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Originally Posted by Evil_inKarlate
Again, it comes down to the underlying assumptions. If we're looking as SS in a vaccuum, you are completely 100% correct. If we're looking at SS with a surrounding context of Federal spending and the overall US economy, you are changing nothing, or perhaps even making things worse.
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Social Security incurred debt is no different than military spending debt incurred. There is no difference.
So, you are saying that even if Social Security's obligations are fully funded with a (roughly) 16% increase in taxes introduced over the next five-ten years, this money won't actually exist and the Social Security will still project insolvency?
Please provide a precise argument. Just asserting "vaccuum" and "context" isn't substantive.
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Originally Posted by Evil_inKarlate
The 'real life' problem is that to cover boomers' SS payments, the US will either incur significantly greater and greater debt, increasing the chance that our financial house of cards will come falling down, or will have to raise taxes to unacceptable levels (or More unacceptable levels, if you prefer), slowing the economy and/or sowing seeds of unrest. Or drastically cut other Federal programs, which again has a potential for social unrest, but that seems unlikely.
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Speaking of vacuums...
You do realize that every single western nation has a) higher debt than the USA, and b) larger boomer obligations. The only exception I know of is Canada and Canada's numbers are projected to be similar to the USA.
Ergo, the USA could raise the Social Security funding through a tax increase and even could double the total US debt position and the USA would still remain the lowest tax jurisdiction in the western world and one of the lowest debt ratios in the western world.
So the question here becomes, how would present German level taxes and boomer obligations, that are generally quite manageable in every other western country, become entirely sufficient to cause the US economy to crash?
That makes no sense. And I'm using the German example only for effect. US tax rates and boomer retirement obligations are only a fraction of German rates - even with the proposed 16% increase in US taxes.
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Originally Posted by Evil_inKarlate
Raising taxes now helps the 'slush fund', but does little to avoid the above negative impacts as the slush fund operating surplus dries up and then the slush fund is supposed to be repaid from general revenues and public debt.
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T-bills held by the Social Security Trustees are not a slush fund. The Government borrowing these funds doesn't actually impact the fund. Taxpayer obligations are taxpayer obligations. US Government debt is US Government debt. Shuffling from one hand to the other may look rather messy and be inefficient, but it doesn't really change anything.
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Originally Posted by Evil_inKarlate
I suppose it Might help if all excess funds were dedicated to reducing the national debt so we had more room to run it back up again later, but this seems unlikely.
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Using Social Security funding to pay down the debt while similtaneously running a current budget deficit will not solve the problem. The place to run surpluses for the paying down of debt is the operating budget.
Indeed, Canada and Denmark are very much engaged in this process. Using budget surpluses to pay down the national debt so that, in the long run, these two countries are better able to debt-finance any 'boomer crunch' that may come 20 years down the road. This is good public policy.
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Originally Posted by Evil_inKarlate
A more likely scenario is that Congress will funnel any new surpluses into vote-buying programs, which will potentially worsen the later pain when either those programs have to be added to the list of things to be cut or their expense is added to what needs to be covered by tax increases and/or new debt.
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Huh? A Social Security tax increase accrues to the Social Security Trust Fund no matter what the politicians may do with the actual money.
Financing US debt spending from the Social Security Trust Fund or from floating T-Bills on the money markets is no difference at all.
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Originally Posted by Evil_inKarlate
I don't think there's been a problem with the actuarial analysis, just with the intestinal fortitude of the politicians to make appropriate adjustments.
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The problem is US passion for tax cutting. US taxes are too low to support US government services and obligations.