Överskottsmål, är det meningsfullt?

There is a widespread belief that the Social Security Trust Fund is going bankrupt. Thus, while OASDI is currently accumulating large financial surpluses, the fear is that Social Security faces a financial crisis because post-2020 program expenditures are expected to exceed the revenues that will be generated from a shrinking tax base. The solution, many argue, is to “use” (current and future) budget surpluses to “save” Social Security from financial collapse. ...

Can a trust fund help to provide for future retirees?

Suppose the New York Transit Authority (NYTA) decided to offer subway tokens as part of the retirement package provided to employees—say, 50 free tokens per month (for life) upon retirement. Does this mean that the City should attempt to run an annual “surplus” of tokens (on average collecting more tokens per month than are paid out) in order to accumulate a trust fund to provide for future NYTA retirees?

Of course not.

When tokens are needed to pay future retirees, the City will simply issue more tokens at that time. Not only is it unnecessary for the City to accumulate a hoard of tokens, but it will not in any way ease the burden of providing subway rides to future retirees.

Whether the City can meet its real obligation (to convert tokens into rides) will depend solely on the future carrying capabilities of the transit system. Its financial commitment, in contrast, can always be met merely by issuing tokens to future retirees as benefits come due.

Note, also, that the NYTA does not currently attempt to run a “balanced budget,” and, indeed, consistently runs a subway token deficit. That is, it consistently pays-out more tokens than it receives, as riders hoard tokens or lose them. Attempting to run a surplus of subway tokens would eventually result in a shortage of tokens, with customers unable to obtain them. Instead, the transit system always sets its price (say, $1.50 per token) and lets the quantity of tokens it issues “float”. Again, this typically results in a deficit, as the NYTA issues more tokens than it receives, but this practice does not in any way impinge on the its ability to make token payments in the future. Moreover, it would be impossible for the NYTA to consistently run surpluses because the only revenue source of tokens is the NYTA’s own “spending” of tokens.

Just as an accumulation of subway tokens cannot help to provide subway rides for future retirees, neither can the Social Security Trust Fund help provide for the (real) consumption needs of babyboomer retirees. Whether their future consumption needs are realized will depend solely on society’s ability to produce real goods and services (including subway rides) at the time that they will be needed. Thus, an accumulation of credits to a Social Security Trust Fund is neither necessary nor efficacious. Moreover, as was the case in the NYTA analogy, it does no good to run a budget surplus—which simply reduces the demand for currently produced goods. Just as a NYTA token surplus would generate lines of token-less people wanting rides, a federal budget surplus will generate jobless people desiring the necessities of life (including subway rides).

While the analogy with a subway token retirement system is not a perfect one, it does make the important point that the issuer of the token (or dollar) never needs to collect tokens (dollars) before making payments. Indeed, it cannot initially—as a simple matter of logic—do so. It must first “emit/issue” (spend) before it can “collect” (tax). This also means, as a matter of logic, that it makes no sense to attempt to accumulate a trust fund for the purpose of paying-out tokens (dollars) in the future.

Financial Aspects of the Social Security “Problem”
Stephanie Bell, L. Randall Wray


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