On Thu, 30 Oct 2008 20:09:58 -0700, "Bob Weinberger"
wrote:


wrote in message
.. .
I wouldn't go so far as to say "disparaging" it, but it is incorrect.
There is money out there earning interest and the size is very relevant.
The money via "SS tax" is flowing in all the time, but (essentially) it
immediately flows back out, "loaned" to other budget items/agencies/etc.
as an "investment," therefore, the size is VERY relevant. Some actually
flows back in when some new bureaucrat actually pays attention to this
kind of everyday business stuff and pays down "short-term non-capital
badcompany debt," but it is immediately "loaned" back out again.

Richard, you make a distinction without substance. The size of the Trust
Fund is only relevant in bookeeping terms, i.e. which *government account*
the money is tied to.

Er, no. As the tax receipts' input and "investment" occurs constantly,
and the "bonds"/IOUs are at a variety of interest rates and maturity
dates, the size and, generally, scope does matter. Moreover, the money
is out there and earning interest. You may be confusing the money
(principal) _earning_ interest with the interest earned actually being
paid - the interest is being earned daily and bonds are maturing and
interest is being paid to the SSA constantly. The problem is that they
continually lend it back out again to the same and only borrower. Look
at it like this - let's say you own a bank and Bill Gates and Warren
Buffett, your only customers, each deposit 1 million US with your bank.
They then come in and say, "Banker Bob, loan us each a mil at 6%." Sure,
you say. You know they are good for a measly mil so you loan them the
money. And sure enough, in a year they come in and pay you back with
interest. However, they immediately say, "Bob, now loan us 1,060,000 at
6%," and you say, "Um, well, how about letting me keep my interest, but
I'll happily loan you another mil?" "Sorry, nope, we want the
1,060,000," they say and you reluctantly agree, thinking the next year
will be your year. The next year, they pay right on time and clean you
right back out. So, you say, OK, I'll just sell this paper to another
investor, but the guys tell you to read the contracts - you can't
because the IOUs you accepted are "special" and can't be sold, bartered,
or otherwise negotiated.

OK, at what point do you begin to say, "hey, wait a damned minute,
here..." They are still, as of this point, "performing loans," earning
interest and all, but Bob's Bank has jack **** to show for it all.

And then, it really gets good - they come in after several years and
say, "Bob, we've always paid our debts and now, we'd like to borrow 100
mil, but don't worry, we know it's a bigger loan, so we're prepared to
make it worth your while - we'll pay 7%..." And then, it gets even
better. One day, they come in and say, "You know, Bob, we're going to
die eventually, and we'd sure hate to see you stuck, so we're going to
pay you off in full and we're not going to borrow another dime..."
Halle-****in-lu-yahoo, you think! "We've set up 'Trust Funds' and
they'll do all the borrowing, just like us, but better - they'll borrow
5 time as much as we ever did personally" WHAT!?! "Oh, don't worry,
they'll NEVER die - they'll go on being good little borrowers long after
we're all dead...you, too, Bob...and Bob, you really ought to go see our
tailor - it won't do for a prosperous banker like you to be in that same
shiny suit day after day...Bob...you seem to be crying, Bob...why are
you crying, Bob...?"

It still represents a government obligation no matter
which pocket it comes out of. As the current SS obligations grow, there is
less money for Congress to "borrow" to spend on other things.

Er, again, not exactly - it's worse than that, because the borrowing is
in fact earning interest and so, again, the size does matter a great
deal.

They really
worry about the time when there is no SS surplus and they not only have none
to "borrow",

Um, that's not when anyone needs to start worrying...

but are obligated to pay money owed to the fund in order to
meet current obligations.

AHA! _THAT'S_ when the poo is gonna hit the whirler...

That money will need to come from somewhere - e.g.
either reduce SS benefits, increase SS or other (e.g.income) taxes, reduce
other government programs, or increase debt.

Lessee here...**** off AARP and a passel of old folks, **** off welfare
recipients, **** off any number of Government tit-for-tat titsucklers,
or start yelling about taxing "Big Business" and "the rich"...what will
they do, what will they do....I wonder...I wonder...

HTH,
R

Bob Weinberger

* As a side note: During tours at the Pentagon in the Navy Budget Office, I
was constantly amused and appalled at how much time was spent ensuring that
funds were spent from the "proper" accounts relative to the time spent
ensuring that the funds were productively spent on worthwhile projects.


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