Larry Interviews Max Skidmore on Car Concerns
I just finished interviewing Max Skidmore on Harry Douglas' Car Concerns today.
Max Skidmore is the author of Securing America’s Future. Max is a Curators’ Professor of Political Science and Thomas Jefferson Fellow at theKansas City
You can listen to the interview by going to www.carconcerns.com. All the episodes are archived there. Today is episode number 451 and the interview takes place in the second hour.
Max Skidmore is the author of Securing America’s Future. Max is a Curators’ Professor of Political Science and Thomas Jefferson Fellow at the
You can listen to the interview by going to www.carconcerns.com. All the episodes are archived there. Today is episode number 451 and the interview takes place in the second hour.
Posted by Larry Bradley at 2/26/2009 12:07 PM 
Categories: Social Security, Bailout, Politics
Tags: Social Security Politics Bailout
Categories: Social Security, Bailout, Politics
Tags: Social Security Politics Bailout
Larry, I listened to about 15 min of the 'radio interview.' Sounded like a knowledgeable guest, but it was taking too long to get to the meat of the advertised topic....
Some points about social security:
1. It is a program in two parts: a tax and a welfare benefit program. There is just about no relation between the two, except the benefit program has served to make people willing to pay the tax.
2. Historically the tax has been way higher than the cost of the benefit program. The government has always dumped the extra money into the general fund like any other tax revenue, and spent it on anything and everything. Basically, Social Security has been serving as a disguised income tax to fund all sorts of government spending.
3. The 'Social Security Trust Fund' has always consisted 100% of non-marketable government bonds, which the Treasury creates in exchange for the FICA cash as it spends it. This works pretty much like a family spending every dollar they take in, but thinking they have lots of savings because they write themselves an IOU every payday.
(This means, by the way, that ANY politician who accuses the 'the other party' of 'raiding' the social security trust fund is blowing smoke (or to be more blunt, lying). The trust fund, by law, has been 100% 'raided' from the very beginning.)
4. At some point(one accepted projection says 2017), the benefits paid under social security will exceed FICA tax revenue. Then, instead of being a government cash cow, the program will be a net expense. As boomers retire, it has the potential to become a huge expense. This will require huge revenues. If the revenue isn't there, the benefits won't be either. Perhaps benefits will be cut, or perhaps there will be large inflation without benefit adjustment to make the benefits affordable to the government.
5. The only way retires in the future can be supported in the same way as retirees up to now is for the economy to grow at a fast rate, so government revenues can grow too. This, you may have noticed, is not happening at present.
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Mike,
Interesting points.
As you say, lack of fiscal discipline by both sides is making for some interesting times for all of us.
Larry
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