If we had put Social Security into Al Gore's "lockbox"...?

[kentuck]

What would the deficit be today?

Hasn't it run about a $150-200 billion surplus every year since 2000? So probably well over a trillion dollars would have been added to the deficit without Social Security. Or they would have raised taxes to pay for their wars and taxcuts?

The Republicans plan is to keep on spending the Social Security fund on Defense and taxcuts until it is gone.

It's about time Democrats stop all this nonsense talk about deficits and Social Security. They are all worried 20 years down the road when they should be concerned about today.

[Sherman A1]

1. Agreed

[chimpymustgo]

2. Dayum. Thanks for reminding.

[econoclast]

3. SS surplus does NOT decrease the budget deficit

SS is "off budget". The budget deficit does NOT include SS in any way. ( except perhaps the interest paid to the SSTF on their holdings of US Treasury securities ... I have to check that out ). But if the budget deficit is 500 billion dollars and SS has a 100 billion surplus, that does NOT reduce the deficit to 400 billion dollars. What it DOES do is reduce the amount of the 500 billion deficit that the government has to borrow IN THE MARKET.

Since SS is required by law (and has been since the 1930's) to invest any surplus in US Treasuries, this means that if the deficit is 500 billion dollars and SS has a 100 billion surplus, that does NOT reduce the deficit to 400 billion dollars, but then the government sells 100 billion in US Treasuries to SSTF and only has to borrow 400 billion INTHE MARKET.

FYI. For a period starting in the LBJ administration and ending in the Reagan administration SS WAS "on budget" and SS surpluses WERE put "on the budget" and any SS surplus did reduce the reported budget deficit. They called it the "unified budget". But that stoped in the 1980's and SS was again put "off budget".

What about when SS itself has a deficit? IE SS takes in less in taxes than it pays out in benefits. I think this is the first year that will happen. Then, the process works in reverse.

Suppose the government deficit is 100 billion dollars. But suppose SS has to pay out 20 billion in benefits in excess of what they collected on taxes. Where do they get the money? They redeem 20 billion of their treasuries. Ok. Where does the treasury get the money from if the government already has a deficit. They borrow it in the market. So, the budget deficit is 100 billion but they have to go to the market to raise 120 billion dollars. 100 to finance that year's budget deficit and 20 to pay off SS

So, SS doesn't impact the budget deficit, but does impact how much the government has to raise in the market.

To turn the 2.4 trillion in assets in the SSTF into the cash needed to make future payments, those assets have to be redeemed. Which means that, since the government seems likely to continue running budget deficits, to get that cash the government will have to borrow an additional 2.4 trillion dollars in the market. That is an additional 2.4 trillion on top of what they need to borrow to cover the annual budget deficits.

[supernova]

4. So true

*sigh*

The President who wasn't.

[pinto]

5. "Reid wants no cuts to Social Security"

Reid wants no cuts to Social Security

By David Espo, Ap Special Correspondent – Wed Feb 16, 7:09 pm ET

WASHINGTON – Senate Majority Leader Harry Reid said Wednesday that cost-cutting in large government benefit programs is possible "as long as you eliminate Social Security" from the discussion, registering opposition to prominent proposals to hold down spending.

"Social Security has contributed not a single penny to the deficit. So we can talk about entitlements as long as you eliminate Social Security," said Reid, D-Nev. "Because Social Security is not part of the problem we have in America with the deficit."

Reid's spokesman, Jon Summers, said the Nevada Democrat opposes any cuts for Social Security recipients, as well as any reduction in benefits promised to future retirees. He also rejects an increase in the age at which workers can begin to draw full Social Security retirement, Summers said, because "he sees that as a benefit cut."

http://news.yahoo.com/s/ap/20110217/ap_on_re_us/us_reid_social_security