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May 13, 2009

Oh, Right, the Social Security Problem is Obama's Fault, Too

Duh on me.

Nom de Blog:

When the budget is out of balance by the amount it currently is, the Social Security "trust fund" gets eroded more quickly. IOW, the government writes more IOUs to the baby boomers.

And you know what, that's happening right now and it's Obama's fault. Well, he had a lot of help from Harry Pelosi and Nancy Reid, of course.

Also markets are prospective. So there's a lot of pull back of investment right now because people look at the discounted cash flows of their investment under the new, higher tax regime and understand that what would have been prudent investment is no longer sound.

Right, right, right... Social Security money is (and has been for a long time*) diverted to general revenues, so the more we spend in general revenues, the more the "trust" (which is not a trust, but a stack of government IOUs in the form of bonds) is depleted.

And more debt equals higher payments equals greater costs in carrying the debt.

So, right, yes, this is largely Obama's fault. Not the long-standing trajectory of Social Security to insolvency -- but the sudden change of the insolvency date from 2041 to 2037.

Well, you can't say I tried to pin this on Obama. I specifically said I couldn't conceive of how this was even partly his fault.

But it is.

* Edited. A commenter says the diversion began happening under LBJ. I don't know if that's true, but it would make sense; the system would start producing excess revenues when the number of payors (the coming of the Boomers into the economy) began exceeding the number of payees (the previous, smaller generations).

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posted by Ace at 04:56 PM

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