RE: Trust Fund cynicism - right mood, wrong target

[Michael Jones <powderfinger99@yahoo.com>]

<<<
I agree with your point that the SS Trust Fund is real. I have been
fighting that battle myself. But I am frankly puzzled by your
assertion that the Congress is 'phony' or 'lying'. Your own example
demonstrates that the trust fund is indeed everything it should
be. It was private economists in the early '80's who convinced
Congress, in a very public debate, that this was the proper way to
account for gov't surpluses or deficits. Indeed, the current
'surplus' indicates how much money the gov't will be ADDING to the
capital markets this year.
>>>

The argument about the Trust Fund IMHO, doesn't get at the real
issue about the funding of Social Security. The goverment pays
it's obligations either through taxes, selling assets and 
borrowing. How the politicians squabble about who gets what and
who spends what really doesn't matter. The more important issue
is how it chooses to manage it's total balance sheet.

When the government raised the payroll tax in 1983, it enabled
the government to spend more by borrowing the excess FICA taxes.
I would argue that the extra money didn't prevent government
from borrowing less from the private sector. Rather, the extra
money gave the goverment license to spend more. If these moneys
had to be borrowed in full in the private sector without the
cover of Social Security, it would have come under more scrutiny.

The government spent all the excess Social Security money and then
some, somes as much as 300B / year. The end result was that the
extra payroll taxes didn't strengthen the system. It enabled
the government to spend more and increase the obligation to the
Trust Fund to a future generation.

Only if the excess money was used to pay down existing debt would
have the Trust Fund been strengthened, since this would reduce 
the long term interest costs to the rest of the government.

After 16 years of the increased payroll tax, we have more debt
and higher interest payments each year. How did that tax increase
strengthen the system? How can we trust the government that any
future payroll tax increase would not cause even more long term
debt?

Michael