Three U.S. ex-presidents denounce the current one in a two-week stretch

[gamb00ler]

54 minutes ago, JimGant said:

So, the real question is: What's the definition of debt?

 

 

I guess that sums it up....it comes down to accounting vs. reality. I agree with Cato, that the increase in public debt due to cash flow deficits is the key factor -- not that, when netted with intragovernmental debt (those Trust Fund IOU's) that there is no increase in debt. That conclusion just papers over the fact that negative cash flows ARE a problem. 

 

Anyway, probably time to move on. 

 

 

You're making an emotional choice not a logical one because the figures don't lie.

You cannot deny that the amount owed to the SS trust funds (by the Treasury) is declining.  And since the balance is held in essentially T-bills and T-bills represent the national debt...... the only possible conclusion is that the share of the national debt held by the SS trust funds is declining.  So... that portion of the national debt absolutely is declining.

 

You should view the balance of T-bills held by the SS trust funds as a bank balance.  It is after all, invested in one of the safest asset classes.  When Treasury makes a benefit payment, it reduces that balance to match the benefit.  If in 2010 the benefits paid was $200 but the FICA taxes were only $100, the Treasury would reduce the SS T-bills balance by $200, but would receive $100 from the SSA to invest in a new T-bill.  That leaves a net reduction in the national debt of $100 .... .but the Treasury needs to cover the shortfall from SS funding ($100) by selling a T-bill to another investor for $100.... so the national debt goes back up $100.  The interactions between SS trust fund and the Treasury in 2010 did NOT increase the national debt.

 

This is ultra simple once you discard all the hype and misdirection, and don't get confused by the seemingly incestuous dealings between different sectors of the government.

[JimGant]

11 minutes ago, gamb00ler said:

If in 2010 the benefits paid was $200 but the FICA taxes were only $100, the Treasury would reduce the SS T-bills by $200, but would receive $100 from the SSA to invest in a new T-bill.  That leaves a net reduction in the national debt of $100.... .but the Treasury needs to get that $100 by selling a T-bill to another investor for $100.... so the national debt goes back up $100.  The interactions between SS trust fund and the Treasury in 2010 did NOT increase the national debt.

The SSA wouldn't invest in a new T-bill without positive cash flow -- the SSA pays out its total cash flow in to beneficiaries -- then cashes in its IOUs for the cash deficit payout required -- then with that cash, makes the additional payout required. But, these mechanics are incidental to the scenario at hand...

 

....which is: the Trust fund is just an accounting entity, trying to match cash flow in with cash flow out -- to make sure Social Security pays for itself. What's going on now, and since 2010, is: It isn't paying for itself, when you look at cash flow in vs. cash flow out. That the Trust fund has a nice fat surplus number in paper IOU's, for now -- doesn't mean squat. This whole drill is about cash flow.

 

So, based on cash flow, the SS Admin has to borrow from the Treasury -- and the Treasury has to get that cash from selling Treasuries to the public. So, based on cash (necessarily so), the deficit increases by the amount the Treasury needs to borrow from the public; but it DOESN'T decrease -- on a cash basis -- by any IOU's zeroed out for the Treasury infusion to the SS Trust fund. 

 

Back to the basics. The Trust fund is purely an accounting entity. Its existence in no way affects that the SS Admin has a cash flow shortfall, and, fortunately, can call back that cash it loaned years ago to build aircraft carriers. This is what's going on now (since 2010). And, for sure, this increases the deficit - in cash terms (in return for decreasing the deficit back in the years loaned for aircraft carriers). But, an accounting entity, with non cash IOU's -- cannot be matched one for one with Treasury sales, for cash, to the public.

 

So, let's stick with cash flow -- for a balanced discussion. 

 

 

 

 

[simple1]

They are not wrong. Trump is unfit to represent the Office of the President of the USA.

[gamb00ler]

1 hour ago, JimGant said:

The SSA wouldn't invest in a new T-bill without positive cash flow -- the SSA pays out its total cash flow in to beneficiaries

To be brief.... NO.

You don't seem well informed on SSA's practices and procedures.  They don't make any payments.  The Treasury makes every SSA benefit payment.  My bank account tells me that Social Security paid me but a quick Google search will reveal the processing is done by the Treasury.  Those payments are 'on behalf' of the SSA.  In actuality, I believe that all FICA taxes are received by the Treasury and just credited to the SSA's 'bank account'.  Proper accounting entries will ensure correct attribution of funds received.  This is a much simpler transaction than unneeded transfers back and forth between different government agencies just to buy T-bills.  The end result is that SS trust funds do increase their T-bill holdings with every FICA collection.

1 hour ago, JimGant said:

which is: the Trust fund is just an accounting entity, trying to match cash flow in with cash flow out -- to make sure Social Security pays for itself. What's going on now, and since 2010, is: It isn't paying for itself, when you look at cash flow in vs. cash flow out.

I agree... the SS trust funds are just an accounting entity.  They don't handle any funds directly.  All that work is handled by the Treasury's accountants.  That doesn't mean that SSA doesn't have an impact on all contributors and beneficiaries, after all they are the ones in charge.... Treasury is just a flunky doing the paperwork.

 

How can you just ignore the SS trust funds interest income?  Is it that you don't think it's real because there isn't any direct transfer from Treasury identified solely as T-bill interest?  Or is it because you considered it to be only a value on paper because it is entirely held in T-bills?  I'm sure you count the compounded interest accumulated in your retirement accounts as an asset belonging to you and solely for your use as you see fit.  Are all your retirement assets real or only paper?

 

The SSA trust fund, including accumulated interest is definitely REAL and effective.  You should know this because it has been used to ensure that beneficiaries receive 100% of their benefits since 2010 despite a shortfall from FICA collections.  SSA trust fund is just a complicated retirement account (earning interest) shared by millions.  The money belongs to the contributors for their collective use per the benefit schedule.

1 hour ago, JimGant said:

And, for sure, this increases the deficit - in cash terms (in return for decreasing the deficit back in the years loaned for aircraft carriers)

NO, No and no.

When the SS trust fund was growing.... it DID NOT REDUCE the deficit.  What it did reduce is the amount of T-bills sold to other investors.  The T-bills the SS trust fund purchased played the same role as every other T-bill sold to buyers..... they FUNDED the deficit.... but did not reduce it.

 

Same as for any year, the Treasury sold sufficient T-bills to cover the interest on the national debt and the gap between Federal gov't expenditures and tax revenue for the current fiscal year.  The Treasury did NOT reduce the amount of T-bills sold due to SSA purchases.... just that some portion of the T-bills sold were purchased by a different arm of government instead of an investor.

 

 

 

1 hour ago, JimGant said:

So, let's stick with cash flow -- for a balanced discussion. 

If you include EVERY cash flow, but you don't.  You selectively ignore what doesn't fit with Cato misinformation.

[mogandave]

1 hour ago, simple1 said:

They are not wrong. Trump is unfit to represent the Office of the President of the USA.

Why?

[gamb00ler]

@JimGant 

The SS trust funds have two relationships with the Treasury.  The Treasury serves as a bank for the SS trust funds.  Here is how the Treasury fulfills that role:

 

Since the Treasury is the payer of every SS benefit AND the initial recipient of ALL FICA taxes, it makes sense that the SSA trust fund does not transfer any funds to or receive any funds from the Treasury.  FICA funds received become increases in the SS trust fund T-bill balance and all SS benefit payments become decreases in that balance.  Also the interest payable on the T-bill balance is delivered via an increase in the trust fund's T-bill balance.  The SS trust doesn't move any funds around.  That work is all done by the Treasury.  This is the same everyday processing done on your chequing account at a bank.  I'm pretty sure typical banking functions don't involve sleight of hand or dirty little secrets.

 

 

The second relationship between the Treasury and the SS trust funds is strictly as lender/borrower.  Here is the description of that relationship:

 

When the SSA trusts buy T-bills they fulfill the same role as EVERY other T-bill owner fills.  They become lenders that fund the US national debt.  As a T-bill owner the SS trust funds have the same limited relationship with the Treasury as any other investor.  The SS trust fund's effect on the Treasury is not greater or less than that of any other T-bill investor.

 

 

Where the Cato Institute and many others, go wrong is conflating the two relationships between the Treasury and the SS trust funds.  This is a serious mistake.  The two relationships are completely separate and independent.

 

I wonder why the Cato Institute ignores the fact that the reduction in amounts owed to the SS trust fund offsets the extra borrowing required to cover the shortfall in FICA taxes.... political bias maybe?

 

Just for fun, I'll be calling the Cato Institute to see if I can reach Romina Boccia the author of the Cato article you linked in a previous post.  I already emailed them.

[simple1]

2 hours ago, mogandave said:

Why?

 

Not going to take the bait.

[JimGant]

14 hours ago, gamb00ler said:

I wonder why the Cato Institute ignores the fact that the reduction in amounts owed to the SS trust fund offsets the extra borrowing required to cover the shortfall in FICA taxes.... political bias maybe?

 

No, because they know that intragovernmental debt is a non player when it comes to reporting a meaningful deficit number. And that only public debt, e.g., those bonds sold to China should be considered.

 

In your example, having to sell $70B to China to cover the SS benefit cash flow shortfall -- means nothing, because it is matched dollar for dollar in the drawdown of Trust fund IOU's. So, on your accounting worksheet, there's absolutely no increase in deficit -- meaning, it makes no difference whether or not the Trust fund is running a cash flow shortfall -- or a cash flow surplus. But, of course, it does make a difference. So smarter people use different accounting worksheets.

 

By the way, intragovernmental debt is recognized as a number that need be sidestepped in certain situations -- to get to a meaningful position. Such is the case when it comes to the debt ceiling -- where the intragovernmental debt represented by the SS Trust fund -- is excluded. 

[gamb00ler]

1 hour ago, JimGant said:

No, because they know that intragovernmental debt is a non player when it comes to reporting a meaningful deficit number. And that only public debt, e.g., those bonds sold to China should be considered.

Then they ignore the facts.  The SS trust funds are FUNDING the national debt.  That's indisputably a fact.  Essentially ALL government borrowing is included in the national debt.  Et voilá.

 

Although the numbers are now dated, this article does not ignore any details like the Cato article does:

https://www.epi.org/publication/social_security_and_the_federal_deficit/

 

Who do you choose to believe?

Here's the Treasury's listing (MSoft word format) of who owns the national debt:

https://fiscal.treasury.gov/files/reports-statements/treasury-bulletin/2025/b2025-2fd.doc

 

 

[JimGant]

Let me see if I’ve understood all you’ve said/implied:

 

The billions in negative cash flow by the SS Admin since 2010 has NOT increased the annual deficits, because the dollars the Treasury had to borrow from China were zeroed out – in accounting terms -- one for one, by the redemption of Trust fund IOU’s.

 

Thus, you’re of the Bernie Sander’s school of accounting, where the negative cash flow, paid by Chinese dollars, isn’t a problem because the Trust fund doesn’t run out of IOU’s until 2033 or so. Thus it just doesn’t matter that the public deficit has increased by those Chinese dollars, because those Chinese dollars have cancelled an equivalent amount of intragovernment debt. So, rest assured by the likes of a pinko like Bernie Sanders.

 

Now the Cato school of accounting says, hey Houston – we have a problem. And we can’t wait until 2033 to address that problem – the billions in negative cash flow is occurring now – resulting in a public deficit increase equivalent to those Chinese dollars having to be borrowed. That Bernie Sanders, and other fools, believe the Trust fund has equivalent value to those Chinese dollars – is confusing reality with accounting methods. Thus, the only way to present the very real problem is to NOT include intragovernment debt into the equation. Then, maybe Congress will get the message to act now, because the Trust fund really doesn’t give you until 2033 to act.

 

Or do you, like Bernie, believe this negative cash flow since 2010 – doesn’t represent a problem – because the Trust fund hasn’t run out of IOU’s?

 

Too bad the Trust fund didn’t invest their surplus dollars in gold, or a Sovereign Wealth Fund; then we wouldn’t have to have this discussion.