Centerfield

Party discipline must be anathema to a nonpartisan centrist movement, as opposed to a Centrist Party. We've seen strict party discipline in the House of Representatives in the hands of Tom DeLay and his predecessors both Democrat and Republican. We've seen a movement towards strict party discipline in the Senate, including the recent move to deny Senator Specter the chairmanship of the Judiciary Committee.

Strict party discipline punishes politicians who cross the aisle and forge a compromise in the middle. It raises its head as party leaders exclude their rebellious colleagues from choice committee assignments and chairmanships, kill their legislation without debate on its merits, run party nomination contests, or, at the outer extreme, gerrymander a maverick colleague out of his own district.

I appreciate that you're not praising party discipline, per se, Rick, but the point I wish to associate with this thread as you've titled it is that centrists should be opposed as a matter of centrist policy to enforcement of strict party discipline on any issue, as an obstacle to bipartisan compromise.

If the Democratic Party chose to take on Joe Lieberman, I think they would be doing a great injustice to their own future. I think it could be appropriately compared with Pat Toomey's decision to take on Republican Arlin Specter. Specter survived--barely--but easily won the general election. (I don't think Toomey would have been so fortunate.)

I believe it's dangerous for either party to demand blind allegiance--whatever the issue may be. The prevelant mindset of marching in step with leadership needs to be rocked. The Democratic Party needs Lieberman, both Nelsons, and Salazar, just as much as the Republican Party needs the Maine Duo, McCain, and Chafee. It's called balance, plain and simple. The leadership in both parties, by continuing its efforts to stifle any type of break from the decreed positions, continues to shut off a huge segment of the electorate.

Since what is at stake is always a conflict between absolute good and absolute evil, the quality needed is not a willingness to compromise but the will to fight things out to a finish. Nothing but complete victory will do. Since the enemy is thought of as being totally evil and totally unappeasable, he must be totally eliminated - if not from the world, at least from the theater of operations to which the paranoid directs his attention. This demand for unqualified victories leads to the formulation of hopelessly demanding and unrealistic goals, and since these goals are not even remotely attainable, failure constantly heightens the paranoid's frustration. Even partial success leaves him with the same sense of powerlessness with which he began, and this in turn only strengthens his awareness of the vast and terrifying quality of the enemy he opposes. --Richard Hofstadter, The Paranoid Style

Written in 1966, yet somehow timeless.

I am in favor of a true "grand compromise" to reform social security. But I don't think pushing the (currently vague) Bush plan through with the votes of a couple of endangered Democrats from red states would count as the Bush side having compromised--particularly if the spin which follows is a "victory" for Republicans and a defeat for Democrats. With real bipartisanship, neither side wins and neither side loses.

Lieberman truly is the key, since his is not a red state Democrat, and his vote would be seen as a "conviction" vote.

As centrists, I don't think we should be in a position where we are calling for Democrats to support whatever the President puts forward in the name of bipartisanship. That would be tilting to the right. The President should lead with a moderate plan, and also be prepared to share credit. That kind of leadership Democrats should support in the name of bipartisanship.

I think I understand the underlying concern, here.

Suppose Bush pulls out a somewhat improbable victory on Social Security.

He's already in the middle of some significant reversals to the plus side in the foreign policy arena -- the Iraq elections, Lebanon, the Israeli-Palestinian peace process. All these things are turning to the positive.

Here we have a guy, who I consider not to be a very talented leader, who may end up implementing major policy changes that bring historic gains at home and overseas.

You also have a guy who relied on party-base politics to get where he is, rather than reaching out. Conservatives in the party may end up being forever convinced that they have the right formula both for electoral and policy success. The smugness of Ann Coulter, who's column I just read yesterday, is almost unbearable.

It's an uncomfortable situation for centrists. Because we're right on the issues, and we've been right to suggest that someone from our bench would make an uncommonly successful national leader. It's harder to make that argument if Bush makes conservatism work for America.

All that said, I think we have to look at this in terms of the policy. If Social Security reform is good for America, we need to do it. This is a pivotal moment on that issue, because if we don't do it now, there's virtually no chance we'll come back to it in a couple years. The baby boom retirements start in 2008, and we won't be able to do a pre-funding plan like private accounts once the system starts to feel that demographic stress.

It's now or never, most likely, and we have to step up and do the right thing.

I think we should support what makes sense and adds up and substantively addresses the issue, regardless of which party or politician floats the boat. And I don't see any reason to support anything or anyone blindly. On anything. Ever.

If centrism is not about finding and supporting real and workable applied solutions regardless and in spite of the continual partisan bickering and posturing, it's not really about anything at all, other than perhaps a "new partisanship."

From a pure tactical point of view, some would argue that the Democrats might actually be better off letting the GOP reform SocSec. The reason is that entitlement reform is one of the last threads holding the Republican majority together. There are currently three or four factions in the GOP fighting over everything. There are the deficit hawks v. the tax cutters, the social cons v. the civil libertarians, and so forth. But entitlement reform is still a major uniter when it comes to Republicans, as is the war on terror. So tactical Democrats who are thinking longterm may want to get out of the way of SocSec reform, let it happen, and give the GOP majority one less thing to agree on.

As centrists, I don't think we should be in a position where we are calling for Democrats to support whatever the President puts forward in the name of bipartisanship.

Well, um, agreed, but who among us has suggested this? I don't recall anyone here suggesting we should give Bush's plan a rubber stamp. I support what makes fiscal sense: dealing with the coming shortfall asap, slowly and carefully integrating investment into the program to help out a little bit, and generally facing the demographic music.

This is clearly the defining issue of the domestic agenda, and the Democrats need a win to show they're alive.
No, they don't. They need to govern responsibly in the people's best interests to show they've changed enough to be trusted again. They need to show they've changed enough to have transcended the reputation they earned when they controlled congress--that they tax too much and spend too much on entitlements to their special interests.

The GOP carried budget balance on their backs for years, and when it finally passed, Clinton got credit. Now on SS, it's time for the democrats to do the right thing and work with Bush to forge a plan that accomplishes the main things that need to happen. Unless it looks like an obvious and utter shafting to the poor and giveaway to the rich, they have to accept it if puts us on the right track,because they're the minority. Strike a balance between being principled and being wilkling to compromise in the nation's interests.

If it's a reasonable deal, and democrats demagogue on it and scare people away from recognizing that we need to do something now, I won't forgive them.

As far as opposing Lieberman goes, it's ludicrous for the democrats to do that. Why would they want to waste resources in order to put a safe seat at risk when they could use those resources to gain a senate seat elsewhere?

As centrists, we should promote the idea of voting in primaries with the specific goal of making it harder for each party to nominate zealous true-believer standard-bearers.

I don't see this Centrist org as having a charge to address the "balance of power". This discussion seems to focusing on how "who's in power" should affect our beliefs/actions. I'd echo what Tully, bk and JD said.

To echo some of the other thoughts, I certainly don't believe that I advocated a rubber stamp of Bush's proposals. If it came across that way, please realize that was the farthest thing from my mind.

What I am oppossed--regardless of issue--is the leadership of either party acting like mob bosses and telling US Congressmen (and women) to "heel." Lieberman has earned the right to disagree with the leadership of his party when he so chooses, just as Arlin Specter, Susan Collins, Lincoln Chaffee (hmmmm...seems to be quite a list of moderates here on the R side) have earned the right to not march lock step with Frist and DeLay.

I like to listen to Rush every now and then for entertainment purposes and heard his tirade today about the "nuclear option." Conservatives are incensed that Collins, Snowe, Chaffee, McCain, Specter--even Graham (SC) and Voinovich (OH--are expressing reservations to going along. To me, this says that maybe reason is starting to rear it's head.

Is Tomasky out of his mind? I'm sure the GOP would love to see the Democrats trying to unseat sitting Democratic Senators. And Lieberman, especially. If the Democrats worry about defeating Lieberman in the primaries, that might end up giving the Republicans a seat. If this is the quality of thinking going on among Democrats, I think we can look forward to a long Republican reign.

Tomasky doesn't really want to challenge Lieberman. It's a pressure tactic. And perhaps it's working. See The Kentucky Democrat

William, you say, “Here we have a guy, who I consider not to be a very talented leader, who may end up implementing major policy changes that bring historic gains at home and overseas.’

If implementing major policy changes that bring historic gains at home and overseas is not the sign of a talented leader, what is?

I think we can agree that Bush does have the ability to push things through--unlike say, President Carter, who often seemed paralyzed.

The question is, will the policies he's pushed through leave us better or worse off. I believe his financial management will leave us worse off. Whether his foreign policy will work out well or not is still an open question--after a rought time, he's had a good run these last couple months, but he's not out of the woods yet.

As a McCain Republican, I definitely think that Bush's presidency will end up being highly effective but will leave a lot of loose ends that need to be dealt with. The foreign policy scene looks good right now. Domestic reform has a ways to go, and the next president is going to have to revisit the Medicare bill and No Child Left Behind to see what's working and what's not. We'll see if the sensible centrists get a SocSec package done. The deficit is the biggest disappointment of course.

McCain's on Hardball right now. He looks healthier and more vibrant than he did a few months back. I'm hoping he can go the distance in 2008, as I think he'd do an excellent job at building off of Bush's record and tweaking the things that aren't working out so well.

ROA, I think your question goes to the heart of what a leader really is. The traditional heroic American view of leadership is that a leader is someone who has more vision than the rest of the people, convinces the people to buy into his vision, and then boldly leads them to the promised land that only he saw.

There's another line of thought about leadership, one with origins in Eastern philosophy, which stated cynically says that a leader is someone who sees a majority heading in a certain direction, gets to the front of it, and loudly declares a parade.

I think Bush absolutely has the sort of horse sense about where the people want to go to be that kind of leader. I'd call that talent, but not everyone else will. I think where much of the disagreement comes in is when people don't want to give Bush credit because they think it means acknowledging him as some sort of bold visionary. My take is that many reasonable Americans with good realistic common semse, put in Bush's place, would have decided to respond loudly and aggressively on multiple fronts in response to 9/11, and may also have decided to sound an alarm about SS.

So in the presidential sense of leadership, I'd guess I'd say that leadership talent means having the radar needed to divine the wisdom of the crowd and answer the call. Make sense?

I think the Democrats have good reason to oppose the president's plan. I do believe something needs to be done about Social Security but the Republicans have lost my trust in them because of how they are presenting the change. They first came out saying that the SS system is in crisis. A crisis to me means that SS recipients in the next 5 years will stop receiving a check. That's just not the case.

Secondly, they said there isn't anyting in the SS trust fund but IOUs. There is $1.5 trillion of Treasury Bills in the trust fund.

Thirdly, they present a plan that requires $2 trillion in borrowed funds to work. As some have pointed out, if we borrow $2 trillion and put it in the SS trust fund we've solved the problem.

The Bush administration now admits that their plan doesn't solve the solvency issue without borrowing money and SS is not in crisis. If the Republicans came out more honestly about what they want to achieve then I'd be more open to their plan. But if I were an elected Democrat and was aware of quotes from past Republicans looking to do away with SS and was faced with people telling me SS was in crisis and we must change it as quickly as possible I'd do what I had to do to put the breaks on the Republican steamroller so we could eventually have debate and a bipartisan solution.

As a matter of fact if I were an elected Republican I'd do the same thing though it would be harder as a Republican because of the leadership pressure to walk in lock step.

Blewp bleep

This is a debate about whether to continue Social Security with some fixes versus phasing out Social Security altogether.

Compromise? Sure -- raise the cap on income subject to the SS tax. For the most part, that'll wipe out the 75-year deficit projection, plain and simple.

But add-ons and carve-outs for private accounts? No way. Not even close. Forget about it.

If you want to talk pension reform, fine. But tell Grover Norquist to keep his hands off Social Security.

I know what he wants to do, and I ain't helping him do it.

Fact is, the Republicans have enough of a majority to pass the President's plan right now. I say call for a vote -- straight up or down. They don't need the Democrats. The Dems have nothing to lose and everything to gain by just saying "no" and walking away.

This is President Bush's idea and he and his party should stand or fall on the merits of it.

Accountability! What a concept.

End of sermon.

Blewp bleep

Hey Mike. You said this:

Secondly, they [ the GOP] said there isn't anything in the SS trust fund but IOUs. There is $1.5 trillion of Treasury Bills in the trust fund.

I'm wondering where you think the government is going to get the money to cash in those treasury bills. If you honestly think it's a lie that the trust fund is an accounting fiction, you really don't understand bonds and financing debt. You're operating under a fundamental misconception. You don't GET it.

A treasury bill IS an IOU. When you buy a government bond, it's a piece of paper that says something like "the US government will give you $1113 in 2015 in exchange for $1000 today." Then the government takes that money, and spends it. That's how a budget deficit gets financed, by using bonds to borrow money from the people who buy them. That money gets spent today, and re-paid with interest in the future.

So sure, the "trust fund" has treasury bills in it. But they don't have money backing the bonds, only faith. The money got spent, it's gone. All the "trust fund" has is a bunch of notes that say something like "the US government will give the purchaser(also the US government!!!!) $1113 in 2015 in exchange for $1000 2005." But when the seller and the purchaser are the same entity, like in this case, then if the money got spent in 2005, all that is left when 2015 comes around is a note that says "we owe ourself some money." Get it?

I can't stress how important it is for you to understand this if you want to understand social security. If you don't make the effort to understand this, you're going to keep misleading people. Once you understand this, you're going to get mad , and you won't want to believe the government did something so foolish and underhanded. But they DID. It's not even really debatable. It's fact. There IS no money, only IOUs. Bonds that are purchased by the same entity as the issuer are just IOUs, plain and simple.

BK:

"There IS no money, only IOUs."

That's right. And that includes the bills in your wallet, the money in your bank account (that's insured by an agency of the federal govt. up to $100k), the stock in your portfolio, the corporate bonds you own, your life insurance policy, your homeowner's insurance policy.....

At some point everything is converted to U.S. currency. Until then it's just an IOU, a paper promise that may or may not be kept. Maybe we should go back to a barter system. I'll wash your car if you mow my lawn. Now there's something tangible!

But I did agree with your very well reasoned posts on the death penalty. So much in fact I saw no reason to add anything. I agree with a lot of your posts. But being a centrist I can't follow you in lock step:).

bk, it is you that is misleading people. You are implying that the Treasury Bills won't be paid off. Do you think that either the Democrats or the Republicans would be so politically stupid as to not pay off the bonds that are in the SS trust fund? It would be the end of either of those parties as a major party if this was done.

The Treasury Bills technically are the government loaning itself money but don't you think it is better to loan yourself money than to get the money from foreign countries?

The Treasury Bills in the SS trust fund will be paid. There are various ways to do it such as selling more Treasury Bills to someone other than our own government.

I don't think the point is so much that either one wouldn't be so stupid as to not pay off the bonds that are in the fund. The fundamental point is where does it stop? At what point do we reach a place where we can no longer feasibly honor the massive debt that we have piled on ourselves?

An individual consumer may run up massive credit card debts, mortgages, car loans, etc with the best of intentions. At some point, it's not that they don't want to pay it off, but it becomes financially impossible, and bankruptcy inevitablly follows.

How many more years of massive deficits can we stand before we reach that point?

ufrh4,

I whole heartedly agree about the debt. I'm a fan of the Concord Coalition and voted for Ross Perot twice just to make a point that we need to pay off the debt. The result being that we've gone from about $4 trillion in debt in '92 to almost $8 trillion in debt in '05.

But that being said, we don't just collect money for the SS trust fund and then write it off to pay for weapons systems or whatever that money was borrowed for. The SS trust fund's Treasury Bills have to be paid just as any Treasury Bill has to be paid. The solution to the debt is to stop spending more money than we take in and apply more of the money we take in towards the national debt. Of course it's easier said than done and I certainly don't have the list of programs that should be cut to make it happen.

When Republicans took over I thought we'd finally have some spending cuts and get the national debt under control. BOY WAS I WRONG! :(

BK is absolutely 100% correct. TANSTAAFL.

Waste of time to argue with fundamentalist ignorance, Brian. Articles of religious faith are not amenable to logical analysis. The money won't be taxed from us to pay us. It will simply magically appear out of thin air. Krugman told them so.

I don't know much about what Krugman thinks, but just this morning Chris Farrell spoke on Marketplace radio (marketplace.org) about SS. Farrell is senior economist with Minnesota Public Radio, former editor at Business Week Magazine, a former merchant marine and I think most people would call him a centrist. I know he is well respected in the financial community.

Farrell doesn't align himself with the "do nothing" group on SS but feels minor changes such as raising the retirement age are all that are required. He defines two groups of people on this issue, those who think there is a big problem and those who don't. He states those who think it's a big problem are essentially predicting much slower growth going forward than in the past 75 years. If growth is similar to the past, the problem will not rise to the level of crisis that many predict.

I'm not going to go over all the arguments that have been hashed out on this forum, but I would suggest that "fundamentalist ignorance" cuts both ways. It might be worth it for everyone to at least consider other points of view before accusing them of ideological bias.

You are implying that the Treasury Bills won't be paid off.

Mike, I'm implying no such thing about treasury bills. I'm simply trying to get you (and others) to understand that there's a fundamental difference between an internal debt and an external debt. You are denying this difference represents any type of real-world reality. But it does, because we can't just sneak over to the mint and print more money. People are watching. They watch how much debt we issue in the form of bonds, too!

Look, I could give you $5 dollars and you could give me a note that says you promise to pay me $5.25 in 3 months. We could both be happy, You'd have $5 and I'd trust you to pay me back with real money.

But suppose this instead: suppose you took $5 out of your OWN pocket, and replaced it with a note that said "Mike promises to pay Mike $5.25 in 3 months." Then you spend the $5. Three months from now, when that note comes due, what good is that note to you? It's NO GOOD. It just tells you that your $5 is gone.

The T-bills are the same thing. Sure, the government will "pay off" those treasury bills, but they'll do it by using tax dollars or by issuing more bonds. By borrowing. The money has to come from some external source sooner or later, because all the people in the entire world who invest in bonds are watching what we're doing.

And that's the part you can't escape. If you want to pretend internal accounting numbers respresent actual assets, good luck to you. Go to the corner sandwich shop, and see if they'll give you a sandwich in return for a piece of paper that says "mike owes mike $5.25."

At one point, the US gov't collected tax dollars from the SS payroll tax, and some was left over. They could have done any number of things. They could have put the money in a bank. They could have bought shares of IBM. They could have bought real estate. But what they did was buy their own bonds, converting actual dollars into debt. the took the money, spent it, and wrote a bond, which is an iou.

Suppose they had taken that excess money and bought real estate. If they'd done that, the government would have real assets with real value. But what they have is note that says "we'll pay ourselves what we say we owe." When the note comes due, it has to be paid off with real money from somewhere else, like my pocket, or yours, or some foreign investors.

When we start trying to "spend' the "assets" in the "trust fund" we'll need to find an EXTERNAL source, which will be either extra taxes or extra bonds. And if we start trying to sell twice as many bonds as usual, that will become a problem. In order to sell them, we'll have to offer really high interest rates because we'll be regarded as financially unsound. Look, you can't get away from this. I'm right, and you want to talk yourself into me being wrong. but i'm not. There is not a single person who understands finance who agrees with you. Go ahead, pretend we're all wrong, see where it gets you.

Tim, when people can't be bothered to read the basic materials (the SSA Trustee's Report) and prefer to loudly proclaim whatever they wish reality to be as Truth, then yes, I call that fundamentalist ignorance. Namely, the reliance on an emotionally favored "authority" in place of using their own synapses to examine the available information. Just like religious fundies rely on church leaders and doctrine to tell them what to think, so they don't have to.

Farrell may well think that the SSA's intermediate projections are too cautious--but they're extremely well-grounded projections. Just assuming they're pessimistic doesn't make them so--that's the Tinkerbell/ostrich approach. While the math required to make those projections isn't all that simple, the tables themselves do not take a genius to read. Even under the "best-case" scenario (which is estimated at only a 2.5% probability) the system still has financing shortfalls. It is worth noting that the probability of the "best-case" scenario is the exact same as that of the "worst-case" scenario.

Go to Figure IV.B1. The three blue lines and the three dashed red lines are the probability space. The green lines are the current tax revenue level. See the space under the OASI green line but over the blue line on the left? That's the "surplus." That's the money the government takes and spends and replaces with IOU's. See the space over the OASI green line but under the blue lines in the out years? That's the very real shortfall. (Same below, with the dashed red line for the DI portion of the program.)

Now, the SS figures touted by the "no problem" crowd are internalized figures. They treat SS in isolation from the rest of the government. If that were true, then we would have no problem at all. The government would simply provide all the magic money required to give us all the retirement benefits we want! Just shade in all the shortfall spaces with fairy gold. Hell, lift the lines right up to wealth for everyone--it's magic money!

In reality, that money to fill the shortfall space has to actually come from somewhere. The government does not have a secret Swiss bank account to cover the trust fund Treasury notes. There is no giant mattress stuffed with SS savings. So the government must get the money to fill that space from taxation or borrowing, or it must cut benefits, or it must cut other federal spending. There are no other sources. In terms of overall government revenue requirements, the existence of the trust funds means absolutely nothing at all. Not one dime's difference whether they exist or not. This is why Figure IV.B1 is the appropriate baseline for calculations, and why the 2042 date and the trust fund balances are illusory.

Changing the tax rate shifts the green lines. Cutting benefits shifts the blue/red lines, and can be done in quite a variety of ways. Raising the retirement age is one of them. Indexing benefits to CPI instead of wage growth is another. Means-testing. And so on. But the remaining space still needs to be filled from either debt or taxes.

Note that raising taxes before the money is actually required to pay benefits simply gives the government more deficit financing that has to be paid back in the future. I accomplishes absolutely nothing but increasing overall government debt. Increasing taxes on a pay-go basis does not do that. Increasing taxes to hand over "free" money to Congress does. It's like giving bourbon, Seconal and car keys to delinquent teenagers and telling them to have a good time.

That is the point Brian was making, that so many people seem to have so much trouble understanding. All of the "minor change" solutions not involving benefit cuts seem to fall into the same category, relying on the trust funds as a mechanism for future financing, when the trust funds aren't financing vehicles at all, but internal government accounting tools.

Those are the realities. The politics is a whole different debate. We should be addressing reforms. Those can take many different forms, and that's what we should be figuring out--which ways we prefer to address the shortfalls. Instead we get people chattering that there isn't even a problem, simply to oppose those who are offering proposals. What they should be doing is coming up with better proposals.

bk, would you rather have kept the SS trust fund money in a savings account and borrowed the money that was borrowed from the SS trust fund to pay for current government expenses from foreign investors instead? I realize you are trying to make a complicated issue simplistic by talking about IOUs written to oneself but the fact of the matter is that either the government would owe money to itself in the SS trust fund or it would owe that same money to foreign interests. I would rather our country borrow money from itself and they pay that money back when it becomes due. That is exactly what is going to happen which means there is $1.5 trillion in the SS trust fund that will be paid back into the trust fund either through taxpayer money if we are balancing the budget or through more loans if we are not balancing the budget. You can call it an accounting trick and use me borrowing from myself as an example but your "real world" example isn't reality - it's not going to happen that way. The government collected the money that is currently in the SS trust fund for SS and they are going to pay the Treasury Bills when they come do to keep SS solvent as long as the trust fund has money/bonds. To say that there isn't money in the SS trust fund is factually incorrect.

I'd rather we had balanced the budget, set aside the surplus in actual investments with real value, and not borrowed any money from anyone. that's what I'd have done if i was in charge, by any means necessary.

There is no money in the trust fund. Congress spent it. T-bills are not money, they are promises to pay. When the purchaser and the issuer are the same, they have no value and no meaning. None. Zip. Nada. That is factually correct.

Since you are determined to think I am wrong, we must agree to disagree. When you find out I am right in 30 years, please don't vote to re-tax the additional money I have set aside for retirement because I knew I wouldn't get all of what the government has overpromised. The irony is that I'll be ready if SS falls short, and I'm the one willing to face facts and fix it. You're the one who isn't ready, and you don't even think there's a problem. Utterly unbelievable.

bk said, "I'd rather we had balanced the budget, set aside the surplus in actual investments with real value, and not borrowed any money from anyone."

I agree.

bk said, "There is no money in the trust fund. Congress spent it. T-bills are not money, they are promises to pay. When the purchaser and the issuer are the same, they have no value and no meaning. None. Zip. Nada."

Here is where you are wrong. Even the Congressional Budget Office recognizes in it's SS calculations that the SS Trust Fund will have the money to pay out once the system starts paying out more than it is taking in. The debate isn't whether the money will be there or not. The debate is how we will pay back the T-Bills once they come due.

bk said, "You're the one who isn't ready, and you don't even think there's a problem. Utterly unbelievable."

If you would read my posts closely rather than imply that the SS Trust Fund will never pay out a dime once it is needed with your misleading language of "IOUs" (which would only occur if the government went bust and I don't believe that will happen) then you would have read that I do think SS needs fixing. Re-read my original comment. As to I not being ready, unless you're my financial advisor posing as bk you have no idea if I'm ready or not for retirement. Since you think I'm not ready I absolutely know that you aren't my financial advisor. Therefore it is your comments that are "utterly unbelievable."

bk said, "...we must agree to disagree."

My sentiments exactly.

Mike,

I never implied that we won't pay out any money for SS. What I've said over and over is that the government does NOT have real assets in the trust fund to use to make the payouts.

When the time comes to make the payouts SS has promised, every penny of it will have to come from new revenue sources EXTERNAL to the government, either tax increases or additional borrowing. Those are the only sources. The bonds are meaningless outside of being a promise to pay. We have a promise, but the government doesn't have the assets.

I'm glad you have a financial advisor. Ask him about the SS trust fund. Ask him if a promise is the same thing as an asset.

I'm also glad you're not relying on being right that SS is going to pay Amreicans everything they've been promised, which is only likely to be true if you are at least 50.

would you rather have kept the SS trust fund money in a savings account and borrowed the money that was borrowed from the SS trust fund to pay for current government expenses from foreign investors instead?

Personally, Mike, I would rather the government not have overtaxed us to begin with in order to create a slush fund, and then spent that slush fund and calling the resulting IOU's "savings" or "assets," when they're not.

But barring that, yes I would have preferred the surpluses be actually either invested externally or sequestered and not spent. Even simply taking the money out of circulation would have been less harmful. If the politicians would have had to face the real deficit figures, rather than robbing the slush fund to hide the extent of the excesses, we might have had some better fiscal discipline somewhere along the line. Instead we've been used as a captive lender--the problem being we're not just the payee, but also the payor.

I know! Next week, I think I'm going to go "save" a whole buncha money by taking out a second mortgage and spending the cash as fast as I can! It's OK, though, 'cause I'll write myself IOU's for all of it and call the IOU's "assets." And when the mortgage payments come due I'll just send those "assets" to the bank to cover the payments! And if they grinch that they're not real assets but only IOU's, why I'll just go back to the bank and borrow more money to pay the IOU's! The bank will give it to me, right?

The difference being that the bank can turn me down. But with the feds, we're the bank, and the feds have the legal right to "rob the bank," to take our money in order to get the money to pay us. It's called "taxes." They can also borrow in our name in order to pay us. Or just give us less than they promised.

More taxes. More debt. Benefit cuts. Or some combination thereof. No matter which way you turn, do nothing or do something, those are the choices, and the existence of the "trust fund" balances doesn't change the required revenue figures by one single dime, or alter the timetable for raising that money by one single minute. Raising more "surplus" taxes before they're needed as pay-go revenues is just more borrowing--it still doesn't do a damn thing to change the required revenues or the timetable.

If you're serious about wanting to understand the problem, the links are in my post above. And an excellent review of alternate approaches and their costs (including the "do nothing" approach) can be found at Centrists.org. The current NPV cost of "doing nothing" is hitting $6 trillion, BTW.

Tully said, "Personally, Mike, I would rather the government not have overtaxed us to begin with in order to create a slush fund, and then spent that slush fund and calling the resulting IOU's "savings" or "assets," when they're not."

You really don't expect me to take you seriously when you use language such as "slush funds" to describe a trust fund that has extended the life of the SS program and "IOU's" to describe Treasury Bills that are purchased worldwide as very safe investments, do you?

Tully said, "I know! Next week, I think I'm going to go "save" a whole buncha money by taking out a second mortgage and spending the cash as fast as I can! It's OK, though, 'cause I'll write myself IOU's for all of it and call the IOU's "assets.""

Ok, so it's obvious you don't want anyone to take you seriously. Thanks for letting us know.

Mike, I'm not responsible for your personal level of economic and financial education--or lack thereof. I have accurately described the realities of the current system. You can verify the realities with the CBO and the SSA. If you can't be bothered to take that first step, you are certainly welcome to your personal lifetime supply of fairy dust and magic money--but it's not spendable.

Ignorance is curable. Even fundamentalism can be treated. But you have to take the first step yourself, by actually seeking truth instead of memorizing and regurgitating dogma. Otherwise, you're just another noisy fundie robot. Of which there is no shortage, on either left or right.

Blewp bleep.

Tully, it seems to be you who needs further education. When you say that Treasury Bills in the SS Trust Fund are equal to IOUs you write to yourself you are just pointing out your ignorance on the matter. You need to move away from bad analogies as your guide to knowledge.

Let me know when you start selling your IOUs to to Fortune 500 companies and foreign governments as safe investments.

SS needs fixing but we need to start discussing how to fix the program without misleading analogies and rhetoric. Like you said, ignorance is curable. Seek help.

You just flunked Financial Accounting 101, Mikey. Big time. (A course I used to teach, BTW.) I suggest some study in double-entry bookkeeping. Maybe then you can explain how lending yourself money can produce a doubled asset from a single liability. Money for nothing! I guarantee you that financial professionals the world over will pay you well for the secret.

It's really really simple, which may be why you can't grasp it. Hold someone else's note, you have an asset. They have a liability. If someone holds your note, they have an asset, and you have a liability. Hold your own note, you have an offsetting transfer entry. Nothing more.

If you can't grasp the difference between internal and external accounts, do yourself a big favor. Let someone else keep your books. It's safer that way. But hey, innumeracy is also curable, no?