A mini brain teaser for Sean Hannity

Sean Hannity told his viewing audience this week that he thinks the Social Security trust fund has been "mismanaged."  Presumably, he's siding with the crowd who laments the SS trust fund "raid."  [Not sure what Alan Colmes thinks about it; I wish I did.]

Hannity has plenty of company: many Democrats and Republicans alike share the misguided view that the trust fund is "empty" because of the so-called raid.  In an attempt to stimulate some critical thinking on Sean's part, I sent him an email with a mini brain teaser; but it was apparently buried amid thousands of messages he doesn't have time to bother with.  So I decided to post it, in case some of the readers here have an inside track with Mr. Hannity.  Here's the mini brain teaser:

If the SS trust fund had never been "raided," what would it contain today:

(a) pallets and pallets of cash, which does not earn interest?  or . . .

(b) interest-earning US Treasury securities?

[Note that both (a) and (b) are backed by the full faith and credit of the US government.  Also note that (b) is what the trust fund contains today.]

And if you know anyone (...such as Ron Paul, Al Gore, Dennis Kucinich, or one of your neighbors) who thinks a logical case can be made for choice (a), please ask them to leave a comment here explaining their thought process.

The bottom line is this: it simply does not matter what the trust fund contains.  It doesn't matter if it's empty, it doesn't matter if it contains pieces of green paper (cash) with George Washington's picture, it doesn't matter if it contains orange pieces of paper (bonds) with Ben Franklin's picture.  It doesn't even matter if the Treasury incinerates all those pieces of paper just after the close of each business day, then reprints them just before opening the next business day.  It simply does not matter.

What DOES matter is the future productive capacity of the US economy—which, after all, is the basis for worldwide faith in the "full faith and credit of the US government."  Yesterday, today, and tomorrow. 

We should be asking our politicians what they'll do to improve the future productive capacity of our economy.  We should NOT be interested in what the unimportant lockbox contains.  Sean Hannity is among the people in a position to start asking the right question.  But step one is for the people in a position like Hannity's to understand the right question themselves.  Not many of them do, just yet.  [I'm still wondering if Alan Colmes does.]

I wrote an article about the SS Lockbox Hoax a year or two ago; the logic still applies—although it's still obvious that politicians and cable news talking heads don't get it yet.

Comments

[Ron Hardin]

Alternatively argued, the government must instantly return to the economy every penny it takes in, either by spending it or by buying back debt with it, lest the money supply fall.

In fact this is automatic in meeting the Fed's interest rate targets.

Money is not wealth. It is a ticket in line to say what the economy does next, presumably something for you.

The Fed prints and soaks up tickets to keep the number of tickets matched to what the American economy is capable of doing at once.

That operation compensates away whatever the SS trust fund might do.

Privatization of Social Security has the same problem, by the way. If everybody saves, the demographic bulge has too many saving today and too many selling at retirement, which reduces the return on investment until people have to retire later to balance the number of workers and the number of retirees.

Raising the retirement age is what will fix social security, and would happen regardless, so long as people are living longer.

Growing the economy is nice but it's not the fix for that demographic problem ; if living longer is a problem at all.

Think of it as being able to retire the last ten years of your life, not as being able to retire after age 65, as life spans increase.

[Bob]

Sean has a LOT of company. Name me ANY talk show host that that can speak about things economic. You won't find one. At least they're not on the radio in my area.

As far as TV goes, Kudlow is the only guy I can think of that gets it and that's because he's been there, done that.

O'Reilly is my guy when it comes to talk radio but every time he ventures into anything financial or economic, I turn him off.

You really need to find a way to get on with one of these guys. As if you have all this free time.

[Daltonsbriefs]

If I recall you've been able to guest interview at CNN, how about Fox? At least Fox has a conservative slant, open minded perhaps, and may be open to listening and learning from you.

[mark]

Ron H,
I was 100% with you except the comment about raising the retirement age. My position is best explained with the following hypothetical example:
If 25% of the population is over 65 and retired, the rest of the population is producing all the goods and services for everyone. Through the process of innovation, it now requires 10% fewer working people to produce the same amount of goods and services (I am sure you know this to be called productivity gains). If a demographics change results in a 10% increase in the number of people over the age of 65, this society would enjoy the same living standard while everyone over 65 could still retire. And if producivity gains were even greater, then all would enjoy a greater living standard as long as the working population decides to share those gains with those retired. This is why Social Security is indexed to wage gains and not just inflation. Because we as a society have decided to share worker productivity gains with retired people.

[Chris]

Mark --

I think your hypothetical misses a few things. If you get more retirees, then you either need more workers or need to pay them more to offset the increase in Social Security costs -- the level of production or productivity doesn't directly matter. Now, more productive workers are paid more, but (1) it's not a 1-1 improvement -- a worker twice as productive is not paid twice as much; and (2) there's a cap on social security tax, so once a worker hits around $100K, any improvement in his productivity doesn't generate new SS taxes.

The SS trust fund mismanagement is that it exists at all. The Congress has gotten used to spending the extra money. Does anybody rationally believe that when all the boomers start hitting retirement, Congress will cut back that spending? No; like a crack addict, it will do anything it can to support its spending habit, which means either large tax increases or huge additional debt.

Sometime in the next 20 years, the costs will become too large to handle, and Congress will be forced to cut Social Security back. I'm 40 in a few weeks--the Social Security that's there when I retire will be a thin shadow of its current self. As a result, I have to pay for the boomers retirement and my own.

SS is a crappy deal, and I would just as soon abolish it now, except for those in it who are too feeble to work. My money should not be going to people who are capable of earning their own money, regardless of their age.

(Don't get me started on Medicare.)

[Aaron]

If the US government had taken the surplus funds and invested them in a global index fund "lockbox" to be opened in so many years to fund SS, would that even matter?

[Counter Revolutionary]

Chris, I think you said this before and I tried to correct you. ---"Sometime in the next 20 years, the costs will become too large to handle, and Congress will be forced to cut Social Security back."---

If the economy does not go to hell, the SS trust fund may NEVER EVEN BE NEEDED! We are approaching 1/4 the way through the Baby Boomer (BB) generation 40 year impact on the SS.

Yes, even though they are just signing up for their Bennies, the current collections will cover their needs until at least 2017. Moreover, this estimate has been extended each year. Another ten years of extension and we should have reached the peak and be starting on the down slope of demand without ever touching the SS Trust Fund.

At that point, IF IT COMES, the trust fund will stop growing and start falling.

If needed how will it be used to pay SS benefits? The current non-transferable intra-governmental bonds will be converted to publicly held bonds. No increase in debt. Those bonds are already on the books as debt. Some retirement accounts, maybe even yours, will be invested in these Fed Bonds, and you will have received your monthly check. Scared yet?

Growth will take care of any potential increase in interest needed to be paid on those publicly held bonds. It's been going down, and should continue.

What bothers me most is the years of fear mongering foisted on our society by both political parties, and the unknowing co-conspiring MSM.

[Chris]

Counter Revolutionary --

The "trust fund" is an accounting fiction -- it's basically just a record keeping device. There is a huge effective difference between inter-governmental debt and public debt, regardless of what the "books" look like. The Gov't could "issue" $1,000 T in new inter-governmental debt and nothing would happen, just like I can tell my wife "I now owe you a billion dollars," without effect.

Even if the "trust fund" isn't touched, the difference between SS intakes and outtakes will decrease, even if it never gets to $0. That difference is money that the Congress has spent and will continue to spend. So, it will either need to issue more public debt or raise taxes.

The burden of that debt and those taxes will fall on me and my children, not on the people collecting Social Security.

(I hope you're correct about growth, but it would have to be huge to completely offset the boomer hit.)

[MarkG FmPA]

CoRev,
For over a year now, I've been learning as much as I can get my hands on about the anticipated fiscal challenge around our entitlement programs.

I haven't come across any analysis that indicates the year the SS program goes cash flow negative (and starts redeeming government notes) is steadily extending or that we should expect it to push significantly (more than a year or two) past 2017.

In fact a recent speech at the National Economists Club by either James C. Capretta, Fellow, Ethics and Public Policy Center or Andrew Biggs, Deputy Commissioner, Social Security Administration (I can’t remember which one specifically, I believe it is the former) indicates his modeling of all of the factors that affect when the program goes cash flow negative indicates that this target date is very stable. In other words, the program as it currently is will go cash flow negative in 2017 plus or minus one or two years—we can bank on that.

These speeches (#31 and #33) are on podcast at http://tinyurl.com/34qrx7.

I think we have to consider the total anticipated funding requirement for our current entitlement programs because at the end of the day they are all funded by tax revenues and, arguably, government borrowing—the pie is only so big (and yes, we all agree we need to grow the pie!) The question is whether or not the government can raise the necessary revenue during the approaching large demographic retirement phase to make the annual SS, Medicare, and Medicaid payments that are anticipated under current law.

Between now and 2017 (and beyond), it is going to be harder and harder for the government to spend in total what “we” have been spending as the SS surplus goes away. In the absence of tremendous economic growth and corresponding tax revenues between now and then (4% to 8% GDP growth, yea right!?), “we” are looking at having to make tough choices between higher taxes, spending cuts, or even greater borrowing as a % of GDP.

If you have some research that indicates that this isn’t the case – I would very much like to see it.

[Steve]

FYI, the publicly-held debt is the relevant number; intragovernmental debt is just an accounting mechanism. The reason I show both (total and publicly-held) in the debt clock is because, in theory, the intragovernmental portion will start to transform into publicly-held fairly soon (after the social insurance system shifts from surplus to deficit). At some point (25 years?), the two numbers will, in theory, be equal -- after which, in theory, the SS trust fund will begin "borrowing" from the general fund.

BTW, all of this complexity is due to the original wordsmithing, back in the 1930s, which sold social security as a "contribute now, benefit later" system, to avoid having to call it a "relief" system (workers pay taxes now to support today's retirees). It probably wouldn't have passed Congress had it been dubbed "relief."

Maybe it's time to call it what it is: a relief system. Some politicians like Edwards want to monkey with the tax side (eg, remove the FICA cap, but don't change benefit payouts), which completely undermines FDRs original rhetoric that it's not "relief." The rich pay more tax now, but their eventual benefits don't change. If that idea succeeds, we'd have a good basis for unifying the entire budget, and eliminating the misleading "trust fund" concept.

[Counter Revolutionary]

MarkG, Here's a link for a guy I consider a SS expert. He is not associated with SSA, but pretty much sow up at all the left leaning Econ-blogs that discuss SS.
http://tinyurl.com/3aun3u

His later entries discuss the SS estimating models and their assumptions. It is short hand but if you do understand what/where he is coming from it is at least more clear.

Another source is www.angrybear.blogspot.com
Look through the archives for articles on SS and Bruce Webb's and Dale Coberly's comments.

Coberly estimates that the overall impact of correcting a SS shortfall is $2 per week per worker. Not a whole lot.

[Counter Revolutionary]

Steve, I don't know of any trust fund that does not operate the same as the SS Trust Fund. I think the legislation was signed in Aug 1935. You are more than correct on the politics of getting it signed.

[Berens]

....well, OK -- "it-simply-does-not-matter-what-the-trust-fund-contains" ... 'if' you're not really concerned about ever getting any assets back from the Social Security system.

If you casually lend your life-savings to someone who you hope will pay you back some day (with interest) -- then your future heavily depends upon that person's willingness & ability to fully pay you back many years in the unknown future. But with only a simple non-transferable IOU (..and no collateral) -- it could be a very large & risky bet.

But every year, Potomac politicians spend all the many Billions of "surplus" Dollars given to them by political appointees in the Social Security Administration. In return, the Social Security "Trust Fund" gets simple pieces of inked-paper -- special-issue, 'non-negotiable' U.S. Treasury securities, that merely represent an administrative promise by future federal politicians to repay these Social Security loans. Unlike most commerical grade securities & bonds -- these "special" trust-fund IOU's can not be sold or cashed in anywhere else but the U.S. Treasury, and only if future Congressional politicians choose to allocate money for repayment.

It is certainly possible the U.S. Federal government could someday default on some or all of its outstanding securities, like any other borrower (..the huge Soviet Union government did indeed go bankrupt). Default implications could be severe or moderate for the general economy -- but an 'empty' Social Security trust fund would be catastrophic for average retirees who had diligently paid into it all their working lives. What might future Federal politicians do if faced with unprecedented debts, world war, world economic depressions, health epidemics, natural disasters... ??

So the Social Security Trust Fund represents merely a casual political promise to pay future benefits. Funds will only be available if the government raises the resources necessary -- thru future taxes, borrowing, reduced federal spending elsewhere... or reduced benefits to Social Security recipients. And note the U.S. Supreme Court ruled in 1960 that recipients have no legal claim on promised benefits -- the entire Social Security system exists and operates on the whim of sitting politicians.

Do you have complete faith & trust in the current U.S. Congress (?) How about the year 2041 Congress (?)

Maybe a real 'trust fund' with real assets (.. like happens everyday with private banks & financial institutions) --
might not be such a horrible, laughable idea ??

What is the overall concept & objective of any "trust fund" ?

[Steve]

Berens:

First, regarding the difference in the "trust fund" concept for government vs private sector, my friend William F. Hummel pointed me to this a while back; it's from the federal government publication, Analytical Perspectives, FY 1996, p. 251:

"The Federal budget meaning of the term 'trust' differs significantly from its private sector usage. In the private sector, the beneficiary of a trust owns the income generated by the trust and usually its assets. A trustee, acting as a fiduciary, manages the trust assets on behalf of the beneficiary. The trustee is required to follow the stipulations of the trust, which he cannot change unilaterally. In contrast, the federal government owns the assets and earning of federal trust funds, and it can raise or lower future trust fund collections and payments, or change the purpose for which the collections are used by changing existing law."

In any case, the SS system has always depended on trusting current and future politicians to fulfill the promises of past politicians.

One way to "privatize" the system while avoiding the straw-man objection that "the stock market is too risky" would be to issue a new form of T-bonds (specially-designed nontransferrable "retirement bonds") to each worker, as that worker and employer pay FICA into the system. It would privatize each individual's retirement benefit asset, rather than leaving it under the government's control, which would leave it exposed it to future politicians whims. As I see it, a proposal to privatize SS via a "T-bonds only" program would smoke out the real issue: private property vs government control.

But, even then, the system's viability would depend on a sufficiently healthy economy in the future. Without it, those private bonds could be worthless. A healthy, viable economy is the underlying requirement, whether the system is government controlled or privatized.

[Jim Glass]

"If the SS trust fund had never been 'raided,' what would it contain today... it simply does not matter what the trust fund contains.
~~~
I love arguing Social Security!

If, like state government and private sector pension plan trusts, the SS Trust Fund had invested to hold real economic savings for the government (German bonds, IBM stock, REITs, gold bullion -- i.e., IOUs from other parties instead of from the US gov't itself) here's a difference that would matter a lot **to me**.

After 2017, I wouldn't face a near 20% income tax hike to pay again for my own SS benefits that I already paid for.

SS payments relative to SS payroll tax receipts post 2017 are going to quickly grow by 2 points of GDP compared to today. It will take a near 20% income tax increase across-the-board, on individuals (including retirees!), businesses, everybody, to cover that by financing the redemption of the trust fund bonds.

If the SS Trust Fund had instead accumulated real savings, the need for this income tax hike would have been avoided by liquidating its savings to finance benefits, at least until the trust fund is exhausted some time in the 2040s --by which time I don't really expect to care.

[Jim Glass]

"What DOES matter is the future productive capacity of the US economy—which, after all, is the basis for worldwide faith in the 'full faith and credit of the US government.' Yesterday, today, and tomorrow. We should be asking our politicians what they'll do to improve the future productive capacity of our economy."
~~~

I couldn't agree more. And investing the SS Trust fund in real private sector economic assets certainly would've done more to boost productivity yesterday ... oh, but that's $2 trillion of spilt milk under the bridge.

Alas, going forward, there's nowhere near enough time to grow out of our coming fiscal troubles. As to the '"full faith and credit of the US government." Moody's has just gone on record projecting the US govt's credit rating as heading south starting in 2017, due to the cost of Medicare/ Medicaid/ Social Security, absent *big* tax increases or benefit cuts.

http://www.ft.com/cms/s/0/40f3a2be-bfa9-11dc-8052-0000779fd2ac.html

This puts it in agreement with Standard & Poors, which earlier projected that the credit rating of the US will fall from AAA to "Junk" in the 10 years from 2017 to 2027 under current law.

http://www.scrivener.net/2007/06/bastiat-never-even-heard-of-social.html

2017 is only nine years away! What we are talking about here is a 50% across-the-board income tax increase to cover the cost of SS, Medicare and Medicaid by the year 2030, with taxes rising steadily from there. That's the size of the funding gap.

Of course, tax increases anything like that are the worst thing possible for growth, nobody's going to like massive benefit cuts, and national bankruptcy is bad too ... But happily for the politicians, they have many more important things to talk about this election season.

[Jim Glass]

"If 25% of the population is over 65 and retired, the rest of the population is producing all the goods and services for everyone. Through the process of innovation, it now requires 10% fewer working people to produce the same..."

Wait right there. The entire WORLD produces the goods needed by retirees. And an ever-growing portion of their services too. There is simply no issue at all about the international economy being able to physically supply sufficient goods to retirees, or anyone else in the US. Domestic growth is needed to meet financing needs.

[Kevin]

Said it before and I'll say it again. Tax social security benefits at a rate of 100%. Problem solved!

[Jim Glass]

"If needed how will it be used to pay SS benefits? The current non-transferable intra-governmental bonds will be converted to publicly held bonds. No increase in debt. Those bonds are already on the books as debt."

Not as interest-paying debt, with a tax cost of $1 present value for every $1 of such "converted" debt.

"Growth will take care of any potential increase in interest needed to be paid on those publicly held bonds. It's been going down, and should continue."

Well, the projections from CBO, GAO, Moody's, S&P, et. al., are that on current law annual interest on the debt will reach 20% of GDP -- larger than the entire size of the federal gov't today -- in the late 2030s, with, as GAO put it, "end of government" resulting. That's why S&P projects the US bond rating falling to "junk" by 2027, absent big tax hikes and/or benefit cuts, as noted in my comment above.

"Coberly estimates that the overall impact of correcting a SS shortfall is $2 per week per worker. Not a whole lot."

Bah, silly claims like that are all based on SS's "actuarial balance" over 75 years or whatever loooooong period, while counting the trust fund bonds as "assets", instead of the liability to the govt that all its bonds are.

But SS runs on **cash flow**, and nobody involved in its long history ever gave a whit about its actuarial balance, until a need for this kind of denialist argument arose recently.

Heck, SS's biggest advocates used to praise it explicitly for being actuarially unsound! E.g. Paul Samuelson's famous article, _Social Security, A Ponzi Game That Works_:

"The beauty of social insurance is that it is actuarially unsound."
http://scrivener.net/2005/02/beauty-of-social-security-by-paul.html

SS goes cash flow negative by 2 points of GDP annually during the post-2017 trust fund years. It costs a lot more than $2 per week per worker to cover 2 points of GDP.

Look, if "actuarial balance" is what you and Dean Baker want for SS, that's easy. Just have Congress raise the interest rate on the trust fund bonds, and maybe drop a few trillion more bonds in the trust fund. Done! Full actuarial balance for infinity achieved in a day!

But alas, that won't raise a penny of *cash flow* to pay promised benefits post 2017. There's only way to get the cash flow to pay a 2 points of GDP rise in benefit cost -- increase current taxes by 2 points of GDP.

[Counter Revolutionary]

Jim Glass, what the heck are you talking about? Here you say:
"There's only way to get the cash flow to pay a 2 points of GDP rise in benefit cost -- increase current taxes by 2 points of GDP."
So your plan is to further increase the SS Trust Fund and lower our current deficit by increasing taxes? Remember the SS law, and most other trust fund laws require surpluses be sent to the general fund.

Which leads to a series of questions. 1) Which law(s) do you intend to change? 2) What is the likelihood of those laws being changed in the way you wish? 3) How long do you expect to take to complete said law changes? 4)Ever heard of the Poli-Sci "law of Countervailing Forces?"

Furthermore, your comment:
"SS payments relative to SS payroll tax receipts post 2017 are going to quickly grow by 2 points of GDP compared to today."

Implies you/your sources know the exact day/month when the flow goes negative, know exactly the number of beneficiaries needed to be funded completely and/or partially at that time, make up of benefits (they change as wages change), size, makeup, and wages of the future workforce, general economic conditions going forward from today. and above all your own future income.

2 points (?percentage points?) of GDP is nominal or real? If nominal what is the growth in that specific year, and in the years between now and then?

Most comments aimed at generating fear about SS usually quote large scary numbers without context, and support. As you have done here.

If you can answer the questions raised above then we can start on the next round of more detailed questions to get to your estimating model.

BTW, I believe in privatizing SS, but probably for reasons other than yours.

You are on a blog whose message is growth can solve many of our problems, and you come on ignoring and contradicting it? Sheesh!

[Counter Revolutionary]

Jim glass said: ""Coberly estimates that the overall impact of correcting a SS shortfall is $2 per week per worker. Not a whole lot."

Bah, silly claims like that are all based on SS's "actuarial balance" over 75 years or whatever loooooong period,..." but he is wrong. Coberly's claim is totally based upon cash flow. Moreover, his individual impact is low but results in a large cash flow number. Do the math. Here's some help: the Dec 2007 labor force number was 146M workers times $2 times 52 weeks. Now add work force growth compounded for ten years to get to an estimated amoun in 2017+. How large is it then?

See how that ole growth thing works? Not only economic but other factors go into these estimates. Can you tell us you/your sources have taken them into account in their fearsome comments.

[Ron Hardin]

I don't see any crisis. Just raise the retirement age for benefits as the demographics may require, and actuarial balance is instantly achieved.

If you want to retire earlier, do it on your own dime to fill the intervening gap.

[Counter Revolutionary]

Ron Hardin: "If you want to retire earlier, do it on your own dime to fill the intervening gap." Which is what has been happening for generations, with the exception those few who got early retirements from their employers.

I have a friend who retired at 54. He was eligible for full retirement at that time, but is waiting until 59 to start drawing on his IRA without penalty, and then 62 for obvious reasons.

[Ron Hardin]

``and then 62 for obvious reasons''

You're better off waiting to 70 and take the higher benefits.

[Crashex]

You are all looking at only one side of the equation. Hardin is close, just reduce the number of people collecting.

In the age of WWF, American Gladiator, Ultimate Fighting and reality TV, a creative capitalist society can surely come up with a WIN-WIN solution.

Cage death matches for anyone who wants SS, mandatory participation every five years. Winner gets nominal SS benefits plus 50% of the loser's check. Net benefit to the system is the other 50% of the loser's check plus TV, ticket and consession revnues.

Then that death tax throws money back to the general fund and the medicare/medicaid system has one less participant.

I'd guess that a detailed analysis of the numbers would show that everyone won't need to particpate; we can run a selective service style lottery and only have a few thousand matches each year.

Besides, it's the perfect political solution. No significant long range planning. Let's get those colliseums started--LET THE GAMES BEGIN!!

[Counter Revolutionary]

Ron Hardin said,
"You're better off waiting to 70 and take the higher benefits."

That's not what they taught us when I took my retirement class. More months at a modest reduction versus fewer months at maximum benefits usually has the younger recipient getting more. Of course, YMMV.

[Zephyr]

Determining your optimal age for starting SS benefits is a function of your life expectancy. The longer you expect to live the better the bargain of starting at a later date.

[Jim Glass]

"Jim Glass, what the heck are you talking about? Here you say: 'There's only way to get the cash flow to pay a 2 points of GDP rise in benefit cost -- increase current taxes by 2 points of GDP.'"...

It's simple. Government benefits are paid with cash. The only way the government gets cash is through taxes. Issuing bonds also reduces to taxes because the tax cost of servicing the interest on each $1 of bonds discounts to exactly $1 of tax present value.

Ergo, if you increase SS benefits by 2 points of GDP you must increase taxes by 2 points of GDP. QED.

"So your plan is..."

Step 1. Recognize the problem. Step 2. Decide how to close the funding gap through a combination of raising taxes and cutting benefits -- the *only* options for closing a cash flow gap.

But the politicians and general public are still far, far away from Step 1.

"Implies you/your sources know the exact day/month when the flow goes negative, know exactly ..."

Projecting to 2030 -- only 2/3rds the length of a home mortgage -- is not such a big deal. SS is easy. You just look at the workers at every age and apply the mechanical benefit formula. Medicare/Medicaid is more complex. The result is that SS costs rise by 2 points of GDP around 2030 then stabilize, while medical benefits rise by 4 points of GDP by then and keep growing from there. (Though CBO warns the medical cost projections assume much slower cost growth in the future than in the past.)

On current law all those 6 points of GDP of increased spending must come from income taxes. Today income taxes are 11 points of GDP. Do the math.

For sources and analysis see for starters the SS Trustees report at SSA.gov and "The Fiscal Year 2007 Financial Report of the United States Government"
http://www.gao.gov/financial/fy2007financialreport.html

"2 points (?percentage points?) of GDP is nominal or real?"

You'll have to explain the difference between a nominal and a real percentage point of GDP.

"Coberly estimates that the overall impact of correcting a SS shortfall is $2 per week per worker. Not a whole lot ... Here's some help: the Dec 2007 labor force number was 146M workers times $2 times 52 weeks. Now add work force growth compounded for ten years to get to an estimated amoun in 2017+. How large is it then?"

2007 GDP is $14.3 trillion. 146 million x $104 is a bit over 0.001 of that. You are off by a factor of almost 20, too low, today. Going forward the work force shrinks in relation to GDP and the dollar loses value to inflation. So in time you will be off by a factor of 50 ... then 100...

"You are on a blog whose message is growth can solve many of our problems, and you come on ignoring and contradicting it? Sheesh!"

I agree with Steve 100% ENTIRELY that fostering growth should be the #1 issue, and that the politicians grossly neglect it.

But we should admit that no matter how much growth we get, the politicians can promise to give more than 100% of it away -- and making such promises is something they don't neglect, they are very very good at it.