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On Senator Ron Johnson Vs Krugman
Paul Krugman had another of his nasty moment on TV Sunday (ABC -Link) when he took on Senator Ron Johnson (R, WI). The topic was Social Security. I want to throw my two cents into this fray.
Senator Johnson made the comment:
Social Security is in danger of “going broke” unless action is taken. “When I hear people saying Social Security is solvent to the year 2035, it’s not.”
Krugman fired back with:
Your facts are false. The Social Security thing—Social Security, it has a dedicated revenue base, it has a trust fund based on that dedicated revenue base. You can’t change the rules midstream and say, ‘Oh well, suddenly the trust fund doesn’t count.’ ”
Is SS going broke as the Senator claims? Or is Krugman right, when he says that SS is solid because it has a big Trust Fund?
There is not much 'out-there' on this topic that could could convince either side. You have the vast majority of the conservative thinkers/writers who have concluded that the SSTF is a sham, and you have all of the progressives who see it in precisely the opposite light.
I would like to use two credible sources on this issue in an attempt to determine who's right. The Office and Management and Budget (OMB) has opined on this, so has the Congressional Research Service (CRS). I think these sources are as credible as can be had. The CRE is supposed to be apolitical, while the OMB is decidedly political. The following information from OMB comes from 2010, a period when Peter Orszag was the boss at OMB. Given that Pete was running the show, one would have anticipated a Populist 'spin' from OMB on the question of TFs; not the case at all.
CRS made the following observations regarding the Trust Fund for the Federal Employee Retirement Fund (FERS). I'm not going to spend a 1000 words convincing you that FERS = SS. (But if PK asks me to, I will). They are very similar entities, they collect revenues, they invest surpluses in Special Issue Treasury Securities and they make benefit payments to covered workers.
CRE had this to say about the TF for FERS (Link):
The assets in private-sector pension funds represent a “store of wealth” that firms can use to meet pension obligations as they come due. The CSRDF, however, is not a store of wealth for the federal government.
Got that PK? The CRE says there is no wealth (aka money) in the TF:
The OMB provides more clarity on TFs. From the Budget of the United States Government, Fiscal Year 2010: Analytical Perspectives (Link)
Balances in the trust fund are available for future benefit payments and other trust fund expenditures, but only in a bookkeeping sense.
Ah! There is no money in the TFs. They are bookkeeping entries. OMB concurs with CRE - TFs are not a store of wealth. More:
The holdings of the trust funds are not assets of the Government as a whole that can be drawn down in the future to fund benefits.
How many ways does OMB have to say this to convince PK? Another:
The existence of large trust fund balances, therefore, does not, by itself, increase the Government’s ability to pay benefits.
Is this getting through to progressives like PK? This is not the tin hats talking PK. This is your "guys".
Senator Johnson made the statement that the SSTF accounting was similar to a person who writes themselves an IOU for $20, and then somehow believes he actually has an asset. PK objected. This is what the OMB has to say about it; no wiggle room for PK with this:
These trust fund balances are assets of the program agencies and corresponding liabilities of the Treasury, netting to zero for the Government as a whole.
Got that PK? The Senator was correct. Writing an IOU to oneself nets to zero. If the OMB was the arbiter of the TV debate, it would have said that the Senator had the facts, and Krugman was blowing smoke.
Krugman, on the other hand, is claiming victory. He still believes that the SSTF has real fairy dust in it. He maintains that he alone has the facts. In his typically snarky manner:: (Link)
I have to say, it’s extremely telling that conservative Republicans don’t seem able to make their case without resorting, right from the beginning, to obviously dumb fallacies.
Who's right? PK or the Senator? Which side is suffering from "dumb fallacies?" This is a critically important point to resolve. Either we continue to live in PK's fantasy land, or we recognize that SS is a here-and-now issue. There is no middle ground. One side or the other is "right" on this one. For the US, it's a make-or-break issue.
Note:
Where did the 'money' go that PK thinks is available today? It was spent years ago.
The 'economic miracle' of Bill Clinton was bought with money looted from SS. Bill sucked out $565b in his eight years. No one even noticed.
George Bush really raided SS. A total of $1.5T leaked out during his years. Who 'paid' for Iraq and Afghanistan? SS did.
If anyone is upset about the status quo, they can point to either a Republican or a Democrat. They're equally to blame. But looking backward, and laying blame, is a fool's game. The fact is the money is gone and SS is Paygo today. It's running big annual deficits. SS will produce $75b of red ink in 2013 (equivalent to 10% of the deficit). The deficits will pass $100b in 2016 and explode from there on. The beast is howling - and Krugman thinks it's his cat purring.
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Absolutely, its what we've been saying for years. A trust fund has assets, liquidity, however one wants to define "assets" it is real, wholly independent of new revenue...ie more debt issuance or taxation.
All one needs to take home is this simple statement...
Balances in the trust fund are available for future benefit payments and other trust fund expenditures, but only in a >>>bookkeeping<<< sense.
If you don't believe me, ask to see the "assets" backing the "Trust Fund". Its your money isn't it?
Ponzi over.
As good an explanation of the mess that is SS as I have ever read.
Ditto.
Bruce marshals basic facts, that have to be spelled out over and over to ideologues who believe that the label 'Trust Fund' disposes of all questions.
Unfortunately, non-accountants often never grasp that on a consolidated basis (the only meaningful one for Usgov + SocSec), the Trust Fund is not an asset. It's just a parent-subsidiary obligation that nets out in consolidation.
This makes it unnecessary to address the issue that even if the Trust Fund WERE an independent entity, rather than a wholly-owned subsidiary of Usgov, its 'non-marketable' Treasuries are value-impaired, since they can't be sold to third parties, but only redeemed.
People who point out these facts are not enemies of Social Security. They are simply exposing an in-your-face accounting fraud, which endangers all Social Security beneficiaries.
Anyone who supports Social Security and is concerned about the welfare of the elderly should demand that the political accounting subterfuges STOP NOW.
Thank you, Bruce Krasting, for demolishing the ideologically-motivated lies of Paul Kurgman.
Facts and ideologues?
Never the twain shall meet.
All Bruce did was to fall into Krugscum's trap.
As long as people keep fighting him, he cannot lose, as he has no factual basis anyway.
Sheeple respond to emotions, not facts about systems they fear to understand.
Thanks Bruce. If only PK were in the cat sanctuary like that poor lady in CA;--)
SS trust was raided years ago. All that's left are IOUs.
And now they want to come after your/our IRAs.. to "assist" us in buying Treasuries.
Get out NOW of your IRAs and 401k´s, bitchez!
Again, if the FED has $85 Billion per month for the banks, and CONgress had $770 Billion for bailing out failed banks, insurers, and corporations - there is no shortage of money for Social Security - only a lack of will to reward those who pay the taxes versus those who steal them.
Yes, the bearded potato Krugman is a delusional fool.
Funny though, to hear the GOP and "conservatives" puff their chests up and get self-righteous about responsibility and debt when they voted for the bailouts, have not restrained the FED, and passed N.D.A.A.
It is immoral in the face of non-stop bailouts and liquidity (free money) for banks and corporations to debate Social Security and Medicare cuts when they have already been promised and taxed. The fact that it is even debated is a sign of our impending doom.
Limited government, responsibility, self-reliance, blah de blah - yeah, yeah - I'm all for it - but not when banks and corporations are rewarded for gambling and theft, not with privatized gains/socialized losses, not with corporations being deemed individuals by the Supine Court, not with the raping of the Constitution.
Sorry, deal breaker, game over, crossed the Rubicon. If there is enough money for the banks and the corporatocracy than there is enough for human beings. If there isn't than the whole thing needs to be torn down. The most patriotic thing anyone can do in our current kleptoligarchy is to demand every entitlement and pay as little in taxes as possible.
The beast must be starved, the beast must be killed. Your responsibility and hard work only serve to keep the hegemonic beast alive, to allow it's growth and it's increasing suffocation of life, liberty, and the pursuit of happiness. Politics is the distraction - it is a dead end - it will never solve the problem only feed it.
Hearing politicians and economists debate about Social Security and budgets is like listening to undertakers discuss funeral arrangements.
Link to the "debate" on ABC: http://abcnews.go.com/ThisWeek/video/week-roundtable-budget-battles-1869...
The SS TF is not a bank just as Hostess Twinkies is not GM.
Sorry. SS recipients are gonna get hurt I suspect. Seniors have no lobby that comes even close to Bankers, insurance companies, Big Oil and the NAR.
Lo siento. Via con Dios, amigo.
Paul Krugman, all snark and no bite.
He's so intellectually dishonest it makes me nauseated. And what's worse is that people believe him.
Or worse yet, that people are stupid enough to argue with his sophistry.
If it's this easy to refute Krugman's lies (and it is), then they simply do not matter.
It's all about signal to noise ratio. Until the NYT has to close up shop, there is NOTHING to be done in regards to "intellectual battles of ideas," as he has NONE.
When Bruce "attacks" Krugman, all it does is to reinforce emotional attachments to false ideas, strengthening the resolve of those dumb enough to follow him in the first place.
This one soon turns from satire into IRL
Paul Krugman Declares Personal Bankruptcy
http://dailycurrant.com/2013/03/06/paul-krugman-declares-personal-bankru...
Rather than tighten his belt and pay the sums back, the pseudo-Keynesian economist decided to "stimulate" his way to a personal recovery by investing in expenses he hoped would one day boost his income.
I shouldn't have followed Mr. Krasting's link to Krugman's column. I feel physically ill every time I read one, and it only gets worse when I peruse the comments. So much mindless butt-kissing it's nauseating.
Nothing will convince the sheep who follow Krugman. Even when they're in their late 60s eating catfood, they'll proclaim SS solvent because they receive a $20 check from Uncle Sam each month.
I think the fact that the last time we had a serious debt ceiling issue the president pulled out the SS cards and said "we may not have enough money after paying the bond holders their money to pay the SS recipients", we could see another problem arise as the conservatives juggle their options and decide if the trust fund is worth saving or not. Up to now it has always been saved, as has just about everything else. O'riely is still looking for just one spending cut from the administration and were havin a tough time deciding who should be the first to go under.