How can people not see this?

mt15

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It’s already bad. I’ve started noticing how many minimum wage workers are truly elderly. There are two women I work with who are putting off retirement until seventy because of financial concerns. One’s husband got cancer, eventually died and his bills wiped out their retirement so she knows she will have only SS to survive. She just retired this last year but is still coming in to help out about 10-15 hours a week. The other I’m not sure how bad her finances are, but she indicated to me she can’t retire until at least seventy.
 

FullMonte

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If this was done in the private sector, it would be considered cooking the books. Having the SSA buy government bonds was just a way of making it look like they didn't just take money from the SSA to spend it elsewhere.
We were talking about this the other day at work, and I don't think your analogy holds water.

If this happened in the private sector, it might be considered cooking the books. Let's say that Sears had loaned Kmart money to stay afloat, and Kmart was paying interest only on the loan. If you looked at the top level of the company's balance sheet, you would see that they loaned money to themselves, and are only paying themselves back interest. That would all fall under one financial umbrella at the top.

However, with the Social Security/Congress thing, it wouldn't be the same. There is no financial umbrella under which you can say that anyone loaned themselves money. The Social Security Administration is funded by a certain tax stream. That money goes straight into the Social Security Administration, and is paid out to recipients. The US General fund is funded by completely separate income streams. The only way the funds were mingled is in the purchase of the bonds and in the repaying of the bonds.

A better example from the private sector would be to say...imagine Kraft Foods decided to purchase a commercial for the Superbowl. Kraft foods is then paying the NFL a substantial amount of money. One of the people who is receiving that money is Robert Kraft, the owner of an NFL franchise. Would anyone say that from a financial standpoint, Robert Kraft was cooking the books by paying himself?
 

StudioSaint

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We were talking about this the other day at work, and I don't think your analogy holds water.

If this happened in the private sector, it might be considered cooking the books. Let's say that Sears had loaned Kmart money to stay afloat, and Kmart was paying interest only on the loan. If you looked at the top level of the company's balance sheet, you would see that they loaned money to themselves, and are only paying themselves back interest. That would all fall under one financial umbrella at the top.

However, with the Social Security/Congress thing, it wouldn't be the same. There is no financial umbrella under which you can say that anyone loaned themselves money. The Social Security Administration is funded by a certain tax stream. That money goes straight into the Social Security Administration, and is paid out to recipients. The US General fund is funded by completely separate income streams. The only way the funds were mingled is in the purchase of the bonds and in the repaying of the bonds.

A better example from the private sector would be to say...imagine Kraft Foods decided to purchase a commercial for the Superbowl. Kraft foods is then paying the NFL a substantial amount of money. One of the people who is receiving that money is Robert Kraft, the owner of an NFL franchise. Would anyone say that from a financial standpoint, Robert Kraft was cooking the books by paying himself?
If you want an almost perfect private sector analogy, go back the turn of the century and Enron. They played a shell game moving money around through the various companies they owned to artificially inflate their revenue and assets. It all looked great on paper if you weren't aware of the fact that all of the money moving around was coming from one single entity.

Your analogy is flawed. First, where the money came from is not the issue, so separate revenue streams is irrelevant. This is about where the money was received from, it's about what was done with the money once it was taken in.

Let's look at what was done with the money and who was involved. Money was shifted from one government fund to another government fund. Who did it? Congress, because they control both the SSA and the general funds budget. One single entity has control over the sources of both funds. The SSA and general funds are both owned and regulated by Congress. You can compare it to shifting money from one division or subsidiary to another division or subsidiary. At the end of the day, it all belongs to the parent company and the parent company has to account for the entire company in it's financial filings.

In your example, Kraft is not the single owner or controller of the NFL. The NFL and Kraft do not file their financials together, because they are two completely separate and independent entities. Kraft is partially doing business with himself through two different and independent business entities. The SSA is not independent of Congress. It is controlled and regulated by Congress. Congress decides how much money it gets. Congress decides how much money it spends. Congress decided to take money from the SSA to spend on non-SSA things.

Rather than being upfront about that, they tried to make it look like the SSA made an investment instead of Congress borrowing money. Any interest paid on the bonds that the SSA "bought" come from the government, not from a separate and independent third party entity. The interest that will be paid back to the SSA will come at the expense of the general funds, which means other funding will have to be cut in order to pay the SSA the interest.

It's a zero net gain for the government, therefore it is not really an investment. It also remains to be seen if the SSA will actually ever get all of it's money back.
 

FullMonte

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If you want an almost perfect private sector analogy, go back the turn of the century and Enron. They played a shell game moving money around through the various companies they owned to artificially inflate their revenue and assets. It all looked great on paper if you weren't aware of the fact that all of the money moving around was coming from one single entity.
The bolded part is key. The money that was being moved was all "theirs." At the end of the day, that money belongs to the owners of the company. It eventually ends up in their pockets. They were moving their own money from one place to another. The money from social security is never "the government's." The general budget never ends up with that money.

In your example, Kraft is not the single owner or controller of the NFL. The NFL and Kraft do not file their financials together, because they are two completely separate and independent entities. Kraft is partially doing business with himself through two different and independent business entities.
But, that's exactly why the separate revenue streams make the analogies the same. The budget for Social Security and the General budget are two completely separate independent entities.

The SSA is not independent of Congress. It is controlled and regulated by Congress. Congress decides how much money it gets. Congress decides how much money it spends.
Do they? Does congress annually budget for how much is paid out through SS or how much is taken in? Or is that controlled through other laws? I know that, for example, the COLA for Social Security is not something that Congress controls, specifically. It is controlled by various indicators (NOTE: I do realize that Congress can vote to change that, but it's not something that Congress controls in the same manner that they control the annual general budget)

Congress decided to take money from the SSA to spend on non-SSA things.
Did they? Or did the Social Security Administration decide to invest their surplus? Can you point to anything that suggests any member of Congress took any action to get money from Social Security?
 

WhoDatPhan78

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The bolded part is key. The money that was being moved was all "theirs." At the end of the day, that money belongs to the owners of the company. It eventually ends up in their pockets. They were moving their own money from one place to another. The money from social security is never "the government's." The general budget never ends up with that money.
Technically the people doing the shifting of the money weren't the "owners". The stockholders were the owners, these guys were playing around with stockholders money. They may have been stockholders themselves, but the majority of stockholders had no idea what was going on.

it's actually a perfect analogy.
 

FullMonte

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Technically the people doing the shifting of the money weren't the "owners". The stockholders were the owners, these guys were playing around with stockholders money. They may have been stockholders themselves, but the majority of stockholders had no idea what was going on.

it's actually a perfect analogy.
But again...it was the stockholder's money that was being shifted around to something else that the stockholders owned. While they may not have had knowledge of it, it was still their money being moved around inside of their own holdings. The stockholders had a debit in the money that was moved out of one account and a credit of that same money that was put in another account.

The Social Security Trust Fund and the US General Budget are two completely separate accounts that have no one "owner" that ends up with the benefits of those proceeds. No one person/entity is both losing the money that was taken out of one account and gaining the money that was put into the other account.
 

WhoDatPhan78

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But again...it was the stockholder's money that was being shifted around to something else that the stockholders owned. While they may not have had knowledge of it, it was still their money being moved around inside of their own holdings. The stockholders had a debit in the money that was moved out of one account and a credit of that same money that was put in another account.

The Social Security Trust Fund and the US General Budget are two completely separate accounts that have no one "owner" that ends up with the benefits of those proceeds. No one person/entity is both losing the money that was taken out of one account and gaining the money that was put into the other account.
taxpayers are pretty much the same as shareholders.

The money the government has all came from taxpayers.

it's almost an identical situation.
 

FullMonte

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taxpayers are pretty much the same as shareholders.

The money the government has all came from taxpayers.

it's almost an identical situation.
I'd say that in the case of accounting...the taxpayers are more like the customers who purchased products from Enron. They are the one's supplying the money.
 

StudioSaint

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The bolded part is key.
The key part of what I said was "If you want an almost perfect private sector analogy." I acknowledge right off the bat that it wasn't perfect. There is no perfect private sector to government sector comparison, because they are different. You're getting hung up on the owned. Replaced owned with controlled and you'll see how it's a very apt analogy, even though it has flaws.
But, that's exactly why the separate revenue streams make the analogies the same. The budget for Social Security and the General budget are two completely separate independent entities.
It doesn't matter where the money comes from, what matters is who controls the money and what they do with it. All of the revenue streams actually come from a single source, taxpayers. All tax revenues are controlled by one group, Congress. All tax revenues are essentially held in a public trust by Congress on behalf of the American people. This is why there is no perfect analogy in the private sector. Still the closest analogy as to what Congress did with SSA funds is the Enron example. I guess you have to have a background in general ledger accounting to understand this.
Do they? Does congress annually budget for how much is paid out through SS or how much is taken in? Or is that controlled through other laws? I know that, for example, the COLA for Social Security is not something that Congress controls, specifically. It is controlled by various indicators (NOTE: I do realize that Congress can vote to change that, but it's not something that Congress controls in the same manner that they control the annual general budget)
Really? Do you not know who wrote and writes all of our federal laws?
Did they? Or did the Social Security Administration decide to invest their surplus? Can you point to anything that suggests any member of Congress took any action to get money from Social Security?
I think if you knew that Congress didn't, you would say so and point to something that says so. Answer this simple question, can Congress change or eliminate the taxes that fund the SSA? It's a simple question that illustrates how things on paper can obfuscate the realities of a situation if you don't see the complete picture.

We deviated way off track here. The crux of this conversation is whether or not Congress used SSA funds to pay for other things. They did. They shifted the money from SSA into other things by using government bonds. When a government agency buys government bonds, there is no way for the government as a whole to have any capital gain. To pay the interest on the bonds the SSA holds, Congress will have to take that money from somewhere else within the government. There is zero net gain from a government agency buying government bonds.

This conversation started because you said this to another poster:
I'm going to guess that you just decided to ignore my post from earlier...so I'll spell it out again. you...are...wrong.
If you think I'm wrong about anything, prove me wrong.
 
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StudioSaint

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I'd say that in the case of accounting...the taxpayers are more like the customers who purchased products from Enron. They are the one's supplying the money.
This is actually exactly why there isn't a perfect analogy between the public and private sector. Taxpayers are not in any way customers. They don't have a choice about how much money they contribute and they don't get to decide how it's spent.

Taxpayers contribute to a public trust when they pay taxes. They are not buying products and services from the government.
 

FullMonte

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This conversation started because you said this to another poster:
If you think I'm wrong about anything, prove me wrong.
I said to the other poster that he was wrong because he was. He made two statements that were factually incorrect. He said that there were no laws requiring the money to be repaid (which is false, the current laws and federal budget require the government to repay bonds) and he said that there was little chance that the money would be repaid (currently, the laws on the books require that money to be repaid, and the interest has been paid as agreed)."

There's no way I can prove you wrong because neither you nor I are wrong in our debate. We have differing opinions about what is a better analogy, and I believe we both have valid reasons for believing our analogy is better. At the end of the day, we'll just have to agree to disagree about this, and that's cool.
 
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It’s already bad. I’ve started noticing how many minimum wage workers are truly elderly. There are two women I work with who are putting off retirement until seventy because of financial concerns. One’s husband got cancer, eventually died and his bills wiped out their retirement so she knows she will have only SS to survive. She just retired this last year but is still coming in to help out about 10-15 hours a week. The other I’m not sure how bad her finances are, but she indicated to me she can’t retire until at least seventy.
I just mentioned to a coworker that I’m going to get a lifeguard certification and joked about it being all 16-18 year old kids and me. He told me his spouse (65) went and the classes are filled with 60+ year olds looking for extra seasonal income.

Most people don’t realize how quickly they can blow through a few hundred grand when all they have is SSI.
 

mt15

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Yep. Our local Walmart is full of senior employees, as is Lowe’s, McDonalds, our gas stations, etc. I’ve been noticing it a few years now.
 

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