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Rob Salkowitz

Social Security is funded by US Treasury Bonds, backed by the "full faith and credit" of the US government - the same ones that are held by millions of people around the world who believe they represent a stable financial asset. If those are no good, then this country has a lot bigger problems that the Social Security fund.

As to the question of how we will pay those obligations coming due in 2018 and beyond, when money going out of the SS system starts to exceed money coming into the system from the wage tax - we will do exactly what we always do. We will borrow it. Adding $2 trillion to the national debt over the period of 2018-2052 is not excessive - it's actually fairly modest by today's standards. Meanwhile, if productivity grows by 2.2% instead of the 1.8% projection that the SS actuaries are using (it's been growing by about 3% since 2000), then there will be no funding problem at all.

Seems to me that boosting that productivity number (by means of technology and better management) is the easiest and most painless way out of this fix, and it's something both sides can agree on. Among other things, it will increase the profitability of US businesses, meaning better returns on private investment, so that those who use existing government-sponsored private investments (e.g., tax-advantaged accounts like 401(k) and Roth-IRAs) will benefit as well. I am confident we can make progress if this issue is actually about results, not ideology.


Hi Rob, thanks for stopping by.
As to the "full faith & credit" and the "if that's no good then we've got much bigger problem" arguments, I look at it like this. Suppose a corporation, let's say General Electric, has on its books a large number or corporate bonds, which are simply an promise from a corporation to pay out a certain amount of money on a certain future date. And suppose GE holds bonds from Shell Oil, Lockeed, Mitsubishi, and Daimler-Chrysler. No problem. Then there's another corporation, let's say Enron, that also has a large portfolio of corporate bonds, only in Enron's case its portfolio is composed of bonds from just one corporation -- Enron. See the difference? GE's ownership of other corporation's bonds is a legitimate investment. Enron's ownership of its own paper is a fraud. Social Security's pile of IOU's from the US government is much more analagous to Enron than to GE. And to make matters much, much worse, SS is a compulsory system returning one of the lowest long term investment rates of any investment vehicle.
Fraudulent, compulsory, bad investment. Let's fix it because it stinks, rather than quibble over projections of productivity gains over decades.
I suppose the idea of personal ownership and choice is an ideological issue compared to collective ownership and compulsion. The ideological argument is unavoidable. Let's be honest about that. That's what elections are about, and that's why the fight is so bitter, as it ought to be.

Rob Salkowitz

OK - I see. Pardon for intruding on the separate reality down here. You should take a basic economics class before trying to have a serious discussion about this stuff.


Actually, I have taken basic economics classes. They were huge classes at the University of Florida, with literally thousands of students taking them simultaneously from Prefessor Denzlo. Most of the students had to settle for video taped classes, but I was fortunate enough to have Denzlo live and in person in the business school's large auditorium. And out of the thousands, I set the curve. I used to read economic books for fun, but I suspect we prefer different authors. Marx was never one of my favorites.
That's pretty snotty for you, Rob. Tsk, tsk.
There's a difference between holding a note from some one else and a note from/to yourself. Talk about basic economics.
And are you dissing the Sunshine State with that "down here"?

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November 2008

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Seen at low tide

  • American White Pelican
    Saw 30 in one flock on a weptember evening while fishing
  • Hummingbird
    Finally, my first hummingbirds. Saw them on a fire bush in Crystal Beach, FL. My rental's neighbor's yard is all xeriscaped, which is ugly to me but just fine with the little hummers. At first, I thought they were the biggest hornets I'd ever seen.
  • Flamingo!
    One of these dudes flew right over my house. I couldn't believe it. And please don't tell me it was a roseated spoonbill because it was a frickin' flamingo, dude! Huge and pink and right there above me. I was like so freaking out, you know?
  • Falcon!
    Don't see these guys too often. Wish we did. Bet the morning doves don't.
  • Black Skimmer
    These beauties are getting scarce, but one flew by yesterday at low tide on the hunt for minnows.
  • Dead sea turtle
    cool, but smelly
  • Reddish Egret
    These have been hanging out around the pool quite a bit lately. Must be a new group of adolesent birds -- the youngsters like to hunt where the water is clear, and it takes them a day to figure out there are not now and never will be fish in the swimming pool no matter how clear the water.
  • Sand Piper
  • Brown Pelican
    I saw a flock of about 200 of these at Disappearing Island yesterday, just south of Anclote Island on the west coast of FL. Good to see such a large flock.
  • Wood Pecker
    They've developed a sudden interest in the orange tree, which just went into bloom.
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