Monday, September 27, 2010
Ross Douthat issues a false statement that aligns with his prejudices:He writes: "And as everybody knows, the only way to really bring the budget into balance is to reform (i.e., cut) Medicare and Social Security." As Dean Baker points out: 1) Social Security is not contributing to the deficit or to budget woes. 2) One can rein in Medicare (and all medical) costs, not by cuts, but by adopting a Japan/Canada/European system of health care.
posted by Quiddity at 9/27/2010 08:20:00 AM
2 comments
Dean Baker is being disingenuous. Social Security is just beginning to contribute to the deficit because the "trust fund" surplus has turned into a deficit. The Social Security trust fund represents $2,000,000,000,000 that will have to be paid back from the treasury over the next 30 or so years in ever upward-ratcheting amounts as the Ponzi scheme unravels, Social Security dissolves in an ocean of red ink, and the Social Security bonds are redeemed, to the extent that economy can support this lavish gift to the generation that foisted this fraud on them.
These bonds, of course, are completely illegitimate and should be canceled. Since 1983, workers have paid extra money to Social Security over and above what was being paid out. Social Security exchanged the extra money for treasury bonds, and Congress spent the actual money.
Who did it spend it on? The same generation, the same people who were paying the extra money into the “trust fund.” The government spent the money on growing the government to its current, unsustainable level, coupled with income tax cuts. Government had found a way to sneak a flat income tax hike past the public by way of the Social Security system. With low overall tax rates and Social Security payments paying for government, we got the economic boom of the late 80s and 1990s.
The moral problem is that, having received the full governmental benefits of increased taxation during their working years, the boomer generation now expects to receive the full benefits a second time, in the form of repayment of the bonds. That’s double dipping and that’s the root of the problem. The Boomers taxed and spent during their working years, and now expect the next generation to supply matching funds for their taxing and spending binge. They should not get it.
jms, the Alaskan pension fund and the Norwegian pension fund hold billions in treasury bonds.
Treasury bonds represent the general obligation of the american taxpayers, and the the current and future taxpayer is now beginning to owe past FICA payers their money in the SSTF.
There has been $1.5T of overpayment and $1T of accrued interest.
This is not a ponzi, this is simple accounting.
The general fund is not a ponzi, we just need to raise taxes and cut spending.
Money does not disappear in the system, the inadvisable tax cuts left money in the private economy to grow. Taxing that money back now is simple and straightforward.
The late 80s boom was largely driven by deficit spending, btw. The national debt tripled under Reagan, doubling in real terms.
We've all benefitted from the last 30 years growth. Your "double-dipping" thesis makes no sense.
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