At 07:48 AM 2/15/2005 -0800, Nick Arnett wrote: >Lest anyone be confused, Social Security's net assets have *increased* every year since 1982 and the > longer-term trend certainly has been so (see http://www.ssa.gov/OACT/STATS/table4a3.html). This >doesn't mean we can close our eyes to the future population shifts, but it does mean that any hint >that there is a present-day crisis, rather than a far future one, surely must be regarded as >politically, not financially motivated. In the cliche of good journalism, "Follow the money."
This, of course, presumes that you actually believe that Social Security has assets - which I don't. Let me explain: Social Security cannot accumulate any excess revenues, be they assets, investments, etc. All current revenues that Social Security cannot spend on current benefits are mandated by federal law to be spent by the federal government. Social Security's future obligations are implicitly backed by the federal government. That is, to the extent that Social Security's current revenues fail to cover current obligations, it is expected that these obligations will be met out of general government expenditures. (That's really all that the so-called "trust fund" really means.) So, to take this logic one step further, I don't believe that this implicit obligation will at all change whether the so-called "trust fund" is exhausted or not. Social Security's obligations can be changed unilaterally by the federal government. For example, let's say the federal government institutes some combination of: increasing the retirement age, means-testing benefits, indexing benefits to inflation rather than wages, etc. To the extent that this decrease in benefits reduces the need for Social Security to theoretically draw down its so-called "trust fund", then those so-called "assets" simply remain as expenditures of the government. In other words, there is no difference between changing the promise of benefits and (as Joshua Micah Marshall is currently putting it) "defaulting" on the Trust Fund bonds. The so-called bonds in the "trust fund" are simply promises to pay a certain amount of Social Security benefits out of current revenues, and I don't think the nature of that promise at all changes based on the nominal accounting of the "trust fund". Far more important in such a scenario would be the nominal current accounting of the general fund (i.e. the general federal budget) at such a time - that is what would determine whether benefit promises or met, or whether the benefits are cut. The nominal accounting of the "trust fund" would have almost nothing - if anything at all - to do with it. To put it simply, the revenues of Social Security are revenues of the government, the obligations of Social Security are obligations of the government. Social Security has no assets that the government itself does not have. JDG _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
