If I put a billion bucks in the bank, and I have pledged to give a billion plus X to someone at some future date, I still have a billion bucks.
What we have here is a bowdlerized version of a balance sheet that purports to comprehend the present value of assets and liabilities. No doubt that in these terms, the Gov's liabilities exceed its assets. But balance sheets of this sort are not appropriate for the public sector, particularly the Federal government of the U.S.
The real asset of the Gov is its power to tax a large, growing economy. It has a problem if we have reason to believe it will be difficult to finance future liabilities. The numbers in question here are not informative on this question.
Surplus is a flow concept. Future liabilities of Social Security is a stock. Matching them up is dumb accounting. If you want to get cute, you could match up increases in liabilities (more workers becoming eligible for more benefits in the system) with increases in assets (reductions in the public debt due to surpluses). But nobody does that.
The Feds aren't allowed to keep any money. Money they have left over after spending is a surplus. Don't let anybody tell you different.
mbs
-----Original Message----- From: owner-lbo-talk at lists.panix.com [mailto:owner-lbo-talk at lists.panix.com]On Behalf Of Michael Pollak Sent: Thursday, August 23, 2001 1:59 PM To: lbo-talk at lists.panix.com Subject: Re: The Non-Vanishing Budget Surplus
On Wed, 22 Aug 2001, Max Sawicky wrote:
> Current estimates by the Congressional Budget Office of the 10-year
> budget surplus, after netting out the tax cut, are $3.968 trillion.
> If you want to try and hoodwink the public and subtract Social
> Security Trust Fund surpluses, it's $1.484 trillion. If you want to
> try even harder and subtract Medicare surpluses, it's $1.087 trillion.
Besides dividing by 10, what is the cover story in today's FT not counting in the last paragraph below so that they come out with zero? Is the phrase "debt reduction" a trick -- do they mean pledges *besides* those associated with SS and Medicare, as if those were somehow sacrosanct too? (To make their figures jibe with yours, those would have to be independent pledges of debt reduction of over a 100bn to 150bn a year. That would really be masochism. And dishonesty.)
<quote>
The US economic slowdown and tax rebates have sharply reduced this year's US federal budget surplus, the White House conceded yesterday.
It's Office of Management and Budget said it expected a budget surplus of $158bn for 2001. Although that is the second largest surplus in US history, it is well below last year's record $237bn and a far cry from the record $281bn the administration predicted four months ago.
In addition, the surplus woudl shrink to $1bn if fund pledged by both Democrats and Republicans to Social Security and debt reduction were subtracted. If the pledges are to be taken seriously, it mans this year's available surplus has essentially gone.
<unquote>
> I've a forthcoming article in The Progressive Populist on all this.
> I'll post a link when it's up.
Looking forward to it.
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com