Explaining Modern Money redo this from billy blog site
Modern Money Primer redo this from Billyblog site
AARP: GUILTY OF INNOCENT FRAUD ON SOCIAL SECURITY NEGOTIATIONS?
Why does the AARP persist in repeating, ad nauseum, the lie that "Social Security and Medicare Must be Included in Deficit Reduction Negotiations?"
"To understand what's wrong with this headline, you need to grasp one fact: Social Security is, ultimately, just another pay-as-you-go government transfer program. Your benefits are safe as long as voters agree that transferring that much money to seniors is better than transferring it elsewhere.
Where the system really turns befuddling is with the trillion-dollar Social Security trust fund, an accounting phantom that has launched a thousand half-cocked headlines like AP's, "Social Security on Pace to be Drained by 2037." Social Security experts like Eugene Steuerle of the Urban Institute regard it as a trillion-dollar distraction. "I try to avoid the trust fund debate," he writes in an email. "Social Security is mainly a pay-as-you-go system."
What does the trust fund do? The Social Security Administration itself describes it as "budget authority." That is, until the fund runs out, the program can order the Treasury to come up with the money to pay benefits, without asking Congress for more money even if FICA taxes don't cover those benefits." ERIC SCHURENBERG, Moneywatch, 1.30.2011
Therefore, the trust fund doesn't change how the Treasury pays for benefits: Treasury doesn't need to have money in the Fund to send out Social Security checks or pay M/M benefits.
THIS FACT, THAT THE TRUST FUND IS IRRELEVANT TO BENEFIT PAY OUT IS THE FRAUD IN THE AARP'S SUPPORT FOR THE SIMPSON-BOWLES-PETERSON LONG TERM STRATEGY TO PRIVATIZE SS & MEDICARE- MEDICAID.
AARP is telling you that because the record keeping process shows that there are no more dollars coming in there is no more money to pay out to beneficiaries and their benefits must be cut or taxes increased. That is a lie. The Social Security program, as indicated above, is never dependent upon Trust Fund balances to issue checks. The Federal Government will continue to fund benefits forever, no matter what happens to the Trust Fund.
In the meantime, forget about when the Social Security trust fund will be "drained." Indeed, forget about the trust fund altogether. It's irrelevant. As with all the fiscal challenges we face, Social Security's biggest risk is failure of political will.
What Seniors and all other Americans must understand is that America, the Federal Government, issues our currency, the dollar, whenever it needs to do so under law to pay for all dollar denominated obligations. There are no operational constraints, there are only political, self-imposed constraints, like the debt ceiling which should have been repealed when we left the Gold Standard in 1971.
You should understand that the Federal Government only needs to do two things, in monetary and fiscal policy; control inflation and move the economy toward full employment, respectively. All funding issues can be settled by issuing Treasury checks, since they never bounce. We could have Social Security benefits twice current levels but we don't because our "erstwhile leaders" don't have the faintest clue about how our government pays for stuff on a day-to-day basis. It does not pay for stuff with tax or borrowing revenue per se.
This is fact because the Federal government issues all the money before it can tax or borrow it. No other entity can issue dollars. Banks can't, they can only issue credit/debt which is not legal tender. And they can't do that until the Federal Government first issues money as payment for goods and services or transfer payments to us in the private sector. This one operational fact (sole issuer of the currency) is the difference between a prosperous America and a suffering America.
AARP's economists, along with Geithner, Summers, Mankiw, Samuelson, Kudlow and the neo-libersls are totally unaware of these distinctions in how, operationally, the Federal Government manages expenditures, therefore, they will continue to lie to AARP members and America about the need to do "something" to Social Security and Medicare/Medicaid funding.
Nothing is further from the truth.
We need to manage M/M to reduce/eliminate operational inefficiencies and save one third of current annual costs, but cutting benefits to recipients and payments to medical practitioners is the wrongheaded approach to the issue.
-- Social Security has no solvency or “running out of money” problems. The SS crisis is a phoney one. No solution to this “fiscal crisis,” bipartisan or partisan, is needed. What is needed is a solution to the political problem of getting SS's funding guaranteed in perpetuity by Congress, just the way it guarantees funding for Medicare Parts B and D. The same applies to the so-called Medicare crisis. It too is phoney, and can be solved easily by Congress guaranteeing funding in perpetuity to Medicare Parts A and C.
-- However large the Federal Debt becomes, it cannot be a “crushing burden” on our Government, because Federal spending is virtually costless to the Government, if it wants it to be.
Just leave Social Security alone it is the most efficient government program ever.
All Peterson and his greedy, filthy rich ilk want is the $1.6 trillion in annual FICA payments flowing now to the Treasury. They want that cash flow. That's all they want. They're not a bit concerned about efficiencies, benefit structure, etc. They'll let Met Life, Prudential and the other rip of sub-industries deal with the suckers who fall for SS privatization.