Reply #18: Moynihan & SS. A delicate topic on DU I think [View All]

[econoclast]

Moynihan is a Democratic Legend
So some of his SS ideal may be grating on DU

In 1990 the SS Trust fund was still "on budget". (I was incorrect in earlier posts when I said the "on budget" thing started with LBJ and ended in the late 1980s. It didn't get put back "off budget" until the early 1990s ... During Bush 1 )

So Moynihan's ire in 1990 was directed at the "on budget" accounting. They called it the unified budget. With the SS surplus "on budget" SS surpluses DID reduce the stated budget deficit.

Moynihan desperately wanted that money Saved fir the beneficiaries. But there the argument gets kind'a circular.

We have to invest the surplus for the future
Ok. Invest in what? Something very safe. Ok. What is the safest thing there is? US Treasuries! What happens when you buy Treasuries? The federal government gets General Revenue! You are right back where you started.

Which us why Moynihan advocated some ideas that might not be DU appropriate.
1. Supported ditching CPI for COLA and using chained CPI. (sound familiar?)
2. Supported cutting SS taxes 2% across the board and letting people invest those proceeds in tax defered private accounts (yikes-privatization?!?!?)
This would cut into the SS surplus but that was OK by Moynihan because it only ended up in the General Revenue bucket anyhow. ( note not because it was "raided" but because that is where the money from selling Treasuries goes)

Like I said. Delicate issues here at DU