RE: Trust Fund cynicism - right mood, wrong target

[James <jamesk_51@hotmail.com>]

>From: "Steven H. Johnson" 

>>>>That's a reasonable argument, if we assume a broadly informed public, a careful media, a willingness on the part of everyone to go beyond sound bites and look at what's really happening, and no motivation on the part of politicians to get credit for running a surplus when, in fact, they're still running a deficit.

Actually, there is no 'if' at all.  Reality is reality, no matter whether the average Joe understands it or not.  The politicians certainly 'deserve' credit for lowering the deficit by $370 billion (from 300 billion 'deficits' to 70 billion 'surpluses' under the same accounting).  But since those who were responsible for the $300 billion deficits were all pretty much re-elected, I don't think there is much practical difference between 'credit' and 'blame' to argue about.

>>>>I think the intent has been to deceive.

Nope.  Just playing the game by the same rules politicians from both parties have operated with for the past 16 years.  If they were 'stealing' the money, they would have incentive to deceive.  But, like you said, the money is all there, the system did just what the system was designed to do.

>>>>And the private industry analogy is terribly important.  Private sector companies are not allowed to paper over operating deficits by adding in the surpluses received by their company pension programs.  One of the key points of the ERISA reform, as I recall, was to block exactly that kind of misreporting.

But, the difference between the public and private sector is significant.  When Clinton proposed to buy 'securities' for the SSTF of the same type that Ford might for its pension fund, almost everybody protested.  And you ignore the fact that when the Federal govt invests $1 billion in a new highway, the accounting only  accounts for the money spent or borrowed, not the asset. But when Ford exchanges $1 billion for a new plant, the bottom line on the balance sheet doesn't change at all.  The asset cancels out the debt or cash spent.  The method used for saving the SS excess was the most appropriate for govt.

>>>>And it's also true that the lack of an arms length relationship between the Trust Fund and the Treasury has become a source of great public suspicion.

Only because people like you cast suspicion upon it.  Like you said, the MONEY IS ALL ACCOUNTED FOR.  On what basis should anybody be suspicious.  Everything is accounted for in public records.  The Trust Fund and the Treasury are at arms length, that is why bonds are issued at the weighted average of the public capital market Treasury Auctions.  I distrust politicians and beaurecrats as much as the next guy, but I think it is counter-productive to beat them up when they do a GOOD job.

>>>>If the Trust Fund is to be established on a foundation that the public finds completely trustworthy, the current relationship needs to be changed.

If it ain't broke, don't fix it.

>>>>The politicians do need to be taken out of the picture.

That statement will probably be popular with many, but it is really nonsensical.  POLITICIANS ARE THE IMPLEMENTATION OF OUR DEMOCRATIC VOTING RIGHTS UNDER THE CONSTITUTION.  Indeed, it is only through them that we have any control over govt.  Otherwise, you are just dealing with beaurecrats who have civil service protections.  THAT IS THE LAST THING WE WANT TO DO.  You really don't have to deal with politicians when you live under a dictator.  I prefer a democracy!

>>>>The nation's retirement assets ought to be out of their reach.  If this change isn't made, the Trust Fund will never be given public permission to accumulate a sizable pool of capital. 

And who will be responsible for the protection of these assets?  Under your scenario, nobody who the citizens can hold accountable.  Your own examples show that the politicians have performed their job (as it relates to the SSTF) honestly.  Your only hope for a system with a gov't component is for you to spread that word.  If you convince people that we can't trust the gov't, there goes any chance for your plan.