Doug wrote: > Why is this so hard to understand? Social > Security is an obligation of the U.S. > Treasury. They write the checks, after all. > In an attempt to meet a projected excess > of outflow over inflow at some point in > the future, the system has accumulated > surpluses that it invested in non-tradeable > T-bonds. Someday, the SS system is going to > have to redeem those bonds to pay > beneficiaries. How does the Treasury come > up with the cash? It will either have to > raise taxes, cut spending elsewhere, or > borrow anew. It's not like the Treasury is > some external party to the deal. What > savings are there? They're purely internal > bookkeeping entries.
It's as if the status quo has caged an eagle. The ideologues of the status quo say, "You see, caged eagles cannot fly!" Max seems to be saying, "Let that eagle out of the cage and you'll see that it can fly up to the top of that mountain." Doug seems to be saying, "If we make our argument as if eagles need no oxygen or as if they don't have to abide by the law of gravity, we are going to look stupid and will never be taken seriously." It is true that an economy -- even if it could continuously glide along its "full employment" path -- has at each particular point in time a finite amount of wealth to distribute, and that applies to the resources society devotes to discharging its public functions. But the issue that Max (and others) seems to be getting at is that *when the economy is far from full employment* the funding of public expenditure programs (e.g. Social Security) does not have to be a zero-sum game. Certain fiscal policies (e.g. "deficit spending" and, therefore, borrowing) can help the economy expand the whole pie and, basically, fund at least a portion of the public sector's obligations from what comes as a "free lunch." Frankly, as things stand right now, I don't see much of a political downside to -- as Doug puts it -- just kicking the can down the road. That may be a tactical necessity, since there are such taboos fogging the minds of people. I guess if people had the things clear in their heads and we had sufficient political strength, we could just say, "Look, from this point, working people are in command. So, if you hold public debt in your portfolio and have a net worth exceeding $X, then consider that debt officially repudiated. From this point on, we will only honor explicit (and tacit) grandfathered-in public obligations contracted with working people (and, among those, the ones that, after careful review, working people collectively may view as legit), all other obligations are not legit and are now officially disavowed, abolished, gone." Bottom line: We want the needs of people to be met. How specifically that is to be done in a system in which private ownership is considered such a sacred cow should be left to the financial imagination of our public economists and the political imagination of our politicians, since ideological and political compromises may be required here and there. What we cannot afford is not to meet those popular needs. After all, what's the point of an economy if not the welfare of its people? _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
