Last U.S. combat troops leaving Iraq

[Hauldren Collider]

For ****'s sake, how could you and HC make such a basic error as this?

The government doesn't spend anything on Social Security except for the administrative costs of running the program. It's a trust fund. The SS budget line item is what we owe SS because the government keeps borrowing money from it to pay for things like stupid, unnecessary wars.

This actually almost made me laugh more than those star wars critique videos

[Kuciwalker]

Which goes back to my point that if it's a philosophical complaint about SS itself, that's a different argument than complaining about it being a chunk of the deficit. Americans want Social Security, and they're willing to pay in to the system now for expected benefits when they retire. Current benefits are completely paid for by that system, and future benefits will be paid for as well because the system will get back the money it's owed. That money was not meant to go anywhere else, so citing as an example of government wasting money is stupid and wrong.

Um, no?

You are under some sort of bizarre impression that the way the accounting is set up has any kind of relevance.

Social security is two completely disconnected parts of the federal budget:

1) An income tax.

2) A government pension.

The only way those two are related at all is that we decided to call them both, together, "social security".

It is not actually some kind of independent entity from the rest of the federal budget. It is nominally accounted as such, but that accounting is a complete fiction. And therefore the massive expenditure is a completely valid target for someone who wants to reduce the deficit.

[Kuciwalker]

Taxes that wouldn't be being collected if it didn't exist. Unlike other taxes, SS taxes all go to one place--the SS trust fund. It is designed so that people will get back what they pay into it.

No? Boris, if at some point in the future the "fund" were depleted and the FICA tax didn't cover all of the benefits, then the money would come directly out of the rest of the taxes. The system wouldn't say "oh, hm, I guess we all have to go home now" and stop sending out the social security checks.

[Kuciwalker]

If for some magical reason the government could ONLY every have the FICA tax and the social security pension together, but could not enact just one of them or the other, then your argument would have some merit. But that's just obviously untrue.

[Al B. Sure!]

How does a thread about US troops coming out of Iraq turn into a discussion of the nature of the social security system?

[Kuciwalker]

Seriously, every year the IRS collects N trillion dollars in taxes and the federal government spends M>N trillion dollars on social programs and the army and whatnot. Why do you have this bizarre idea that the way they shuffle those N dollars around internally has any relevance to the "I want to make M - N smaller" calculation?

[Boris Godunov]

No? Boris, if at some point in the future the "fund" were depleted and the FICA tax didn't cover all of the benefits, then the money would come directly out of the rest of the taxes. The system wouldn't say "oh, hm, I guess we all have to go home now" and stop sending out the social security checks.

I already pointed out that if and when SS payments have to be covered outside of the fund, then there's a legitimate reason to tie the program to the national deficit. And again, that's assuming that nothing it done to address the situation between now and 2037.

But the point still stands that the fund, right now, is comprised entirely of taxes paid specifically for it's purpose, the FICA tax. No money that wasn't intended to go to pay for SS benefits has ever gone for them. As it currently stands, the opposite is the case: money intended for the program has been siphoned off by the government to pay for all sorts of things--and that's what the budget deficit line item for SS stands for. Look at it this way: I borrow $10,000 from my 401(k) for an emergency. Of course, I have to pay that money back to my 401(k) through regular payroll deductions. Under this logic, it would be like saying that my 401(k) was the thing causing the $10k dent in my net worth, but it's clearly not, it's whatever the emergency was I used to borrow against it.

[Hauldren Collider]

Boris, you don't seem to understand the concept of fungibility. If SS required more money than it took in--which it soon will--you can bet that congress will divert taxes from other places. Accounting gimmicks give the illusion that the money isn't actually in one big pot but the simple reality is that it does not matter where the money comes from or where it goes. For all practical purposes, it goes into one big pot and comes out of one big pot.

[Boris Godunov]

Boris, you don't seem to understand the concept of fungibility. If SS required more money than it took in--which it soon will--you can bet that congress will divert taxes from other places. Accounting gimmicks give the illusion that the money isn't actually in one big pot but the simple reality is that it does not matter where the money comes from or where it goes. For all practical purposes, it goes into one big pot and comes out of one big pot.

Huh. So the savings account I have at my bank is just an "accounting trick" as well, since all the money goes into one big pot and comes out of one big pot (the bank), and that distinction of accounts is just on paper, anyway. Who knew?

Seriously, is this the argument? Because there isn't dollar-for-dollar correlation of the FICA taxes paid to what goes into/comes out of the fund, it amounts to an "accounting trick?" That's pretty asinine.

If SS required more money than it took in--which it soon will--you can bet that congress will divert taxes from other places.

Jesus ****ing Christ, how many times do I have to say this: until that ACTUALLY HAPPENS, complaining about the costs of SS as a part of the deficit is stupid. It hasn't happened yet, as to date the costs have been entirely covered by tax payments into the system for the specified purpose. I refuse to take seriously people citing imaginary costs from outside the fund. Get back to me in 2037.

[Hauldren Collider]

Huh. So the savings account I have at my bank is just an "accounting trick" as well, since all the money goes into one big pot and comes out of one big pot (the bank), and that distinction of accounts is just on paper, anyway. Who knew?

YES. THIS IS EXACTLY HOW IT WORKS. However you can only personally take a certain amount out of the pot.

Jesus ****ing Christ, how many times do I have to say this: until that ACTUALLY HAPPENS, complaining about the costs of SS as a part of the deficit is stupid. It hasn't happened yet, as to date the costs have been entirely covered by tax payments into the system for the specified purpose. I refuse to take seriously people citing imaginary costs from outside the fund. Get back to me in 2037.

SS is OBVIOUSLY part of the deficit because if we cut SS spending, we could use the SS taxes (WHICH ALL GO INTO ONE ****ING POT HOW MANY TIMES) to pay off our debts. The fact is that the government just pulls from any excess left over in SS and immediately spends it to pay off the federal debt. It all goes into one pot.

[Boris Godunov]

YES. THIS IS EXACTLY HOW IT WORKS. However you can only personally take a certain amount out of the pot.

Ok, if that's your argument as to why SS is just an "accounting trick," it's retarded.

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund#Recent_Attention_to_the _Social_Security_Trust_Fund

At a Senate hearing in July 2001, Federal Reserve Chairman Alan Greenspan was asked whether the trust fund investments are “real” or merely an accounting device. He responded, “The crucial question: Are they ultimate claims on real resources? And the answer is yes.”

http://krugman.blogs.nytimes.com/2008/03/28/about-the-social-security-trust-fund/

Social Security is a government program supported by a dedicated tax, like highway maintenance. Now you can say that assigning a particular tax to a particular program is merely a fiction, but in fact such assignments have both legal and political force. If Ronald Reagan had said, back in the 1980s, “Let’s increase a regressive tax that falls mainly on the working class, while cutting taxes that fall mainly on much richer people,” he would have faced a political firestorm. But because the increase in the regressive payroll tax was recommended by the Greenspan Commission to support Social Security, it was politically in a different box – you might even call it a lockbox – from Reagan’s tax cuts.

The purpose of that tax increase was to maintain the dedicated tax system into the future, by having Social Security’s assigned tax take in more money than the system paid out while the baby boomers were still working, then use the trust fund built up by those surpluses to pay future bills. Viewed in its own terms, that strategy was highly successful.

The date at which the trust fund will run out, according to Social Security Administration projections, has receded steadily into the future: 10 years ago it was 2029, now it’s 2042. As Kevin Drum, Brad DeLong, and others have pointed out, the SSA estimates are very conservative, and quite moderate projections of economic growth push the exhaustion date into the indefinite future.

But the privatizers won’t take yes for an answer when it comes to the sustainability of Social Security. Their answer to the pretty good numbers is to say that the trust fund is meaningless, because it’s invested in U.S. government bonds. They aren’t really saying that government bonds are worthless; their point is that the whole notion of a separate budget for Social Security is a fiction. And if that’s true, the idea that one part of the government can have a positive trust fund while the government as a whole is in debt does become strange.

But there are two problems with their position.

The lesser problem is that if you say that there is no link between the payroll tax and future Social Security benefits – which is what denying the reality of the trust fund amounts to – then Greenspan and company pulled a fast one back in the 1980s: they sold a regressive tax switch, raising taxes on workers while cutting them on the wealthy, on false pretenses. More broadly, we’re breaking a major promise if we now, after 20 years of high payroll taxes to pay for Social Security’s future, declare that it was all a little joke on the public.

The bigger problem for those who want to see a crisis in Social Security’s future is this: if Social Security is just part of the federal budget, with no budget or trust fund of its own, then, well, it’s just part of the federal budget: there can’t be a Social Security crisis. All you can have is a general budget crisis. Rising Social Security benefit payments might be one reason for that crisis, but it’s hard to make the case that it will be central.

But those who insist that we face a Social Security crisis want to have it both ways. Having invoked the concept of a unified budget to reject the existence of a trust fund, they refuse to accept the implications of that unified budget going forward. Instead, having changed the rules to make the trust fund meaningless, they want to change the rules back around 15 years from now: today, when the payroll tax takes in more revenue than SS benefits, they say that’s meaningless, but when – in 2018 or later – benefits start to exceed the payroll tax, why, that’s a crisis. Huh?