Pethokoukis

Is GOP ready to slash defense, shut down government rather than raise taxes?

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No trillion-dollar platinum coin. No 14th amendment. Time to get down to serious business. If Politico’s reporting this morning is accurate, then “90%” of House GOP members are ready to allow across-the-board sequestration budget cuts to take effect rather than compromise with President Obama. And “more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes.”

1. I don’t think more than half of House GOPers are willing to accept an actual debt default where Treasury bondholders don’t get paid. More likely what this means is that GOPers are willing to accept a situation where the government can’t pay everyone and is forced to prioritize debt payments. The WSJ today says this is “technically possible.”

2. So now we are talking about what Wall Street terms a “technical default,” where obligations outside of interest payments are delayed. Chris Krueger of Washington Research Group says there is a 20% chance the Congress fails to raise the debt ceiling before the “extraordinary measures” expire, which would result in a technical default on the U.S. debt … 20% may not sound high, but it is high when the odds are supposed to be zero.  The 80% is based off of nothing more than blind faith.” And here is Citigroup: “So it is possible that we will get a technical default for a few days, but more likely that Congress will give in, vote the debt ceiling up temporarily, and let the automatic sequesters kick in.”

3. Is a technical default a bad thing? Treasury Secretary Timothy Geithner suggests it is. As he said back in 2011:

‘Prioritization’ also fails to account for how payments on principal would be made if investors were to lose confidence in U.S. creditworthines. …  Under normal circumstances, investors who hold Treasuries purchase new Treasury securities when the debt matures, permitting the United States to pay the principal on this maturing debt. Yet in the scenario you advocate, in which the United State would be defaulting on a broad range of its other obligations, there is no guarantee that investors would continue to re-invest in new Treasury securities.

4. Team Boehner is clearly trying to avoid any sort of default, technical or otherwise. Indeed, the GOP background quotes in the Politico story seems part of that effort: “Boehner assumes he can ultimately talk members out of default, [and] Republicans who know him well believe he will never allow default, even if it puts his leadership position at risk.”

5. GOP leaders will try and convince their rank-and-file that the debt ceiling is the wrong fight to pick. Better this one:

[House GOP leaders] are searching for ways to delay that life-or-death choice or convince members that a government shutdown is sufficiently dramatic to make their stand. …The 2013 continuing appropriations resolution expires on March 27, cutting off funding for most federal agencies. It needs to be extended, and Republicans don’t want to do so unless a new continuing resolution reduces spending, too. This is where they could choose to shut down the government to dramatize their contention that for four years Obama has promised in words to cut spending but in action only piled up debt. Many Republicans believe this is precisely what they will do.

6. Politico calls the sequester, “The most likely outcome right now.” A compromise with the president would likely mean replacing half the spending cuts with tax hikes of some sort. Recall that the White House has already released a memo showing how capping upper-income deductions could realistically raise $450 billion to $650 billion over a decade. Doubt GOP goes for this.

7. And what if the sequester should happen? Well, spending would get cut. If the sequester happens and the previous Budget Control Act spending caps hold, spending as a share of GDP would drop to 21.2% by 2018 vs. 22.9% last year.

Let’s look at defense spending for a moment. It would get cut to historic lows, around 2.5% of GDP. Some context: Right before 9-11, the “peace divided” brought defense spending down to 3%. Moreover, defense spending accounted for, on average, a 7% share of GDP from 1948 to 2000.

85 thoughts on “Is GOP ready to slash defense, shut down government rather than raise taxes?

  1. Why measure defense spending against GDP? If GDP rises, does that mean we need to spend more on defense? And if GDP was to decline, would that mean our defense needs were also less?

    While we can only spend on defense an amount we have, the standard should be whether we’re spending as much as we need to spend to handle the threats we face.

  2. “If Politico’s reporting this morning is accurate, then “90%” of House GOP members are ready to allow across-the-board sequestration budget cuts to take effect rather than compromise with President Obama. And “more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes.”

    Rock on- let the GOP self destruct. It’s already a shrinking minority made up of lunatics.

    • It’s hard to become the ‘Daddy’ figure in relation to spending control. It’s simply easier to be the ‘Mommy’ and let the kiddies have their ice cream for dinner every night. Well, until it destroys the family.

  3. I do not understand why the government would have to default on any debt. Federal revenues vastly exceed the amount of debt service. What would have to happen is that the government wold have to prioritize what it spends on things other than debt service.

      • re: ” Then why do we borrow 4+ Billion/day?”

        because we not only have to pay interest on the debt, we have to pay to fund DOD/National Security, Entitlements and the rest of govt.

        right?

  4. Defense budget even without sequester is to get “cut” $40 billion this year. The “cut” though is off of requested amount, not 2012 spend. Defense would be held at same level as 2012. I can’t believe that every government agency can’t take at least a 5% cut off of 2012 non-disbursement spending and do so with ZERO effect.

    It is time to stop measuring “cuts” off of projected spending levels that also include inflation. No one int he private sector measure a budget cut that way. Only in the fantasyland that is Washington DC does that happen.

  5. Sure, barry has to take it slowly in turning the country into a 3rd world country where they’ll accept Martial Law to be “saved”.
    Frogs are happy to be boiled if you increase the pot temperature slowly

  6. <>

    In 2011, there was $58 billion in Medicare fraud, waste and abuse uncovered. Who knows how much more is in that program. Surely the Pentagon can easily take a $40-50 billion cut quite easily. There easily has to be billions and billions funneled to special interest and campaign donar defense contractors…

  7. Republicans should pass a bill to increase the debt ceiling, conditional upon production of an actual budget – passed by both houses and signed by the President.

    This would mean the Senate would have to finally produce a budget that could go into conference committee to negotiate a budget the both houses would pass and the President would sign. No more continuing resolutions to maintain status quo.

    Then let the Senate Democrats explain why they would rather hit the debt ceiling than do their statutorily defined job and produce a budget. That is, after all, where the normal budget process has broken down – in the failure of the Senate to produce a budget.

    • Substantively this isn’t really any different than what the GOP is saying now — that debt ceiling change is conditional on spending reductions (any future budget that would get through the House and Senate would have to have reductions as well). But I do think you’ve hit on a much better way of framing the issue. I doubt if more than 5% of the population knows that the House has approved budgets every year and the Senate has approved none.

      • re: ” I doubt if more than 5% of the population knows that the House has approved budgets every year and the Senate has approved none.”

        A CR – continuing resolution is not a budget.

        It’s a vote to CONTINUE spending established in the previous budget – at the levels approved in the previous budget.

        A vote for a CR is a vote to appropriate money – and to do so at the existing spending levels.

        So the problem is how can someone vote TO CONTINUE spending and also vote to limit debt?

        it does not make any sense.

        If you are opposed to spending then you vote against the CR … you vote it down altogether or you require a drop in spending to get a yes vote.

        How can anyone stand up in front of the media and advocate not voting to approve the debt increase when that same person previously voting to continue spending via the CRs?

          • a budget bill does not take effect until both houses pass it or a conference compromise of it and the POTUS signs it.

            What happens to spending if the budget does not get past both houses and the POTUS signs it?

            CR – Continuing Resolutions.

            you have to vote for them also.

            if they do not pass, then spending authority expires – ergo spending stops – BEFORE you ever get to the debt ceiling issue.

  8. so the big “threat” that the GOP has for the debt limit is that they will let the sequester go forward and take effect if Obama does not do what they want him to do?

    Oh.. and this is the group that votes YES on Continuing Resolutions to keep spending at the current rate and so they’ll vote yes to keep spending and no to increasing the debt limit?

    This is the GOP “strategy” ?

    lord. LORD! these guys are like escapees from the looney bin… and now masquerading as “normal”.

    • My impression is that the House accepts the passage of CRs because otherwise they will be blamed for shutting down the government. CRs are only necessary because the Senate refuses to pass a budget that could go into conference committee negotiations to produce an actual budget.

      Obviously, House Republicans aren’t doing a good job communicating that it’s the Senate that refuses to carry out the statutorily defined budget process. Or too few people are listening. Either way, they are losing the public perception battle. Anything they do, other than giving in to continuing the current spending levels, is seen as obstructionism leading to government shut-down.

      • re: no budget and “blamed for shutting down the govt”

        how about hypocrisy?

        you say they have to pass the CRs.

        Nope. No more than they have to raise the debt limit.

        both require votes.

        and BOTH the SEnate AND the HOUSE have to vote in the majority for CRs.

        If you refuse to vote for the CRs – you vote to stop spending and in turn keep from having to extend the debt.

        By voting for the CR and then saying you will vote against raising the debt – you have, in effect, voted for increased spending and then …refuse to pay the debt.

        this is a big problem for those who say that we have a “spending problem” …

        It appears that they say one thing but they do something else and then try to spin it to sound like they were opposed to the spending – when they, in fact, did approve it themselves.

        you can’t have it both ways.

        this is why I say this is Kabuki Theater.

        • “you say they have to pass the CRs”

          I’m not saying the House has to pass them. I’m saying they have let themselves be intimidated into passing them.

          If it is hypocrisy – if they actually are secretly happy to continue current spending levels – then a pox on both houses.

          • re: ” I’m not saying the House has to pass them. I’m saying they have let themselves be intimidated into passing them.”

            how can they be intimidated to pass CRs but not intimidated to increase the debt limit?

            how does it make sense that on one vote they can be intimidated but on the other, not?

            here’s the vote BTW:

            http://clerk.house.gov/evs/2012/roll579.xml

          • Remains to be seen whether they will continue to be intimidated, doesn’t it?

            If it’s not intimidation, perhaps they are simply incapable of taking a unified, principled position and sticking to it.

          • re: intimidation

            they do not sound intimidated. There is a steady stream of them coming on the cable channels defiantly saying that if
            Obama does not specify cuts that they will not agree to increase the debt limit.

            But the funny thing here is that the GOP could, themselves demand cuts at the CR level BEFORE the spending is approved and BEFORE the debt limit needs to be increased.

            it just seems bizarre for them to make the argument that it is up to Obama to make the cuts because many of the same folks were the ones who originally increased the spending in the 2000-2006 time frame when we doubled the DOD/National Defense spending and doubled the entitlement spending (which they did vote for – like Medicare Part D).

            so NOW.. instead of them rolling back the spending that they originally approved, they want Obama to do it.

            I mean WTF – can the GOP not specify and INSIST at the CR level, the cuts they think need to be done or are they so feckless that they don’t want to piss off those on Medicare and the DOD establishment?

            these guys are hypocrites. They claim to be fiscal conservatives worried about spending – and they cannot and will not make their own line in the sand about what to cut and then they blame the other guy!

          • “..blah, blah.. Obama to make the cuts because many of the same folks were the ones who originally increased the spending in the 2000-2006 time frame when we doubled the DOD/National Defense spending and doubled the entitlement spending (which they did vote for – like Medicare Part D).”

            Federal spending FY 2007, last yr of GOP Congress under Bush: $2.73 trillion

            Federal spending 2012: $3.796 trillion

  9. Anf if they vote to NOT keep up the CR charade, and stick to
    their guns (so to speak) that spending must be cut, they’re called obstructionist and accused of being the evil beasts willing to take the US economy down the tubes. You can’t
    have it both ways. A CR is supposed to be a short- term stopgap measure to kepp us running until a BUDGET is passed.

    • A CR is a vote to CONTINUE THE INCREASED SPENDING.

      If you are going to take a stand against increased debt then you should first take a stand on the spending.

      Otherwise, you’re actually agreeing to add more debt when you vote to increase spending.

      and no.. you can’t blame “intimidation” on just one of the two votes.

      If you are principled about the spending, then you vote for what you think is right, stand by your vote – and in refusing to vote for increased spending, you are in fact voting to not increase the debt.

      It’s a simple proposition if you are truly serious about the issue and not just playing kabuki theater games for the media.

      The bottom line here is that the GOP has the tools to stop or reduce spending by simply NOT agreeing to continue to do it – but they are so feckless and dishonest about it that they vote for the CRs and then come out in public and decry the debt that they just voted on to increase.

      that’s a losing strategy not to mention seriously hypocritical to their claimed concern about spending.

      how in the world can you stand up in front of the cameras and make a case for shutting down the govt AFTER you have actually voted to INCREASE spENDING?

      that’s just plain dishonest.

      • It’s either dishonest or else it’s just confusion and inconsistency.

        Hence my suggestion – increase the debt limit to cover spending already authorized, but with the provision that no more CRs will be accepted, only an actual budget.

        Would they stick to it? I don’t know. I fear too many think double-talk will keep them in office, but a consistent stand on spending won’t.

        The Democrats have an easier argument to make: “Just keep spending; there’s no problem, at least not now. We can reduce spending next year or the year after that, maybe. Or maybe after ten more years.”

      • “If you are principled about the spending, then you vote for what you think is right, stand by your vote – and in refusing to vote for increased spending, you are in fact voting to not increase the debt.”

        And then scumbag parasites like Larry G will laugh themselves silly if the GOP gets blamed for creating a crisis, loses the public, and then the elections in 2014.

        “It’s a simple proposition if you are truly serious about the issue and not just playing kabuki theater games for the media.”

        Notice how Liberal Larry never applies this “die on your sword” standard to the budgetless Democrat Senate, or the President who repeatedly, outrageously, and dishonestly declares he’s fiscally responsible.

        • re: ” if the GOP gets blamed for creating a crisis, loses the public, and then the elections in 2014.”

          the GOP is just plum dumb these days.

          I may not agree with specified cuts they might propose but that is a principled position.

          what they are doing right now is cowardly and hypocritical and worse – they are (once again) deluding themselves – convincing themselves that they can vote in favor of CRs to increase spending then later threaten to shut down govt over increasing the debt limit – they they agreed to do when they voted in favor of the CR.

          “Notice how Liberal Larry never applies this “die on your sword” standard to the budgetless Democrat Senate, or the President who repeatedly, outrageously, and dishonestly declares he’s fiscally responsible.”

          you get a “budgetless” Senate when you cannot agree bi-bipartisan to a budget.

          if you do not vote for the CR – then govt is shut down.

          70 GOP voted against the CR. That WAS a principled position and if they had done that – at that point they could have legitimately bargained for less spending – perfectly consistent and principled.

          but you cannot vote to increase the spending then a few months later renege on paying for the spending you approved.

          that’s dishonest and hypocritical and the GOP is deluding themselves if they think people don’t know this and Obama won’t point it out.

          these guys are in LA LA Land. They still don’t accept they lost the election.

          If they lose in 2014 – they have no one to blame but themselves.

          • “I may not agree with specified cuts they might propose but that is a principled position.”

            Yeah, you aren’t going to agree with any cuts to your government checks out of “principle.” Such a man of high ethics!

            “you get a “budgetless” Senate when you cannot agree bi-bipartisan to a budget.”

            Sometimes I can’t tell if your dishonesty or your astonishing ignorance is at play. Reid has not submitted a budget for reconciliation in over 3 yrs now.He doesn’t need the GOP to do that. The GOP Congress has passed budgets like clockwork. Those budgets die lonely sitting on Reid’s desk. In short, what you wrote is untrue.

            “but you cannot vote to increase the spending then a few months later renege on paying for the spending you approved.”

            The goal is to get Obama and the Democrats to agree to future cuts in spending and entitlement reforms. It would help your credibility if you would not just regurgitate Obama’s lies.

            “that’s dishonest and hypocritical and the GOP is deluding themselves if they think people don’t know this and Obama won’t point it out.”

            You are the master of dishonest and hypocritical. Your hero Obama runs up $6 trillion in debt, the Senate Democrats lawlessly ignore budget laws, and you attack the group actually trying to get some fiscal responsibility, albeit with wobbly knees. As I’ve pointed out before, you’re simploy employing Alinsky rule #4, which must just comes natural to corrupt, low information voters like yourself.

          • “I may not agree with specified cuts they might propose but that is a principled position.”

            Yeah, you aren’t going to agree with any cuts to your government checks out of “principle.” Such a man of high ethics!

            I would agree – as long as there are across the board cuts. everyone takes a haircut. I’m fully in support of increasing the premiums on Medicare also.

            ““you get a “budgetless” Senate when you cannot agree bi-bipartisan to a budget.”

            Sometimes I can’t tell if your dishonesty or your astonishing ignorance is at play. Reid has not submitted a budget for reconciliation in over 3 yrs now.He doesn’t need the GOP to do that. The GOP Congress has passed budgets like clockwork. Those budgets die lonely sitting on Reid’s desk. In short, what you wrote is untrue.”

            If Reid did not submit a reconciliation – then how did it pass?

            you can’t have continued spending without BOTH the Senate AND the House voting to do it. So who is ignorant now guy? How do you think spending continues if not approved by both houses?

            ““but you cannot vote to increase the spending then a few months later renege on paying for the spending you approved.”

            The goal is to get Obama and the Democrats to agree to future cuts in spending and entitlement reforms. It would help your credibility if you would not just regurgitate Obama’s lies.”

            ha ha ha. If that were the real goal then why didn’t the GOP stick to it when the CR was passed?

            ““that’s dishonest and hypocritical and the GOP is deluding themselves if they think people don’t know this and Obama won’t point it out.”

            You are the master of dishonest and hypocritical. Your hero Obama runs up $6 trillion in debt, the Senate Democrats lawlessly ignore budget laws, and you attack the group actually trying to get some fiscal responsibility, albeit with wobbly knees. As I’ve pointed out before, you’re simploy employing Alinsky rule #4, which must just comes natural to corrupt, low information voters like yourself.”

            Obama cannot spend a penny without the Congress approving it and they approved it with the CRs in Sept 2012. That’s the simple truth.

            the debt that we have came from majority votes in favor of the CRs.

            I’m employing no rule here other than the simple truth – which is there is no spending without a majority vote of BOTH the Senate and the House whether it’s a new budget or CRs.

            You need to stop swilling that AEI hooch guy and at least want to find out the truth here.

  10. Let’s look at defense spending for a moment. It would get cut to historic lows, around 2.5% of GDP. Some context: Right before 9-11, the “peace divided” brought defense spending down to 3%. Moreover, defense spending accounted for, on average, a 7% share of GDP from 1948 to 2000.

    How deceptive can you get Jimmy? Why not just point out that when you add up the baseline Pentagon budget, CIA, defense based NASA expenditures, VA and non veteran Pentagon pensions and benefits, off budget war funding, DHS, NSA budget, interest on previous borrowing to fund wars, and other expenditures you are looking at nearly 100% of the revenue coming in from income taxes? Why shouldn’t that be cut by 60% or so, particularly when the CIA shows that American military spending is higher than the next 10 countries combined and that most of those countries are allies?

    Isn’t it time that the GOP woke up and saw that its position is no longer the same as that of the voters that support it?

    • re: measuring spending as a percent of GDP

      is … bogus….. and deceptive……

      what COUNTS is how much revenue we are bringing in and right now we have available about 1.3 trillion total – regardless of GDP percent.

      Measuring by GDP is little more than a tactic to evade the spending issue – which includes entitlements but also includes DOD.

      and that’s why the GOP has trouble specifying cuts.

      you cannot balance the budget by cutting entitlements only but you can try to confuse the spending issue by talking about GDP.

      • Of course you can balance the budget by cutting entitlements and defense. And you have your numbers wrong because total revenue is around $2.5 trillion of which just less than half is income tax.

        • re: ” And you have your numbers wrong because total revenue is around $2.5 trillion of which just less than half is income tax.”

          Nope. Numbers are right. The problem is when we look at revenues, we do not differentiate between the ones that are unrestricted and the ones that are earmarked/dedicated from special taxes to special uses.

          The FICA tax generate more than 800 billion of that 2.5 trillion and that money is totally dedicated to SS and Med/A.

          look here: http://en.wikipedia.org/wiki/File:U.S._Federal_Receipts_-_FY_2007.png

          even after subtracting the FICA, you still have to account for things like the fed gas tax which is also restricted /earmarked as a tax and as an expenditure.

          what you are truly left with for the rest of govt spending including DOD/National Defense and entitlements is about 1.3-1.5 trillion tops.

          See this is the problem:

          1. – people use percent of GDP and that’s bogus

          2. – then they count the dedicated non-income tax, tax revenues like FICA as if they are actually part of the discretionary budget pie and they are not.

          Once you get this straight in your mind – you realize just how bogus it is to talk about ANY EXPENDITURE as a percent of GDP when even your entire actual available revenues themselves won’t even cover DOD/National Defense much less entitlements and other govt spending.

          Please note also that you hear NONE of this from Conservative think tanks, nor the GOP nor the Chicken Hawks and NeoCons.

          None of them will tell the truth on this issue.

          • “The FICA tax generate more than 800 billion of that 2.5 trillion and that money is totally dedicated to SS and Med/A.”

            Again with your dishonest accounting gimmickry. FICA gets siphoned out of my pocket just the same as other taxes. It gets sent into one big pot to be pissed away.

          • “Please note also that you hear NONE of this from Conservative think tanks, nor the GOP nor the Chicken Hawks and NeoCons.”

            Chicken hawk smears, Larry G? I did my boot camp at Fort Jackson, SC. Where did you do yours?

          • Chicken hawk smears, Larry G? I did my boot camp at Fort Jackson, SC. Where did you do yours?“…

            Heh! Heh! Heh!

            Nice smacking of the fool…

  11. There’s a lot of money wasted at defense but if one is really serious about cutting waste and dropping the amount the federal government extorts from its citizens then maybe everything in this catalog of crapola should be considered non essential…

    • All of those departments should be cut. But defense also needs to be cut to the bone because the US can no longer afford to play global cop or pursue empire. It will still be the strongest nation by far and will make a lot more friends through commercial trade than it can by using its military.

      • But defense also needs to be cut to the bone because the US can no longer afford to play global cop or pursue empire“…

        Ahhh, more of your leftist nonsense vangel

        • Ahhh, more of your leftist nonsense vangel…

          There is nothing ‘leftist’ about my argument. I cannot see how anyone can justify spending more than $1 trillion on defense related activities when income taxes only generate around $1.2 trillion per year and how the US can justify spending more than the next 48 countries combined. Are those on the right idiots or just financially illiterate?

          • I cannot see how anyone can justify spending more than $1 trillion on defense related activities when income taxes only generate around $1.2 trillion“…

            Unreal!

            Do some homework first before the silly, factless, statements come out…

          • Unreal!

            Do some homework first before the silly, factless, statements come out…

            I did my homework. Everything that I have said can be supported by references to material from the CBO, State, Pentagon, DoE, as well as a number of think tanks and organizations that keep track of all of the military related data. See?

            http://www.globalissues.org/article/75/world-military-spending

            http://armscontrolcenter.org/issues/securityspending/articles/fy09_dod_request_global/

          • I had not seen these links. thanks.

            I’ve asked here before, what PERCENT of the US revenues should be spent on National Defense and I’ve asked that question with a clear linkage to how much revenue we actually take in.

            And when I’ve asked that question in that context, not a one of those who think we should spend what we are currently spending or more – will answer that simple question.

            they much prefer to talk about military spending as a percent of GDP and hate like hell to talk about it in the context of have much tax revenues we actually have to spend on the military.

          • Everything that I have said can be supported by references to material from the CBO, State, Pentagon, DoE, as well as a number of think tanks and organizations that keep track of all of the military related data“…

            ROFLMAO!

            Yeah, its always a good practice to get data from the very people who cause the problem…

          • you can always tell when Juandoze gets zinged with the truth – it invariably evokes ” ROFLMAO!”

            and the truth is – that we spend almost every penny that we take in – in tax revenues – on National Defense.

            that’s the truth.

            and what Van posted that compared and contrasted our National Security expenditures with other nations just basically confirms this.

            Our only excuse seems to be that we have to be in charge of the world – AND we have no choice but to spend most of what we take -in – in taxes on doing that job.

          • nd the truth is – that we spend almost every penny that we take in – in tax revenues – on National Defense“…

            Just like vangel, you’re a L-I-A-R larry the lost

          • Just like vangel, you’re a L-I-A-R larry the lost…

            While Larry is usually pretty dim and confused he is right when it comes to this issue. When you add up the budget for the Pentagon, VA, non-military employees of the Pentagon, DHS, DoE nuclear program, NASA military satellites, CIA and drone program budgets, NAS, off budget supplementary military spending, military aid to other governments, interest on debt that comes from prior war spending, etc., you find that the annual bill comes out very close to the annual tax revenues coming from income taxes. This is not sustainable and as taxpayers become more and more aware of the issue they will turn even further from the Democratic/GOP position on foreign intervention than they are now.

          • he is right when it comes to this issue. When you add up the budget for the Pentagon, VA, non-military employees of the Pentagon, DHS, DoE nuclear program, NASA military satellites, CIA and drone program budgets, NAS, off budget supplementary military spending, military aid to other governments, interest on debt that comes from prior war spending“…

            Repeating the LIE vangel does not make it factual…

          • ROFLMAO!

            Yeah, its always a good practice to get data from the very people who cause the problem…

            As I said, the data comes from a very diverse set of sources. The simple fact that you have no answer to the critique that is being made is proof enough that the arguments were more than adequate to make the point. The US does spend nearly as much on defense related activity as it takes in as income taxes. And the US does spend more on the military than the next 40 countries combined, even though many of those countries are allies.

            So tell us again why the military should not be cut and why fiscal prudence is supposedly ‘left wing.’

          • The simple fact that you have no answer to the critique that is being made is proof enough that the arguments were more than adequate to make the point“…

            No the simple fact vangel is that you think repeating a lie will somehow make it morph into some sort magic mantra of truth…

          • re: ” As far as revenue to the federal treasury, it is $2.7 trillion. The below graph is from the St. Louis Federal Reserve”

            the mistake that most people make is they do not account for the 800+ billion that is FICA tax and dedicated to SS and MedPartA.

            FICA, by law, is earmarked (much like the gas tax and other similar taxes) for only the purpose for which it was levied.

            After you subtract out FICA and the other dedicated taxes like the gas tax, you end up with what you really have left to spend on the military, entitlements and the rest of govt.

            You won’t hear this from most of the think tanks like AEI and others because they basically don’t want you to really know the plain facts.

          • re:the mistake that most people make is they do not account for the 800+ billion that is FICA tax and dedicated to SS and MedPartA.

            …and the mistake people such as your self make is that you also have to take that spending out of the expenditure side…

          • re: ” and the mistake people such as your self make is that you also have to take that spending out of the expenditure side…”

            if you mean to account for it – I do.

            FICA and SS have no impact on the budget nor the deficit.

            that’s the problem when you include in on both sides.

            It confuses the realities.

            the realities are this:

            we take in about 1.5 trillion in taxes – and we spend about 2.5 trillion – and that’s your trillion dollar deficit right there.

            the think tanks don’t want you to look at it that way and that’s why they keep talking about military spending as a percent of GDP.

            knock the FICA out of the revenue side and knock SS/MedA out of the expenditure side and see what you get.

            you’ll get what I just told you.

          • re: FICA and SS have no impact on the budget nor the deficit.

            Actually they do.

            http://econlog.econlib.org/archives/2013/01/obamas_mistake.html

             
            There he goes again.

            If congressional Republicans refuse to pay America’s bills on time, Social Security checks, and veterans benefits will be delayed.
             
            If congressional Republicans refuse to pay America’s bills on time, Social Security checks, and veterans benefits will be delayed.
             

            That’s a statement President Obama made at today’s press conference. See here for transcript.
            It’s not true, as Nancy Altman and John S. Scarberry pointed out in July 2011. The Social Security Administration owns bonds that the U.S. Treasury has issued. To make up for a shortfall each month, the SSA could sell some of these bonds to the Treasury. But where would the Treasury get the money to pay for these bonds? By issuing bonds to the public. How could the Treasury do that if the debt ceiling is not raised? The debt ceiling includes the SSA bonds. So for every $1 billion the Treasury pays when the SSA redeems bonds, the Treasury could issue $1 billion in new bonds without affecting the official debt at all.
             
            Now, we know that if the Treasury did this with, say, $1 billion, the actual net debt of the federal government–the debt it owes to entities other than other parts of the federal government–would rise by $1 billion. But the debt ceiling is not on this net debt which, last I checked, was approximately $11.6 trillion. The debt ceiling is on the gross debt, which includes the amount the Treasury owes other entities within the federal government.
             
            Link for transcript of the prez’s statement:
            http://www.washingtonpost.com/politics/president-obamas-news-conference-on-the-debt-ceiling-fiscal-battles-and-gun-control-jan-14-2013-transcript/2013/01/14/9bc1a690-5e65-11e2-90a0-73c8343c6d61_print.html

            Altman and Scraberry in Huffington Post:
            http://www.huffingtonpost.com/nancy-altman/disentangling-social-secu_b_905227.html

             
            Schedules of Federal Debt, Treasury Department, Sept 30, 2012 through Dec 31, 2012
            http://www.treasurydirect.gov/govt/reports/pd/feddebt/feddebt_dec12.pdf

          • once again.

            the money that SS gets from the general fund is money to pay back the FICA taxes that were taken originally.

            the govt borrowed the FICA tax money instead of having to sell more Tnotes to the public but the loan was temporary and had to be paid back.

            And it works that way for more than 100 other trust funds including the gas tax.

            When the govt collects the gas tax – it borrows that money to spend and issues notes to pay it back and when the time comes to build a highway – the money is paid back by selling t-notes to the public.

            the gas tax money was a temporary loan.

            until the law is changed, gas tax money is dedicated to roads and FICA tax is dedicated to SS and the 100 other trust funds work the same way.

            The problem here is that AEI and the so-called Library of Economic liberty are simply lying about how the trust funds actually do work.

            here – get yourself educated:

            http://www.gao.gov/new.items/d01199sp.pdf

          • FICA, by law, is earmarked (much like the gas tax and other similar taxes) for only the purpose for which it was levied.“…

            larry g if you want to believe in that fairy tale, well then run with it dog…

          • Where is your data to show that there has been an error in the argument? The fact is that you do spend more than the next 40 countries combined and that almost all of the money coming in as income tax revenues is spent on military and security programs. End of story.

          • Where is your data to show that there has been an error in the argument?“…

            You need the link pointed out to you again?!?!

          • Unreal!

            Do some homework first before the silly, factless, statements come out…

            I did my homework. Everything that I have said can be supported by references to material from the CBO, State, Pentagon, DoE, as well as a number of think tanks and organizations that keep track of all of the military related data. See?

            http://www.globalissues.org/article/75/world-military-spending

            http://armscontrolcenter.org/issues/securityspending/articles/fy09_dod_request_global/

          • “FICA and SS have no impact on the budget nor the deficit.”

            Like his hero Obama, Larry the liberal likes to repeat the same outrageous lies over and over
            as if that makes them true. Any cursory examination of the federal budget demonstrates the “no impact” line is untrue. And it’s been demonstrated over and over how entitlements are bankrupting the country, how SS has been in the red for the past couple yrs and will continue on.

            Larry’s then resorts to either meaningless blather, or he spouts the rube goldberg financing schemes cooked up to show there really are assets instead of IOU’s in the “trust funds.” It’s bullshit, and even Larry is probably not dumb enough to believe it. But perhaps the economy will stave off collapse just long enough for Larry’s golden yrs to remain idyllic.

          • FICA and SS are separate from the budget even though they are reported in the unified budget.

            FICA is a dedicated tax that can only fund SS and MedA.

            If there is a surplus, it can be “borrowed” instead of the govt have to sell Tnotes – right away – but eventually, the FICA money has to be paid back – just as we have to pay back the Tnotes the public owns.

            Ya’ll are being purposely ignorant on this.

            The facts are out there and easy to find but you won’t get them by listening to AEI and company.

          • the ones you cited are not credible sites.

            they have consistently put out propaganda, misinformation and disinformation about the reality of FICA and SS not the least of which is the simple fact that they are not part of the budget – only reported in the uniform budget.

            FICA is a dedicated tax that can only be spent on SS.

            that’s the truth.

            the sad part is that AEI and others have been successful in their effort to confuse people.

            but the simple truth is that FICA is a dedicated tax that only funds SS/MedPartA and the money in the trust fund (that was indeed spent) was put there by FICA originally.

            that’s the truth also.

            if for some reason Congress voted to not pay back the FICA in the surplus the worst that would happen is that FICA would directly fund SS and benefits would slowly reduce over time as the demographics took hold (and no intermediate changes made – such as increasing retirement age or changing the chained CPI).

            here’s the reality:

            individual and corporate income taxes generate about 1.5 trillion.

            that’s the only money we have to fund entitlements, the military and other govt.

          • If there is a surplus, it can be “borrowed” instead of the govt have to sell Tnotes – right away – but eventually, the FICA money has to be paid back – just as we have to pay back the Tnotes the public owns.

            Your inability to connect the dots is astounding. Just as right wingers who see nothing wrong with spending almost all the money that comes in as income tax revenue on defense you do not see anything wrong with wasting the surplus contributions on general spending in the hope that some time in the future the government can raise more taxes or borrow more to pay back the ‘trust funds.’

          • re: the Juandozed “sourced” debt clock… right… take one look at the SS and tell me what is is saying …

            re: trust fund and connecting the dots

            you confuse an advocacy for the method rather than an explanation of how it works.

            one of the problems we have are the outright lies about the trust fund and how it functions.

            you cannot begin to understand how SS really works if you won’t understand how the trust fund really works.

            At that point when you do understand, one could, at that point, take an INFORMED and PRINCIPLED stand on it but until then all you got is ignorant misplaced ideology.

            read this – it explains how the trust funds work – by law and if things are to change – this is where it would start.

            http://www.gao.gov/new.items/d01199sp.pdf

            I don’t advocate the way they work but I feel that one should actually understand how they work – before they take a position.

          • Ask yourself WHERE the 2.1 trillion trust fund came from originally.

            It came from FICA taxes guy.

            it was “borrowed” but only temporarily but needs to be paid back.

            First, there is no ‘trust fund’ because there is no money or marketable securities held by the fund. Second, if the government needs to borrow to pay off SS and Medicare recipients it means that the contributions are short of the spending, which means that there is a shortfall, not a surplus.

            Your inability to see the problem is astounding. For some reason you see nothing wrong with Congress spending the surpluses and leaving behind notes that promise to tax more or borrow in the future to make good on what was taken. Well, when the bond markets and taxpayers have had enough there won’t be any way to replace that money or the money owed to pension plans that hold similar promises.

          • “First, there is no ‘trust fund’ because there is no money or marketable securities held by the fund.”

            you can say that all you want but it’s simply not the reality of the way the law works. you disagree with it but it’s still real.

            ” Second, if the government needs to borrow to pay off SS and Medicare recipients it means that the contributions are short of the spending, which means that there is a shortfall, not a surplus.”

            they borrowed the FICA money originally no different than the borrowing money by selling Tnotes to the public. The only difference is they borrowed the FICA money so they could put off borrowing Tnotes but when the benefits need to be paid they will have to then sell Tnotes.

            ALL 100+ trust funds work this way – as intended by Congress and laid out in law.

            “Your inability to see the problem is astounding. For some reason you see nothing wrong with Congress spending the surpluses and leaving behind notes that promise to tax more or borrow in the future to make good on what was taken. Well, when the bond markets and taxpayers have had enough there won’t be any way to replace that money or the money owed to pension plans that hold similar promises.”

            Simply not true. I see the problem and I clearly understand that borrowing money to pay for operating expenses is a big problem but in order for you or me or anyone else to truly understand – you have to acknowledge the realities of how it works (or not).

            You’re deluding yourself about the process – because, in essence, you don’t like it – but that won’t change the process. It goes on the way it was designed to.

            that’s all I’m saying. Accept the truth and the reality and don’t play games with it just because you are opposed to the concept.

            that’s a big problem with you guys. You deal in revisionist histories and alternate realities for things you don’t like and it disconnects you from the real world and you end up on the fringe.

            If you really want to be part of change – to change the way the system works – the first step is to under how it works and why BEFORE you can seriously advocate anything else.

            You have bought the AEI propaganda and disinformation on this and it leads to nothing other than ignorance.

          • you can say that all you want but it’s simply not the reality of the way the law works. you disagree with it but it’s still real.

            No, there are no marketable assets in the fund. That makes it imaginary. I can say that I have a trust fund that has a trillion dollar IOU in it. But an IOU is not a marketable asset so no promises made are backed by that trust fund.

            they borrowed the FICA money originally no different than the borrowing money by selling Tnotes to the public. The only difference is they borrowed the FICA money so they could put off borrowing Tnotes but when the benefits need to be paid they will have to then sell Tnotes.

            You are being stupid again Larry. When notes are sold to the public the purchasers can cash them in as they wish. That is not true for the IOUs that are given when Congress steals the excess contributions. If the trustees had treasuries, gold, stocks, or real estate in their portfolio they could use the proceeds from sales of those assets or from the income generated by them, to pay off the beneficiaries no matter what Congress was doing. Because they do not have anything marketable they have to now depend on Congress to borrow or tax more to return the stolen money.

          • “you can say that all you want but it’s simply not the reality of the way the law works. you disagree with it but it’s still real.

            No, there are no marketable assets in the fund. That makes it imaginary. I can say that I have a trust fund that has a trillion dollar IOU in it. But an IOU is not a marketable asset so no promises made are backed by that trust fund.”

            no it doesn’t. It’s that way for every trust fund guy and they designed it that way on purpose.

            Again – you disagree – but that doesn’t change the facts.

            “they borrowed the FICA money originally no different than the borrowing money by selling Tnotes to the public. The only difference is they borrowed the FICA money so they could put off borrowing Tnotes but when the benefits need to be paid they will have to then sell Tnotes.

            You are being stupid again Larry. When notes are sold to the public the purchasers can cash them in as they wish. That is not true for the IOUs that are given when Congress steals the excess contributions. If the trustees had treasuries, gold, stocks, or real estate in their portfolio they could use the proceeds from sales of those assets or from the income generated by them, to pay off the beneficiaries no matter what Congress was doing. Because they do not have anything marketable they have to now depend on Congress to borrow or tax more to return the stolen money.”

            Again – this is the way it was designed – on purpose. You don’t like it but it doesn’t change the facts that they work as intended. This is not just SS. This is virtually all of more than 100 Trust funds in govt.

            The FHWA which builds highways from the gas tax works exactly this same way.

            The special issue notes are backed one-for-one by Tnotes.

            Once Again.

            You do not agree with the way it was set up but lying about it does not change it.

            your option here is to say that you disagree with the way that the Govt does Trust Funds – all of them – not just SS.

            what DUMB here Van is your insistence that the truth is something different than the reality.

            you’ve either believed the AEI’s propaganda on this or you are helping to spread it.

            here is the truth:

            http://www.gao.gov/new.items/d01199sp.pdf

            are you saying the govt is lying also?

            you guys kill me… you live in an alternate universe that denies the real world.

          • no it doesn’t. It’s that way for every trust fund guy and they designed it that way on purpose.

            Yes, the funds were designed as slush funds and piggy banks for Congress. On purpose. That does not change the fact that the IOUs are not marketable. The trustees have no option to sell off assets when there is a shortfall. They have to go to Congress and hope that it can borrow or tax more to pay them back.

            Again – this is the way it was designed – on purpose. You don’t like it but it doesn’t change the facts that they work as intended. This is not just SS. This is virtually all of more than 100 Trust funds in govt.

            Yes dumdum, the funds were designed to be pilfered by Congress. So what? That does not change the fact that they cannot make up shortfalls by selling off the assets acquired by purchases made by the use of excess contributions.

          • “no it doesn’t. It’s that way for every trust fund guy and they designed it that way on purpose.

            Yes, the funds were designed as slush funds and piggy banks for Congress. On purpose. That does not change the fact that the IOUs are not marketable. The trustees have no option to sell off assets when there is a shortfall. They have to go to Congress and hope that it can borrow or tax more to pay them back.”

            it’s not JUST the Trustees guy – you continue to mislead on this. NONE of the Trust Funds have the option to sell Tnotes to the public – ONLY the Treasury can do that – by law – and so when they borrow from these other account, they issue non-marketable notes – on purpose, according to the law and they back them one-for-one with Tnotes sold to the public.

            This is the way it was set up. There is nothing illegal or wrong about it other than you (and others) don’t like it but hells bells Van there are a LOT of things you don’t like about govt but that don’t make them not true!

            “Again – this is the way it was designed – on purpose. You don’t like it but it doesn’t change the facts that they work as intended. This is not just SS. This is virtually all of more than 100 Trust funds in govt.

            Yes dumdum, the funds were designed to be pilfered by Congress. So what? That does not change the fact that they cannot make up shortfalls by selling off the assets acquired by purchases made by the use of excess contributions.”

            don’t start with the name calling dumbass.

            No they can’t make up shortfalls by selling off assets. It not the way they decided to set it up.

            You don’t like it. I “get” that but you act like it’s illegal or should be or that it means SS “fails” and none of this is true.

            Virtually ALL trust funds work this way. The trust fund for the fuel tax works this way so does the trust fund for military and airport fees, etc… each one of them has a separate revenue stream dedicated just for that purpose but the money goes directly to the Treasury not to agency.

            This is why when you get a check from the govt – it says U.S. Treasury on it no matter whether it is an IRS refund or a SS benefit check.

            your basic problem is that you don’t like the govt running a deficit and having a huge debt.

            On that point, I totally agree with you.

            but you seem to think that they way they deal with it is somehow not legal but it is guy. It’s all exactly the way they intended it to be.

            I accept that – not because I support it necessarily but because if you refuse to accept and understand that you end up with all kinds of kooky – wrong ideas about what is going on with the SS Trust funds.

            Admit it Van – this discussion started months ago and you did not have a clue about how Trust Funds really worked until I started giving you credible links instead of the propaganda that AEI was spouting.

          • re: ” Again – this is the way it was designed – on purpose. You don’t like it but it doesn’t change the facts that they work as intended. This is not just SS. This is virtually all of more than 100 Trust funds in govt.

            Yes dumdum, the funds were designed to be pilfered by Congress. So what? That does not change the fact that they cannot make up shortfalls by selling off the assets acquired by purchases made by the use of excess contributions.”

            you say “pilfered” guy but they set it up to work that way on purpose…. and Congress and various POTUS have had decades to do something about it – even talking about “lock boxes” but they have never changed it – in part because it’s a fairly standard way to deal with it that most other countries also employ.

            Even companies will temporarily use internal assets to defer having to borrow, Van…

          • ALL 100+ trust funds work this way – as intended by Congress and laid out in law.

            Yes, Congress intended to rob plans of contributions for as long as possible before some future Congress has to figure out how to put the money back. Why is that OK?

            Simply not true. I see the problem and I clearly understand that borrowing money to pay for operating expenses is a big problem but in order for you or me or anyone else to truly understand – you have to acknowledge the realities of how it works (or not).

            But it does not ‘work’ because all you have is a process that allows Congress to rob contributors without acknowledgment through a debt increase. Those IOUs are not counted properly in all the debt figures that are being thrown around just as all of the defense spending is not being measured properly by having it come from all kinds of accounts by other departments.

            You’re deluding yourself about the process – because, in essence, you don’t like it – but that won’t change the process. It goes on the way it was designed to.

            I am the person who points out that the IOUs are not marketable and as such you don’t have a proper ‘trust account’ as defined by the general accounting standards. You are the one who thinks that an IOU is the same as a T-bill and you call others deluded? Please grow up. And learn how to think.

          • “ALL 100+ trust funds work this way – as intended by Congress and laid out in law.

            Yes, Congress intended to rob plans of contributions for as long as possible before some future Congress has to figure out how to put the money back. Why is that OK?”

            what they intended Van was that IF they were going to have to borrow money – they would borrow money from their own secondary revenue sources FIRST – knowing it would only be temporary and the borrowed money from the accounts would have to be paid back – and in they were in deficit it would have to be paid back by selling Tnotes to the public OR they would get increased revenues from income taxes either changed tax policy or increased growth.

            you disagree with this approach but it’s the way it was set up on purpose.

            “Simply not true. I see the problem and I clearly understand that borrowing money to pay for operating expenses is a big problem but in order for you or me or anyone else to truly understand – you have to acknowledge the realities of how it works (or not).

            But it does not ‘work’ because all you have is a process that allows Congress to rob contributors without acknowledgment through a debt increase. Those IOUs are not counted properly in all the debt figures that are being thrown around just as all of the defense spending is not being measured properly by having it come from all kinds of accounts by other departments.”

            no they have to increase the debt ceiling if there is a continuing deficit. All this does is use the other revenues they receive (beyond income taxes) for spending rather than borrowing. this is topped out by the way by the amount those other taxes generate. Once they’ve used the 6trillion, there is no more from those sources.

            “You’re deluding yourself about the process – because, in essence, you don’t like it – but that won’t change the process. It goes on the way it was designed to.

            I am the person who points out that the IOUs are not marketable and as such you don’t have a proper ‘trust account’ as defined by the general accounting standards. You are the one who thinks that an IOU is the same as a T-bill and you call others deluded? Please grow up. And learn how to think.”

            they’re not marketable ON PURPOSE …BECAUSE – they are BACKED one-for-one by Tnotes.

            When those accounts need their money back – the govt sells Tnotes to get the money.

            You’re deluded because you basically say this is a failed/incorrect/dishonest policy.

            And what it is – is a on-purpose policy, approved by Congress and understood and accept and supported with no intention of changing it by Congress.

            And you delude yourself by saying this is why SS is broke and nothing could be further from the truth because the funding from SS is the FICA tax.

            If, for instance, the govt decided to renege on the SS (and other) trust funds, what would happen in terms of the deficit?

            Nothing.

            The deficit, without spending cuts, would continue at the same rate.

            the only thing that would change would be that – by law, the benefits paid out to SS recipients would have to be GRADUALLY reduced over the coming decades until after several years they would fall to about 75% of what they would have been without being able to draw down on the Trust FUND OR SS itself would have changed made so that benefits could be continued at 100% of the original schedule.

            Yet you and others – like the AEI and brethren CONTINUE to cite the way the trust fund works as proof that SS is failing – as if there is no 800+billion a year coming from the FICA tax no matter what happens to the Trust FUnd.

            this is why I say you are delusional about this.

            You don’t like the way the trust funds work but you pretend it’s only SS trust funds that work this way and you don’t like the concept of SS so you use this argument to support your delusional ideas that it’s unsustainable and is involved with the current budget and deficit. – which is just plain loony.

            What I do give AEI credit for is their successful deluding of many people – even including people who support SS because 99% of most people do not know the actual facts with respect to the Trust Fund and too lazy to find out themselves.

            This is why I KEEP POSTING that Trust Fund FAQ and the Social Security Trustees Reports because if anyone takes a few minutes to read both of them they will see what a farce the current AEI narrative about SS is.

          • what they intended Van was that IF they were going to have to borrow money – they would borrow money from their own secondary revenue sources FIRST – knowing it would only be temporary and the borrowed money from the accounts would have to be paid back – and in they were in deficit it would have to be paid back by selling Tnotes to the public OR they would get increased revenues from income taxes either changed tax policy or increased growth.

            The problem with your narrative is the permanence of the problem. It isn’t temporary. Money stolen in the 1980s was never put into the trust funds in the 2000s. Congress just kept taking and replacing the money with IOUs instead of actually borrowing in the capital markets. As I said, when the funds run short there is no asset to sell off to pay the beneficiaries. That means that there is no trust fund in place; just an accounting fiction designed to fool the idiots who will accept any narrative.

        • All this is negotiable, whatever accounting rules are in effect can be changed:
          “FICA is a dedicated tax that can only fund SS and MedA.

          If there is a surplus, it can be “borrowed” instead of the govt have to sell Tnotes – right away – but eventually, the FICA money has to be paid back….”

          When the debt crisis comes, Larry, as it looks like it is inevitable now, do you think you greedy geezers will somehow be spared? It’s all part of the same monetary system.

          • paul says: “When the debt crisis comes, Larry, as it looks like it is inevitable now, do you think you greedy geezers will somehow be spared? It’s all part of the same monetary system“…

            And there it is in a nutshell…

          • re: ” When the debt crisis comes, Larry, as it looks like it is inevitable now, do you think you greedy geezers will somehow be spared? It’s all part of the same monetary system“…

            And there it is in a nutshell…”

            yup. that’s your ONLY HOPE guy – that there WILL be a debt crisis.

            otherwise, you’re screwed, right? happy dreams cuz that’s all you got.

            ;-)

          • yup. that’s your ONLY HOPE guy – that there WILL be a debt crisis.

            otherwise, you’re screwed, right? happy dreams cuz that’s all you go“…

            I gotta ask larry g, why do you take such inordinate pride in your stupidity?

            What is that all about?

            If simple pictures & words can’t explain the realities to you, then what does?

          • Juandoze – that debt clock is as bogus as you are bo“…

            Ahhh, you parasitic libtards are nothing if not hilarious for your collective inability to get a grip on reality…

            You idiot, its all sourced…

  12. Does Social Security increase the budget deficit?

    http://www.aei-ideas.org/2012/12/does-social-security-increase-the-budget-deficit/

    http://www.aei-ideas.org/wp-content/uploads/2012/12/12.13.12-Social-Security-Expenditures-600×360.jpg

    Over at the Huffington Post, Jason Linkus and Ryan Grimm claim that media fact checkers are “sputtering” in trying to explain how Social Security might affect the deficit and debt. I examined this issue in depth at Real Clear Markets, but here’s the short story:

    There are two main measures of the budget deficit and the federal debt: The “on-budget” deficit shows the balance of programs other than Social Security (and the postal service), while the “unified budget” deficit combines Social Security with the rest of the budget. Likewise, the “publicly-held” debt includes only debt sold in financial markets, while the “gross debt” includes special-issue debt held in trust funds, including Social Security’s.

    If you focus on the on-budget deficit, Social Security doesn’t have any effect. Likewise, the gross public debt isn’t affected. On the other hand, Social Security does affect the unified budget deficit and the publicly-held debt. If Social Security’s financing worsens—as it has in recent years, due to the recession and the retirement of the Baby Boomers—then that affects the deficit and debt. Back when conservatives advocated investing the Social Security surplus in personal accounts, liberals endlessly cited figures on how doing so would increase the (unified) budget deficit and the (publicly held) debt.

    So we know the Left is being a little inconsistent. But which measures are the most commonly used and the most important? The CBO says:

    To assess how all federal activities, taken together, affect the economy and financial markets, it is useful to include the cash receipts and expenditures of trust funds in the budget totals along with the receipts and expenditures of other federal programs. Therefore, the Congressional Budget Office (CBO), the Administration’s Office of Management and Budget, and other fiscal analysts generally focus on the total deficit in that “unified budget,” which includes the transactions of trust funds.

    The CBO also says that gross debt “is not useful for assessing how the Treasury’s operations affect the economy…. Because the debt issued to those [trust fund] accounts is intragovernmental in nature, it has no direct and immediate effect on the economy.” Similarly, the GAO says that “debt held by the public best represents the cumulative effect of past federal borrowing on today’s economy and on the current federal budget.”

    So, by the measures that most budget analysts use and which many liberals themselves cite, Social Security’s worsening financial outlook negatively impacts the budget deficit and the debt. Why not focus on arguing about how to fix it?

    Huffington Post link:
    http://www.huffingtonpost.com/2012/12/12/social-security-fact-checkers-fiscal-cliff_n_2286462.html?utm_hp_ref=mostpopular

    Real Clear Markets link:
    http://www.aei.org/article/economics/retirement/social-security/social-security-never-added-a-dime-to-the-deficit-really/

    CBO link:
    http://www.cbo.gov/sites/default/files/cbofiles/attachments/01-31-2012_Outlook.pdf

    Other CBO link:
    http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/88xx/doc8877/12-13-ltbo.pdf

    GAO link:
    http://www.gao.gov/new.items/d04485sp.pdf

    • re: ” Does Social Security increase the budget deficit?”

      Nope. and citing AEI links won’t get you to the truth either.

      Ask yourself WHERE the 2.1 trillion trust fund came from originally.

      It came from FICA taxes guy.

      it was “borrowed” but only temporarily but needs to be paid back.

      but even then – you’re off in LA LA Land because in the real world – until the law is changed FICA funds SS and the rest of the budget spend the income/corporate taxes.

      if you were serious in understanding the truth – you’d realize the propaganda that AEI is spouting on this.

      You could “cut” SS tomorrow and it would have zero impact on the budget.

      It would erase the 2.1 trillion intergovernmental debt that the Fed owes to the trust fund since they did spend that money – which was FICA taxes.

      but other than that – what exactly would happen to the budget and the deficit if you cut SS?

      nothing.

      so you’re just evading the truth here.

      and the simple truth is that we get about 1.5 trillion in income taxes and that’s the only revenue we really have to finance entitlements, military spending and other govt.

      that’s the simple truth.

      • “Ask yourself WHERE the 2.1 trillion trust fund came from originally.”
        The same place all taxes comes from, out of the pockets of private sector workers. There’s no “FICA” pocket, all taxes come from the same source.

        “You could “cut” SS tomorrow and it would have zero impact on the budget.”

        And that’s just lies you repeat over and over. Bill Clinton increased the taxable portion of SS, which is really the same thing as cutting it.

        “that’s the simple truth”

        It’s amusing how a congenital liar like Larry keeps talking about the “truth.”

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