Reply #34: Trust fund and tax cuts [View All]

[slipslidingaway]

Even though the money is owed to the trust fund, we're broke as we have spent it on other things.

Foreigners hold somewhere between 45-55% of our bonds and our government cannot pay everyone.

Bush in February 2001, where he got the 2.6 trillion dollar figure I'm not sure.

"To make sure the retirement savings of America's seniors are not diverted in any other program, my budget protects all $2.6 trillion of the Social Security surplus for Social Security, and for Social Security alone."

http://www.whitehouse.gov/news/releases/2001/02/20010228.html


"Prepare for Social Security to get plundered to pay for tax cuts

During last year's campaign, George W. Bush solemnly pledged that his tax cuts would not come at the expense of future retirees, that the reserve the Social Security system was accumulating to help it pay benefits to the baby boomers would be kept in a "lockbox" — that is, that Social Security surpluses would not be used to cover deficits in the rest of the budget.

Ever since Mr. Bush was sworn in, however, it has been apparent that he takes some of his promises more seriously than others. And so no sooner were big tax cuts for the rich in the bag — an event followed, with breathtaking speed, by the revelation that revenue projections are in free fall — than administration officials suddenly discovered that the lockbox is a silly idea. Here's what Mitch Daniels, director of the Office of Management and Budget, said last weekend: "There is no box, there is no mattress. Paul O'Neill doesn't have a hole in the backyard where this money goes. . . . What's unfair is to mislead the American people into thinking this money's in a box somewhere. It isn't. That box has nothing but promissory notes in it." (Thanks to Joshua Micah Marshall for that quote.)"

http://www.pkarchive.org/column/71101.html


"Bush repeated the bankruptcy assertion this week, ignoring the fact that at the end of December Social Security's Old Age and Survivors Insurance Fund, and the separate Disability Insurance Fund, held a combined $1.7 trillion worth of Treasury securities.

While the president may not choose to recognize the reality of the trust funds, their existence played a key role in his massive federal income tax cut passed in 2001.

Part of the rationale for that tax cut was that the government would run huge budget surpluses over the following 10 years, surpluses estimated to reach $5.6 trillion over the period 2002-11, according to the Congressional Budget Office. More than half of that total was projected to come from a surplus of $3.1 trillion in Social Security payroll tax revenue over expenses for the period.

Without such large projected surpluses, it is doubtful Bush could have pushed through tax cuts on the scale of the variously estimated $1.2 trillion to $1.6 trillion cuts enacted in 2001.

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=aW9MJ9gZO8S8


HEARING OF THE HOUSE WAYS AND MEANS COMMITTEE SUBJECT: FISCAL YEAR 2006

"REP. STARK: Thank you, Mr. Secretary, for being with us here today. I just wanted to reaffirm something with you. I have a problem at home. My son will be 10 shortly, and he received from his grandparents a thousand-dollar savings bond which will mature shortly after his 10th birthday.

And with all this discussion, the Budget Committee, the majority of the Budget Committee spokesman suggested that the trust fund was going bankrupt because it's just IOUs from the government. And I was trying to explain to my son that what he has is an IOU from the government. And can I go home and tell him that the secretary of the Treasury assures him that that thousand-dollar U.S. savings bond is gilt-edge and will be honored by the United States and full faith and credit of the United States?

SEC. SNOW: Yes, yes you can. Those are full faith and an obligation.

REP. STARK: And is it not true, then, that all of the assets in the Social Security trust fund are as gilt-edge and secure as my son's U.S. savings bond?

SEC. SNOW: As I said to Congressman Rangel, they are all backed by the full faith and credit of the United States government --

REP. STARK: Thank you.

SEC. SNOW: -- and there has never been a default.

REP. STARK: There's been some question raised here, and I thank you for that answer."

http://www.knowledgeplex.org/news/72716.html