Like having an Internet? Thank the "theft" of the SS Trust Fund

[Recursion]

It worries me that alongside the garden-variety misunderstanding of how the Trust Fund works, I'm seeing even on DU an argument that amounts to something like "government spending is all wasted". This is a Republican argument and it worries me to see it here.

Take the Internet: it's a stellar example of an infrastructure that languished for years in the private sector (anybody remember Banyan Vines?) and absolutely benefited from massive public investment during the 1980s. The ROI on this spending has been beyond astronomical. This is what an "investment" is at the governmental level: spending money so that the economy in the future will be better. If we had a sane accounting system, it would be much clearer.

I own a (very) small business which has some capital stock (a sewing machine). As this depreciates, I have to account that as a "cost". If I spend money to keep it up, I have to account that as money "saved": the value now resides in the sewing machine. Using the money allegedly "stolen" from the Trust Fund, the government has made investments in things like an Internet, space shuttles, one of the most-educated labor pools in the world, a military bigger than the rest of the world's put together, finding the virus that causes AIDS, regulating industries, brokering a peace deal in Northern Ireland... these aren't all the best possible investments, or the ones I would have made, but that doesn't change the fact that they are investments, and the money hasn't just disappeared; we just refuse to account it sanely (even the much-maligned military industrial complex is a whole lot of fairly good jobs). All of these things make possible the kind of economic growth that makes a social insurance program for retirees feasible.

It's not just impractical for the Government to take a bunch of money and hold it in some sort of account; it would be mind-bogglingly stupid even if it could be done.

[Enrique]

1. you really did a number on that straw man

[patrice]

2. Part of this is about WHO is using that money. Not all jobs are created equal, some jobs are better

for everyone and some are worse for everyone.

We want SUSTAINABLE jobs that offer people a variety of ways to authentically fulfill their personal individual potentials as workers.

[Recursion]

3. Well, we've managed to get most people off the farm, which is a step towards that

And we don't have many repetitive brainless mill jobs anymore, which is yet another step towards that.

[Angry Dragon]

5. ..........

[patrice]

59. Off-the-farm is a step backwards, as far as those who could/would be personally satisfied by

those kinds of jobs.

And maybe there are some people who just want "brainless mill jobs" because they satisfy their degree of drive toward personal development in other ways, not to mention that there are lots and lots of jobs out there now that are the 21st century version of "brainless mill jobs" though not in actual mills. Those also may have their place if you didn't have to sell your soul to get and keep them. These are a couple of the reasons that authentic Labor development and union reform are so very very necessary.

[sad sally]

60. Sad to think getting rid of farmers is an example of success.

I guess if a person doesn't care who owns the land or what they're putting in the food one eats, or how animals are treated, then get all those people off the farms and into the cities and turn the land over to industrial agriculture giants.

Family farmers were stewards of the land. Industrial "farmers" pollute communities with chemical pesticides and treat animals in the most inhumane manner. And if the industrial "farmer's" profits aren't big enough, they'll turn the land into condos and shopping centers. Less family farmers, less farmland? So what - the US can just import all its food from countries where there are no environmental or health standards.

[patrice]

61. It's not. nt

[Recursion]

69. I was being an ass

I posted Wendell Berrey's lecture about this in Good Reads yesterday. I agree (my day job is on an historic farm, for that matter) but I definitely consider this a First World Problem.

[snooper2]

18. Is there where we get into liberal arts degrees again

[patrice]

63. That's only part of that whole bag of "Education Reform" issues and, relative to that

whole milieu, only a small part at that.

[msongs]

4. Obama and his fellow democrats: All options are on the table regarding SS

so don't expect them to protect it

[Robb]

6. Death panelz!!

[Recursion]

10. He's also said time and again that SS isn't part of the debt problem

He and Harry Reid are about the only two who keep on pointing that out.

Medicare is a different story -- it's definitely part of the debt question.

[The2ndWheel]

7. "spending money so that the economy in the future will be better"

Better depending on who and when you ask.

[obxhead]

8. Investment implies doing so with the hopes of a return.

The funds stolen from SS were never intended to returned.

[Recursion]

9. They have been. Already. For example, the Internet exists (nt)

[obxhead]

11. Yes the internet exists.

I get that. It's a wonderful thing.

Was any funding taken from SS to help create it returned to that SS fund now that the investment has paid off?

Time and again money is removed from SS for investment with no plan to return or replace those funds after the investment bears fruit.

[Recursion]

12. Sure, tons

Was any funding taken from SS to help create it returned to that SS fund now that the investment has paid off?

Yes. I have a job because of the Internet. Every two weeks money from my paycheck is sent to the Trust Fund.

[HiPointDem]

14. gov't's role in development of internet was mostly before reagan jacked payroll taxes to produce

surpluses that increased every year.

[Recursion]

15. There were two periods, the early 70s and the late 80s

The funding in the late 80s (which Gore famously got misquoted for taking credit for) is what broke it out of being a universities-only thing.

[HiPointDem]

19. reagan fix to SS = 1983. Significant surplus not generated until 90s. your post = red herring.

what government spends workers' payroll taxes on is irrelevant to the point that the general budget *should not* be funded from regressive payroll taxes. or from the post office retirement slush fund, or other such funds that come solely from workers.

[ProgressiveProfessor]

76. Your thesis has merit, your view of the development of the Internet is almost as flawed as Gore's

[TheWraith]

16. How can you say something so completely and totally wrong with a straight face?

What you just said is about as factually accurate as claiming that money not based on gold is worthless, or that the capital of New York is Peru.

[rhett o rick]

20. Your post does nothing to add to the discussion. It merely attacks the poster.

I think the poster has a point, if you dont, why not counter instead of attacking the poster?

[obxhead]

53. Thank you for the personal attack.

Now maybe you can describe how I am wrong.

[HiPointDem]

13. straw man/red herring. point is that taking money from workers in excess of what's

needed to fund current SS recipients and maintain a year's TF balance =

1. reducing their consumption
2. funding government through a regressive tax
3. funding tax cuts to billionaires.

and the government did it for 40 years. and is now spreading the fud about social security.

government spending funds a lot of things. point is, minimum wage workers shouldn't be funding them through their payroll taxes. that's what the income tax is for.

[TheWraith]

17. Do you understand the entire POINT of the trust fund?

Hint: it's to pay for the retirement of the baby boomers, when there would be so many SS recipients that the current workers couldn't practically pay for them all. Trying to directly balance payroll taxes against retirees basically means giving up on Social Security right this minute.

[HiPointDem]

21. yes, better than youself, i think. "when there would be so many SS recipients

that the current workers couldn't practically pay for them all" is a ridiculous statement.

current workers *always* pay for current retirees. all current consumption is financed from current production, and if you think about it 5 minutes you'll understand why this *must* be so.

putting an extra $2 billion or so into the TF over 40 years did *nothing* to make it easier to pay today's or tomorrow's retirees' benefits.

on edit i'll add that this "so many SS recipients that current workers couldn't pay for them" appears to be a variant on the "there used to be 16 workers for every SS recipient, now only 3, soon only 2, omg!" meme.

and today's worker produces value 16 times (or whatever the number is) greater than the worker of yesteryear did. i.e. today's worker produces goods and services that can support more people in the same way that today's farmer produces more food with less labor.

The issue is not "how many workers" but what share of the value of production today's workers take for their labor.

Capital has taken most of the value of productivity increases over the last 40 years and they want to take more. That's why they want to cut SS through the back door, *not* because the labor of workers can't support retirees.

[Recursion]

23. That's $2 Trillion, not $2 billion, and it did two very important things

1. It let the government spend that money in the interim, the benefits of which are important

2. It lets us borrow up to $2 trillion to retire those bonds without increasing the debt

[HiPointDem]

24. you're right, and i know that, just not thinking.

1. the benefits of war spending, tax cuts to billionaires, factory offshoring, increasing low-wage jobs and a real-estate bubble were important? doubtful.

2. "borrow" from who or what? *who* is doing this "borrowing"? fact is, the government borrowed from *us*.

[Recursion]

29. Benefits

the benefits of war spending, tax cuts to billionaires, factory offshoring, increasing low-wage jobs and a real-estate bubble were important? doubtful.

Well, the Government didn't really spend much money on factory offshoring. It spent money on things like, say, the Internet and a bunch of aircraft carriers (which employee a bunch of Americans in their production and maintenance). Plus roads. Oh, and finding the HIV virus. etc.

"borrow" from who or what? *who* is doing this "borrowing"? fact is, the government borrowed from *us*.

If you have a savings bond, yes, the government is borrowing from you. The government has borrowed a few trillion dollars from the trust fund, because it would be astronomically stupid for that trust fund to have just kept cash lying around, or invested it in private securities.

[HiPointDem]

31. it "spent" a lot of money in lost tax collections, for starters.

savings bonds have nothing to do with anything. we're talking about social security.

you have not explained why it was necessary to collect 2 trillion from workers in excess of what was needed to fund SS recipients and keep a one-year cushion in the TF.

please explain. and "so we could find the HIV virus" doesn't constitute an explanation.

the operations of the federal government are supposed to be funded through a progressive income tax, not the regressive payroll tax which hits low-income workers harder than high income ones, and those who live off capital NOT AT ALL.

[Recursion]

34. I'd love for it to be more progressive

What I'm arguing against is the notion that there was a better thing for the government to do with that money than spend it.

[HiPointDem]

36. no, once it collected it, that's all it can do. my point is that it should not have been collected

in the first place.

2 trillion in excess of what was needed to fund SS beneficiaries and maintain a 1 year TF cushion should not have been collected.

there was no reason to collect it & you haven't given one.

[Recursion]

42. You're essentially making Gore's "lockbox" argument, which would be great...

...if Congress weren't a bunch of sociopathic five year olds.

Yes, we would be in a better position to borrow to fund Boomers' retirement if we hadn't collected the money the first place, strictly from a fiscal standpoint. However, fiscal questions aren't all that matter: we'd be in a much worse position politically to do that, because if it weren't for the trust fund, the borrowing would add several trillion to the debt. As it is, we can borrow at the same level that we retire debt to the trust fund, meaning Congresspeople don't have to say they are increasing the debt when they do it. This is also a great time to do that, since the world is beating a path to our door to lend us money.

[HiPointDem]

45. No, my argument is 180 degrees removed from Gore's lockbox. There is not lockbox, never has

been and never can be.

My question is very simple and you are determinedly ignoring it and blowing smoke about the internet.

WHY WAS IT NECESSARY TO COLLECT SS TAXES ABOVE THE AMOUNT NEEDED TO FUND CURRENT RETIREES + A ONE YEAR CUSHION, PER THE ORIGINAL DESIGN OF THE PROGRAM?

[Recursion]

47. As I've said, so that we could borrow to fund the retirement without increasing nominal debt levels

Basically, "go into debt now so that we won't have to admit we're going into debt later".

[HiPointDem]

48. You keep claiming that funding future SS benefits would require going into debt, but offer no

rationale for your claim.

Funding SS benefits in the past did not create any debt. Why do you believe that funding SS benefits in the present or future requires debt creation?

[Recursion]

50. Because we have a large cohort retiring, and the younger cohort is making less than their parents

It's something we could see coming long enough to come up with this idea 30 years ago to make a fig leaf for the borrowing we would have to do.

[HiPointDem]

52. Ridiculous. No different from any other generation. SS started out with something

like 16 workers funding one retiree and the ratio has gone down every year.

If going into debt wasn't necessary then, it isn't now.

The younger cohort making less than their parents doesn't mean taking on debt is required.

It's certainly a good reason to raise wages, however. However, the fraudsters trying to steal the SS TF don't want to talk about that little issue.

No, 30+ years ago when Reagan-greenspan started this little over-funding gambit, it was supposed to "save" social security for all time.

well, that was bullshit, as witness all the handwringing now. just when the boomers are supposed to retire, their "savings" supposedly doesn't exist.

what a con.

you haven't explained why debt it required to fund SS because it's not required.

[Recursion]

55. I have. Fewer workers per retiree

And a general lowering of wages among those workers. You seem to be in the odd position of simultaneously lamenting and denying those facts.

At any rate, the argument for borrowing is that we project outlays will fairly soon exceed income, for the demographic reasons I mentioned.

[HiPointDem]

58. fewer workers per retiree is irrelevant when workers produce more value, which they do.

lower wages are problematic, but *don't in any way require the nation to take on debt*.

and then you return to the projections, which also don't mean that the nation has to take on debt.

[Recursion]

62. I never argued that we "have to"

Just that it's one of the better ways to close that gap, and we've given ourselves a pOlitically feasible way to do it.

[HiPointDem]

65. uh, what? that was the reason you said it had been necessary to collect excess social security

payments for 40 years.

ok, so i see that you can't come up with any justification for that 2 trillion in excess collections.

[Recursion]

70. OK, I'll try this more slowlly

Collecting the excess revenue gives us political cover for borrowing more money.

Contrary to your question, we don't "have to" borrow. It's just a less contractionary way of doing closing the gap than raising payroll levies, and it's much more politically feasible than raising wages. So borrowing is not a need, but it's something we want to do, and collecting the excess revenue provides political cover to do it.

[HiPointDem]

74. what are you talking about? we don't need to borrow, but borrowing from workers gives us

political cover to borrow more?

payroll levies *were* raised, above the cost of funding the program, for 40 years.
nothing you're saying makes sense, & it's because there was no reason to collect the excess money in the first place *except* to throw it into the general fund to "cover" tax cuts to the rich.

[rhett o rick]

22. I agree with you. nm

[sabrina 1]

26. The SS fund more than covers the Baby Boomers, who paid for their parents retirement AND

their own. There is no problem with SS, the problem is that the money was borrowed and used for wars and to cover the loss of over two trillion dollars incurred by the Bush Tax Cuts, among other things.

That money needs to be returned to the fund. Making excuses, ignoring these facts, claiming, wrongfully, which is what the right has been doing for decades, that the Baby Boomers are putting a strain on the SS fund, is simply the lies spread by the Right which no one who understands how it works, believes anymore. But I see it is creeping back, this right wing meme.

The people are creditors of the Government, just like any other creditor. If the government defaults on its debt to any of its creditors, which so far, it never has, the country would be over. The SS fund is a creditor, the Government needs to find a way to pay its debts, but NOT by making its creditors pay them, that is simply ludicrous.

[HiPointDem]

32. i'll add that gens x & y are also paying this double tax.

[rhett o rick]

25. I am not sure of what your motive is with this post. These expenditures have nothing

to do with SS. What happens isnt hard to understand. The government has different accounts and the SS account currently has a positive balance while the military account is deeply in the red as is the account for infrastructure maintenance and some of the things you list.

It appears that you want us to accept that we may have to cut SS in order to balance the books. And you are justifying that by claiming the money went to good use. If that's what you are saying, I say bullcrap. We need to raise taxes to get the military account out of the red and not cut SS benefits.

[Recursion]

27. I'm saying SS is fine, and would be in very bad shape if that money hadn't been spent (nt)

[HiPointDem]

28. why? please explain how it would be in very bad shape.

[Recursion]

30. Because that would have been 2.5 trillion taken out of the economy over the past thirty years

That would have been very contractionary. There might have been less money spent on making the Internet accessible, meaning I wouldn't have as good of a job as I do and I'd be paying less in FICA levies today. Or there might have been less spent on finding the HIV virus and we wouldn't have the ARV cocktails that make AIDS management possible now and much cheaper than the early ARV days. Or there might have been less spending on aircraft carriers and the Pascagoula shipyard would have closed (somehow I doubt that one would happen).

[HiPointDem]

33. 2.t trillion would have been taken out of the economy? how so? you mean workers would have

buried the money in their back yards?

[Recursion]

35. If you're talking about not having collected the levies in the first place, sure

I'm not arguing that the payroll tax shouldn't be more progressive; it should. I'm saying once the government has collected the money, spending it isn't some sort of theft, it's the only sensible thing to do.

[HiPointDem]

37. you haven't explained *why it should have been collected in the first place.*

why should the government have collected 2 trillion in excess SS taxes over the last 40 years?

there are justifiable reasons for the regressivity in payroll tax collections, since the payout is progressive.

BUT NO GOOD REASONS FOR USING REGRESSIVE TAXES TO FUND THE GENERAL OPERATIONS OF THE GOVERNMENT.

Do you see the distinction?

[Recursion]

44. Oh, that's just so when we borrow $2 trillion now it doesn't increase the nominal debt

I think you underestimate the importance of that. If we retire a dollar of debt to the trust fund with every dollar we borrow to fund upcoming retirements, we won't be increasing the amount of debt, which is politically important to a lot of Congresspeople.

[HiPointDem]

46. Why would funding SS in the future "increase nominal debt" anymore than funding it in the past

did (which is not at all)?

Why do you insist that funding ss in the future will somehow necessitate borrowing?

Please justify that assumption.

[Recursion]

49. Because there won't be enough workers per retiree making enough levied wages to fund the outlays

And allowing SS to swap debt when that crunch hits is a clever way around the principle that we shouldn't borrow money to pay for SS.

[HiPointDem]

54. The number of workers per retiree is IRRELEVANT, as I've repeated told you.

The number of workers per retiree has dropped every year since SS was founded, and no borrowing was ever required.

The number of workers per retiree is irrelevant. What is relevant is:

1. How much value does each worker produce?
2. How much value does the worker get to keep (and be taxed on)?

The farmer of yesteryear could feed 10 people. Today's farmer feeds 100 (or whatever). Same with today's worker in toto.

By insisting that the US MUST go into debt to support its workers, what you're actually saying is that the US does not produce enough food, goods, services to feed and maintain its population.

Which is clearly absolute bullshit.

[Recursion]

57. That's hilarious

Seriously? Read your post again. The number of workers per retiree has been dropping since the program started. Eventually we will hit a ratio where receipts are exceeded by outlays. The trustees say that's in the next decade or so.

I mean, seriously, you're saying "the water has always been rising and we haven't had to start swimming yet". True, but we can project when we will need to.

[HiPointDem]

64. sorry, you're either confused or trying to confuse.

going from 3 workers to 2 workers per retiree is no more problematic than going from 16 to 3.

in the same way that going from 100 farmers to 1 farmer per hundred people is non-problematic when today's farmer produces 100 times more food.

it's not that hard to grasp.

[Recursion]

71. That's ridiculous

going from 3 workers to 2 workers per retiree is no more problematic than going from 16 to 3.

BS. There is a point at which outlays exceed receipts. We're nearly at it.

[HiPointDem]

73. there is a point at which outlays exceed receipts, but it has nothing to do with worker to retiree

ratio.

and in case you missed the point of the whole reagan 'fix', outlays were *supposed to* exceed receipts when the boomers started retiring, that was the alleged point of 'pre-funding".

[HiPointDem]

43. spending it is all the government *can* do with excess TF collections, by law. That's not the

point.

[sabrina 1]

39. The Bush tax cuts were the cause of two trillion being taken out of the economy.

Had Congress refused to pass those tax cuts, the economy would not have needed to raid the SS fund, but they would have anyhow, for Wars and other hobbies they like to use the people's money to pay for.

Why the focus on SS when there are so many other reasons for money 'being taken out of the economy'?

[HiPointDem]

40. no "raid". any excess payroll tax collections have to go into the general fund. it's always been

the case.

but it's not always been the case that payroll taxes were collected in excess of what was needed to fund current retirees and maintain a 1 year cushion.

The excess collection that started in the Reagan years is analogous to the overfunding of the post office pension fund.

It creates a nice slush fund that bad actors can use for bad purposes.

then turn around and say "whoops, we spent everything!"

[sabrina 1]

56. Yes, I understand that aspect of it. But those 'bad actors' should not be allowed to use

it, especially if that was their intention, by saying 'sorry, we spent everything and SS is in trouble'. That is like a badly behaved child taking someone else's toys, and then later throwing your hands in the air and saying 'well, what can we do, he broke them so that's the end of it'. It's not the end of it. That child should have to replace those toys.

[rhett o rick]

68. That money should have been taken out of the economy instead of going into debt. Maybe we wouldnt

spend so much, on wars for example, if we had to pay as we went.

[rhett o rick]

67. When you say that the money has been stolen from the trust fund

you are feeding the arguments of those that want to dismantle SS. They claim there is no money in the fund. I counter that by saying that no money has been stolen and the fund is fine.

I dont at all understand why it would be in bad shape if we hadnt spent our selves into debt.

[girl gone mad]

38. Yes, there is no reason for the government to "store up"..

something which it can create in unlimited quantities.

Governments are not households.

[HiPointDem]

41. +1.

[Romulox]

51. Income inequality and worker insecurity has greatly increased during the timeframe you mention

perhaps despite of the "investments" you mention, or perhaps because of them. Who can say?

Still, the last 30 years are not a good example of sound government economic policy as it relates to the common person--we've lost considerable ground.

[patrice]

66. MOST of the "jobs" they created with that money are jobs KILLING PEOPLE - and - not only

did they "use SS Trust Fund" money one way or another, directly or indirectly, to create those "jobs", they are jobs that the employees CANNOT be terminated from for practically any reason whatsoever.

No matter how in-efficient, no matter how slow, no matter how many people it takes to get a single task done, no matter how much it costs "DEFENSE" APPROPRIATIONS ALMOST NEVER FAIL.

[Recursion]

72. Most jobs created by government spending are jobs killing people?

Really?

[patrice]

75. Talking about exponential growth in the military and UN-ENDING, overt or covert, wars & all of the

support jobs that make that possible.

And the subject is not government in general, but some of those who, directly or indirectly, got their hands on the SS Trust Fund and the jobs that they created by means of corrupting the political process and by lobbying coming from the revolving door between the Pentagon and the private sector.