Friday, February 18, 2011

Setting Social Security Record Straight & Why the Rethugs Think You'll Give Them The Rest of Your Power Over Your Future

John Boehner's "So Be It" Economics With a turn of phrase that ranks right up there with "I'm alright, Jack," "We care about the small people," and "Let them eat cake," House Speaker John Boehner voiced the Republican response to concerns about the consequences the GOP's budget cuts for millions of Americans, their families and their communities: "So be it." John Boehner
Social Security a deficit causer? NOT! It's pure baloney according to Robert Reich, who should know as he was a Social Security Trust Fund trustee previously. (Emphasis marks added - Ed.)

New Jersey Governor Chris Christie, a Republican presidential hopeful, says in order to "save" Social Security the retirement age should be raised. The media are congratulating him for his putative "courage." Deficit hawks are proclaiming Social Security one of the big entitlements that has to be cut in order to reduce the budget deficit.

This is all baloney.

In a former life I was a trustee of the Social Security trust fund. So let me set the record straight.

Social Security isn't responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.

Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.

Does this rest your mind amid the fake tumult generated by the rightwingnuts who want to steal the Social Security Trust Fund and give it to their bankster/investor friends to play with in the name of the stock market's guaranteed higher returns? No? Read on.
. . . why should there even be a problem 26 years from now? Back in 1983, Alan Greenspan's Social Security Commission was supposed to have fixed the system for good - by gradually increasing payroll taxes and raising the retirement age. (Early boomers like me can start collecting full benefits at age 66; late boomers born after 1960 will have to wait until they're 67.) Greenspan's commission must have failed to predict something. But what? It fairly accurately predicted how quickly the boomers would age. It had a pretty good idea of how fast the US economy would grow. While it underestimated how many immigrants would be coming into the United States, that's no problem. To the contrary, most new immigrants are young and their payroll-tax contributions will far exceed what they draw from Social Security for decades. So what did Greenspan's commission fail to see coming? Inequality. Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation. Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission's fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income. Today, though, the Social Security payroll tax hits only about 84 percent of total income. It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000. Presto. Social Security's long-term (beyond 26 years from now) problem would be solved. So there's no reason even to consider reducing Social Security benefits or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling. Not incidentally, several months ago the White House considered proposing that the ceiling be lifted to $180,000. Somehow, though, that proposal didn't make it into the President's budget.

In Willie Sutton Wept, Paul Krugman spells out the differences between the deficit hawk frauds.

There are three things you need to know about the current budget debate.

First, it’s essentially fraudulent. Second, most people posing as deficit hawks are faking it. Third, while President Obama hasn’t fully avoided the fraudulence, he’s less bad than his opponents — and he deserves much more credit for fiscal responsibility than he’s getting.

. . . Mr. Obama has lately been going where the money isn’t, making a big deal out of a freeze on nonsecurity discretionary spending, which accounts for only 12 percent of the budget.

But that’s what everyone does. House Republicans talk big about spending cuts — but focus solely on that same small budget sliver.

And by proposing sharp spending cuts right away, Republicans aren’t just going where the money isn’t, they’re also going when the money isn’t. Slashing spending while the economy is still deeply depressed is a recipe for slower economic growth, which means lower tax receipts — so any deficit reduction from G.O.P. cuts would be at least partly offset by lower revenue.

The whole budget debate, then, is a sham. House Republicans, in particular, are literally stealing food from the mouths of babes — nutritional aid to pregnant women and very young children is one of the items on their cutting block — so they can pose, falsely, as deficit hawks.

. . . anyone who is really serious about the budget should be focusing mainly on health care.

. . . The bottom line, then, is that while the budget is all over the news, we’re not having a real debate; it’s all sound, fury, and posturing, telling us a lot about the cynicism of politicians but signifying nothing in terms of actual deficit reduction. And we shouldn’t indulge those politicians by pretending otherwise.

Mrs. Bush, Abstinence and Texas

. . . let’s discuss choices, starting with Barbara Bush raising an alarm and Gov. Rick Perry’s personal experience with sexual abstinence. I did throw in the last one to keep you interested. Sue me. . . . Nobody wants to see underperforming, overcrowded schools being deprived of more resources anywhere. But when it happens in Texas, it’s a national crisis. The birth rate there is the highest in the country, and if it continues that way, Texas will be educating about a tenth of the future population. It ranks third in teen pregnancies — always the children most likely to be in need of extra help. And it is No. 1 in repeat teen pregnancies. Which brings us to choice two. Besides reducing services to children, Texas is doing as little as possible to help women — especially young women — avoid unwanted pregnancy. . . . the Perry government is a huge fan of the deeply ineffective abstinence-only sex education. Texas gobbles up more federal funds than any other state for the purpose of teaching kids that the only way to avoid unwanted pregnancies is to avoid sex entirely. (Who knew that the health care reform bill included $250 million for abstinence-only sex ed? Thank you, Senator Orrin Hatch!) “Abstinence works,” said Governor Perry during a televised interview with Evan Smith of The Texas Tribune. “But we have the third highest teen pregnancy rate among all states in the country,” Smith responded. “It works,” insisted Perry. “Can you give me a statistic suggesting it works?” asked Smith. “I’m just going to tell you from my own personal life. Abstinence works,” said Perry, doggedly. . . . Meanwhile, Perry — having chosen not to help young women avoid unwanted pregnancies and not to pay enough to educate the booming population of Texas children — wowed the crowd at the Conservative Political Action Conference in Washington with his states’ rights rhetoric.

Which would be fine, as I said, if his state wasn’t in charge of preparing a large chunk of the nation’s future work force. Perry used to be famous for his flirtation with talk of secession. Maybe we should encourage him to revisit it.

Why Isn't Wall Street in Jail?

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that." . . . Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people. The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industry-wide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted.

Hank Paulson decides to tell the truth? Maybe even he fears the next crash.
Paulson Comes Clean? (Paulson) said that regulators need real power in order to be tough and effective. He said a strong, independent consumer protection agency is needed to help prevent the next financial crisis. And that we should help the millions of "responsible" homeowners hurt by the crash, instead of demonizing them.

. . . Paulson didn't just express opinions to the FCIC. He also provided anecdotes that illustrate the real problem with Fannie, Freddie, and the entire "privatize government" movement:

When you give government backing to people with private-sector incentives, very bad things happen. So as the media distracts itself (and us) with the power struggle between Democrats and Republicans, a conflict it insists on describes as the "left" versus the "right," Paulson described problems and their solutions in ways that neither party's leaders are willing to discuss.

. . . The problem wasn't that government was too activist, but that the "ownership society" idea (and other government policies, including taxation) used government to encourage over-borrowing by some homeowners, enriching financial speculators while creating needless risk for borrowers.

Someone finally challenges the bullies who want to take their expensive tastes out of the poor's hides:
Live Reporting from the Wisconsin Rally An estimated 30,000 Wisconsin residents flooded the State Capitol in Madison in protest of Governor Walker's proposed budget "repair" bill that would end 50 years of collective bargaining for Wisconsin workers. CMD reporters will be out providing live coverage of these historic events. Votes are scheduled for Thursday, February 17 and Friday, February 18.

Picking on Poor Kids isn't Tough


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