The Party Line – February 18, 2011 |
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| By: Gregg Levine Friday February 18, 2011 8:59 am | |
Hey liberals, hey progressives, when President Obama says, “Social Security is not the huge contributor to the deficit,” he’s not backing you, he’s frontin’ you.
(In case that’s not enough for you, here’s an archive of previous editions of The Party Line.)
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Some ideas for the DC area.
“huge”..right..cough
Another great analysis Greg. Thanks. We do really have to think small (narcissistic) to understand Obama and the current crop of politicians. I just endured viewing The Social Network and am reminded of what a bunch of pricks go to Harvard.
“If American workers are being denied their right to organize and collectively bargain, when I’m in the White House, I’ll put on a comfortable pair of shoes myself, I’ll walk on that picket line with you as President of the United States of America.”
-Barack Obama, November 2nd, 2008 in South Carolina.
Good find.
great Job on the videos, greg. Obama = Reagan. “The Great Communicator”.
Me, I intend to get behind Obama on Social Security and push, or at least fly around croaking.
Blue Texan’s regularly scheduled post is up: Right-Wing “Small Government” in Action: Texas Senate Passes Mandatory Sonogram Law
Dear God, what a way to ruin a truly excellent joke. And you missed the real punch line – Obama doesn’t think he’s RR, he DOES think he is Jesus Christ.
Now to the rest of your video. It’s truly amazing that people miss the point about the Wisconsin rage. Like it or not, accept it or not, the costs of pensions ARE driving at least part of our deficits. Public pensions, private pensions, union pensions, social security pensions, it does not matter. They may not be the biggest deficit drivers TODAY, but they ARE the 800 lb gorilla going forward.
As long as people keep ignoring the pink elephant in the room, we are doomed to finding ourselves in a mess of red ink. It’s like seeing an inch of water in the boat and saying “Well, it’s just a little leak. Let’s keep heading out to sea.”
h/t cbl on facebook. I can’t claim that one.
Unless of course he’s got a fundraiser in Silicon Valley.
Priorities.
The state of Wisconsin is paying a big bank 15% annually to manage their pension fund. If they were doing it internally, the cost would be about 3%. So how about taking the money out of the banks’ hands and putting it back where it belongs? Their pension plan is running a deficit because it’s paying a massive commission to Wall Street.
As for social security, read something, please (besides Atlas Shurgged). Social Security is not part of the budget. It exists outside the budget. It is self-funded. Congress has leveraged or borrowed trillions against social security and now can’t afford to pay it back. Hence the distortion of reality. If the money raided from SS funds was repaid, there would be a 1trillion-ish surplus in the program.
I think he just wanted to hug Zucker-booger.
Tax the wealthy. That is the sleeping gorilla.
Yep.
Spot on! The surplus right now is 2.6 trillion and expected to be 4 plus Trillion in 25 years. These are facts and hard to argue intelligently against.
So where do you get that money to repay those SS Trust funds? See, calling SS “off budget” makes it sound like it’s self-sustaining and not an issue.
So let’s do this. Since SS is something that is off to the side, let it live off to the side. Pay out annually based on what comes in. And send a big “pay me” note to the US Congress to get those funds back. When you do that, you simply shift money from the left pocket to the right one. SS becomes whole but now the deficit is great for the “budget”.
As for that “big bank” that is managing the pension fund, absolutely. Take it back in, manage it yourself, and then when it achieves much lower returns, go back and stop paying out what you don’t have. I’m all for it.
It’s called living within your means. Get used to it.
so what tax rates and income levels do you support? do you support just offloading it all onto the “rich”? (what’s rich?).
The US Government has an obligation to pay that money back. If they do away with their endless foreign wars at $468 million per day, that would cover the SS money, and a lot more.
As for big banks paying larger returns, most state pension funds are underwater because of the orchestrated collapse in 2008. The big banks caused that. They’re may be paying a slightly higher yield now, but they cost most funds anywhere from 20-50% 3 years ago. They’re no rolling the dice with a lot less money, and it’s the fault of the banks.
I’d be happy with a roll-back the the Reagan-era tax cuts.
By that you mean roll back to before RR cut our taxes and the economy took off, we saved the world from Communist USSR, and ended the Cold War? The 90% marginal tax rates on the top earners?
We need to march on Washington ASAP!! I am so sick of the BS this President throws out..make the lies this President throws out! This article relates the other piece asking does Obama have a care for others and this affirms what I already know…Obama does NOT care about anyone but the rich!! I can see him smiling away with a dimmissive laugh if anyone pushed back on him about this plan
Both parties are bought…I will NEVER vote for Obama…all this worry about the GOP Govs/members of Congress and we still have to worry about a Demo President ..a Massive protest is needed and we to take control of the conversation not these bought pricks in 5k suits!
I actually mean after Reagan cut taxes in his first term. The economy took off because of tech development. Not because of anything Reagan did. The Cold War ended because Russia collapsed under its Oligarchs. We didn’t save the world from anybody. The Russians did it to them selves, just like we’re doing.
Pal, I don’t understand why we’re having this conversation. Aren’t Galt fans against government taxation and ruination? Against forced contributions like social security? Against insane expenditures on foreign wars?
I should think that we’d be on the same page here. People are taxed, without choice, to pay contributions to Social Security. With the promise that they will get that money back. Where is the problem there? I have money deducted from my paycheck twice a month so I can get it back when I retire.
Why are we arguing about social security when we’re spending $468 million a day in Iraq and Afghanistan? If we stop that waste of taxpayer money, trying to prop up two foreign countries while our own is falling apart, our budget crisis will be mostly solved.
Also, the reality of the fiscal situation should be apparent to you as a Galt fan. Governments that run a surplus force the private sector to run a deficit. There is a finite number of dollars in this country. If the government has more, the private sector has less. Reducing the deficit means taking more money out of the private sector. Isn’t that against your Randian beliefs as well? I’m all for the rich being rich, and the poor being poor. I just thing that obscenely rich and obscenely poor are things that should be minimalized. There should be more middle ground. A thriving middle class fuels the private sector, fuels production, fuels consumer spending. All things that improve personal wealth.
You’re arguing to increase the wealth of the government.
The USSR invaded Afghanistan at Christmas in 1979. Then the price of oil collapsed from the $30-$40 per barrel range to the $10-$20 per barrel range. The USSR, being a net producer of oil, saw a collapse in its oil rents. The USSR finally left Afghanistan in 1989. Then it also collapsed. It’s easy to find an historical graph of real oil prices per barrel. See what happens to the price of oil in the 1980s.
The IOUs in the SS Trust fund are bonds, backed by the full faith and credit of the US government.
Kris, you really believe that the big banks “orchestrated” the collapse in 2008? And in the process lost trillions of dollars of shareholder capital globally, not to mention the impact on the gloabl economy? To what end? Is this some sort of Trilateral Commission ploy to bring the Rockefellers back into power?
Was it just Jamie Dimon, Lloyd Blankfein, and George Soros, or did Dick Fuld (Lehman) and Jimmy Coyne (Bear Stearns) decide to take their own firms down to make the “orchestration” appear genuine? Did the Bilderberg Club have a role?
Wow, someone’s been nipping on the right-wing Kool-Aid a bit much. And as always, now doesn’t know the difference between reality and fantasy.
So sad.
Wrong. Not big drivers. Try again.
http://www.inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp
This is a table, not a graph, of oil prices. Notice 1980: real price per barrel = $99.11, the highest it’s ever been. Notice 1990: real price per barrel = $38.57, less than 40% of 1980 price.
Notice 1986,1987,1988,1989.
I’m missing the point your making here. Are you showing that the USSR collapsed outside of any Reagan influence, because of the loss of value in their main product?
Yes.
Gotcha. That’s what I thought.
I believe that in the beginning of the MBS debacle, the banks were just trying to make money hand over fist. Someone along the way realized what was coming, and they started shifting assets and short-selling companies that would be effected. Yes, the orchestrated it. Conciously or otherwise, banks were responsible for the asset pools that collapsed.
Just because everyone and their brother looted the trust fund doesn’t mean it doesn’t have to be paid back. The fact remains that left alone SS does not add 1 penny to the deficit and is self sustaining via the payroll tax. If people would leave SS alone there would not be a problem or a talking point.
Oh, Jesus! Not RayGun! *g*
Gregg, I have said the same about the Capitol before. Our Congresscritters have no problems with people on the White House fences. It would be a hugely different thought and atmosphere to protest at Capitol Hill. After all, we should hold our Congress responsible. Obama does not make the laws, he can only suggest to Congress.
Thanks for detailing the behind closed door, “Grand Bargain”. I don’t think people have a great enough understanding of how they play Americans in this way of Nonlegislating for the sake of jerking the last few boards out from under the floor of the Middle Class.
“So where do you get that money to repay those SS Trust funds? ”
Maybe the same place they find the money to repay the other holders of treasury securities? You know, like Japan, China, India, Goldman, Citi, and anybody holding treasury securities?
Obama will not actually be frontin’ me until the dust settles and we see what he DOES, not what he SAYS.
This is the guy who said a mandate to buy private insurance was wrong.
Anyone who believes a word he says is a fool.
OFG, it goes beyond mere kool-aid drinking.
He seems unable to comprehend that the borrower (Treasury) is responsible for the deficit, not the lender (the SS Trust Fund).
Once he made that leap, it’s no surprise he ignores all the other Treasury Security holders and proclaims that Treasury must default on SS.
Hey Greenscam Randiness wannabee, take that Citibank cost of funds of 0.25 percent and the 7.5 percent student loan interest I’m paying them and … ask me where I think the problem is.
Obama at best is a fool when it comes to framing unless one acknowledges the dems elected an (R). What more needs be said?
His weakness on protecting social security is a strong signal. It’s in play and he put it there.
It’s blaming the victim. That money was just lying there, begging to be stolen. The thieves couldn’t help themselves.
In plain language, Obama is a liar. Levine dances around the truth.
Are you referring to SS? I thought that payouts had begun to exceed contributions, i.e., that the surplus in the Trust Fund was as large as it will ever be . It will decline to zero in a quarter century if no changes are made. However, there is enough money to pay full benefits for the next 25 years, even if nothing is changed.
No, the way they have it set up is that benefits are paid out of current incoming fica revenues, which, because of the recession have decreased. That’s why they are pretending to fix what they perceive to be wrong with Social Security…the trust fund holds 2.6 trillion in treasury bonds which can be redeemed for whatever balance of payout is not paid by current revenues. It is a smoke screen to make it look like the fund is being depleted. Creative bookkeeping makes it look so bad! If they were to actually create jobs, the current funds would take care of current benefits, with any excess going into the trust fund. They have pullrd the wool over the public’s eyes, because they don’t want to have to redeem the trust fund bonds. Pretty slick, don’t you think?
@ owwfno
I do not understand. Current contributions to SS do not match payouts. Where does the extra money come from to make up the shortfall? The gov borrowed from SS Trust Fund and left bonds as IOUs. Bonds are not perpetual. They have a maturity date. If SS Trust Funds were “stolen” in different years I would assume there are bonds as IOUs with different maturity dates. In any event, where does the money come from to make up the amount by which payouts exceed contributions this year 2011 or next year 2012?
“the costs of pensions ARE driving at least part of our deficits.”
Notice there’s no quantity or proportion mentioned. The weight of a rhetorical gorilla is not a relevant metrology. You’re supposed to just accept that pension are not just a significant part, but the overwhelming part. No mention of attempts by organizations, public or private, many successful, to raid these pension funds for general use.
Then the metaphor changes to pink elephants, a popular delerium related to alcoholic withdrawal.
John Galt: 1)inventor of the steel plow blade, or 2)a character in Ayn Rands’ propagandist scree Atlas Shrugged, panned even by Whittaker Chambers in the National Review.
Must be amateur night.
Thanks Gregg!
And yeah, I still think that Obama is trying to keep his 2006 campaign promise to Robert Rubin. Unlike promises made to the general public, promises made to men such as Robert Rubin do seem to matter to Obama.
http://firedoglake.com/2008/02/13/the-hamilton-project-same-corporatist-whine-in-new-dlc-vessels/
“I want to thank Bob [Rubin] and Roger [Altman] and Peter for inviting me to be here today…
…the coming baby boomers’ retirement will only add to the challenges that we face in this new era…
…too many of us have been interested in defending programs the way they were written in 1938″
- Senator Obama at the 2006 launch of The Hamilton Project
So Senator Obama had already made SS cut promises to Wall Street predators before he had even become known to the public as candidate Obama.
Of course, whatever they cook up will be painted as a bold, courageous sacrifice to build a better tomorrow. And what a complete load of BS it will be.
I expect that we’ll also see more than a few soccer style dives as the collaborators try to deflect the cuts from themselves.
http://www.youtube.com/watch?v=IHVTYNGS-F4
Are you referring to SS? I thought that payouts had begun to exceed contributions,
From what I have read that is not correct. Only the people who want to cut SS say that payouts had begun to exceed contributions.
If you think they are pricks you should see their parents.
http://www.actuary.org/pdf/socialsecurity/Social%20Sec%20Trustees%202010%20IB%20FINAL%20WEB%2010-15-10.pdf
This is from the American Academy of Actuaries from Oct 2010. It is short: 8 pages.
You only need to read the left hand-column of the 1st page, including the 3 bullet points, if that is the correct term.
“The Department of the Treasury will soon begin to repay Social Security—a long-expected consequence of the Treasury Department having received surplus cash from Social
Security in the past.”
Notice the 2nd bullet point:
“The Social Security trust fund has full legal rights to as-
sets that are currently about $2.5 trillion. To repay Social
Security, the Department of the Treasury will have to raise
the money (either through taxation, issuance of debt, or
reduced spending elsewhere).”
There doesn’t seem to be much ambiguity in these remarks.
Yeah, it’s called US Treasury Bonds. Just like those US Savings Bonds we all bought as kids.
When they are redeemed, the government has to borrow the money or issue new ones.
What’s your point? That the government should default on them? That Social Security (our individual payments) should continue to fund the government operations forever and the government (and the folks with their Bush/Obama tax cuts) never have to pay that back?
Good link. Thank you gvandergrift.
The Department of the Treasury will be repaying Social Security because SS payroll receipts will be less than expenditures. The Social Security trust fund may well still increase above the $2.5 Trillion currently held because the US Government obligation to SS are accumulating at a 4.9% interest rate currently. That’s $120 million annually and way more than the payroll shortfall.
So if the Government redeems some of it’s obligations to Social Security and finances them with issuance of debt, isn’t that just replacing one debt with another? How does that increae the deficit?
Good link. Thank you gvandergrift.
The Department of the Treasury will be repaying Social Security because SS payroll receipts will be less than expenditures. The Social Security trust fund may well still increase above the $2.5 Trillion currently held because the US Government obligation to SS are accumulating at a 4.9% interest rate currently. That’s $120 million annually and way more than the payroll shortfall.
So if the Government redeems some of it’s obligations to Social Security and finances them with issuance of debt, isn’t that just replacing one debt with another? How does that increae the deficit?
@dakine01
What is the point of your post? Other than surliness?
Are the obligations, the IOUs in the SS trust fund, garden-variety 30-year maturity US Treasury Bonds? Can you prove this, either way?
Did you read even the 3 sentences I quoted? This is what happens when the obligations mature: “To repay Social
Security, the Department of the Treasury will have to raise
the money (either through taxation, issuance of debt, or
reduced spending elsewhere).”
Yes, the US Treasury will have to raise the money to repay the Social Security debt somehow – just as they have to do with any other US debt.
Again, why should the Social Security bonds and indebtedness be any different? The SS surplus was used as an excuse to give tax cuts to the top per cent of earners over the last 30 years and now they have to pony up in new taxes. Why are you buying into the framing of “ZOMG! We can’t pay our obligations so we have to cut Social Security!”?
@stevedaly
Where did you get that 4.9% interest rate figure? 4.9% of $2.5 trillion is $122.5 BILLION. I can understand that the Trust Fund could grow and that the overall interest rate, whatever it is, could change, because some of the bonds would mature in any 1 year and change the portfolio of IOUs.
As to your 3rd paragraph, the ground underneath me is a little shaky here. http://en.wikipedia.org/wiki/United_States_public_debt
There are 2 parts to the US debt of $14 trillion: debt held by the public and intragovernmental obligations. I assume the money the US gov owes SS is part of intragovernmental obligations. If the US gov issues new bonds (borrows from the public) in order to pay what it owes SS, that would increase the deficit in the current year. The total debt would remain unchanged but debt held by the public would increase and intragovernmental obligations would decrease. The increase and the decrease would be identical thus creating no change in total debt.
@ dakine01
Do you read the words I write? Point to the specific sentence(s) where I say what the gov owes to SS is somehow different. Point to the specific sentence(s) where I am “buying into the framing.” I asked you whether the bonds SS holds instead of cash are garden variety 30 year US Treasury bonds? Whether the answer is “yes” or “no,” can you prove it? How can you identify what, specifically, the SS surplus was used for over the last 30 years?
Why does it matter what type of Treasury bonds they are? The Treasury issues far more than 30 year bonds. The SS bonds are called “Special US Treasury Bonds” but they are still Treasury bonds backed by the “full faith and credit of the United States Government” and trying to paint 30 year bonds (as you seem to be doing) as the only viable bonds is nonsense.
The US Treasury issues everything from overnight bond issues to 30 year issues. They are all notes against the US Treasury.
That’s right wing nonsense. Nothing has been “stolen” from Social Security… at least not yet!
Treasury will make good on bonds held by the trust fund just like they make good on any other bond which they have issued.
It really doesn’t and even if it did… why would that be a concern?
@ dakine01
OK. I understand better now. When you say “Yeah, it’s called US Treasury Bonds. Just like those US Savings Bonds we all bought as kids,” you are actually completely clueless as to the kinds of obligations they are. You don’t have any idea of the terms of the Special US Treasury Bonds and/or how they differ from the kinds of 30 year US Treasury Bonds you or I could buy. However, you have identified them as something other than garden-variety 30 year Treasury bonds. What makes them Special?
Nothing I wrote says garden variety 30 year US Treasury bonds are the only viable bonds.
The Treasury issues all kinds of (I guess the generic term would be debt): 30 years bonds, 10 year notes, 7 year notes, 6 month bills, 3 month bills, etc. Their maturities differ. Also short term instruments, such as bills pay discount in the front of the term rather than interest at the end of the term. The Treasury also issues very short term debt; I know very little about that but know it is not called bonds.
The only purpose in labeling them as IOU’s rather than calling them government bonds is that the word IOU makes them sound risky. Never mind that our government is bound by law to honor it’s debts.
The primary right wing source of the “IOU” nonsense is Peter G Peterson. The Wall Street predator that is hard at work trying to loot Social Security. No doubt, you have bought into his propaganda efforts.
They are Special Bonds as they can not be purchased on the open market by you and me.
That doesn’t make them anything other than Treasury Bonds.
Yes, they are different, but they are still indebtedness that the US Treasury owes.
Why is this an issue for you? Is it because they can’t be purchased by the MOTU that makes you seemingly want to denigrate them? Does the ability of the MOTU to make the purchase make some bonds more important than others?
Oh, and when I did work for a bank all those years ago, we did refer to the overnight purchases as part of the bonds market.
So I guess that means we were wrong since we used that particular term to describe the purchase?
@ dakine01
They are Special Bonds, that cannot be purchased on the open market. What interest rate do they pay and when do they mature?
It’s an issue for you. You made claims you can’t substantiate; put words in my mouth.
The 4.9% interest figure was from the bottom of page 5 of the latest Trustee’s OASDI report (August 2010) which covers the year 2009 and earlier.
http://www.ssa.gov/OACT/TR/2010/tr10.pdf
I agree with you that this interest rate should decline somewhat in future years. The report showed that the interest accumulating in 2009 was $118 Billion.
I do not follow your logic of how borrowing with new bonds to pay back Social Security obligations increases the yearly deficit. If you reduce one liability on your balance sheet by increasing another liability an equal amount, your total liabilities would be static. So how would the switch in borrowing increase your loss for the year if it doesn’t increase your liabilities?
I don’t know what the official maturation or interest rate are. Why does it matter? The Treasury has been issuing the bonds to the Social Security Trust fund since the early ’80s as the SS monies were borrowed by the general fund.
Now a quick google led me to a FAQ page from the SSA that answers some of your questions.
You can find more informaiton by going to the FAQ page and clicking through the links embedded in the blockquoted areas.
But again, why does it matter what the maturity period and the interest rate are?
OK. I get it now from Wikipedia. The ‘deficit’ will increase when the Government borrows from the public to pay back Social Security or to pay the interest owed. Because by definition the government can not take credit against the deficit for payments to Social Security. So the ‘deficit’ is defined according to the Government’s own rules and is not a valid method of profit and loss accounting. Even though the Government is paying down it’s obligations to Social Security, they can claim it increases the ‘deficit’.
@ dakine01
It matters if 1 wants actually to understand how SS works, as opposed to just shooting off 1′s mouth based on partial information. It matters if 1 is careful about what 1 says and wants to be accurate.
If you want to be accurate then stop calling them IOU’s.
I thought everybody knew that the IOUs are Treasury bonds, backed by the full faith and credit of the US government.
An IOU could be many things beside a Treasury bond. Thus 1 should be careful about what 1 says if 1 wants to be accurate.
@ captjjyossarian
I used “bonds as IOUs” at least twice, in posts made last night at 7:25 ET. Did you really think I didn’t know what the obligations were?
@ captjjyossarian
The IOUs in the SS Trust fund are bonds, backed by the full faith and credit of the US government.
I wrote this yesterday 2:56 PM ET. Yup. I guess I bought into the propaganda.
You use the term IOU. Honestly, the only folks using the term IOU in relation to the Social Security trust fund are right wingers.
Do you find IOU to be a particularly accurate term to use w/regard to the Social Security trust fund?
Perhaps you can explain the reason that you chose to use the term IOU.
@ captjjyossarian
I find it easiest to believe you hadn’t read the entire thread, but decided to start talking regardless.
I have heard the term IOU applied to SS. I know the SS IOUs are bonds. I wanted to be sure others who may have heard the term know the IOUs are bonds. I wanted others to know that what sounds informal and insubstantial is actually secure and binding.
Do you find IOU to be an accurate term to use?
Your previous posts would suggest that you do know the difference. Thus there would be no legitimate reason for you to use such a term.
On the off chance that you really don’t understand, just lookup the legal definition of IOU.
Using the term IOU corrupts the language of the Social Security debate.
An inch of water? The boat sunk and we’re swimming away from shore.
Screw marching. We need to form a 3rd party. Attack the Democrat Republican Crime Family and get elected.
You still want more Democrat Republican criminals? How much more bullshit will it take?
Obama is a flagrant liar. See this.
http://www.thedailyshow.com/watch/tue-june-15-2010/respect-my-authoritah
Its time to rebuke Levine and others who are deceiving us all.
If you haven’t seen what Obama has done yet you don’t need an eye doctor, you need a shrink.
Please prove they are special or different. Is this public information or are you sitting in Geithner’s office on his knee while he explains secrets no one knows about?
The US Treasury Dept has a website. Why not get official info?
Whatever SS invests the funds in is out of our hands.
The privileged have had one hell of a ride and its time for payback. First uncap the cap and restore SS to a nonissue.
In 2006 the Dems got elected to stop the wars. That was a blatant lie. Both those wars are illegal based on 911.
Why would any American not look at the 911 evidence to learn that all 3 towers were brought down by controlled demolition?
Flight 77 never hit the Pentagon. A plane is aluminum like a beer can. No plane could blast a hole through 3 thick walls and leave no jet engines. Only a missile could do that. Flight 77 was diverted somewhere and all on board were murdered.
Try not to get goofy. Try to examine the evidence. The entire crime was filmed.
This will increase the strength of every argument you make by a factor of ten.
Well done.