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There isn't much left to be said in defense of an almost three-trillion (yes, trillion) dollar taxpayer-funded program always under attack from those who want to take one-third of it for their personal profits arising from a bought-and-paid-for rich-man's-media-created hysteria that appeals to the ignorant or purposely uninformed.
The first comment found below the essay is the usual right-wing response to the system's well-documented future stability.
The second comment knocks the first into the cheap seats.
From Naked Capitalism's maven, Yves:
Progressives Need to Up Their Game Against Social Security’s Enemies
March 24, 2014
Yves Smith
Yves here. I must confess I find it difficult to counter the simple-minded and inaccurate arguments of the deficit scaremongers. They start from the falsehood that we have been “living beyond our means” when pre-crisis, deficits were running at 1.2% of GDP and the CBO projected that they would rise to and remain at 1.5% of GDP, which was a sustainable level. The Federal debt to GDP ratio would have fallen over time at that level of spending.
What made debt levels rise was the global financial crisis. Yet you never, ever, hear this crowd talk about banking industry reform, or for that matter anything other than cutting “entitlements”. The formula is “deficits dangerous, cut spending for ordinary people.”
It’s hard to beat the “live within your means” imagery, which is intuitively appealing to most people and difficult to rebut in the soundbites usually allotted for this type of conversation on TV or at conferences. Dean Baker takes the line of explaining that long-term forecasting is prone to error, and that even i(f) Social Security turns out to need fixes, we have plenty of time to do it and it would take at most 1% more of GDP of spending, which is comfortably affordable.
And as for Medicare, which is not part of this post, I suggest you read how the Fed’s long term fiscal forecasters have shredded the CBO model that has served as the basis of deficit hysteria. They demonstrate that the spending growth projections are indefensibly aggressive and violate the CBO’s own rules for budget forecasting.
- Joe Firestone, Ph.D., is Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program.
Firestone taught political science as the graduate and undergraduate level and blogs regularly at Corrente, Firedoglake and Daily Kos as letsgetitdone. Cross posted from New Economic Perspectives.
MSNBC’s right-wing representative on The Cycle, Abby Huntsman (daughter of defeated Republican candidate John Huntsman, got a lot of pushback from Social Security defenders after her rant last week. They made points similar to the following in countering Huntsman:
– SS is not bankrupt now, it has $2.6 Trillion in Treasury IOUs in the SS “trust fund” accumulated because Treasury has used FICA collections to “pay for” other Federal spending since 1983, when the Government began to collect more from workers and employers than was paid out to beneficiaries. The accumulated IOUs, projected interest on them, and future FICA collections are projected as being enough to “cover” 100% of SS benefits until 2033, and then 75% of benefits thereafter. 100% of benefits could be “covered” from 2033 on, if the payroll tax cap on Social Security were to be removed.
– Huntsman’s claim that seniors have longer life expectancies than when SS first was enacted is greatly exaggerated, because life expectancies at birth have improved due to improvements in infant mortality rates. But they haven’t improved nearly as much at age 65 and older, and apart from that, the improvement that exists after age 65 is reached is primarily concentrated among certain social groups, and that the poorest and most needy groups in our population, who need SS the most, have either seen little improvement in life expectancy, or even a decline in life expectancy in recent years.
– Savings of seniors now average very little more than is needed for them to cover Medical expenses due to aging and there is precious little left over for living expenses beyond what SS spending will cover.These two are different because the Government can do various things to close that gap. Huntsman mentions only cutting benefits or moving the SS retirement age to either 70 or even 75, so that enough will be left in the fund to close the revenue/benefits gap. But there are other ways of doing this easily; most notably removing the payroll tax cap so that the well-off, or those who are prospering, will pay the same share of their income into Social Security as most of the rest of us, and/or there can also be gradual small increases in the employee and employer contributions that will close the projected gaps indefinitely.
– Huntsman is conflating the SS “Trust Fund” running out of money in 2033, with SS running out of money. The first is happening as it was always planned to happen when the Reagan Administration and Congress agreed to raise FICA payments to almost double the amount previously paid, for the boomer generation to cover its retirement benefits; but the second depends on what Congress will do in the future to close the gap between current projected FICA revenues and projected benefits.
Other points of less importance, and moral arguments, which from my point of view are among the most important, about the right to a decent secure retirement for the elderly are made, as well.
But, there is one point, the most important one of all, which is not made in all these “progressive” push-back arguments against Abby Huntsman’s right wing Petersonian “Fix the Debt” rant. That is the point that there is no entitlement crisis and no emergency, and neither an increase in payroll taxes, nor robbing from “future generations” is necessary to close the projected gap after 2033 because Congress can pass legislation providing for annual automatic funding of expected costs for all SS and Medicare trust funds.
That’s done now for Supplementary Medical Insurance (Medicare Part B), and Prescription Drug Benefits (Medicare Part D), and the same practice using similar legislative language can be extended to the SS Old Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds. End of story. Once that is done, no gaps between SS revenue and benefits can be projected by institutions, such as CBO, under current law.
You may doubt this solution by pointing out that legislation like this just pushes off Huntsman’s Social Security solvency problem to the Treasury at large, rather than its being SS’s problem, but it doesn’t solve the real insolvency problem. Only it does, because the Government as a whole has no fiscal solvency problem, since it can always use its authority to create the reserves in the Treasury spending accounts to pay all its bills including all those exceeding its revenues.
The customary way of creating such reserves is to sell Treasury debt instruments, destroying reserves in the private sector, and getting the Fed to place an equal amount of reserves in its accounts. But, there is another way it can be done under current law, and still other ways open to Congress, if they want to pay all the SS benefits they would have guaranteed by the proposed change in the law that would solve this faux problem.
The way any gap appropriated by Congress can be closed under current law, is to use Platinum Coin Seigniorage (PCS) to do it. As many of my readers know, I’ve explained how this would work in my e-book. But, the basic idea is that coin seigniorage can be used by the Treasury to require the Fed to use its reserve creation authority to place reserves in Treasury accounts, without Treasury engaging in any additional taxing or borrowing.
So, this capability coupled with Congress providing for annual automatic funding would end the Huntsman, Peterson, Bowles, Simpson, Ryan, and Obama revenue gap problems with Social Security and all other entitlements, for that matter, without these poor folks having to worry about taxing the rich, like them.
And, if Congress doesn’t like that alternative way of placing reserves in Treasury’s accounts so it can spend Congressional appropriations, then it can always just go ahead and place the Fed within the Treasury Department, giving the Secretary the direct authority to order the Fed to fill its accounts with enough reserves to cover any revenue shortfalls, without either raising taxes or issuing more debt instruments.
So, these are the easy ways to end the faux crisis which won’t befall us anyway until 2033. Why won’t the “progressives” pushing back against Abby Huntsman mention solutions like these? Why do they, instead, always propose solutions that will raise taxes on the wealthy? Are they afraid to let the people know that the Government isn’t like a household and doesn’t have the same financial problems they have, just written large? Are they so insistent on solutions that will tax higher income and wealthy people, because they must kill the two birds of full employment and greater equality through taxing with a single stone?
Moving toward greater economic equality is a focus we ought to prioritize very highly, but getting that done is a separate issue from defeating deficit terrorism by taking the deficit reduction and faux entitlement crises off the table so full resources can be devoted to strengthening the safety net and legislating programs essential for getting millions of Americans on their feet again and contemplating the future with hope. That, in itself, will lessen inequality.
And after that is done, we can then turn our attention to programs primarily focused on creating greater economic equality. But until it is done, let us focus on stopping the bleeding of working and middle class Americans and restoring them to the economic health and sense of economic opportunity, that we’ve always thought was so important to American life.
Comments:
Jim Haygood
SS is not bankrupt now, it has $2.6 Trillion in Treasury IOUs in the SS “trust fund.”
So if I have $100K in my bank account, am I bankrupt or not? You can’t answer the question without knowing my liabilities. And as the author obviously knows, the same is true for Social Security, or any other entity. But it makes a better sound bite for the innumerate to just baffle them with big numbers. Trillions, OMG!!!
In fact (as opposed to rhetoric), the Social Security Trustees report for 2013 notes on page four that:
‘For the 75-year projection period, the actuarial deficit is 2.72 percent of taxable payroll. The open-group unfunded obligation for OASDI over the 75-year period is $9.6 trillion in present value.’
In other words, Social Security is grossly underfunded, and fixing it with payroll taxes would require a swingeing bite. Those who try to sweep these inconvenient facts under the rug are no friends of Social Security.
Pension security begins with full funding, contractual enforceability, and a fiduciary obligation to beneficiaries. Soc Sec possesses none of these basic safeguards, and as such, is a source of uncertainty and insecurity, not to mention low payouts owing to malinvestment of its assets.
diptherio March 24, 2014 at 11:41 am
“For the 75-year projection period…”
Ah yes, “projecting” over three generations into the future: sure to be highly accurate.
Don’t worry Jim, climate catastrophes and disease will wipe out many of the people CBO is projecting long before they reach retirement age; many before they’re even born! The CBO has failed to account for our planetary post-industrial decline. Taking that into account makes the SS numbers look far rosier.
saurabh March 24, 2014 at 11:53 am
$9.6 trillion over 75 years comes to $128 billion a year, which is already only 1% of GDP. In addition, while that number is in nominal terms, hopefully over the next seventy-five years the economy will continue growing faster than the rate of inflation (i.e. there will be real growth in productivity), making that percentage even a smaller. This is an accounting problem that we need to take care of legislatively. It is not a crisis requiring us to scrap our social welfare system right now, or privatize it into the hands of those who will surely destroy it.
Min March 24, 2014 at 12:00 pm
I have two reactions to the Living Beyond Our Means meme.
The first is, what does that mean? Burning too much oil? Eating too many french fries? Degrading our environment?
The second is, Are You Nuts! How can the richest, most powerful nation the world has ever known live beyond its means? If we have people going hungry, living on the street, or dying from lack of medical care it is not because we cannot afford to feed them, clothe them, house them, or heal them. It is because we do not want to do so. The claim that we are living beyond our means is just an excuse for doing nothing.
washunate
Social insurance is popular, just, evidence-based, cost effective, and critical to the entrepreneurial risk taking upon which market-based economics depends. I find that someone not amenable to at least one of those angles is usually part of the problem (unless of course they are legitimately critiquing private property ownership itself, but that perspective is quite rare…)
I would also add, though, that acknowledging people’s concerns about things like inflation and government waste is helpful. After all, if the cost of living wasn’t going up so much, then why is chained CPI a big deal?
We are squandering massive resources, and the healthcare sector in particular is definitely part of the malinvestment. The OASI trust fund is sound. But the DI and HI trust funds have real choices coming, and our unemployment insurance system is embarrassingly awful.
Only a tiny minority of the unemployed are covered by UI benefits. Those excluded range from prisoners to recent graduates to people who ‘voluntarily’ quit a prior job to people who violated a ‘policy’ of the prior employer to people who worked for an employer not covered by that state’s unemployment compensation system.
It is also interesting hearing a defense of social insurance in the MMT context, since social insurance (particularly universal unemployment insurance and universal health insurance) is one of the biggest alternatives to MMT’s JG/ELR. What social insurance offers – especially in the American context – is proven historical success combined with the underlying philosophical view that life is a basic right, not something that must be earned. JG is exactly the opposite – it says that people should have to work for even the most basic of necessities.
Again, we need to hear the above comment every day in all the unbiased (and biased, but dream on!) media in order to be able to fight back against the corrupt media-paid professional liars.
As I have commented so many times in the past, get a life folks. Social Security is as secure as the citizens who paid into it all their work lives want it to be. Dean Baker* has documented how less than a $1.00 a week increase in FICA taxes (not to start until 2020, folks!) will secure it for a century into the future (if you have no faith in the continued existence of and increase in the GDP of the USA). Coberly explains to naysayers even more pointedly.**
* An increase in the tax rate of 0.14 percentage points annually (0.07 percent on both the worker and the employer) beginning in 2020 and running for thirty years should be sufficient to make the trust fund balanced for its 75 year planning horizon. This leaves a total increase in the tax rate of 4.25 percentage points (2.23 on both the worker and the employer) by 2050. (The spreadsheet is available on request.)_ _ _ _ _ _ _
** written by coberly, March 16, 2014
. . . the "unfair" extra cost to the Millennials is about eighty cents per week per year while their wages are expected to rise about eight dollars per week per year, and their life expectancies to increase by about three years.
. . . it is real hard for me to see this as a burden, much less unfair. but as an old math teacher . . . I have learned that not everyone has much of a sense of proportion where numbers are concerned.
. . . the baby boomers already paid more into the system. That was the 1983 tax increase. The extra that the Millennials will pay is not to pay for the boomers, but to pay for their own longer life expectancy/lower wage growth
I boarded a bus on May 6, 1970, and went to Washington, D.C., to protest the Ohio National Guard's murder of the peaceably demonstrating students at Kent State (who chartered the bus and how and what happened next will be an important chapter of my coming autobiography).
I, also, have yet to see a true public accounting of what exactly happened on that day from a government or administrative spokesperson who took responsibility (one way or the other) for the unfolding events.
This state of affairs will never go away (until it is resolved by a truth commission). And certainly not now in a time of 24/7 surveillance of the entire populace.
(photo: Laurel Krause)
Kent State Truth Tribunal Addresses the United Nations Human Rights Committee
Laurel Krause, Open Mike Blog
24 March 14
n March 13, 2014 the Kent State Truth Tribunal addressed the United Nations Human Rights Committee at the United States 4th Periodic Review in Geneva:
My sister Allison Krause was one of four students shot to death by American military personnel in the parking lot of her university campus at Kent State, Ohio on May 4, 1970 as she protested the Vietnam War. I was fifteen years old when this happened. I have come here today to ask that the United States be held accountable for failing to fully investigate this incident and its own complicity in the crimes that took place and to deliver justice to the victims and their families. Allison stood for peace and died for peace on May 4th.
My mother Doris Krause, now 88 years old, is not able to travel due to her failing health. Even though Mom’s not here, she helped write these words and believes in them. Our sentiments are shared by family members and by many others present at Kent State at the time of the shootings, as oas concerned citizens who have also longed for accountability for the historic, and tragic, series of events at Kent State.
For 44 years the United States government has refused to admit that four young students … children … were killed at Kent State. There has not been a credible, independent, impartial investigation into Kent State. No group or individual has been held accountable. Even in 2010 upon the emergence of undeniable, credible forensic evidence pointing to direct US government involvement, there has still not been a full accounting of the events on and near that day, and no remedy delivered to the victims.
Because of the failure of the US government to pursue accountability and deliver redress to victims, we ask the UNHRC to press the US to initiate a new investigation of Kent State, with a particular focus on the forensic evidence that emerged in 2010. The right to assemble and protest is professed as a cherished American value and is a fundamental facet of our democracy.
The Kent State precedent has cast a shadow over this democracy for over 40 years. If Kent State remains a glaring example of government impunity, it sends a message that protestors, especially young men and women, can be killed by the state for expressing their political beliefs. My sister died protesting for peace and I would like to honor her memory by ensuring that this never happens to another American protestor again.
# 2014-03-24 07:52
Congratulations on your tenacity and dedication to the truth about the events that led to the murder of your sister and the other 3 unarmed students during a peaceful protest against the invasion of Cambodia on May 4, 1970. Many, many of us have not forgotten this seminal event w(hich), along with the Tet Offensive in 1968, turned public opinion fully away from its warmongering and abuses of protesters of that war and racial bigotry.
Cover ups of the sort which Nixon and his cronies boasted about - including Kent, were the rule of the day in 1970 - a time when a nation was so divided it was not possible to have any hope. Your efforts and sacrifices in the name of your sister may very well rip open the lies that caused a nation to become the worst abuser of "democracy" as a cover for freedoms we are losing every day. Thank you, Laurel Krause. We will follow this process to its end in full support.
Monday, Mar 24, 2014 10:35 AM EST
Paul Krugman Bashes GOP for Pushing America Toward Oligarchy
The New York Times columnist thinks the time to stop a slide into permanent inequality is running out
Elias Isquith
In his latest column for the New York Times, award-winning economist and best-selling author Paul Krugman has a warning to Americans everywhere: If we’re not careful, we may end up living in an oligarchy much sooner than we think. And we’ll have Republicans to thank.
“America’s nascent oligarchy may not yet be fully formed,” Krugman writes, “but one of our two main political parties already seems committed to defending the oligarchy’s interests.”
For proof of the GOP’s fealty to the interests of the super-rich, Krugman turns back the clock to the George W. Bush years, focusing particularly on that president’s signature tax cuts. “It’s generally understood that George W. Bush did all he could to cut taxes on the very affluent,” Krugman writes. “It’s less well understood that the biggest breaks went not to people paid high salaries but to coupon-clippers and heirs to large estates.”
According to Krugman, Republicans’ focus on protecting the interests of massive, inherited wealth hasn’t abated in the post-W. era. Citing a favorite target, Krugman notes that former vice-presidential candidate Paul Ryan’s so-called road-map budget plan would strip away taxes on nearly every form of what the economist calls “unearned income.”
“Under this plan,” Krugman warns, “someone living solely off inherited wealth would have owed no federal taxes at all.”
Having established the what of the GOP’s oligarch-friendly policies, Krugman next turns to the why:
Why is this happening? Well, bear in mind that both Koch brothers are numbered among the 10 wealthiest Americans, and so are four Walmart heirs. Great wealth buys great political influence — and not just through campaign contributions. Many conservatives live inside an intellectual bubble of think tanks and captive media that is ultimately financed by a handful of mega-donors. Not surprisingly, those inside the bubble tend to assume, instinctively, that what is good for oligarchs is good for America.
As I’ve already suggested, the results can sometimes seem comical. The important point to remember, however, is that the people inside the bubble have a lot of power, which they wield on behalf of their patrons. And the drift toward oligarchy continues.
Comments:
Jack Hughes
The Republican Party is in reality a massive wealth-enhancement scam for the plutocracy. For a relatively minor investment - hundreds of millions of dollars - America's plutocrats receive trillions in tax avoidance and direct subsidies from the taxpayers.
Of course, such a scam requires massive deception to convince the rubes to vote against their own economic self-interest in favor of the hereditary aristocracy. But with the help of the corporate media and with Republicans selling the "striped turds" of so-called social issues, the sheep eagerly line-up to be willingly fleeced as their jobs disappear, wages decline and their country's infrastructure crumbles around them.
Jimmy Carter: 'I Believe If I Send an Email, It Will Be Monitored'
Former President Jimmy Carter. (photo: AP)
Former President Jimmy Carter believes U.S. intelligence agencies are spying on him — so much so, he eschews email to avoid government spies.
"You know, I have felt that my own communications are probably monitored," Carter told NBC's Andrea Mitchell in an interview broadcast Sunday. "And when I want to communicate with a foreign leader privately, I type or write a letter myself, put it in the post office and mail it.
"I believe if I send an email, it will be monitored," Carter continued.
The 89-year-old said the National Security Agency and others have abused the argument that gathering intelligence is critical to homeland security.
"That has been extremely liberalized and, I think, abused by our own intelligence agencies," Carter said.
Grover Norquist and the Kochs take on Tennessee GOP
Elias Isquith
The anti-tax activists declare war on Republicans in the Volunteer State who say a new tax cut is unaffordable
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