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Sunday, February 13, 2011

A Parable For Our Times

A boy named Bart has a paper route.  He doesn't want to spend his earnings now, but save them for later in life, so he can stop pitching papers some day.  His dad, Homer, offers to hold the income in trust, and puts the money in the same drawer with his spending cash.  It's in an envelope marked "Bart's future." 

But Homer is a bit careless, One day he gets thirsty and notices that the beer fund drawer is empty - except for Bart's envelope.  Homer takes the cash, and slips in an IOU, then goes to Moe's for a few cold ones.  With the passage of time, Bart naively keeps turning the money over to Homer, whose thirst is unquenchable - so the IOU's build up.

Suddenly one day, Homer has a cup of tea and realizes that he has built up quite a debt to Bart, and doesn't know how he'll be able to pay it back, pay the mortgage, and keep drinking, all at the same time.  So he says: "Bart, you are part of my budget problem.  It is unreasonable of you to expect to get all of your money back. In fact, you're a bit of a leach to expect it. I have a problem with finances, and we must all share the pain.  You wanted your money when you were 18.  Now you have to wait until you're 21.  And I'll probably only give you 80 cents on the dollar.

"Meanwhile, keep turning over your earnings.  I'm thirsty." 

This is how Social Security is related to the Federal Treasury, and this is how paying SS benefits affects the Federal budget.  

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3 comments:

Steve Roth said...

I'm really surprised by this post.

This would be an apt parallel if government consumption (read: "beer") expenditures were the cause of the (small) SS shortfall projection.

But they're not:

http://www.asymptosis.com/wp-content/uploads/2011/01/Gov-consump-exps.png

And government consumption expenditures are not for beer. They're for stocking the kitchen with food and paying the utility bills.

Better:

Maggie, who doesn't make much on her babysitting gigs, nevertheless pays a large percentage into the Bart/Maggie fund. Bart, who's running a whole string of paperboys from his laptop and making boocoo, doesn't pay very much.

But when it's time to divvy it out, Bart's shortfall gets pulled from Maggie's share.

Steve Roth said...

Why the unfair division? Because Bart is spiffing Homer on the side from all his profits. Maggie can't afford the baksheesh.

Jazzbumpa said...

Steve -

I'm not saying this is a great analogy - in fact, it was pretty much off the top of my head in one of the SS posts at AB.

In my parable, Homer's beer fund represents profligate spading - endless, pointless wars; tax subsidies to international oil companies, tax breaks to the mega-rich - that sort of thing. Rational govt expenditures are represented by Homer's mortgage.

No analogy is perfect.

My point is there is no real SS crisis.

Cheers!
JzB