> I hate to interrupt these fascinating disquisitions on
> post-structural subjectivities and what not, but I am REALLY CONFUSED and
hope someone out there (you listenin', Max?) can help.
> Clinton's budget projects a $4.4t surplus over the next 15
> years (yeah,
> right!). Clinton proposes that, of this, $2.7b be used to shore up SS. He
> claims that using this $2.7t for SS will keep the system solvent until
> 2050. ("Investing" $0.7t of the $2.7t in stocks will,
> supposedly, keep the
> system in the black until 2055).
> But isn't $2.7t almost exactly equal to the projected SS trust fund
> increase over the next 15 years? I mean, wasn't this ALREADY budgeted for
> SS? Am I wrong here?
I don't have the new numbers on the 15 year surplus
in the Trust Fund yet, but the equivalence is irrelevant.
The trust fund collects a surplus, then buys
non-tradable bonds from the Treasury. Then
Treasury gives the cash back to the Trust Fund,
free and clear. Then the Trust Fund
lends said cash back to Treasury getting more
bonds and a higher fund balance. Thereby the
Fund is "solvent" for more years into the
future. The exception is the extent to
which the Fund uses its cash to buy
stocks (1/4th of the surplus, in the
WH proposal). Then it can't lend the
cash back to the Treasury. If they did
this four or five times, the Fund would
be solvent until the next millenium.
It's only a matter of time before some
genius proposes that the Trust Fund
lend its stock to the Treasury, in
exchange for more bonds. Then Treasury
can give the stock back to the Fund,
pushing up its balance even more.
> So is he saying that,rather than spend the $2.7t
> budgeted for SS, the Treasury is going to what? Put it in a vault?
> Transfer it to bondholders?
Pay down debt (buy back Treasury bonds from
the public). In other words, what they wanted
to do in the first place.
> How exactly does Clinton's proposal extend SS
> solvency by 18 years? I'm lost.
The "problem" is defined as the Trust Fund
balance, which with this new arrangement
really does become entirely fictional.
Treasury can print non-tradable bonds and
hand them to the Trust Fund any time it wants,
pushing up the Trust Fund balance. Or it could
stipulate that future bonds would carry a higher
interest rate (any rate you like), all with zero
economic ramifications.
Incredible as this may sound, it will happen
because the Republicans think their end of the
deal is some 40 percent of the $4 trillion surplus
for tax cuts and military spending.
mbs
