What do you think about Al Gore's "lock box" now?

[kentuck]

How could the Repubs spend so much and go into debt so much in just 4 years? Just 4 years ago, we were running surpluses of $250 billion plus per year and were paying down the national debt. Al Gore suggested we put the SS funds in "lock box" to keep greedy and incompetent politicains from spending it.

But, not to worry. Bush and the Repubs have not only spent the entire Social Security surplus, but they are now spending $420 billion per year on top of the SS fund without the revenues to fund their "programs". With the SS fund added into their profligate spending, they are running deficits of about $600 billion dollars per year! A trillion dollars of debt every two years! What rational Republican would believe that is not harmful and dangerous for our nation?

They tell their followers that the deficit is only 4 or 5% of GDP - as if that makes a difference. The GDP is irrelevant to the discussion. It assumes that no matter how much debt we go into, our country produces enough that we could pay it off anytime we want. It assumes that people would voluntarily empty their pockets whenever the country got into a real bind and needed it. And these assumptions are in the present climate where people think they are paying too much in taxes right now! Forget the GDP.

We have never had a more incompetent bunch of big spenders in our nation's history. Too bad there are so many Americans with their heads in the sand. Al Gore suddenly seems wise beyond his time. SNL characters should bring back their derisive remarks about the "loc-c-c-k b-o-x-x-x-" that ridiculed on so many of their shows. Suddenly, it doesn't seem so funny anymore.

[The Backlash Cometh]

1. Lock Box and other things that Al Gore was right about.

That should be the title to his tell-all book.

[johnaries]

2. Gore was right about so many things.

I've talked about the lockbox on other threads.
He tried to tell us how quickly the surplus could become a deficit.
He tried to tell us the stock market bubble wouldn't last.
The world would be a much different place if the SCOTUS hadn't given away the election.

[BlueInRed]

3. I was thinking the same thing about SNL

I'd be real happy if they ran that LOCKBOX skit again!

I always thought Gore was right about that and so much else. Ever wonder what the world would be like today if the Supremes hadn't stop them counting votes and Gore had gotten sworn in?

[mattclearing]

24. It would be great if SNL revisited this.

When Gore starts doing more public speaking in the next few years, watch for this "Told you so" angle to spring up.

[FreedomAngel82]

31. I wonder that all the time

BlueInRed. 9/11 probably wouldn't have happened, we'd all be fine and having happy lives, we wouldn't be in war, education would be up, and think of what could be happening with the enviornment! *sigh* If only....

[orleans]

62. I think about that a lot

(not the SNL skit--although I wouldn't mind seeing it again either). But I wonder how things would be different. It's almost like I'm missing something I never even had.

Then I start feeling resentful at Gore for telling the senators to back off and not contest the vote. Then I think about Maxine Waters and her voice and face when she said something about not needing any senator and i can almost feel her pain, and I start to get choked up.

yeah, i've often wondered how different the world would be.

[Vinca]

4. It seems like a distant memory that Democrats were once

considered the "tax and spend" party and Republicans were known as the "fiscal conservatives." Of course Dubya's got a third M.O. It's the "don't tax and spend anyway" doctrine and it's rapidly heading us toward bankruptcy court. Gore was right about the "lock box."

[gulliver]

5. Gore had a tin ear for terms.

The term "lock box" was destined for ridicule. You can't treat people like idiots. Gore should have used a term like "non-Enron accounting."

I'm with you on the fact that it isn't funny. Bush is committing grand larceny on the "lock box." It masks his deficit and channels cash flow right from workers into the pockets of the wealthy.

Amazing that so much depends on terms. People are laughing themselves out of hundreds of billions of dollars.

[BlueInRed]

7. Non-Enron accounting?

I can see rural America cheering that term on - not. There was nothing wrong with the term lock box, it was his delivery style.

The idea of non-Enron accounting is exactly the kind of language that turns off people in small towns all over America. Can you imagine two farmers sitting in front of the local general store, talking about Gore being right about "non-Enron accounting"? Never gonna happen. I can see it in the urban areas, no problem. But rural America is who we keep losing.

[gulliver]

15. Let's not patronize and talk down to farmers -- or anybody.

That's my whole point. You aren't going to see two farmers (or two anybody) sitting down and talking about the "lock box". That term sounds like somebody was trying to think up something two "rube farmers" would be likely to "take a ken to." Why do you think it was so easy to ridicule in the first place? Darryl (the dipsh*t) Hammond was making fun of Gore's patronizing lingo, not the need to keep SS money from being diverted into the general fund off the deficit books.

When you try to make a term too clear and too simple, you make people think you are talking to them like children.

In suggesting "non-Enron accounting" as a substitute, I'm not suggesting it as the only substitute. (Also, Enron happened after Bush was selected the first time, so Gore can be forgiven for not using it in 2000.) I'm suggesting a barrage of creative, interesting terms. They don't have to be "Eraserhead" or "Mulholland Drive" tricky. They just can't be so damned uncool.

[BlueInRed]

16. I disagree completely

Lock box was not remotely condescending and talking in simple terms is not a sign of intellectual simplicity and people in rural areas know that. Sorry you thought it was so uncool, but I doubt the farmers thought that, or that they even watched SNL's parody except when it showed up on the evening news. The rural people I've lived around would never think of trying to be cool.

If what you say is true, how is it that Bush, with his constantly mangled language and deliberately overplayed folksiness, is not seen as talking down to rural people? I would hardly call anything that Bush says as calculated to be cool; if anything, it's calculated to be just the opposite.

[gulliver]

22. Actually, Bush is quite cool. He is slick.

And I don't mean "Fonzy" cool or rap cool. I mean Bush is "comfortable in his own skin" cool, relentless cool, cool as a shark. Bush has no compunctions, no self-doubt, nothing but the business of winning. He is an asshole, but he is cool. No matter how many times he exposes himself for the dimwitted, cowardly, smart-ass Momma's boy that he is, Bush refuses to accept the shame that is rightfully his.

Bush is not condescending. His folksy bull sucks up to rather than looks down on his marks. Bush strokes people and acts like he owns the place; Gore and Kerry explain to people and play for their acceptance.

I'm not arguing for Dems to be "cool" in the sense of "mod" or "avante garde" or sophisticated. I am arguing for them to be cool as in "cool under fire." Unafraid. And I've come to believe that certain phrases like "lock box" are just one degree too corny, one degree too phony, one degree to calculated. As the Tao Te Ching says, "a good walker leaves no tracks." The "lock box" leaves tracks.

You are better off using words that assume people are slightly smarter than they are if you intend to lead them. You can use "lock box" as a secondary image, IMO, but you have to lead with the real deal if you intend to lead people with truth rather than demagoguery.

[BlueInRed]

28. agree about the cool under fire aspect n/t

[kentuck]

37. What does Bush say that you find "cool"?

Is it his great sense of self expression?

[gulliver]

48. The pie hole is cool, for example.

Think of all of those infuriating pictures of Bush with his mouth open. He doesn't look like he has a doubt in his fool mind. We know he is saying some Rove-crafted piece of shtick designed to demagogue or beguile. We know what he is saying will utterly ignore science, intellectual fairness -- most of all honesty. We know that. But look at the perfect brazenness of it!

Bush's self-assurance despite (or perhaps because of) the emptiness of his mind and his history of personal worthlessness is an eigth wonder of the world. John Kerry, in every way superior to little Bush, doesn't have Bush's bearing of personal self-satisfaction.

Believe me, kentuck, it isn't admiration I feel toward Bush. He is "cool" because he is too stupid and unscrupulous to have a conscience. He is cool because when he makes a complete ass of himself, he still likes himself and jokes or bullies his way out of it ... or without a second thought uses a shill or whatever.

Is it dry drunkenness, narcissism, power madness, spoiledness, sociopathy? A little of each? I don't know. But it is effective enough to keep him (barely) where he can foment a Christian/Muslim cold war, bankrupt our children, put Americans at each other's throats.

Look (as Kerry is so fond of saying), Gore was right about the "lock box," but no one knows it. We have to get really brilliant and wise in our party to get truth and wisdom back on track in our country. We can't count on a "perfect storm" of unprincipled ignorance, family political dynasty, and corporate influence to make our weather for us as it has the Republicans.

Good night.

[cidliz2004]

86. Its not what WE find Bush "cool"

Thousands of others dumb asses find him cool. I always said that when Reagan got in office he was an actor and he knew how to deliver lines and "entertain". I used to watch his speeches and I couldn't figure out why people liked him so much - he never said anything substantial/ Bush is "trying" to be like Reagan. The part of Bush that doesn't measure up to Reagan makes up for it by stealing elections and controlling media...

Bush is a corporation for all intensive purposes. HE does not exist, he never has. Bush in a conglomeration PERIOD. The part we see is the "personality" part. The part that dumb asses connect to.

[robbedvoter]

82. Mr hard work? Watched him during the debates - I beg to differ.

For the limited amount I watched this man, he lost his composure so many times, that "cool" is the last word I'd use (although cold may apply).

[demwing]

It wasn't Gore's Lingo

It was his tone.

Gore was being chided for sounding as if he thought he had to define the words LOCK and BOX so that the rest of us wouldn't get lost.

Like an arrogant college professor who knows he's more intelligent than you, and thus speaks too slowly and too simply, Gore had the right words and the right answers, but just could grab hold of the right delivery.

Think of how Clinton would have delivered the lock box line. It would have been more like your favorite uncle sneaking you a $20, then telling you how to hide it from your mom and dad so they wouldn't know you had it.

Great line, poor delivery.

[BlueInRed]

74. Yes n/t

[demwing]

64. It wasn't Gore's Lingo

It was his tone.

Gore was being chided for sounding as if he thought he had to define the words LOCK and BOX so that the rest of us wouldn't get lost.

Like an arrogant college professor who knows he's more intelligent than you, and thus speaks too slowly and too simply, Gore had the right words and the right answers, but just could grab hold of the right delivery.

Think of how Clinton would have delivered the lock box line. It would have been more like your favorite uncle sneaking you a $20, then telling you how to hide it from your mom and dad so they wouldn't know you had it.

Great line, poor delivery.

[dansolo]

18. Enron was the jewel of Wall Street in 2000

"non-Enron" would have been a worthless term in 2000, since the Enron collapse hadn't occurred yet.

[BlueInRed]

19. good point

another reason for me not to like it.:P

[BlueInRed]

20. deleted dupe

boy DU is working well for me today. most of what I post ends up on here twice.

[gulliver]

23. Already beat you to it.

See post 15. But good catch anyway.

[Tigress DEM]

67. How about "Fat Cat Welfare?"

Rural people are quite smart, but most people don't know that SS has this cap that makes those earning $90,000 or more a year the real welfare customers in social security.

Everyone pays a percentage on 100% of their income, but that cap makes and exception for the rich. If they paid their fair share, there wouldn't be a social security crises and companies would think twice about paying their CEOs and High Level Managers OBSCENE salaries, because it would cost them too much.

[SharonAnn]

40. Enron hadn't collapsed yet! That happened in fall 2001.

[gulliver]

56. Yes, that's right.

I caught it shortly after my post (see post 15). Man, the fact checkers around here are good!

[BlueInRed]

58. Hi, just ran across this -- "lockbox" was actually a Clinton creation

I thought this was the case (that it was Clinton's term), but I didn't have anything to back it up earlier. This comes from TNR ( http://www.tnr.com/091701/chait091701.html ). See also http://www.clintonpresidentialcenter.org/legacy/062899-fact-sheet-on-new-budget-framework.htm .

<snip>
The lockbox idea dates back to President Clinton's 1998 State of the Union address, in which he proposed cordoning off the emerging budget surplus until the two parties found a way to solve Social Security's long-term financial shortfall. The logic was eminently reasonable. Given that Social Security and Medicare account for nearly half of the federal budget, and we didn't know how much it would cost to shore them up, it didn't make sense to fritter away the government's surplus cash. (Contrary to Reich, even if the economy does fare better in the coming years than government actuaries currently predict, that won't solve Social Security's financial troubles. Benefits are tied to wages, so faster growth means higher wages and hence higher benefit costs.)

Clinton thus stymied the congressional Republicans, who, of course, wanted to devote the surplus to a tax cut. But Clinton's line in the sand was gradually undermined as the budget surplus kept growing. At first the surplus consisted entirely of excess funds in Social Security and Medicare. But by 1999, revenues were coming in so fast that the government was projecting a budget surplus outside of Social Security and Medicare. This enabled Republicans to devise a counterstrategy. They agreed to place the Social Security and Medicare surpluses in a lockbox, meaning they could be used only for debt reduction. But the rest of the surplus could be used for tax cuts or spending. Clinton and the Democrats assented to this division.
</snip>

Just thought that was interesting. I do understand about the other stuff you mentioned, the "cool as a cucumber" aspect of Bush. :)

BTW-This is a very good article shooting down most of the nonsense we have thrown at us from the other side.

[gulliver]

85. Interesting.

Thanks for posting it! :-)

[Career Prole]

6. I loved the lockbox.

MODERATOR: And now the first question as determined by a flip of a coin, it goes to Vice President Gore. Vice President Gore, you have questioned whether Governor Bush has the experience to be President of the United States. What exactly do you mean?

GORE: Well, Jim, first of all, I would like to thank the sponsors of this debate and the people of Boston for hosting the debate. I would like to thank Governor Bush for participating, and I would like to say I'm happy to be here with Tipper and our family. I have actually not questioned Governor Bush's experience. I have questioned his proposals. And here is why. I think this is a very important moment for our country. We have achieved extraordinary prosperity. And in this election, America has to make an important choice. Will we use our prosperity to enrich not just the few, but all of our families? I believe we have to make the right and responsible choices. If I'm entrusted with the presidency, here are the choices that I will make. I will balance the budget every year. I will pay down the national debt. I will put Medicare and Social Security in a lockbox and protect them. And I will cut taxes for middle-class families. I believe it's important to resist the temptation to squander our surplus. If we make the right choices, we can have a prosperity that endures and enriches all of our people. If I'm entrusted with the presidency, I will help parents and strengthen families because, you know, if we have prosperity that grows and grows, we still won't be successful unless we strengthen families by, for example, ensuring that children can always go to schools that are safe. By giving parents the tools to protect their children against cultural pollution. I will make sure that we invest in our country and our families. And I mean investing in education, health care, the environment, and middle-class tax cuts and retirement security. That is my agenda and that is why I think that it's not just a question of experience.

MODERATOR: Governor Bush, one minute rebuttal.

BUSH: Well, we do come from different places. I come from being a West Texas. The governor is the chief executive officer. We know how to set agendas as a governor. I think you'll find the difference reflected in our budgets. I want to take one-half of the surplus and dedicate it to Social Security. One-quarter of the surplus for important projects, and I want to send one-quarter of the surplus back to the people who pay the bills. I want everybody who pays taxes to have their tax rates cut. And that stands in contrast to my worthy opponent's plan, which will increase the size of government dramatically. His plan is three times larger than President Clinton's proposed plan eight years ago. It is a plan that will have 200 new programs -- expanded programs and creates 20,000 new bureaucrats. It it empowers Washington. My vision is to empower Americans to be able to make decisions for themselves in their own lives.
http://www.debates.org/pages/debtrans.html

Lying sack of dung! :grr:

[janx]

8. I liked it too.

Thanks for posting that transcript. It's an excellent reminder of what the "lock box" was all about.

[Career Prole]

11. I often turn to those transcripts when "debating" with conservatives.

Shrub lied throughout...nearly every statement, whether about his "accomplishments" or about his domestic and foreign policy plans or his criticims of the Clinton administration...all blatant lies.
The stuff he said about the military...jeebus, what a liar.

[FreedomAngel82]

32. In debates like these

Bush is just an ass kisser. He says what sounds nice but as we can clearly see he doesn't do it. Just for his rich buddies. :grr:

[BlueInRed]

13. I've bookmarked that link, thanks!

That is a great resource. :)

[Tigress DEM]

69. OMG Bush sounded stupid compared to Gore....

No wonder he needed a live link to someone else's brains when he debated Kerry!!

[Career Prole]

76. He sure did!

While the pundits were poking fun at Gore's "lockbox" I was laughing at *'s "fuzzy math" complaints about Gore.
Four years later the chimp, and indeed most of the Republican party, are fuzzy math majors.

[ElsewheresDaughter]

9. bush agenda: war & tax cuts = huge deficits = starvation of the "new deal"

[Donna Zen]

10. Matt Miller

While I agree that a "lock box" may sound good, Matt Miller in "The 2% Solution" debunks the concept. This country has worked on a unified budget theory for years. Miller says that neither party wants you to know that for a whole variety of reasons including wanting us to remain pig-ignorant. Miller needs to read; our country would be much closer to solving it problems and we in turn would have a better future, if a rational discussion could take place.

[kentuck]

12. Initially, with the "unified budget"...

there was very little surplus in the SS fund. After the SS "reform" in 1983, the SS fund started amassing large amounts of money and the politicians greed could not be restrained. They had to spend it.

[Donna Zen]

60. I understand what you mean

nevertheless, it all goes into one system. That is what Paul O'Neill was rambling on about when he said that the money couldn't be replaced because you can't borrow from yourself. Remember that? I thought he's just lost it because I still believed it was separate from the budget. Not so. Anyway, have you read Miller?

Was the 83 reform the increase?

[Igel]

14. Right idea, but too little too late.

It would have pushed the date that the general fund picks up a lot of SS outlays back a decade or so, and reduced the overall burden by a trillion or two.

I can't find it, but the SS administration has a nifty chart showing past/future FICA surpluses and expenses. Their projections usually understate revenue, but they'd have to be massively understating revenues for the FICA surplus (past and future) to cover the liability.

[Nederland]

17. I'll take a personal account over a lockbox any day

Although I disagree with the way in which Bush is doing it, I agree with the principle of personal accounts. In fact, I would argue that what has happened over the past four years is merely proof of why my retirement money is unsafe so long as it remains in the hands of politicians.

[ProudToBeLiberal]

21. so you're ok in investing in Enron and Worldcom?

If we had private accounts before and people invested some of their money into Enron and Worldcom, millions of people would be without some sort of Social Security Benefit.

[Nederland]

53. No

And I never said I was, so please stop making assumptions.

[robbedvoter]

83. It's BFEE who will make the assumption. You won't have any choice

where you will invest. Kenny needs a new pair of shoes and you'll provide for it. Whether you like it or not. Happy piratization to ya!

[johnaries]

29. As I and others have pointed out in other threads, SS is NOT an

INVESTMENT account, it is an INSURANCE account! Investment accounts only work well over the long term. With SS, if something happens to you before you retire you and/or your family can still draw benefits.

With an investment account, if something happens to you and the market is down, you're SCREWED!!!!

[Nederland]

54. No its not

An insurance account is something that politicians cannot steal money from--unlike SS.

[Tigress DEM]

68. Politicians can be thumped out of office, what recourse do you have...

if a corporation screws up your personal account?

And through many administrations, social security has been a no-no, leave it alone so no one says we're taking money away from widows and the elderly.

[gulfcoastliberal]

77. You mean PRIVATE accounts?

NT

[qwghlmian]

25. I still have to hear from anyone exactly what that

"lockbox" means. The concept is silly on its face.

The SS surplus is not $100 that you can put under your mattress. It is on the order of hundreds of billions of dollars annually. This kind of money cannot just "sit idle" - idleness just does not exist for sums like this. It has to be invested somewhere. Today, SS invests it in the safest possible way - buying US Treasury Bonds. This basically loans the money out to the government to do with what it wishes, and in return the Social Security trust fund gets an IOU. What would you prefer that SS administration did with the surplus? Invest it in the stock market - I thought everyone who is against personal accounts thinks stock market is an anathema. Foreign governments' bonds? - you want to hang the retiree's futures on the stability of some foreign government? Private company bonds or banks or insurance companies - those go bankrupt once in a while, and then you lose the whole thing.

Too many people seem not to understand at all the concept of "big money". It is a radically different thing from your everyday cash. You seem to think that you can just put the money aside for a rainy day and lock the door. That's is impossible.

[BlueInRed]

30. my understanding

As I understand it (from people far more knowledgeable than I), the "lock box" is basically nothing more than not raiding the SS trust fund to pay for non-SS budget items. The politicians who came up with the trust fund idea in 1983 eventually couldn't be trusted to just leave that much money (or more accurately, govt securities) alone -- it was just too tempting to have this big fund sitting there. So, they started borrowing from the trust fund to pay for projects, with agreements to pay it back at some point in the future. And it became a regular practice as a way of funding the govt (the whole unified budget stuff). If they hadn't been using SS funds all these years to pay for non-SS items, it is my understanding this would have extended the solvency indefinitely.

So basically, the lock box idea is for politicians to keep their hands out of the SS cookie jar. Payments into SS should be earmarked exclusively for current and future SS liabilities, as that is what they actually promised us in 1983. It also make the whole idea of the promises on private accounts so much more risky, as politicians can always change their mind some time in the future.

And for those who would claim the trust fund isn't real, I have one question. Assuming arguendo that this is the case, then didn't Greenspan and Reagan perpetrate one of the biggest frauds in US history by suggesting that working Americans pay in double the SS tax they were paying, all the while knowing that we were not paying into a real "trust fund" at all? I can assure you that the 1983 SS tax rate increase would never had passed if they had made that little acknowledgment.

[qwghlmian]

34. See, there is again that strange

suggestion that you leave the money "alone". You cannot - it is just NOT possible to leave money on that scale "alone". It HAS to be put into some kind of instrument or it does not exist. Saying that you can leave it alone is like saying that a photon can be stopped. Photons only exist at the speed of light, they do not exist at any speed below, you cannot "stop" a photon, and money on that scale does not exist all by itself, but only as invested.

When it is invested in Treasury Bonds, it goes into general US budget and is spent. What else would you sugest? I gave a few alternatives in my original post - do those sound better to you?

If you want to call what Greenspan and Reagan did fraud - sure why not. How exactly does that change the situation today?

[BlueInRed]

35. Actually it does exist and yes it is in the form of govt securities

Yes, the proceeds go into the US budget if we buy a treasury bond. Technically, the SS fund has an asset (the govt security). The US govt has an asset (the funds used to purchase the security) and a liability (the obligation to pay that security in the future). And those funds can be spent or not. There is no requirement that funds going into the US general treasury must be spent. And if spending didn't expand to include the extra funds coming in to the general treasury from SS's purchase of govt securities, overall income tax rates could have been reduced. (That is one way they financed Reagan's tax cuts.) No corporation would assume it has to spend every cent coming in from the sale of corporate stocks and bonds. But under your theory, the government must spend every cent it takes in no matter the source. Gore was arguing the opposite with the lock box imagery.

As for the reasons why they did not invest in real estate and corporate securities, I suggest you go back to the history of SS -- where Republicans back then argued that investing in such items as real estate and corporate securities would be tantamount to communism. (I believe this goes back to the mid-1940s.) I don't agree with that reasoning on not buying real estate and corporate securities, but that is how we ended up choosing govt securities for the type of investment.

As for the fraud, it goes to show that the very people who are arguing the trust fund is just an illusion argued the exact opposite a quarter century ago. It certainly destroys their credibility now in arguing the trust fund is an illusion. Krugman and other knowledgeable economists argue the trust fund exists and should be set aside for only SS related payments. I'll put my faith in Krugman to know the minutiae of handling the securities.

And if we are to accept your essential premise that the trust fund is a mere illusion, then we should immediately roll back the SS tax to the amount needed just to fund current retirees. There is absolutelly no reason for us to pay extra into the trust fund if it is just an illusion anyway. (Unless the goal is to slyly shift the general tax burden more heavily on to the poor and middle class, which few Democrats want to do.)

[qwghlmian]

38. If the government doesn't spend the money,

the same logic applies to it - it has to be invested somewhere, or it does not exist. Where do you propose to invest the SS surprlus that the government would "leave alone"? If the corporation does not spend the money that come in, it invests it somewhere - either outside, or (by buying back its own stock) in itself. What would you have the government do with the money?

I can see where people would have a problem in government investing in real estate or private corporate securities. There is absolutely no way to ensure that these investments are made fairly, and do not single out certain companies favorably. Government should not be pumping money into the stock market or into real estate market. This is for individuals or corporations to do, not for governments.

"And if we are to accept your essential premise that the trust fund is a mere illusion, then we should immediately roll back the SS tax to the amount needed just to fund current retirees." - I would be all for it. The SS tax should go up/down every year depending on SS obligations. That's the only way to ensure solvency.

When I say that the trust fund is an illusion, I am not stating an opinion. It is an irrefutable fact. The "trust fund" is all about government obligation - it has no physical assets. The "government obligations" are only as good as the willingness of that government to honor the obligation. That is why it is an illusion - it is based on trust, and nothing else. How far are you willing to trust the government?

[BlueInRed]

39. No surprise in that

I am not at all surprised that you'd be fine with doing away with the trust fund, given the arguments you've made so far. It basically shifts the burden of the boomers entirely on to their children.

But I don't accept your essential premise, which is the trust fund is an illusion simply because the assets it holds are govt securities. (In other words, US govt securities are real assets except when they are held by the SS trust fund and paid for with excess SS contributions.) Anyone who believes that should strenuously argue that all the US govt's investments should be changed to either real estate or other "safe" investments. Also, I have no problem with a portion of the SS surplus being invested in the market through a single qualified fund manager (or a small group of fund managers) who will focus on the least risky investments. That is entirely different than private account scheme Bush has come up with.

It's ludicrous to think the govt has to spend every cent it brings in. Govts (state and federal) maintain all sorts of rainy day surplus funds that are not touched. This should be managed the same way.

[qwghlmian]

42. US government securities are real assets -

as long as the US government is willing to repay them. It is a lot harder and much more damaging to US financial standing NOT to repay them to outside (foreign) bondholders. It is harder not to repay those obligations to individual US bondholders - because those bondholders actually hold the physical piece of paper with the obligation on it. It is much easier NOT to repay those obligations when they are owed to US government itself (in the form of Social Security Trust fund). There is no such thing as "safe" investment on the scale of billions. There is such a thing as "safer", and loaning money to yourself is never a very "safe" investment.

If you're claiming that federal government holds "rainy day surplus funds that are not touched" - please give an example of one, its approximate size, and show where (that is, in what kinds of instruments) that fund is held.

[BlueInRed]

49. Hmmmm

First off, given your remarks and approach, I decided to read a few of your posts on other threads to understand your overall philosophy. It looks to me like a few of your goals are to sell the personal account idea and argue against raising the FICA cap. I also noted you'd posted links to negative info on JFK's family and Theresa Heinz Kerry. So, it seems to me your beliefs are not remotely aligned with mine.

As for my comment on "safe" investments, I deliberately used quotation marks and made it quite clear by also saying least risky. No investment, not even govt bonds, is without risk. But then you knew that already.

As for funds, on the state level, before George Bush decimated the Texas budget, TX had several rainy day funds for a variety of things. Until the last couple of years, TN had a rainy day fund, when they finally raided it to balance their budget. It appears you're saying the United States govt is the only govt that cannot have a rainy day fund and that I should have to spend hours to list the precise investments for you, which you will quickly discard, ignore, etc. Yeah, right.

Rather than continuing this circular argument knowing that no matter what I say, you will insist the opposite, I am going to copy an excerpt a knowledgeable person posted on this exact issue. I also refer you to Krugman, who is a very reliable source on the true value of the trust fund. Beyond that, I'm done.

Here's the excerpt.
<snip>
You have asked an economics/finance question - namely, why are US government bonds good investments when I or some mutual fund or foreign government own them, but if owned by an agency of the US government the Bush folks tell me that because they also a liability of the US government they are an illusion, meaning real cash from my wages that I sent the US government's Social Security Trust Fund, which was borrowed to pay for US defense so that funds for defense would not be required from the FIT Tax - (the lower FIT tax meaning a the tax cut for the rich that was financed by my wage deduction for Social Security) - has become an illusion because all I got for my investment in US government bonds was an illusion.

Well, all government bonds are liabilities - and our 1/2 trillion annual deficit is financed by borrowing cash from other governments and giving them bonds. Do you think those foreign governments would still buy our bonds if we were to say this portion of our bond liability will never be paid off because we do not want to raise the cash to give to the holder - namely to give cash to Social Security? And if they don't buy our bonds, interest rates rise and the economy dies. Would the Bush folks want that to happen?

The gov bond investment limitation for the Trust Fund was insisted on by the GOP in 1940 - because otherwise Soc Security would buy stocks and real estate and it would be "socialism by the back door".

The Reagan administration used the trust fund has too few government bonds idea to justify almost doubling the SS tax in 1983, with the idea that the trust fund would be there to offset the boomers retirement (actually to finance the Reagan tax cut for the rich passed Aug 1981 that was destroying the economy - deepest 14 month recession in our history -by 1983).

It seems fair to me to say "Well, in other words, Reagan and Greenspan lied to us in 1983 when they proposed doubling the SS tax to build up trust fund reserves" - indeed I'd press for the right of the Trust fund to cash in the gov bonds and to buy non-gov bonds, stock funds, and real estate.
<snip>

[qwghlmian]

50. I specifically asked for an example of a federal

"rainy day" fund that you claim exists - and you give me state funds. How is that an answer to my question? You claim that such funds exist, then you refuse to give even one example? Yeah, right.

The person you quote is wrong. Foreign bond holders do not care how US government balances its books internally - they only care if US government pays off its external bond holders. That is really elementary stuff.

The suggestion that Trust fund "cashes in government bonds" is ridiculous. You (and your friend you quote) keep forgetting that the SS Trust fund is not an independent entity. It is part of US government. It is not going to independently do something that the government decides is detrimental to it.

[BlueInRed]

52. convenient

how you ignore all the facts except the one you want. How about you prove your argument. I've read enough on other threads now to know what your game is.

[qwghlmian]

55. Pose a question and I would try to answer it.

You made a very specific claim. I asked you to give examples. You refuse to do so and say that this is "my game". Ok - be that way.

[BlueInRed]

63. The person is an actuary you've argued with on other threads

and between you, the actuary, Krugman and numerous economists, I trust their explanation over yours. There is no absolutely reason I should disregard so many knowledgeable people for your say-so. I do not consider you a remotely reliable source, so I would ask you no questions nor give your "explanation" priority over those like Krugman and the actuary. They would easily be qualified as expert witnesses in court on the subject; as for you, I've seen no evidence of the same. And based on what I read elsewhere, I give your posts little credence other than having a clear-cut agenda.

And as to the specifics of what exactly the lockbox idea was, it was created by Clinton (not Gore). Here is the explanation from Clinton:
http://www.clintonpresidentialcenter.org/legacy/062899-fact-sheet-on-new-budget-framework.htm.

And you can pretty much take the arguments contained in the following article and assume they are my position. http://www.tnr.com/091701/chait091701.html.

[qwghlmian]

65. The arguments in both links

agree with my position. See my post #43. They disagree with your claims that federal governments can have "rainy day funds" stashed away.

[Yupster]

71. If the federal government put the surpluses

in bank cd's, that would be close to actually having the surplus exist.

The problem is that even there, if the bank fails, the money is guaranteed by the fedearl government, so it would again be paying itself.

That would be a lot better than what we currently have though. At least the money wouldn't be spent as quickly as it came in as it is today.

Barring a calamity, the money would exist.

The current system, the surplus money is just gone, never to be seen again.

[qwghlmian]

73. Putting money into bank CDs

is riskier than Treasury CDs - banks have been known to fail, but not one Treasury Bond issue has been defaulted on yet. There is always the first time though. Another issue would be whether the banks would be able to handle such a huge (what is it, around 2 trillion now) amount of money. There are only so many mortgages you can issue :). But yes, basically putting it *outside* of the government would be better than allowing the government to owe money to itself.

BTW - the government guarantee on CDs is up to $100K. I think that will not cover the SS surplus.

[Yupster]

75. I agree

that the amounts would overwhelm banks and knock interest rates down to nothing.

I also thought of the 100 k limit, but what difference does a government guarantee make when the guarantee is to itself anyway, so I ignored that problem.

[SharonAnn]

41. Pay off the National Debt! Then, if we need to, we can borrow later.

[qwghlmian]

43. Ding ding ding -

I think we have a winner. Problem is, try selling that idea to the public. It IS actually a good idea, but it is not a "lockbox", the money is not "left alone for rainy day" etc etc.

[Yupster]

45. The trust fund isn't real

Reagan and the congress perpetrated an incredible fraud.

There was never any intention to pay those IOU's back. The bonds are worthless.

Eventually the congress will pass a "unified budget" and just with that simple accounting mechanism, the trillions of dollars of IOU's will cease to exist just like congress always planned.

As for the lock box, it was of course just nonsense.

If you have a worthless IOU in a box, what difference does it make whether you lock the box or not?

[qwghlmian]

47. It is so refreshing to meet someone

who understands this stuff. One point of difference - the IOU is not strictly "worthless". Its worth lies in the willingness of the government to raise money from future taxholders in order to pay the IOU off. If you think the government won't do that (and I do think that it will not be willing to cover the IOU) then it is "worthless". If you're hoping that the government will be willing to raise taxes and do whatever it takes to cover the IOU, then that IOU is "as good as gold".

[Yupster]

66. The IOU's are worthless because they have no value

The government will honor its commitments to pay out its formula to social security recipients if it decides it wants to and can afford to.

It can do this if there are IOU's in a trust fund.

It can do this just as easily if there are not IOU's in a trust fund.

The IOU's are truly worthless and immaterial to the question of whether recipients will get their promised benefits in the future or not.

[robbedvoter]

81. But the government debt to Social Security is real. getting out of paying

it back is fraud - and Gore's point was - it should matter.

[Tigress DEM]

72. Here's a "concept" but it might not fully address your issue ---

You have a point that the money can't just sit there.

The "concept" is "paying your bills" even if you are the government.

When pundits who claim their party is fiscally responsible ignore such a large part of fiscal responsibility by making SS their private piggy bank that is when the value goes into the toilet.

If you look at the surplas created in the Clinton years it couldn't have hurt to put a portion of it toward making SS solvent.

I don't care if it's big money or not, Gore was talking about beginning to address the problem when we had a surplas and talked about balancing the budget every year so there would be more capability to pay the bills.

Average Joe American has to pay his bills, the government should too. Gore's plan would have been a hell of a lot better than giving the richest people huge tax breaks and starting a war in Iraq.

[zulchzulu]

26. SNL didn't help making the term a big "joke"

Most people had no idea what Gore was referring to due to the fact they thought he sucked or was too bland (or not covered adequately by the media)...

Did Schrum help him on that first speech?

[Eric J in MN]

27. It seemed fun to laugh at Al Gore for using the prhase

"lockbox' over-and-over in 2000.

Now I wish I could hear those words from President Al Gore.

[Cha]

33. Like I always thought of it..

A Solid Idea! And I hated it when the gopers and the press unleashed their mocking on Al Gore because of it.

[Skittles]

36. REPUBLICANS ARE THIEVING BASTARDS

and they have the GALL to call themselves "FISCALLY RESPONSIBLE". :puke:

[Tigress DEM]

70. Ya' got that right.

I was thinking mostly it was because of all Bush had borrowed against SS, but I forgot about the Reagan years. Passing the buck.

Well, gotta go now. Getting that partied til I puked feeling and I'm not even indulging in anything but the truth.

Even I can only stand so much truth in one day. Adieu!

[dolstein]

44. Just as pointless as it was in 2000

It's was a gimmick then, and it's still a gimmick. Ok, so the government can't "borrow" from the trust fund. That just mean the government will borrow additional money from private bondholders. As long as social security surpluses are invested in Treasury securities, it doesn't make a difference.

The only way to completely isolate social security from the affects of government deficit spending is to have surplus social security tax revenues invested in securities (most likely debt securities) of private companies. Personally, I think this is a good idea, but I don't think Gore ever proposed it.

[Yupster]

46. Agree dolstein

The only way for the surplus to mean anything is if the money was physically taken away from the government and invested somewhere else.

[robbedvoter]

80. Not as pointless if you consider that the government DID BORROW

plenty from Socual Security - and now W wants to piratize it to get out from ever repaying the debt. The locked box image kinda brings this forth - if you care about this kind of things.

[Yupster]

84. Whether it's privatized or not,

that surplus money is gone. It's been spent. It's not pining for the fields or resting. It's dead, deceased. It is a dead parrot.

It's never going to be paid back.

It will be zeroed out by government accountants, and it will all be perfectly legal.

[iamthebandfanman]

51. lol right on!

i say that to many people now-a-days!

[meow2u3]

57. Excellent idea, bad wording

We had the metaphorical lock box secured, but Bush and his partners in crime nevertheless found a way to crack the safe.

[BlueInRed]

59. Kentuck, you might find this article interesting

It goes into the history of the lockbox and shoots down most of the nonsense about it.
http://www.tnr.com/091701/chait091701.html

And here's Clinton explanation of the lockbox, in great detail:
http://www.clintonpresidentialcenter.org/legacy/062899-fact-sheet-on-new-budget-framework.htm

[moggie12]

87. Thanks for posting those links

They cleared up a lot of confusion on my part. (I like "linkers")

[BlueInRed]

88. why sure!

I know the fact sheet from the presidential center made a lot of stuff clear about the different elements of the lockbox, instead of the cherry picking we so often see in the description of it.

And the TNR article gave the pros, cons, and misrepresentations made by people in the debate. I really liked that as well.

[Hippo_Tron]

61. The 2000 debate skit is still hillarious

And if anything, I think that it brings light to the issue for those who don't really follow politics. It was a great idea, Gore just sold it in a poor way.

[jarab]

78. kick !!

...O...

[robbedvoter]

79. They actually got into debt in 8 weeks. Surplus vanished waay

before 911, after the first tax cut. By March 2001 we were in recession. I have yet so see any proof we are out of it.