>
> 1. Using the excess FICA to pay down the debt does not "spend"
> Trust Fund money as Moynihan claims, but just substitutes one
> debt for another, with a net of no change except for interest.
> Am I right?
>
> 2. Just how big is the Trust Fund at its max in relation to
> the Federal debt? What I have in mind is that the so-called
> tax-cut means no surplus, and thus no continued debt paydown.
>
The op-ed says, regarding the treasury's "borrowing" of social security funds in return for treasuries:
"Balances are available to finance future benefit payments and other trust fund expenditures -- but only in a bookkeeping sense. . . . They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits."
It would seem that the answer to your first question is yes. By the reasoning above, however, a trust fund deficit is no more meaningful than a trust fund surplus, except in the eyes of those who would destroy it. If you use its surplus to pay other debts in the present, there is no reason--except political ones--that it should suffer its deficits either.
Current gross federal debt: $5.7 trillion; social security assets at present (after payments) $1.1 trillion; according to intermediate-cost assumption of SSA projections of two years ago, SS biggest surplus will be $2.4 trillion in 2018.
> 3. If the dollar is just a Fed obligation, backed by no more
> than Treasuries (I've been re-reading your book, Doug), and
> if Moynihan is right (hah!) that making good on the Trust
> Fund is very difficult, then aren't our dollars near
> worthless?
This reflects political choices more than the worth of the dollar, I should think.
>
> Isn't that the logical conclusion of Moynihan's argument, if
> one grants that his argument *is* logical in the first place?
>
> 4. Finally, does anybody have comments on Moynihan's place?
> I've been intrigued for some time by his liberal reputation
> contrasted with his longstanding (I think he was a founder)
> joint editorship with Irving Kristol and Daniel Bell of the
> Public Interest. What gives?
He's always been a conservative lib. Back in the late 60's or early 70's, he wrote a screed about black family dependency on welfare, sounding the moral hazard alarms in race terms. This is mild.
Christian