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Gettin Ugly

Bruce Krasting's picture




 

 

I got into a bit of an Internet tussle with Marketwatch 666. This was another of those posts from the defenders of Social Security, and like most of these articles, this one fell back on an old tired line. The author quoted Ronnie Reagan: (I wanted to barf)

 

Social Security can’t add to the deficit.

 

mw

 

So I dashed off a comment:

 

Social Security does not add to the deficit. Ronnie was right.

Social Security DOES add to the DEBT of the country.

Both statements are true. Which one is the one to focus on?

In 2013 the answer is that it is the debt that matters, not the deficit, and SS is adding to the debt.

 

The author, R.J Sigmund, comes right back with: (and I’m grabbing for the wastebasket again)

 

Bruce, the debt is not a problem....the world economy is suffering from a shortage of safe assets, and the only way to alleviate the shortfall is to increase the debt

 

Then he goes on to add:

 

you've conveniently omitted the fact that it also earned more than $117b in interest on the government bonds in the trust fund....

 

I love it when this happens; folks playing “gotcha”, not even understanding the facts. I come back with my standard response:

 

Careful where you go with that interest income line. Interest is a NON CASH ITEM. SS needs cash to make benefit payments. So SS has to hock its bonds with Treasury to come up with the CASH needed. Treasury, in turn, must borrow from the public to fund the SS shortfall.

 

I told them to go to SSA, and look at the bottom line results at SS for 2011:

 

tf

 

Every penny of the $45.379B cash shortfall had to be borrowed by the Treasury. Treasury did that by issuing more Debt to the Public. I added some number about what's in store for the future with cash deficits at SS:

 

2010 SS deficit = $47B,

2011 SS deficit =$48B,

2012 SS deficit = $60B,

2013- 2023 SS deficit = ~$1T

 

Anyway, I doubt I changed RJ's views on this too much. This is an emotive topic, and I suspect it is going to become more charged in the weeks to come. It’s very hard to have a debate with someone who starts with, “debt is not a problem”. It’s even harder when the debate is ended with:

 

...so take your ranting back to zero hedge, where you might find some other chicken little types who'll buy into your theories...

 

images

 

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Wed, 01/09/2013 - 21:12 | 3139182 Arbysauce
Arbysauce's picture

RJS please tell me you are positioned for deflation.

Wed, 01/09/2013 - 21:06 | 3139165 VelvetHog
VelvetHog's picture

The damned sky reall is falling you know.

Wed, 01/09/2013 - 21:37 | 3139283 blindman
blindman's picture

the sky is fine, the stupidity of our money
system is another story, that is falling.
miraculously the sky will remain the sky,
go figure. and the sun will come up in the a.m.,
how dare it be so?

Wed, 01/09/2013 - 20:09 | 3138956 joego1
joego1's picture

I say we print more money and inject more hopium. When that quits working substitute opium for hopium. Fuck medicare I want opium!

Wed, 01/09/2013 - 22:10 | 3139377 espirit
espirit's picture

All you're going to get is... ink, paper, and printers.

Thu, 01/10/2013 - 03:17 | 3139975 TheMerryPrankster
TheMerryPrankster's picture

The only thing cheaper than paper and ink is electrons.

Why do you think they made all the Social Security checks into electronic deposits?

Even the paper ponzi is becoming too expensive, electrons give you 100% margin when creating money out of thin air. Paper and ink only about 99.9999999999%.

Times are hard when the banksters are cutting corners. layoffs at UBS, et al, the music is stopping and we are seeing less chairs in the room already.

Thu, 01/10/2013 - 10:45 | 3140430 Vendetta
Vendetta's picture

How long will it take for the printing of a $100 bill cost more than its face value? 

Wed, 01/09/2013 - 19:32 | 3138837 ramacers
ramacers's picture

we know were all this is headin', and we know the appropriate defense. get ready folks, alea icata est.

Wed, 01/09/2013 - 19:30 | 3138818 KingTut
KingTut's picture

Not sure about "SS does not add to the deficit".

SS ran up a surplus of $4.5 trillion while all the boomers were young and working.  Unfortunately, the government took it, spent it and gave SS an IOU in return.  So when SS runs a deficit, it asks the Treasury for some of its money back to fill the gap.  That $4.5 trillion is part of the total US public debt, so the SS part of the debt goes down a little, say from $4.5T to $4.4T.

But since the government doesn't have any money (they spend everything they get), they have to print or borrow what they give to SS, which increases the debt back to where it was.  Less is owed to SS, but more to somebody else. This increases the deficit in the sense that if SS paid its own way, the deficit would be lower.

As near as I can tell, the debt remains the same, but the deficit goes up.  What am I missing?

Wed, 01/09/2013 - 23:22 | 3139569 disabledvet
disabledvet's picture

simply false to say "the Government has no money." The Federal Government has MASSIVE amounts of money...but it doesn't use it well at all. Our "death care" system is so broken it really is beyond repair. If the Republicans were smart they would jump aboard the ObamaCare train and fully fund it. Medicare and Medicaid both need to "take a back seat" to funding healthcare for children and families of WORKING households. These folks look at how money is spent (as in "you really are a worthless doctor who doesn't provide care) and "spend correctly." this is not true of seniors and the poor who are "told what care they will get" and then "have the Government billed (in)appropriately." the amount of fraud in the Medicaid system has been rumored to be "beyond belief" http://www.forbes.com/sites/merrillmatthews/2012/05/31/medicare-and-medi... have no fear...the person who has said "no problem" to this "clear and present danger" will be nominated for Treasury Secretary tomorrow. Wow! Obviously Social Security taxes have also gone up so i think Bruce might have to update his numbers based on this fact. Not that a growing employee base isn't critical to Social Security...but simply put "it isn't going broke." there are many potential fixes to this particular PAID FOR program.

Wed, 01/09/2013 - 19:39 | 3138860 hooligan2009
hooligan2009's picture

a JD...here..clink..cheers!

Wed, 01/09/2013 - 19:24 | 3138806 TrustWho
TrustWho's picture

fuk the deficit, fuk the debt as it is all about INTEREST RATES and INTEREST PAYMENTS.

Wed, 01/09/2013 - 19:14 | 3138775 blindman
blindman's picture

the money system and everything adherent to it
is doomed by design. blah, blah ....
it is the difference between issued money
and borrowed imaginary money. the end will be a
shock , sudden and should not be as it is
by design from the structure of the f..g
fraud system. usury has a nasty kick at the end,
get ready, even the winners will be losers.

Wed, 01/09/2013 - 19:38 | 3138800 hooligan2009
hooligan2009's picture

international law also has a defintion of a ponzi scheme

Under the law in many countries, individuals do not have to repay if others fraudulently borrow in their name, and corporations are not liable for contracts that their chief executive officers or other agents enter into without the authority to bind the corporations. The legal doctrine of odious debt makes an analogous argument that sovereign debt incurred without the consent of the people and not benefiting the people is odious and should not be transferable to a successor government, especially if creditors are aware of these facts in advance.

from the IMF in 2002..right here

http://www.imf.org/external/pubs/ft/fandd/2002/06/kremer.htm

note the feeling you get when you consider the absolute rightness of this legal argument..it is like the blinding light you see when you die (so I'm told anyway, about the light thing). this is the kind of thinking that sets off every alarm in every government security agency. it is NOT YOUR DEBT!

Thu, 01/10/2013 - 13:01 | 3140975 tip e. canoe
tip e. canoe's picture

 sovereign debt incurred without the consent of the people and not benefiting the people is odious and should not be transferable to a successor government

this is why government-mandated "welfare" is so ingenious, as it binds the people to the debt of the sovereign.

Wed, 01/09/2013 - 23:26 | 3139574 disabledvet
disabledvet's picture

what the Fed is doing is a violation of law. Chairman Bernanke could be arrested for all the debt he has "created" via an illegal monetization scheme.

Wed, 01/09/2013 - 19:07 | 3138749 DR
DR's picture

BK, the ex bond vigilante turned SS vigilante! Thanks for keeping an eye on this....

 

But do you think means testing SS would work? I believe you would see a lot of upper income folks transferring assets to the kids before the big 65 arrived.

 

What if the US government  tax SS as regular income after a certain poverty allowance? SS is already taxed at certain levels.

 

http://www.ssa.gov/planners/taxes.htm

 

Thu, 01/10/2013 - 09:39 | 3140254 GeezerGeek
GeezerGeek's picture

SS is already taxed - at rather low levels.

2012 was the first year I collected SS. Being (forcibly) retired, I relied on withdrawals from an IRA to supplement my SS income. Because my wife makes a modest income, we quickly got to a point where withdrawals from the IRA caused the taxable portion of SS to increase. I used a tax program to run some experiments, and found that with an adjusted gross income of $50K I was essentially being taxed at a marginal rate of over 20% for every dollar taken out of  the IRA. 

Wed, 01/09/2013 - 18:26 | 3138604 Getting Old Sucks
Getting Old Sucks's picture

Bruce, don't know if you already did this, but will you pledge to give up all your entitlement to SS?  With all the articles you have written on the subject, that's the least you should do to show example of your sincerity. 

And don't say yes if they stop taxing you cause even if they end all benefits, the tax will stay. 

Wed, 01/09/2013 - 22:11 | 3139379 Bruce Krasting
Bruce Krasting's picture

I get no SS benefits. Not old enough. But I'm "entitled" to get about 2gs a month in a couple of years.

I should not get this. I don't need the insurance. Don't feel bad for me.

If they don't take it from me in the form of means tax, will I endorse the check back over to the government? No. I will give the money to someone, something, that needs it more than I.

I can give the money away smarter then the Feds. But I won't keep it. A protest with a nice end, if you will.

 

Fri, 01/11/2013 - 13:25 | 3144589 Arbysauce
Arbysauce's picture

Means testing may be the future but it is a further breakdown of contract and rule of law. I guess it might provide clarity to dupes on the nature of government, the only plus. You *should* get SS and if you want to give it away go right ahead.

Wed, 01/09/2013 - 18:49 | 3138682 Chmee
Chmee's picture

Don't hold your breath sir, I doubt that anyone espousing cuts will be willing to give up even their meager portion to someone in greater need. 

Wed, 01/09/2013 - 19:12 | 3138769 hooligan2009
hooligan2009's picture

i receive no benefits, pay no taxes and have no debt..my assets are...secret! kma! I AM SPARTACUS! (probably due for a name change)

Wed, 01/09/2013 - 19:22 | 3138803 Getting Old Sucks
Getting Old Sucks's picture

Good luck.

Wed, 01/09/2013 - 19:36 | 3138849 hooligan2009
hooligan2009's picture

this is a duplicate and slightly o/t but well..im on a roll (ty mr jd)

just wait...the trillion dollar coin will havea half life of 2 years, so the debt is getting smaller every day..same will apply to bank notes..."wear and tear" will turn them into pulp fiction in only 3 months.

Wed, 01/09/2013 - 18:20 | 3138596 robnume
robnume's picture

So young, so stupid.......If folks would begin talking about cutting the ever-bloated PENTAGON BUDGET!!!!!! we could fund SS with ease. The truth is SS was flush until presidents started "borrowing" from the intact SS funds. People in this country live paycheck to paycheck. They, too, pay taxes - in fact most of the taxes - that are collected as federal/state revenue. This is not an issue regarding "life choices", as some here pose, but a fact. Since the feral government lies and/or completely removes what is actual inflation for most of us - food prices have been on the rise like crazy, as have gasoline prices - per it's "official numbers" racket, not to mention all the goodies that the FASB allow in their "accounting standards", it's a wonder we're not all living under a bridge downtown, taking our lives away. NO MORE BANKSTER, INS. CO. BAILOUTS!!!! And CUT THE SHIT OUT OF THE PENTAGON BUDGET!!!

Wed, 01/09/2013 - 21:20 | 3139190 Fish Gone Bad
Fish Gone Bad's picture

I spoke with William Saito, a brilliant man who founded IO Soft, about 10 years ago.  I asked him about using his technology in medicine.  He agreed it would probabaly work, but that there was much more money in weapons.  Politicians want to pay to kill bad people, not save the good ones...

Thu, 01/10/2013 - 01:15 | 3139833 dark pools of soros
dark pools of soros's picture

there is so much more growth in death

Thu, 01/10/2013 - 12:55 | 3140952 tip e. canoe
tip e. canoe's picture

especially when growth has to be "created" where none exists

Wed, 01/09/2013 - 17:55 | 3138461 QQQBall
QQQBall's picture

If Obomber is good with having me pay for fucktards that cannot pay back their student loans and their mortgage payments for their McMansions (many gotten via liar loans), not to mentions folks like that retard who bought a home in Berkley for like $40k and they cried crocdile tears when they couldn't service the payments on the $600k or whatever was borrowed/refi'ed against it, then why would the Messiah reurn the payments I made into SS over (eventually) 50 years?  So people who consumed their income and wealth and arrived at 65 yo w/o a penny - I should have my SS payments redirected to them b/c I have acte prudently and saved and invested over the years? Fuck that and anyone who says otherwise can KMA.  Give me back what I paid in and what has been paid in buy my employer (which has been me for the past 30 years).  For a change, let's stop punishing the prudent.

Thu, 01/10/2013 - 01:14 | 3139828 dark pools of soros
dark pools of soros's picture

keep working them 2 jobs for a total of 50k a year while some food stamper pro spends all day (since he has all day, and you all work) with your wife..  he'll give her all the attention she needs walking the mall back to front sharing lattes while you slave away just to break even with the bills...

 

Wed, 01/09/2013 - 17:35 | 3138353 Chmee
Chmee's picture

I look at all the people here who would so readily scrap Social Security.  You say that it's because it's costing the country too much, because it's some kind of "socialism", costly and draggin the country down to it's ultimate demise.  I really have to wonder about which direction your moral compass is pointing. 

It's very easy to condemn the 40% of those retirees who would be below the poverty line if it weren't for the benefits they receive, 24% of the recipients counting on it as their sole source of income.  You can rant and rave all you want about how they should have "saved more" or somehow invested better, but the sad truth is that the vast majority of the people in this country live from paycheck to paycheck and couldn't save an extra dime if they wanted to.  And you would yank that all out from under them because you don't want to have to pay another dime out of your pocket.

After you cut Social Security and Medicare are you going to donate a portion of your income to make sure those people aren't living on the streets, get enough to eat and have adequete healthcare?  I sincerely doubt it, otherwise you would already be doing it today. Don't give the crap excuse that you're already being taxed too much already to afford to be charitable.  Take a real hard look at yourself, answer honestly and truthfully if you really would. 

I'm willing to bet that the you call "liberals" elitists, don't you. Well, take a look in the mirror, there's more than one kind of elitist on this planet.

Thu, 01/10/2013 - 11:07 | 3140503 Vendetta
Vendetta's picture

I guess that those who are so up in arms about SS don't have parents anymore, or their parents are well off enough financially that they won't be moving into the basement of their dearly beloved children when SS is dismantled.  My parents are not around anymore but I know lots of boomers who are no different than most on ZH whether left or right politically leaning in their 'belief system' and will be destroyed if SS gets eviscerated... I guess some cheer all that blaming them for the corruption top to bottom of government and its alliance with international financier/banker types who could care less about any particular nation as long as they win their bets.

The great irony of it all is SS was because of the fraud and corruption of the bankers easy credit policies during the 1920's and tens of millions had their life savings destroyed and years of unemployment to contend with when the credit markets froze up and went to shit. FDR, no doubt unjustly helping the bankers through devaluation schemes and other means, also saved many from a bleak end of life with SS.  When I was in Montana over at Peck dam, the museum clearly mentions how many people (10's of thousands) knew FDR saved their lives.. they were starving to death.  It was moving to say the least.

If anyone wants economic justice without economically torturing older people (likely to death) who had nothing to do with the current morass we're dealing, the justice has be taken from the bankers who created these ponzi blowups ... but those are apparently untouchables (like some caste system in India) and they skate off to parts of the world with their ill-gotten gains (Shanghai world financial center most likely). 

Otherwise, the 25 to 40 year olds will have to contend with their children having to encounter dead boomers laying around whereever they die while the kiddies head to school.  Pick the poison carefully I would say, I guess the kiddies will numb out from seeing the dead and or suffering of old folks scrounging around for grubs or whatever while waiting for death to come.

Thu, 01/10/2013 - 01:10 | 3139820 dark pools of soros
dark pools of soros's picture

we'll have our own Stalin.. followed by our own Hitler in due time

Wed, 01/09/2013 - 23:46 | 3139630 Transitory
Transitory's picture

Chmee - "You can rant and rave all you want about how they should have "saved more" or somehow invested better, but the sad truth is that the vast majority of the people in this country live from paycheck to paycheck and couldn't save an extra dime if they wanted to."

 

You realize that money comes out of our paychecks for this, right? So, everyone earning a paycheck had money they could have saved if they had been allowed to keep their paycheck. Instead it is pissed away in the general fund.

Wed, 01/09/2013 - 17:55 | 3138457 arby63
arby63's picture

I'm not sure how many folks are talking about "scrapping" Social Security versus severely updating it. It's an antique.

What's more, it has provided "false comfort" to millions and it's getting worse every day. Social Security simply wasn't designed to do what we are now expecting it to do.

We have morphed SS into welfare--generational dependence.

Exactly when did it happen that 2/3 of the nation became so helpless? Is it the chicken or the egg that caused it? Did jobs leave because we became lazy and stupid (I vote for this one) or did the jobs leave because mega-business got smart and fed Americans the crap they wanted at crap prices (I vote for this one too).

There you have it: A conundrum.

Either way we're screwed.  

Wed, 01/09/2013 - 19:46 | 3138884 css1971
css1971's picture

No. Jobs died. Cancer or sommat.

Wed, 01/09/2013 - 18:18 | 3138581 Chmee
Chmee's picture

It's doing exactly what it was designed to do, prevent people from living in abject poverty when they became too old to work a productive life any more. 

So when did it happen that the country became so helpless?  Jobs didn't leave because Americans became lazy, but it is because they became stupid, stupid enough to believe the propaganda that the manufacturing jobs that would leave would be replaced with "service sector" jobs and that we would become a "Service Economy".   Remember that?  Sure, that worked out for a little while back in the '90s, but then those mega-businesses decided that it wasn't enough for them to boost profits with cheap manufacturing labor, they offshored those service sector jobs too.  Ever call the customer service desk to get something fixed? 

Funny thing, an article I read back in 1991 that described precisely what is actually happening today, that the offshoring of jobs was all well and good in that those jobs were indeed sorely needed overseas in Asia to boost their standard of living, but that it would come with a cost; The standard of living in the US would fall to meet where theirs rose.  And that it wouldn't stop with just manufacturing.  So it has come to pass....

Fri, 01/11/2013 - 13:48 | 3144689 Arbysauce
Arbysauce's picture

Removed dup

Fri, 01/11/2013 - 13:44 | 3144678 Arbysauce
Arbysauce's picture

Protecting old people is the propaganda. The truth is SS is the gov saying we'll keep your money for you because you are all too foolish to save it yourselves. We will (might?) give it back to you far in the future with a negative real return. In the meantime they spend it and let future politicians deal with the mess.

The problem with sweeping social policy is the primary effect is to give dubious politicians sweeping power.

Instead, us sovereign citizens should be responsible for ourselves and keep the politicians on a very short leash.

Wed, 01/09/2013 - 21:05 | 3139161 Marge N Call
Marge N Call's picture

"It's doing exactly what it was designed to do, prevent people from living in abject poverty when they became too old to work a productive life any more. "

So tell me CumHee, who gets to say what is "poverty", or what is "too old to work", or, most importantly, what the definition of "productivity" is???

Let me guess your answer... WASHINGTON DC. Yeah, I thought so.

I feel sorry for you, for you have bought the bullshit hook, line, and sinker and you don't even realize it. Think about it. Joe Biden, Nancy P., Barney Frank and John Boner (hmmm, they may have some other masters besides the public) get's to decide EXACTLY what is deemed "productive", "old", ec, etc.

We are all fucked, but people like you won't realize HOW you are being fucked until you feel Biden's cock in your lungs.

Marge

Wed, 01/09/2013 - 21:49 | 3139324 Chmee
Chmee's picture

I was going to make a retort, but quite frankly people who are more paranoid than I and have to jump to such baseless conclusions about how I define anything or who I listen to don't deserve more than a cursory dimissal.

Wed, 01/09/2013 - 21:37 | 3139285 CloseToTheEdge
CloseToTheEdge's picture

but of course a poser with penis envy

fuck you & biden

Wed, 01/09/2013 - 17:46 | 3138419 CloseToTheEdge
CloseToTheEdge's picture

worth repeating!

After you cut Social Security and Medicare are you going to donate a portion of your income to make sure those people aren't living on the streets, get enough to eat and have adequete healthcare?  I sincerely doubt it, otherwise you would already be doing it today. Don't give the crap excuse that you're already being taxed too much already to afford to be charitable.  Take a real hard look at yourself, answer honestly and truthfully if you really would. 

I'm willing to bet that the you call "liberals" elitists, don't you. Well, take a look in the mirror, there's more than one kind of elitist on this planet.

 

HT Chmee

Wed, 01/09/2013 - 20:01 | 3138929 Sean7k
Sean7k's picture

I see nothing worth repeating here. An entitlement mentality that believes it deserves services without work or wealth? You are the problem, not the answer. 

The provenance of charity lies with those that would choose to give, of their own FREE will. Not forced through criminal theft (taxes).

As for SS and medicare, a legal contract was entered into. It required payments for future benefits. The government pledged to protect those payments and pay them out in the future. To default on this responsibility means they are in violation- regardless of what the Supreme Court says. Consequently, the day they stop funding this contract,  this government is no longer allowed to require our participation or payments. 

We are a society of contracts. Let's behave as one.

 

Thu, 01/10/2013 - 00:51 | 3139782 Transitory
Transitory's picture

Sean7k - We are a society of contracts. Let's behave as one.

 

The US already defaulted when the Fed printed treasury purchases in bulk. That contract is dead, we cannot pay our bills through goods and services.

Thu, 01/10/2013 - 08:12 | 3140134 Sean7k
Sean7k's picture

Absolutely. Now, what are you going to do about it? Defend your government or defend the People?

Thu, 01/10/2013 - 09:53 | 3140286 Transitory
Transitory's picture

Choice three - advocate for a limited federal government that values personal liberty over a social safety net for the general, mostly competent, population. I'm fine with programs for the disabled, but telling me that a person able to earn a paycheck is unable to save his or her own money is nonsense.

Thu, 01/10/2013 - 11:28 | 3140568 Sean7k
Sean7k's picture

But choice three is an oxymoron. There is no such thing as limited government. Government is an animal of control and control despises liberty.  Limited how? By YOUR definition? One that includes a safety net?

That would require coercive taxation. If you can ask for a coercive tax, what is to stop others? Oh wait, that's how we got to where we are today. The only governing structure that prizes personal liberty is anarchy or voluntaryism. Maybe a loose confederation of states where the power lies with the individual. 

You can't have your socialism and keep it caged. 

Wed, 01/09/2013 - 23:32 | 3139589 disabledvet
disabledvet's picture

medicare and medicaid are different because they provide a SERVICE whereas Social Security simply provides a check. defining the former as a "benefit" is both really hard/not hard. Obviously it's hard not to be beyond suspicious when companies like United Healthcare (which in effect is the paymaster for the totality of the healthcare system) make so much money. that sounds HIGHLY inefficient to me.

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