Misrepresentation Thru Misinformation

More of the Same.

"Center on Budget and Policy Priorities.
Understanding the Social Security Trust Funds.
By Paul N. Van de Water, October 5, 2010

In years when Social Security collects more in payroll taxes and other income than it pays in benefits and other expenses - as it has each year since 1984 - the Treasury invests the surplus in interest - bearing Treasury Bonds and other Treasury Securities. Social Security can redeem these bonds whenever needed to pay benefits. The balance in the Trust Funds thus provide legal authority to pay Social Security benefits when the Social Security Program's current income is insufficient by itself.

Debt held by Social Security by contrast, provides information about the adequacy of the program's dedicated financing. Debt held by trust funds does not have the same broader economic significance as debt held by the public. Since it does not need to be financed in private credit markets, it cannot lead to a refinancing crisis. As legal authority to spend money in the future, it is essentially similar to legal authority to meet spending commitments for other entitlement programs that are not financed through Trust Funds and are not included in measures of Federal debt. In addition, an increase in Trust Fund balances that provide authority for higher Social Security expenditures in some distant year is not equivalent to issueing more publicly held debt to finance additional spending today. If additional spending authority leads to more Federal borrowing at sometime in the future, that borrowing will add to debt held by the public when that spending occurs. (note; will add to National debt --- when that spending occurs).

Debt held by the public is a measure of the Federal Government's overall financal health. It represents money that must be borrowed and periodically refinanced in private credit markets; Interest payments on that debt represent a current drain on Government resources. If the specter of excessive debt led investors to lose confidence in United States Government securities, Federal interest cost could increase substantially, with potentially troubling implications for United States and world economies."

Even Representative Paul Ryan misrepresents the part Social Security and Medicare plays in our budget deficit by stating that they are the biggest drivers of our National debt and in a few more years these two, so-called, entitlements, if not reformed, will be consuming almost all of the budget. If, by a law passed in 1990, they are not a part of the budget as proposed by the president or by congress then how can they consume it? The only way they can become a part of the general budget and our National debt is when the Treasury begins borrowing money to buy back those Government Securities (IOUs) that are in the Social Security Trust Fund so as to pay benefits to retirees and disabled.

I can only speculate as to what their political motives are for filling the airways with such propaganda but one could very well be an attempt to cover up their own, at the least, incompetence. How will they explain away all that extra borrowing? If they can convince enough people that it is all the fault of a bad system initiated by President Roosevelt in 1935 and then made worse in 1965 by the adding of Medicare by President Johnson they may still have a chance of coming out of another crisis smelling like a rose. Right now it still smells like a barnyard to me. Can you not smell it?

We, here on the hill, are having to stay in most of the day on account of the heat. We try to get what little work it takes, to keep it looking like someone lives here, done very early in the morning then stay in under the air conditioner. The garden and flowers still look fairly well but there is no rain in sight. That may not be good for us here. Thanks for your time and input. stay tuned. - William