Tuesday, January 15, 2013

Reactions to debate on debt ceiling's impact on Social Security, from NY Times

There are some reactions on the New York Times to my posting under Professor Tribe’s commentary (see link Jan. 13). 

It’s unclear, but here is a rundown of what some people said.

There is a comment that Social Security could sell trust fund holdings.  I’m not sure what this entails.  Social Security has its own statement on this matter here , but it is not clear that it really has its money “now” if the government has spent it on other things.

A direct reply to me by  a “David” noted some analysis by former Social Security commissioner Robert Ball which downplays the “demographic winter” argument but discusses other economic factors which he think can be resolved gradually.  The disability payment program is completely separate and should not be intermingled with Social Security. 

But another “Bill” from Madison WI wrote that I “don’t understand Social Security”.  Does anybody?  He said that there is enough money in the Trust Fund for 30 years. 

What David seems to be saying, on reflective thought, is that the "Trust Fund" mechanism may give existing Social Security beneficiaries some claim for precedence in priortization,  (See my post on my "Issues" blog today.)  It's not clear (given the Flemming v. Nestor decision) that it would, and it might take a federal judge to tell us.  

Maybe so, but the point is that the government already spent that money on other things, with double accounting.  So, without borrowing more, it doesn’t have the money in the bank to make payments.
President Obama’s analogy is right.  If you spend too much money on a vacation and can’t pay the American Express bill, you’d be tempted to take out another credit card just to make this payment.  Otherwise you would default (although it sounds like you could pay the minimum and keep letting your debt grow, which is how the US government has been running).

When legally owed debts cannot be paid, people get hurt.  It’s a simple as that.  Some House Republicans are saying that some in my generation – maybe most of all those of us who didn’t have children – should make an existential sacrifice for future generations.  Others have had to do so. I do get the moral point.  But, if carried too far, that will be the end of my own life.  Again, there are no prisoners, there are no victims.
My other point is that GOP could conceivably make the case that the Social Security debt isn’t owed at all, at least to those with other assets.  I heard John Boehner say something like that in the summer of 2011.  Libertarian Party candidate (from the 1990s) Harry Browne actually wrote something like that in a book in the 1990s.  The idea has been around.

So all of this is very unsettling to me and many in my position.  It’s an “existential cliff” on how people take care of themselves and others, in a world that is not as stable as we have counted on.

Even so,  the ruminations of the past few days suggest that some House Republicans may be willing to back off from this position, of trying to force a “cold turkey” crisis right now (supposedly for the unborn).  But the statements of a few of them (as to Ali Velshi on CNN) makes me wonder if they really understand the credit card billing cycle analogy.

Congress should pass the best bill that it can, with spending cuts and entitlement reform and debt ceiling reform, and then “confront” the president with it. 

But I don’t think we can go on spending the way we have.  How do we deal with infrastructure, the all too vulnerable power grid, and climate change?  

Bernie Sanders speaks out on this: 

Update:  Late Tuesday

Another recent ("conservative") reply to my New York Times post makes what sounds like a more relevant observation, possibly confounding all the other scare talk from both liberals and conservatives:  The Social Security Administration holds Treasury securities and has legally priority for redemption of them or interest payment  (like any other bondholder) if there is a shortfall.  Presumably that could mean that payments to beneficiaries continue.  But then why do so many authorities (including Professor Tribe) say that they could stop?  Is it that knowing constitutional law doesn't mean you understand federal government accounting practices?  If not, who really does?  Even the Treasury Departments's statements are confusing. ("Parlour Timocracy", anyone?)

Frankly, the mainstream media, the law professors, the president, and members of Congress are all over the map on this.  They can't all be right.  Does anybody know what is going on?  

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