Thread by @nick_evans

This is a *very* good article by @M_C_Klein explaining the real implications of the recent Social Security Trustees report: barrons.com/articles/what-… /1

Start off by stripping away the financing and the money and focusing on the real: all retired--everyone who doesn't work--depends on the productivity of those who do. Whether they live off of private investments or government entitlements doesn't change that basic transfer. /2

We need to remember the US Federal government can always create more dollars with no insolvency risk.. The "independent funding" of Social Security (and Medicare Part A) is a political choice, not a financial necessity nor a macroeconomic reality. /3

What *does* matter for the standard of living of our retirees is will those who are working be able (and politically willing) to provide for those who are not working. So demographic trends (mortality/fertility rates) and working age immigrants are obviously important to this. /4

I like how @wbmosler makes this point in moslereconomics.com/wp-content/pow….
With $999 trillion in trust funds and 1 person working to support 300M retired, we'd have a crisis: can't eat $. With $0 in trust funds and 300M working to support 1 retired, that person can live like a emperor. /5

Which obviously highlights the real concern, we *do* have a demographic bulge (now from baby-boomers, later from lower fertility). So, if we are going to support a larger percentage of the population retired, we'll want the smaller % of workers to be more productive. /6

Ultimately, how we support our elderly is a political decision, driven by our values. How much are we willing to support (which) non-workers. What they deserve and what we owe them are a function of our sense justice and power. From @M_C_Klein, @wbmosler, and @John_T_Harvey: /7

This basically applies to the Medicare Part A fund (HI), too. Except that's not about general working population meeting the general consumption desires of the retired but specifically about doctors and nurses and hospitals. /8

The SMI fund (Medicare Parts B & D) is illustrative: the trustees report that it "will remain adequately financed into the indefinite future because current law provides financing from general revenues". ssa.gov/oact/trsum/ind… /9

If Congress wanted to, it could *easily* change the law to finance all of Social Security and Medicare in the same way as Parts B & D, and future Trustees Reports would then change to say that all of the funds are adequately financed into the indefinite future. /10

Maybe then, we'd waste less time on nonsense like self-imposed accounting gimmicks going insolvent, and talk more about worker productivity, share of national income devoted to retirees & other non-workers, our sense of justice, national philosophy, and distribution of power. /11

Even Alan Greenspan has said "there is nothing to prevent the Federal Government from creating as much money as it wants and paying it to somebody. The question is, how do you set up a system which assures that the real assets are created..." /12

For more:
- barrons.com/articles/what-… by @M_C_Klein
- pp.51-58 in moslereconomics.com/wp-content/pow… by @wbmosler
- asymptosis.com/is-the-social-… by @asymptosis
- No Entitlement Crisis ftalphaville.ft.com/2018/05/03/152… by @NathanTankus
- Why SS can't go bankrupt forbes.com/sites/johnthar… by @John_T_Harvey
/end