Sunday, August 8, 2010

They Do As They Please - No Needed Job Creation Awareness & More Social Security Lies (Lesson for the Masses) - The Shadow Elite Engage Even More?

Frank Rich in How to Lose an Election Without Really Trying has just about lost all hope for the Dims. Join the club, Frank, as this insanity-led country continues to drift away from its once-proud bearings of concern for the lot of its common people and proper regulation of those who benefit from fooling them (over and over - with very powerful MSM advertising thrown in for good measure). (Emphasis marks added - Ed.)

Given this spectacle, Obama and the Democrats are, if anything, flattering the current G.O.P. by accusing it of being a carbon copy of Bush. But even if the Democrats sharpen their attack, they are doomed to fall short if they don’t address the cancer in the American heart — joblessness. This requires stunning emergency action right now, August recess be damned. Instead we get the Treasury secretary, Timothy Geithner, offering the thin statistical gruel that job growth has returned “at an earlier stage of this recovery than in the last two recoveries.”

. . . On the same day his essay appeared last week, The Times ran a front-page report on “99ers,” the growing band of desperate jobless Americans who have exhausted their 99 weeks of unemployment insurance benefits.

The Democrats have already retreated from immigration and energy reform. If they can’t make the case to Americans . . . that they offer more hope for a job than a radical conservative movement poised to tear down what remains of the safety net, they deserve to lose.

(EXTRA: If anyone could make a contribution to my PayPal account (or otherwise - contact me for further info), it will be really, really, really appreciated as I'm in quite a pickle financially right now. I sincerely appreciate everything that my kind readers have done for me in the past financially and otherwise. Especially, otherwise, as the support group for this blog is beyond belief. My belief anyway. Again, my heartfelt thanks. . . and now . . . back to your regular viewing.)

One of the commenters on Paul Krugman's blog has one of the most intelligent takes I've seen yet on how to view the right-wing dominated clamor for continuing the Bush "Tax Cuts" (emphasis marks added and some editing was done to improve legibility):

I think we need to have a talk about these so called Bush "tax cuts."I'd like to make a point or two, if that's okay.

They would have been tax cuts if we were not in over 6 trillion dollars of debt when Bush made those revenue cuts. but they were not cuts - they were . . . loans.

Yes, Bush had to borrow money by selling treasury bonds, to cover these so called cuts - mostly to billionaires.

So what did these billionaires do with the money they were supposed to pay in taxes? They bought treasury bonds, of course. That way, the people who were supposed to pay taxes now earn interest at the expense of the rest of us.

I am amazed that little deal can be called a cut of any kind, when we pay $4.85 in interest for each dollar we borrow to keep these lowered tax revenues going.

Yes that's what I said, at 30 years, 5% interest, each borrowed dollar the government is spending is really costing us about 5 times as much as a dollar.

And people wonder why the economy is down the tubes. Those revenue cuts are sucking us all dry, and transferring the wealth all into the hands of the wealthy bond holders.

So OF COURSE we need to let those evil things lapse.

They're killing us. It is amazing just how much we'd be able to do if we didn't have to borrow $5 to spend $1. Seriously.

Hope that clears those silly advertising thoughts that we've been constantly bombarded with lately that taxes will increase on almost everyone if these "non-cuts" expire. They won't.

And now for the biggest lies out there in MSM America.

It was almost as if Goldman Sachs put it up on a billboard: "We’re ripping off our clients."

Amy Goodman interviews Dean Baker who tells us about the lies we are constantly being told by the Rethuglicans (as well as many of the Dimocrats (not even all of them Blue-Dog) about the unaffordability of Social Security.

And how they think they can get away with it (emphasis marks added - Ed.).

AMY GOODMAN: We’re joined by Dean Baker, economist and co-director of the Center for Economic and Policy Research. The big buzz is privatizing Social Security, that Social Security is what’s breaking us, it’s not affordable. Dean Baker, I’d like to ask you what I asked you during the broadcast, that it’s not affordable. Explain your response to this.

DEAN BAKER: Well, it’s really absurd on the face of it. I mean, the program has a separate stream of financing. We all pay a Social Security tax when we work, 6.2 percent of our wages, and employers contribute 6.2 percent on behalf of workers. And that actually has been running a surplus. We’ve been paying more into the program than benefits have been paid out. This was a design that was put in place by the '83 Greenspan Commission. They raised taxes. They also raised the retirement age. It is going up to sixty-seven, now sixty-six. And the result of that is that there's been this huge surplus run, over two-and-a-half trillion, over the last roughly twenty-five years. And the program is supposed to continue to run a surplus for a bit more than a decade, at which point we’re supposed start drawing down on the money in the trust fund, the money that we’ve accumulated.

So this idea that somehow we can’t afford this, we’ve actually been paying more than was needed for benefits, and according to the Congressional Budget Office, the program, as it currently stands, could pay all scheduled benefits through the year 2039 with no changes whatsoever.

Now, when you go further out—2049, '59, ’69—at some point you are going to be facing shortfalls. The main issue there is people are living longer. And at some point, you're either going to have to increase what you pay in, some source of revenue—you could raise the cap, there’s different ways you could do that—or some cut in benefits or raise the retirement age. But this is well into the future. So the idea that, you know, five years, ten years, fifteen years out, that we’re facing some crisis, that’s just simply not true. And everyone who’s familiar with the situation knows that.

AMY GOODMAN: Federal Reserve chairman Ben Bernanke has warned that entitlement programs like Social Security and Medicare will have to face cuts. This is what he told the House Budget Committee last month.

BEN BERNANKE: The type of programs are not self-funded. They’re unfunded liabilities to a significant extent at this point. They are the biggest single component of spending, going forward.

Now, there are various ways to address this. You can restructure entitlement programs. You can cut other things. But at some point, you need to address the overall budgetary situation. If you don’t, you’ll get a picture like this one, where interest rates are rising, interest payments are rising, because the debt outstanding is growing exponentially, and at that point, things will come apart.

A famous economist once said, anything that can’t go on forever will eventually stop. And this will stop, but it might stop in a very unpleasant way in terms of sharp cuts, a financial crisis, high interest rates that stop growth, continued borrowing from abroad. So, clearly we need to get control of this over the medium term, and we’re certainly going to have to look at entitlements, because that’s a very big part of the obligations of the federal government, going forward.

AMY GOODMAN: Economist Dean Baker, your response?

DEAN BAKER: Well, this isn’t the first time Mr. Bernanke has misled Congress on something very important. You recall, he was a big factor in pushing for the TARP and fundamentally misrepresented the situation in financial markets to get Congress to approve it.

But he’s done the exact same thing here again. He uses the term "entitlements" a lot. People here in Washington do that. They know better. Again, the story with Social Security, we’re all looking at the same numbers. Ben Bernanke would not, if he had him here, tell you anything other than what I just told you, that the Congressional Budget Office says the program could pay all benefits through the year 2039 with no changes whatsoever.

Relatively minor changes would keep it fully solvent decades more into the future. The bigger problem is Medicare and Medicaid. But again, Mr. Bernanke knows full well, it’s not that those programs are out of control; it’s that our healthcare costs are out of control. So the real problem is that we have to fix our healthcare system. We pay more than twice as much for our healthcare per person as people do in Germany, in Italy, France, Canada, whatever country you choose to pick.

If our per-person healthcare costs were the same as what they are in those countries, we would be looking at enormous budget surpluses for the indefinite future, rather than deficits.

The problem is that people like Mr. Bernanke don’t want us to challenge the insurance industry, the highly paid medical specialists, the pharmaceutical companies. Instead, they’re saying cut Medicare, Medicaid for the elderly. So it’s just really a dishonest story. The issue here is healthcare. That’s what we should be talking about.

. . . AMY GOODMAN: Do you see a different trend under President Obama than under President Bush in terms of what will happen to Social Security? Ultimately, President Bush didn’t succeed in cutting it.

DEAN BAKER: Well, I worry about what will happen under President Obama. You go back to when President Clinton was in the White House, President Clinton proposed cuts to Social Security.

He was recently on a panel here at a program put on by the Peterson Foundation, and he just got right up, and he said, "I wanted to cut Social Security, but, you know, they wouldn’t let me." Dick Gephardt, you know, at that time the leader of the Democrats in the House, and he said Dick Armey also opposed it. He goes, "They wouldn’t let me, but I wanted to do it."

You know, he just said that in very open terms, which is something we knew back in the '90s, those of us who were fighting against it. But it was just quite striking that this was one of the regrets of his presidency, that he wasn't able to cut Social Security.

And you have a lot of the same people that were in the Clinton administration who are back working with President Obama, and I do worry very much that many of them want to cut Social Security.

One of the things that I — you know, I’m not longing for President Bush to be back in the White House, but, you know, there was a relatively unified stand among Democrats against President Bush’s plan to cut Social Security. And that made it more difficult for him to get very far, and of course he never actually introduced a plan. Nothing ever got voted on by Congress. It didn’t come that close to being done.

When you have a Democrat in the White House and he says he wants to cut Social Security, or at least people close to him say that, then it becomes much more difficult, because it’s not clear how you organize against that, because certainly you will have Democrats who want to support their president.

So, again, I find it very worrisome that — you know, you’re looking at his deficit commission, he appoints his two top appointees, the Republican and Democrat co-chair, who he picked. Both were quite explicit: they want to cut Social Security. So I do think we have to be very worried about cuts to the program under — during the Obama administration.

Now why would this be true? Is it because the previous wars (massive military spending) and Bush tax cuts for the rich were off-the-books and now need the lower classes to pay for them?

Only if you think this is the only type of government obligation that applies. All apply. It's not a pick-and-choose proposition. It is, however, a move-the-dime-under-the-hat one (when it comes to talking about paying the freight - do you remember anyone even mentioning - let alone caring about - who paid the freight for those infamous tax cuts for the wealthy?).

People like the author below, Allen Smith, have become famous by forgetting the first and concentrating on the second. Also you might like to try to keep in mind that Social Security taxes (FICA) were paid only by the working classes - not a dime came out of those who live by investments - they've always gotten off scott-free and live free of taxes (except for any that they deign to declare) in this once-great country. And as you read further, try to remember back to when you heard about Al Gore's idea of the "lock box" for Social Security contributions (emphasis marks added - Ed.).

The rationale for cutting Social Security seems to be that, during such difficult economic times, everything should be a candidate for the chopping block, and that the public should support such cuts out of a sense of patriotism.

The flaw in this argument is that Social Security has not contributed a dime to the budget deficits or the soaring national debt. Social Security is funded exclusively by payroll taxes (also known as FICA taxes), paid into the fund by working Americans. In 1983, the payroll tax was increased substantially in response to the recommendations, the previous year, of the Greenspan Commission on Social Security Reform.

Prior to 1983, Social Security had operated on a “pay-as-you-go” basis with each generation responsible for paying for the benefits of the generation that preceded them. The 1983 legislation changed the nature of Social Security funding. In addition to paying for the benefits of the preceding generation, as was customary, the baby boomers were also required to pay additional taxes to partially pre-fund their own retirement. The net result is that the baby boomers have paid more into Social Security than any other generation. Yet they are often made scapegoats and blamed for the Social Security funding problem. I am not a baby boomer, but I am very sympathetic to them. They are getting a bum rap.

The intent of the 1983 legislation was to generate large Social Security surpluses for the next 30 years that were supposed to be saved and invested, in order to build up a large reserve in the trust fund that could later be drawn down to pay benefits to the baby boomers. The 1983 payroll tax hike has generated more than $2.5 trillion that is supposed to be in the trust fund. If the trust fund actually held this amount in real assets, full Social Security benefits could be paid until at least 2037 without any changes. Unfortunately, none of the surplus revenue was saved or invested in anything. It was all spent by the government on wars and other government programs without making any provisions for repaying the money. Over the past 25 years, five presidents, and the members of Congress, have participated in the great Social Security scam. All Social Security contributions made by working Americans, except the amount which was needed to pay current retirement benefits, has been funneled into the general fund and used for non-Social Security purposes. Some like to say that the government just “borrowed” the money during the time period when it was not needed to pay benefits. But borrowing implies repayment, and no provisions for repayment have been made.

The government did not enact future tax increases that would automatically kick in when the Social Security money was needed. Neither did they enact legislation that would end other spending programs once the Social Security money was needed so the money could be transferred to the trust fund. The government spent the Social Security money, pure and simple, without making any provisions for future repayments. The IOUs in the trust fund are not marketable, and they could not be sold to anyone even for a penny on the dollar. The Social Security trustees confirmed the worthlessness of the IOUs in the 2009 Social Security Trustees Report with the following words:

Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.

In order for Social Security to pay full benefits after 2016, it will be necessary for the government to begin repaying the money it has spent on other things. This will mean increased taxes and/or additional borrowing. Neither of these is politically popular, and there is no assurance that future politicians will be willing to raise taxes to pay for the irresponsible behavior of past politicians. If the money is not repaid in full, with interest, it will have been stolen by the government from working Americans who paid into the fund.

Since Social Security would be fully funded until at least 2037 if the government had not used the money for other things, the only reason that politicians are advocating cuts in Social Security benefits is the fact that the government does not have the money with which to pay its debt to Social Security. Given the fact that Section 13301 of the Budget Enforcement Act of 1990 made it a violation of federal law to use Social Security revenue for non-Social Security purposes, it is hard to justify using the word “borrow” to refer to any of the Social Security money spent after 1990, even if it is eventually paid back.

Dr. Allen W. Smith is a Professor of Economics, Emeritus, at Eastern Illinois University. He is the author of seven books and has been researching and writing about Social Security financing for the past ten years. Read other articles by Allen, or visit Allen's website.

Oh, and on another informative note, I have absolutely no faith in anything those reporters from the Washington Post say about how they knew nothing, nothing about the following until recently.

Right.

Cause they are disengenuous informers after the fact. Everyone knew - in D.C. anyway.

Wonder how long they worked on this before they understood the implications? Maybe, oh, yesterday? And what caused them to just discover this?

July 19, 2010 "Washington Post" - The top-secret world the government created in response to the terrorist attacks of Sept. 11, 2001, has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work. And you don't even wanna go here:

MEMORANDUM FOR: The President

FROM: Veteran Intelligence Professionals for Sanity (VIPS)

SUBJECT: War With Iran

We write to alert you to the likelihood that Israel will attack Iran as early as this month. This would likely lead to a wider war.

Israel’s leaders would calculate that once the battle is joined, it will be politically untenable for you to give anything less than unstinting support to Israel, no matter how the war started, and that U.S. troops and weaponry would flow freely. Wider war could eventually result in destruction of the state of Israel.

This can be stopped, but only if you move quickly to pre-empt an Israeli attack by publicly condemning such a move before it happens.

We believe that comments by senior American officials, you included, reflect misplaced trust in Israeli Prime Minister [Benjamin] Netanyahu.

Actually, the phrasing itself can be revealing, as when CIA Director Panetta implied cavalierly that Washington leaves it up to the Israelis to decide whether and when to attack Iran, and how much “room” to give to the diplomatic effort.

On June 27, Panetta casually told ABC’s Jake Tapper, “I think they are willing to give us the room to be able to try to change Iran diplomatically … as opposed to changing them militarily.”

Similarly, the tone you struck referring to Netanyahu and yourself in your July 7 interview with Israeli TV was distinctly out of tune with decades of unfortunate history with Israeli leaders.

“Neither of us try to surprise each other,” you said, “and that approach is one that I think Prime Minister Netanyahu is committed to.” You may wish to ask Vice President Biden to remind you of the kind of surprises he has encountered in Israel.

And it continues.

Suzan _______________

5 comments:

Phil said...

Various politicians and political groups have tried to take down Social Security for as long as I can remember. If they succeed in my lifetime, I'll be forced to look for a job; at this juncture, "hitman" seems appropriate.

Beach Bum said...

As much as it may get me in hot water with my liberal friends none other than Republican Joe Scarbrough on MSNBC was screaming to the Obama adminstration during the health care war in Congress they should instead be trying out every idea to create jobs.

I have essentially given up on politics for right now, I expect the democrats to at least lose the House and maybe even the senate. With Rand Paul and other assorted nuts running around the halls of Congress the asylum will get even worse.

Oh, as for expatriating to Austraila I am too old. At 45 the only way I can get in is to have $750,000 to invest. That is a no go right from the start. Still looking at Mexico believe it or not.

Suzan said...

I think Mexico is the way to go, BB.

Nice beaches - lots of Americans running away from disaster there - and relaxing for a bit.

Just hope some of them are not Tea Baggers.

;)

Joe Bageant says even farther south is nice too - and some of their economies are improving much more quickly than our own.

I saw those Scarborough clips on his view of the importance of job creation and wondered if that wasn't more CIA-inspired make the 'thugs look better than the Dims wet work (again).

They are quite good at that.

Love ya,

S

dmarks said...

And yet it is the "teabaggers" and the Republican rank and file in Congrsss who opposed the bailouts that OBama voted for and signed, and many on the Left still say are necessary in order to prevent a depression.

Suzan said...

I don't want to disagree with you friend. Heck, we've yet to meet, and welcome aboard.

My take on the Teabaggers is that their knowledge of economics and history does not come close to their anger over the current catastrophic economic/jobs situation, and thus they strike out at Obama for something Bush and his Treasury Secretary, Goldman Sach's CEO Hank Paulson did in the months before Obama was elected: the bailout of the banksters.

Do you disagree?

Fine. Then we can speak rationally as I don't like the policies that Obama has that seem to just be a continuation of Bush's either. How about you?

Thanks for commenting.

You've got a very interesting blog yourself.

S