> . . . > very carefully. Nothing about domestic debt, current account deficits, > fiscal inflexibility . . . The apparent budget surpluses certainly reflect some fiscal flexibility. It's only the political rules and shibboleths that instill inflexibility. > . . . > Rather ambiguous on the degree to which social security would be > invested on Wall St, I thought. Did anyone make more sense out of that bit? . . . The WH would "transfer" 62 percent of the surplus into the Trust fund, then use "less than one-quarter" of the transferred amount for the stock purchases. This transfer is pretty comical. It goes like this: a. SS Trust Fund collects more cash than it needs to pay benefits and administrative expenses, lends cash to rest of Federal govt, receiving non-tradable bonds in exchange. b. Fed govt gives money it just borrowed back to the Trust Fund. Trust Fund lends money back to the Feds, getting more bonds! (keep doing this and there's no telling how 'rich' the Trust Fund gets. They must have gotten this idea from De Long.). c. Feds take proceeds of second loan and pay down outstanding Federal debt. In other words, what Clinton et al. wanted to do in the first place -- run unified budget surpluses. d. Social Security is saved. When Trust Fund runs out of cash, Federal govt uses the huge projected unified budget surpluses to buy back bonds held by the Fund, Fund uses proceeds to cover cash shortfall and pay benefits. In other words, what they can also do if none of the preceding happens. e. Now you know why you're not smart enough to run the nation's economy. mbs
