamount to what you said good business loans are based on. Regardless, we agree running the govt on a credit card is inappropriate. May we see balanced budgets in your lifetime, and snow on Christmas.
The SS trust funds should not have been spent. That's my answer.
The problem Jack is that your pocket analogy is false. If we were "deeply in debt" because of some worthwhile cause(s), I would agree with you. But we didn't have to be in debt at all. The reason the debt was incurred was because of bridges to nowhere, social programs, and promises we couldn't afford to keep. You want to hear about "deeply in debt"? If the "trust fund" had not been spent, we would be more than 2T to the good right now. 14T is no picnic, but it's better than 16T, and SS is solvent much longer than we are currently projected.
"Further, since interest rates reflect supply/demand factors, if the SS trust fund had been buried in the ground, our borrowing more from others would have raised rates on all fed debt which you and the rest of us would have been burdened with via higher taxes (or more debt). So be glad, not sad ! "
The upshot of this is that it's ok that 2+T was blown since we got good rates and didn't have to pay higher taxes?!
But then you say, "Regardless, we agree running the govt on a credit card is inappropriate." With that I wholeheartedly agree.
Pay as you go is a GOOD thing. Much better than hanging our debt on our kids and grandkids as we have done. That's not something to be glad about, Jack. It's something to be ashamed of.