Subject: RE: James' defense of spending SS surpluses
>From Ken Diamond
>>>>I believe the financial status of a creditor, which the general fund is to SS, is important.
I do as well. And the free market bond traders indicate that the creditor is the most 'secure' in the world. Indeed, I believe the trust fund mechanism has played a small role in increasing that security.
>>>>I suspect if you ran a lexis search you would find a dramatic increase in the references to the practice of spending trust fund money.
Sure, because back in the '80's, we were concerned about the effects massive 'structural deficits' on the capital markets. Today, we are focused on SS reform. People are naturally more focused on how the SS trust fund works.
>>>>How do you feel about the accounting proposal? Should debt that is incurred to the trust fund be continued to be represented as an asset in the annual budget figures?
I believe that the accounting proposal is, for the most part, irrelevant, especially as it relates to SS reform. Anybody with both the intelligence and desire to understand gov't accounting, and it's practical effects, already knew what was happening. You merely had to compare the National Debt 'clock' at the beginning of one year to the beginning of the next. Doesn't take an advanced accounting degree to do that.
Most people don't really care. That's why they 'hire' politician's and beauracrats: to handle all those technical details. And, lest anybody forget, this accounting issue was openly debated, both pro and con, in the early '80's. This was the method decided upon, for legitimate reasons. It wasn't a big conspiracy.
A case can indeed be made for changing our accounting method as you have suggested. Since we no longer have the massive 'structural deficits', we need a more 'accurate' view of whether we truly have a surplus. But it doesn't change reality. Both methods require footnotes to explain the assumptions inherent in the method. And note that, contrary to your assertion, 'debt' is not counted as an 'asset' in the current accounting. We are talking about cash accounting as it relates to 'income' and 'spending'. The balance sheet aspect (the National Debt) has always accounted for that SSTF borrowing as debt.
