The Trust Fund Lives, II

Tom Lehman uswa12 at
Fri Jul 31 12:44:05 PDT 1998

Dear Max, There is a difference between a "tool" and the whole damn "toolbox".

As far as "Cass-itch" goes, he will not be happy until he turns this country into another Jugoslavia. Also, I've got a good story about a gang of anarchists from McKees Rocks, PA who tried to rob a bank in my hometown back in the early part of 1917. A shootout took place that would make the wildest western look tame.

Happy trails to you, Tom

Max Sawicky wrote:

> Some corrections to Bro. Hayes:
> >This is absurd; find me an employee of this "trust fund" --
> It's called the Social Security Administration.
> You can even visit them. They're also on the Web.
> >the Social Security system is funded with current contributions; these
> >contributions presently are larger than current payments and the
> >residuals wind up in the general fund. That is: they reduce the
> No, they are borrowed by the 'general fund,' (actually
> known as "Federal Funds").
> >current federal budget deficit.
> >
> >The residuals from previous years? That money is gone; it's not
> >accounted for separately, and there is no such thing as a "fund"
> Nonsense. The Trust Fund is an account.
> It's inflows, outgo, and balance are reported
> annually. That's being "accounted for."
> >that _could_ be holding bonds (incredible: the govt. charging the govt.
> interest!).>
> Not ridiculous at all.
> Note: Rep. Kasich is trying to get
> all the interest in the Fund declared
> non-existent. This brings closer the
> day when the Fund runs into deficit.
> >The supposed 'deficit' or 'bankrupting' of the system comes in years where
> it is projected that current revenues will not cover projected outlays. The
> real picture is that FICA contributions are mixed in with "regular" tax
> revenues, and benefit payments are lumped in with things like "postal worker
> salaries" -- it's just two different rate schedules for a single purpose:
> funding the federal budget. I highly regressive one at that.>>
> Not all that regressive, but that's another
> story. I can't make head or tail of the rest
> of this.
> >But technically, it's already "bankrupt" -- if you don't count year-on-year
> surplusses to some account, you can't say that really the present revenues
> are separate either. So if your overall federal budget has a deficit, so
> does SS. And for most of the last few decades, it has. (Interestingly this
> turns Tom's claim of 7% interest *earning* bonds in the "trust fund" into 7%
> interest *paying* bonds helping to fund the benefits that are paid).>
> I can't imagine what definition of bankruptcy
> we are operating under here. The Fund can more
> than meet current expenses. Unlike a business
> whose loans can be called, when its deficit
> arrives, it can still pay 3/4 of benefits.
> > . . .
> >
> >But: I see examples all the time of people who get benefits from this
> program who probably should not for any other reason than it was promissed
> to them. The question of course is: will that happen?>>
> People get benefits because they paid
> for them. Who could be undeserving in
> this context?
> > . . .
> >Tom says that "the trust fund" is a "macro economic tool" -- but to me,
> it's just a "macro political tool" since it's near-mythical status as an
> actual "trust fund" is just a fiction; it can be shaped to appeal to any
> particular set of constituents.>>]
> The Fund is not a macro tool, since what
> matters for macro policy is not the Trust
> Fund deficit or surplus but the unified
> budget deficit or surplus. The only
> thing that matters is the net effect
> of government borrowing, not transactions
> internal to a government.
> As a political tool, it establishes workers'
> claims to a minimum retirement income. I'd
> say this is a constructive purpose.

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