No Money Left For Social Security After Wall Street Bailout?

[Better Believe It]

CounterPunch
Apri1 14, 2008

Nothing for Families and Retirees
A Trillion Dollar Rescue for Wall Street Gamblers
By MICHAEL HUDSON

Michael Hudson is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JPMorgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world's first sovereign debt fund for Scudder Stevens & Clark. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002)


The American public may justifiably be puzzled by how the government can seem to come up trillions of dollars for foreign wars and banker bailouts, but so little for them. The United States is spending an estimated $3 trillion for an illegal war that has made us less safe, and $1 trillion so far to rescue bankers in a way that is destabilizing the economy. But it can't seem to secure health care or retirement security for all Americans. On Tuesday, March 25, fresh from providing a trillion dollars to underwrite the financial and real estate sector, Mr. Paulson revived the Bush Administration's pretense that there is no money to pay Social Security. Yet "fixing" Social Security--if indeed there is a problem (which is no means certain)--would be relatively easy. Merely restoring the Bush tax cuts for the top 1% of Americans (those earning over $414,000 a year) to the high 30-percent tax rates of the 1990s (nowhere near approaching the 94% top marginal rate of the 1940s, or even the 70-percent rates of the 1970s) would provide 46% more than the Congressional Budget Office's estimate of the Social Security shortfall. The Administration does not acknowledge such inconvenient truths, or do the reporters who simply pass on its handouts to the mass media.

The claim that there is no prospective funding to meet the government's Social Security and Medicare obligations was rendered blatantly incredible in the last week of March, which saw the five-year anniversary of the Bush Administration's war in Iraq. As its death toll to U.S. soldiers reached 4,000, newspaper accounts across the country reported the calculations by Nobel Prize winner Joseph Stiglitz that the war's cost has reached the $3 trillion mentioned above, taking into account its legacy of interest charges and medical treatment for the more than 25,000 troops that had been wounded or had post-traumatic and other psychiatric stress disorders. (Mr. Stiglitz recently updated his analysis to say $3 trillion is a conservative number.)

Five years, four thousand lives, and three trillion dollars for the war--but no money for Social Security and Medicare! Did Mr. Paulson not feel just a little bit discomfort in claiming with seeming urgency that Social Security funding would be exhausted in just over another thirty years, by 2041? Medicare is supposed to be in even worse shape, having accumulated enough wage set-asides to last only until 2019, due largely to rising health costs--which the Bush Administration refused to control by negotiating prices with the drug companies, among others.

The historical road to serfdom is that of debt peonage to a financial oligarchy concentrating wealth in its own hands. Contemporary anti-government "libertarianism" creates a vacuum that the financial sector moves to fill. The problem for society at large is that finance finds its major gains to lie not in raising living standards, but in promoting a free lunch for its customers--while turning corporate profits, monopoly rent-seeking and real estate price gains into a flow of interest to itself, by advancing the credit to finance the purchase of these assets and privileges.


http://www.counterpunch.org/hudson04142008.html

[Faygo Kid]

1. Excellent. Bush's sole failure has been his inability to completely destroy the New Deal.

He got Saddam, mired us in an endless war, trashed the Constitution, crushed the middle class, destroyed the poor, ruined the environment, poisoned our politics, drove the nation's wealth into the hands of a privileged few. All in all, he has been successful, in a Cheney/Rove fashion.

He has not yet destroyed Social Security and Medicare - but he is working on it. He has plenty of time left, although I predict that he will instead focus on attacking Iran.

And leave the final destruction of the social safety net to brother Jeb Bush, who is already staking out that ground as his own.

[Divernan]

2. There will be nothing but massive debt left by the time Bush leaves office.

[gordianot]

3. So there are real elitist in this Country? Maybe we will hear more?

[predfan]

4. Don't forget the Grover Norquist quote about killing big government.........

his disciples in this administration have just about killed the whole process.

[Warpy]

5. That's what Grover (Grima) Norquist wants us to think

Granny can just find a kid to move in with. Her days of plush living on cat food at the taxpayer's expense are just about over. We have BANKS who need that money more!

The only thing standing between a lot of people in this country and real economic serfdom is our bankruptcy law. We still have one even though the banks tried their damnedest to abolish them for citizens. People at or below the median wage can still seek the same protection from predatory lenders they always had and people above it will still find at least partial protection once they've jumped through enough hoops.

Still, a whole lot of people are going to be learning a very tough economic lesson: debt is poison, to be avoided unless there is no other alternative.

[nashville_brook]

6. "debt peonage to a financial oligarchy concentrating wealth in its own hands" -- yep, that's it.

[Junkdrawer]

7. Bush's 2001 Tax Cut was the BIG giveaway...followed by Iraq...

After the $10 trillion 2001 tax cut, the $3 trillion Iraq war, and now the $1 trillion bailout, Social Security cuts will be marketed as "Fiscal Responsibility". RW radio is already gearing up the propaganda machine.

[JDPriestly]

8. $989.90 = the average Social Security benefit in March 2008 was

50,234,000 individuals received Social Security benefits in March 2008. 47,634,000, of which 34,229,000 were 65 or older, received Social Security benefits only.

That means that 13,405,000 of those receiving Social Security are under 65 -- most likely unemployed, unemployed spouses (who may have never worked) or early retirement takers for other reasons such as health.

The individual monthly payments are not enough to live on if you think about maintaining an apartment or house or buying Christmas presents for the grandchildren or having cable TV.

Yet the CEOs of these companies that are being bailed out will retire with millions. Talk about taking candy from children. How about taking food from your grandmother's mouth?

[RebelOne]

9. I'm receiving $1,300 per month in social security benefits.

But I am still working full-time. I could not live on that amount. So, I'm trying to sock money into my IRA and 401K, so that maybe I will be able to retire sometime next year.

[Better Believe It]

10. Let's Lower The Retirement Age To 62

If we take the income cap off social security payments we can easily:

1. Lower the retirement age to 62 with full benefits.

2. Lower the early retirement age to 55 with partial benefits.

3. Pay for a substantial increase in social security benefits.

[CK_John]

11. The professor fails to grasp is that money is a concept not your checkbook. n/t