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Recursion

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87. Do you get how bonds work?

Fri Mar 1, 2013, 05:21 PM

Mar 2013

The Trust Fund holds US bonds. When, in a few years, interest income to the trust fund (which is a whole nother issue, but also contributes to the deficit) plus payroll levies are no longer sufficient to meet benefits, the Trust Fund will have to redeem some of those bonds. The money for that redemption comes out of general revenues, and will come from some form of:

1. Borrowing (deficit increase)
2. Monetization (inflation)
3. Decreased spending on other programs
4. Increased taxation

2 through 4 will no doubt also happen, but it is a simple fact that redeeming the bonds in the trust fund will result in higher borrowing than otherwise.

Now, this borrowing will for the most part be dollar-for-dollar, so it will not have much impact on net debt (this was largely the point), but it will certainly increase annual deficits.

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Why do Obama and Pelosi keep perpetuating the mandate to reform Social Security and Medicare? [View all] TheProgressive Mar 2013 OP

Because they are ignorant or ill. nt MannyGoldstein Mar 2013 #1

Greed is a mental illness....that and ignorance is destroying America. TheProgressive Mar 2013 #9

They are acting like front men for the banks and corporations, woo me with science Mar 2013 #20

Yep. Politicians are spending all their time fundraising. octoberlib Mar 2013 #30

Actually, because some "reform" to both systems is needed. That does not mean kelliekat44 Mar 2013 #45

I very much agree with you. pennylane100 Mar 2013 #79

way too complicated... stillcool Mar 2013 #121

Correct me if I'm wrong, but the "reform" on the table is switching to the chained CPI MannyGoldstein Mar 2013 #137

No. SS is good thru 2090 according to the SS Trustees FogerRox Mar 2013 #140

Oh, Manny, maybe by reform they mean to increase the monthly payments. Jackpine Radical Mar 2013 #60

Because they are in bed with Pete Peterson duffyduff Mar 2013 #118

Perhaps they are trying to drive the unions together . . . ? nt patrice Mar 2013 #2

I don't think threatening to harm SS and Medicare is the right tack...nt TheProgressive Mar 2013 #4

Don't unions need one another? Yeah, it's not the right tack for some of them, but others patrice Mar 2013 #13

Yeah! Maybe that's what Limbaugh's doing, too! Marr Mar 2013 #66

tack marybourg Mar 2013 #14

tanks...! TheProgressive Mar 2013 #17

BTW, the phrase is "... couldn't care less ..." if they "could care less" that means that they care. patrice Mar 2013 #21

lmfao Marr Mar 2013 #64

You may have noticed that I mentioned a couple of things that are driving unions apart. patrice Mar 2013 #70

because they are corporate lapdogs who do as they' like nearly everyone else in national politics.... bowens43 Mar 2013 #3

Yes, but this is an assault on us 300 million... TheProgressive Mar 2013 #6

If 'reform' meant higher benefits ... earthside Mar 2013 #5

Well said and is exactly my points as well. TheProgressive Mar 2013 #8

Well said! Open Medicare to all, raise the cap on the payroll tax. mountain grammy Mar 2013 #33

+1 Liberalynn Mar 2013 #56

I am starting to think they do have a mandate..... djean111 Mar 2013 #7

Nancy Pelosi doesn't care because she's rich. Obama is a millionaire kenny blankenship Mar 2013 #10

Because the GOP can't get away with it n/t leftstreet Mar 2013 #11

You're right Nite Owl Mar 2013 #12

It is infuriating Blecht Mar 2013 #15

Yes, ProSense Mar 2013 #16

Thanks for this...And... TheProgressive Mar 2013 #18

What does any of this have to do with the Deficit? Aren't we supposed to be sabrina 1 Mar 2013 #23

Here: ProSense Mar 2013 #25

I asked about SS and Medicare. Not HC, what do those programs have to do with sabrina 1 Mar 2013 #28

You asked ProSense Mar 2013 #31

I agree with your premise Sabrina... TheProgressive Mar 2013 #32

True, but none of it had anything to do with the specific cause of the deficit. sabrina 1 Mar 2013 #36

Absolutely correct... TheProgressive Mar 2013 #40

Our current NeoLiberal "Free Trade" obsession has to be figurend in too. bvar22 Mar 2013 #120

Yes, Bill signed this into law... TheProgressive Mar 2013 #125

Their "fixing" the deficit makes it worse: patrice Mar 2013 #37

This should all be its own OP. This info is too important for people to miss in a reply. nt stevenleser Mar 2013 #96

Weeeee, a 25% drop in "donut hole" costs by 2020, how will that cut the deficit? just1voice Mar 2013 #102

"All America needs to do ..." "...they could care less ..." = absurdities. Talking as though what's patrice Mar 2013 #19

I am not sure what you are saying here... TheProgressive Mar 2013 #29

That's your phrasing, you should explain it, because it is absurdly over-simplified. nt patrice Mar 2013 #35

It is simple. TheProgressive Mar 2013 #41

I already know that. You didn't say specifically how to make that happen. nt patrice Mar 2013 #50

How? TheProgressive Mar 2013 #53

And of course, you are saying CONGRESS should do these things, because presidents aren't kings. nt patrice Mar 2013 #57

... presidents aren't kings AND they don't write legislation, but then, I bet you know that. nt patrice Mar 2013 #58

You asked for the how and I provided the means. TheProgressive Mar 2013 #61

So specify the legislative process, resources (including persons) & timeline, since it's so simple. patrice Mar 2013 #67

Ok... TheProgressive Mar 2013 #72

Good question. We might not like the answers when we finally get them. sabrina 1 Mar 2013 #22

"Do they think we are stupid?" That's a stupid question ..and yes they do think we are that stupid. L0oniX Mar 2013 #26

I had a cousin who recently passed on Plucketeer Mar 2013 #68

Could it be that it -is- The Grand Bargain? HereSince1628 Mar 2013 #24

If there were no cuts being implemented, they would be saying that Doctor_J Mar 2013 #27

Well, duh, they are expertly and brilliantly faking out the Repugs! MotherPetrie Mar 2013 #34

Apply Occum's Razor. 99Forever Mar 2013 #38

because there is no other way to get $1.5 trillion in deficit reduction hfojvt Mar 2013 #39

The deficit has nothing to do with these trust programs, NOTHING. Cleita Mar 2013 #43

Because these programs NorthCarolina Mar 2013 #44

You're just wrong about that. Recursion Mar 2013 #80

Do you have a link for that piece of misinformation? Because everything I read about Cleita Mar 2013 #84

Do you get how bonds work? Recursion Mar 2013 #87

Get this through your head. The deficit is not the problem of the Social Security trust fund. Cleita Mar 2013 #88

Certainly we *can*, it's just a bad idea Recursion Mar 2013 #89

A thief *can* burglarize your home, but it's still theft just as this is. Cleita Mar 2013 #91

There's nothing criminal about changing benefit formulas Recursion Mar 2013 #93

You know the duck theory don't you? Cleita Mar 2013 #94

It is a default on a debt, and the American citizens are the biggest holder of Federal debt Samantha Mar 2013 #139

Also, this is just a ploy to turn the SS fund over to Wall Street and privatize it. Cleita Mar 2013 #92

Forget it Cleita, I have been down this road with him, he believes in Enron style accounting Dragonfli Mar 2013 #132

Arthur Anderson was the accounting firm for Enron. Cleita Mar 2013 #134

US Treasuries are an obligation of the United States of America TheProgressive Mar 2013 #101

Right! It's an obligation from the general fund Recursion Mar 2013 #103

So what? TheProgressive Mar 2013 #105

I think the whole idea John2 Mar 2013 #112

So you are suggesting we pay 50 cents on the dollar for T-Bills? on point Mar 2013 #114

O rly? KamaAina Mar 2013 #81

I don't know either. Cleita Mar 2013 #42

I am several years out for SS and Medicare TheProgressive Mar 2013 #51

But, importantly, a systemic greed. woo me with science Mar 2013 #46

Absolutely... just one more thing to fix in our government. TheProgressive Mar 2013 #54

It has to be fixed "first.* woo me with science Mar 2013 #65

I am totally with you Woo... TheProgressive Mar 2013 #69

Implement Single Payer for Health Care; and CUT THE DAMN DOD by 50% at LEAST!!! on point Mar 2013 #47

Yes, universal single payer Health Security Administration ... TheProgressive Mar 2013 #55

Why? To make themselves appear to be reasonable and accommodating to those GOPers.... OldDem2012 Mar 2013 #48

Political maneuvers are too complicated for people that look at the world... Comrade_McKenzie Mar 2013 #49

You don't get it. The Beltway Media are the ones that are pushing it.... Spitfire of ATJ Mar 2013 #52

No, I distinctly heard Obama and Pelosi say... TheProgressive Mar 2013 #59

Here's what he said that angered me magellan Mar 2013 #74

Correct. Odd how people appear to think corporate personhood is actively ONLY elsewhere, not ever patrice Mar 2013 #63

Yep, Just wait, you all think you're screwed now, just wait until you become disabled, like me... starzdust22 Mar 2013 #62

The cuts have not happened as of yet... TheProgressive Mar 2013 #73

how are you getting screwed... stillcool Mar 2013 #122

BECAUSE IT IS A DONE DEAL Skittles Mar 2013 #71

Because, by themselves, the Republicans never could. jtuck004 Mar 2013 #75

Here's an idea to save billions on Medicare, red dog 1 Mar 2013 #76

You ask why? I will tell you why! Obama and the Democrats answer to the same boss as Boner and Dustlawyer Mar 2013 #77

For fuck's sake, they do need reforming. Tempest Mar 2013 #78

Raising the age is a cut. C-CPI is a cut. TheProgressive Mar 2013 #82

The only ones I hear calling for an increase in age are Republicans and CEOs Tempest Mar 2013 #90

"Wasting time here"...? TheProgressive Mar 2013 #95

So what increases have you heard about, go ahead.......... just1voice Mar 2013 #100

indeed.. stillcool Mar 2013 #123

and another thing that is done is airplaneman Mar 2013 #83

+ Every single person who understand that Soc Security has a SURPLUS! truedelphi Mar 2013 #86

First off, $16 trillion is the *debt*, not the *deficit* Recursion Mar 2013 #98

Redeeming the trust fund to pay benefits will not significantly increase annual deficits... TheProgressive Mar 2013 #104

my bad - hey I am over 60 airplaneman Mar 2013 #148

Mayeb because people will vote for them whether they are on the side of people truedelphi Mar 2013 #85

The "trust fund" is like me writing an IOU to myself for $2 million, placing it in a safe-deposit Nye Bevan Mar 2013 #97

Well the SS Trust Fund has $2.7 trillion invested in the safest investment in the world... TheProgressive Mar 2013 #107

So how about the government simply issues $100 trillion of Treasuries to the trust fund, Nye Bevan Mar 2013 #109

So how about it? TheProgressive Mar 2013 #111

Why yes I do. But I am not the one claiming that "There is no problems with Social Security". (nt) Nye Bevan Mar 2013 #113

There are no problems with SS that cannot be addressed by: TheProgressive Mar 2013 #116

Well I am confused that first you claim that "There is no problems with Social Security", period, Nye Bevan Mar 2013 #117

There are people who think there are problems with SS. TheProgressive Mar 2013 #119

It's the global "austerity" propaganda brought to us by the 1% just1voice Mar 2013 #99

Maybe because they mean it? Because their sponsors demand it? WinkyDink Mar 2013 #106

Welcome to the weekly ... "Obama is about to kill Social Security" thread. JoePhilly Mar 2013 #108

Some of us what to insure SS/Medicare is strengthened and not cut... TheProgressive Mar 2013 #110

Read the posts ... JoePhilly Mar 2013 #115

That hair on fire insult is so repug-like just1voice Mar 2013 #142

seems daily...maybe hourly... stillcool Mar 2013 #124

Did you hear Obama speak today? Or Pelosi speak today? TheProgressive Mar 2013 #126

yes. stillcool Mar 2013 #127

So, you heard them talk about SS and Medicare 'reform'? TheProgressive Mar 2013 #129

no. I do not get... stillcool Mar 2013 #130

When government and pundits float... TheProgressive Mar 2013 #131

If you really cared then you'd address the President's seemingly weekly swipes and threats TheKentuckian Mar 2013 #128

Damn, you just scared the hell outta me with that! LOL! freshwest Mar 2013 #133

"The shepherd always tries to persuade the sheep that their interests and his own are the same." Tierra_y_Libertad Mar 2013 #135

Things get noticeably worse when you change shepherd to wolf...nt TheProgressive Mar 2013 #136

Latest news: Most entitlement programs are exempt freshwest Mar 2013 #138

That's the sequester. What about the offers from Obama and Pelosi to advert the sequester... TheProgressive Mar 2013 #141

That's a matter of interpretation from media reports that differ from reality. freshwest Mar 2013 #143

This is why: cui bono Mar 2013 #144

The "Fix" for raising medical costs is UNIVERSAL SINGLE PAYER. Anyone who suggests Vincardog Mar 2013 #145

Lobbying bucks- hay rick Mar 2013 #147

Because America is soon to be a 3rd (way) world country... dtom67 Mar 2013 #146