Subject: RE: James' defense of spending SS surpluses
>From Ken Diamond:
>>>>>But there was a political choice whether to spend more than the general fund had available and that political choice is affected by public understanding.
But this is a SS forum not a budget balance forum. And we can't change history. If you are implying that if we did not have the SS excess, they would not have borrowed, then indeed you must be smoking those 'funny' cigarettes. Even after borrowing and spending the SS excess, in some years they borrowed and spent another $300 billion. And they didn't even bat an eye. Supertankers full of red ink!
>>>>I believe there's evidence of the effect of the public's recent awareness of the practice which supports that conclusion.
And they almost all ran for re-election and didn't blush a bit. And almost all were re-elected. The 'people' knew what was going on. They were getting 'services' without having to pay for them with taxes.
>>>>Since you seem to believe what good idea it was to have used trust fund money for current general expenditures and increasing the national debt, why stop now.
I don't believe that at all. Only that if the general fund is to start borrowing, the SSTF should be the first stop. Not encouraging the borrowing at all. And remember, the increase in the National Debt is related to the general fund borrowing, not the SSTF's role in lending.
>>>>Of course trust fund money can be realized through refinancing with the public as the trust fund need the revenues. But less debt is better for future taxpayers, for the cost of borrowing and because redeeming the assets of the trust fund is but one of the costs that the general fund will face as boomers retire.
Yea, but all that debt and the cost of all that redeeming is due to the BORROWING BY THE GENERAL FUND. We would have the same debt and costs if we had borrowed from the public markets instead. Indeed, probably even more, since that would have driven up interest rates.
And where would we have invested the money in the SSTF? You don't get much interest if you stuff it in a mattress. When you 'invest' money, you basically (either stock or bond) give it to another party to spend. They have no incentive to give you a return on your money if you require them to keep it in a vault!
>>>>Medicare and Medicaid are worse problems than Social Security given their growth rates. That's why creating political barriers to using trust fund surpluses is important and none is simpler than an agreement to not use the word surplus unless the national debt is being reduced by an equivalent amount.
You can call it what you want. That doesn't change the reality. But if you don't want to invest in US gov't debt instruments, where would you invest the excess?
