"There Is No Social Security Crisis"

[sabrina 1]

They will lie, use scare tactics and do whatever is necessary to once again attempt to get their hands on the Social Security fund so it is essential for people to have the facts so that they are not fooled by the tactics already being employed by members of 'The Deficit Commission'.

The Commission has become illegitimate as James Galbraith and other respected economists have pointed out, because of its focus on Social Security which has nothing at all to do with the Deficit.

Paul Waldman added his voice to those of other experts on the economy and explains why claiming that there is a crisis, or that that SS is partly responsible for the deficit is a lie:

There Is No Social Security Crisis

The myth of the "Social Security crisis" is so pervasive and so pernicious that it's necessary for those of us who actually believe in the program to respond to the crisis-mongers whenever we can. And they've got muscle -- witness the recent round of full-page newspaper ads featuring a looming iceberg and screaming headlines about the $56 TRILLION!!! we're supposedly in the red (these are funded by hedge-fund billionaire Pete Peterson, the Daddy Warbucks of the entitlement fear factory). So let's examine what the crisis-mongers say, and what the truth is.

For years, we've been told that Social Security is "going broke." It is also often said that at some future point, the program will "run out of money." Just last week, The Washington Post said matter-of-factly that "Social Security is projected to run out of money by 2041." This implies that at some future date, elderly recipients of Social Security will receive checks in the amount of $0, all the money having disappeared.

This is simply bogus. The truth is that the system is quite healthy and can meet all its future obligations with only minor adjustments or perhaps no adjustments at all, depending on what happens to the economy over the coming decades.

He goes on to explain why we do not have to worry about Social Security for decades to come and also deals with the Baby Boomers Retiring Myth

Enter the baby boomers, that endlessly self-absorbed, blood-sucking leech of a generation (I kid). Boomers have just begun to retire; in a few years, their numbers will cause the system to pay out more than it pays in. According to the Social Security trustees, who are responsible for overseeing the system, this will happen in 2017.

The prophets of doom believe that this date -- 2017, remember it, because they'll always bring it up -- is when the sky will tear loose from its moorings and begin hurtling toward our heads. But here's the thing: The period of benefits exceeding tax payments that is supposed to begin that year is exactly the reason why the Social Security surplus exists in the first place. We keep adding to the surplus every year precisely so that it will be there to draw on when we need it. And the baby boomers' retirement is when we'll need it.

But ah, you say, what happens when the trust fund is exhausted? Isn't that when all hell breaks loose, as the system truly "goes broke"?

No. The system will never "go broke."

It is worth reading the entire article. When the public is armed with the facts, it makes it more difficult for the 'prophets of doom' to succeed. Knowledge is power and can easily ward off any fears the propagandists catapult in our direction.




George Bush waited until after the 2004 election before attempting to deal with Social Security. His job was to convince the public that Social Security was facing a crisis and something had to be done about it.

The Republicans have been salivating over the huge Social Security fund for decades. Privatize it, cut benefits, raise the retirement age etc. and to do any of that, they have to convince the public that Social Security is in trouble, and/or contributing to the deficit. The fact that neither of these claims is true, hasn't deterred them.

He failed, they underestimated the political danger of attacking Social Security and airc, AARP launched a huge campaign to stop the rightwing agenda at that time. Where are they now?

Every reputable economist in the country has stated over and over again that there is no Social Security crisis and that Social Security has nothing to do with the Deficit. SS is a separate fund, the Deficit as James Galbraith and others have pointed out has been caused by the Financial Crisis:

James K. Galbraith’s Testimony Blasts Fiscal Commission

The New Deal website summed up James Galbraith's testimony before the Commission. The full text of his excellent address is linked in the article.

For a quick snapshot, Galbraith’s testimony is divided into ten sections, which address the following points:

-That the Commission’s work is illegitimate

-That current deficits and rising debt were caused by the financial crisis.

-That future deficit projections are generally based on forecasts which begin by unrealistically assuming full recovery

-That, having cured the deficits with an unrealistic forecast, CBO recreates them with another, very different, but equally unrealistic forecast.

-That the only way to reduce public deficits is to restore private credit.

-That Social Security and Medicare “solvency” is not part of the Commission’s Mandate.

-That as a transfer program, Social Security is also irrelevant to deficit economics.

-That markets are not calling for deficit reduction, either now or later.

-That in reality, the US government spends first & borrows later; public spending creates a demand for Treasuries in the private sector.

-That the best place in history (for this Commission) would be no place at all.

Our favorite line comes near the end with this withering address to the Commission: “You are plainly not equipped, either by disposition or resources, to take on the true cause of deficits now or in the future: the financial crisis.”

Professor Galbraith, we could not have said it better.

It is not enough to fire Alan Simpson, and/or Pete Peterson. The Commission itself should be disbanded.

President Obama said in the campaign in a debate with Hillary Clinton and John McCain both of whom favored a Commission on the deficit, that he opposed these kinds of commissions as they were really a 'stealth way to get around Congress debating and then voting on issues'.

Just as Bush waited until after the election to deal with their plans for Social Security, this administration is doing the same thing. Call and demand that they deal with it NOW, before the election. Because weare at the 'fool me once, shame on you, fool me twice etc. etc. stage.

They really do think we are stupid ...

[Zenlitened]

1. K&R for an important post. There is no social security crisis.

:applause:

[Subdivisions]

5. Yea, but they gonna take that shit anyways. n/t

[sabrina 1]

15. They are definitely going to try

But it gives me hope when I remember that George Bush after he stole the 2004 election arrogantly announced that he had 'political capital' and was going to use it. I couldn't watch him anymore. I developed an allergic reaction to television, even flipping through channels in case I might accidentally hear his voice.

So when he announced his 50 state SS campaign, I just felt helpless and was sure he would win. But then a miracle happened. He didn't. The American people love Social Security and even Bush could not get them to go along with his scheme to steal it from them.

[Subdivisions]

17. I sincerely share that hope. But I'm used to my hopes being dashed. n/t

[NorthCarolina]

61. For the record, lets all define "They".

I would define "They" as DLC New Dems/GOP. What is your understanding of "They"?

[TBF]

68. "They" is the same owners who looted our 401Ks and spend

billions of our hard-earned money on war.

That is who "they" is - and they need to be stopped (and their corrupted system of Capitalism while we're at it...)

[NorthCarolina]

71. But that still is a nebulous "They". Exactly who, or what entity, or group constitutes "They"? eom

[TBF]

75. I don't think it breaks down via party lines to be clear -

my definition would be those 5% (maybe less) who own most of the wealth in this country. Whether they are visible in politics (or even think about politics) is irrelevant. These are the folks who own the wealth and therefore have more control. Gates, Buffet, those are 2 visible guys - I'd look at the Fortune lists for actual names of the others.

[NorthCarolina]

78. Thank you for your response

and I agree that it begins with the wealth. But these wealthy do not make laws and policy directly. That is the responsibility of Congress and the White House. So I guess I was hoping to make the distinction at that level. Your point is well taken though. Thanks again for responding.

[sabrina 1]

72. Yes, that is my definition also.

It is because of the DLC many of whom are members of this administration or advisers, that we have this Commission in the first place. And that there are so many Republicans on it, like Pete Peterson, Judd Gregg, Alan Simpson eg.

As Galbraith points out, the Commission is illegitimate for several reasons, but one of them is that there is only ONE real economist on it, the rest are political people with agendas and they are not qualified to deal with budgetary issues.

[NorthCarolina]

73. Thank you for your "specific" definition of "They"

and I do, obviously, agree with you. I would love to hear from many on this board, providing us with their understanding/definition of what "they" is.

[walldude]

2. K&R

[xchrom]

3. Thank you - recommend. Nt

[gratuitous]

4. But, but, but

Gee, it's only fully funded for the next 27 years or so. Crisis!

But spending a billion dollars and more a day, every day, weekends and holidays included, on "defense" from now into infinity is sound fiscal policy. Mercy! The things you have to believe to be a good American.

[Faryn Balyncd]

6. K & R #5

:hi:


:kick:


http://www.youtube.com/watch?v=_wHr3nMG6Y4

[sabrina 1]

52. Wow, Great video. Van Hollen just would not commit to vote against cuts

Cenk was great. He pinned him down and didn't let him get away with changing the subject. But, his excuse that we 'have to wait and see' what the Commission returns, it 'will be a big package'. So, basically he's saying if they like the package, but cutting SS is hidden in there somewhere he will vote for the whole package.

They BETTER not do that, I hope he doesn't think we are that stupid.

[Ignis]

7. K&R

Why are we doing Republicans work for them by claiming that SS is "insolvent?"

:banghead:

[inna]

49. "We" are NOT. This is not a d/Democratic position, period. nt

[defendandprotect]

85. Did we elect Obama so he could put Repugs in charge of government?

[MsPithy]

88. Pithy, I love pithy!

Thanks, your comment should be a bumper sticker.

[JDPriestly]

92. Bruce Reed who is running the Commission authored

Clinton's bill to do away with welfare to every extent possible. We aren't hearing anything about how that is working in these days of high unemployment. I haven't seen one article on the effects of Bruce Reed's bill on ordinary Americans.

The TANF which helps fund state welfare programs is, I read, due to expire soon.

Here is an article on it:

http://www.cbpp.org/research/index.cfm?fa=topic&id=42

'Temporary Assistance for Needy Families (TANF) is a block grant created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, as part of a federal effort to “end welfare as we know it.” The TANF block grant replaced the Aid to Families with Dependent Children (AFDC) program, which had provided cash welfare to poor families with children since 1935.
Under the TANF structure, the federal government provides a block grant to the states, which use these funds to operate their own programs. States can use TANF dollars in ways designed to meet any of the four purposes set out in federal law, which are to: “(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (4) encourage the formation and maintenance of two-parent families.”'

http://www.cbpp.org/cms/index.cfm?fa=view&id=936

Poverty declined between 1940-1996. (This article is very interesting but does not credit the Roosevelt New Deal and GI Bill investments following WWII enough for the decline in poverty.)

"Long-Term Declines in Poverty-1940 to 1994

Poverty touches the lives of millions of Americans in the 1990s. However, poverty is less common now than it was in the 1960s, and dramatically lower than before World War II. The percentage of the population in poverty was more than three times as high in 1940 as it was in 1994. But all of the postwar decline in poverty rates occurred before 1973. The rate increased slightly over the past 20 years (see Figure 3)."

http://findarticles.com/p/articles/mi_qa3761/is_199609/ai_n8754349/pg_7/

So what happened after Bruce Reed and Clinton's "welfare reform"?

Poverty increased. Read this:

"On September 24, 2002, the US Bureau of the Census released its annual report on poverty in the United States, covering the year 2001. A week later, the Bureau’s annual study on health insurance coverage was released. A few days after that, the Department of Agriculture announced that the food stamp rolls were continuing to grow. In each case, the news was bad with regard to the condition of people living in or near poverty in this country.

For the first time since 1993, national poverty, as measured by the Census Bureau, is on the increase, rising by 1.3 million people to 11.7% of the population. The only group for which income actually rose in 2001 is the wealthiest 5% of those living in the US. Lack of health care coverage is also increasing, with 41.2 million (14.6% of the population) having no insurance, up 1.4 million people from 2000. Another indication of increased domestic poverty came when the Department of Agriculture released figures for July 2002 showing that in that month there were 23,935 people on the food stamp rolls than there had been just one month before, raising the total enrollment to 19.4 million people. This is the latest in a series of increases totaling 1.4 million people in the last year.

The poverty line is established annually through a 40-year-old formula that essentially calculates the cost of a basic "no frills" diet for low-income people, adjusts it by family size, and triples it. This formula does not give consideration to housing, child care, transportation and health care costs, which are now a more significant part of most poor families’ budgets than food. The poverty line for a family of four people in 2002 is $18,100."

(National Council of Churches website)

http://www.ncccusa.org/publicwitness/povertyincreases.html

And more recently, are there more poor or fewer poor?

"Poverty
The 2008 ACS data show that an estimated 13.2 percent of the U.S. population had income below the poverty threshold in the past 12 months. This is 0.2 percentage points higher than the 13.0 percent poverty rate estimated for 2007. The estimated number of people in poverty increased by 1.1 million to 39.1 million in 2008."

http://www.census.gov/prod/2009pubs/acsbr08-1.pdf

The only way to help America's poor, middle-class and wealthy is to improve the economy. The way to do that is to end "free trade" as we know it.

I recommend that we have a trigger mechanism. Following any year in which either unemployment rises above 5% or our trade deficit exceeds a certain percentage of our GNP, taxes on imported goods and use taxes on all services provided from overseas be triggered. That way we can insure that a healthy percentage of American trade boosts America. \

When we export more than we import, our economy expands. When we import more than we export, our economy shrinks. When our economy expands, we all do better. When our economy shrinks, we in America suffer. End free trade.

[dflprincess]

8. Jon Stewart can add this to his next candidate v President Obama bit:

"President Obama said in the campaign in a debate with Hillary Clinton and John McCain both of whom favored a Commission on the deficit, that he opposed these kinds of commissions as they were really a 'stealth way to get around Congress debating and then voting on issues'."

Once elected, Obama appointed a "deficit" commission to consider destroying the one program that isn't adding to the deficit and actually benefits the "little people".

[sabrina 1]

9. Yes, it's definitely Jon Stewaret material.

I can picture him showing the video of that debate, then moving on to the speech announcing the formation of the Commssion and the WTF expression his face! Lol!

[mortfrom]

70. Minor query

Not to throw water on the point, but I can't recall any debate among Obama, Clinton and McCain. Clinton and Obama debated during the primaries; McCain would have had to wear a convincing disguise to have been on the floor with them. Obama and McCain debated post nomination; Clinton would have been a surprising addition to the two presidential candidates. There were no four-way (both pres and vpres candidates for each side) debates.

[sabrina 1]

74. Good point. The issue came up in a debate with Clinton

I have posted a link to it before and if I can find it again, will post it. McCain also favored Commissions. Obama made a prepared speech in which he called McCain's support for Commissions 'a stunt'. I have posted it below in one of my comments.

Iow, he addressed the issue of Commissions more than once. Each time, in the primaries, and later when addressing McCain's position on Commissions.

[dflprincess]

82. I have to confess I just copied that line from the OP

and missed that. Now that you mention it, it does stand out.

[sabrina 1]

90. Yes, I cannot edit it. However it did come up in the debate with

Hillary which is where I believe he said it was stealth way to by-pass Congress. I have a link somewhere as I have posted it before.

And separately from that, he did call McCain's stated policy of using Commissions 'a stunt'. I conflated the two and appreciate the correction although it's too late to fix.

Here is a link to an Obama speech during the campaign in which he attacked McCain for suggesting the use of commissions.

Obama dismisses McCain commission as 'stunt'

Sorry it's from Politico but the quotes are Obama's own words. I will try to find the other remarks he made in the debate with Clinton. His position on this of course began to change as he got closer to the WH.

[unblock]

10. it's really hard to predict that far out with any remote degree of certainty

especially when, by 2041, there will be workers contributing into the program whose parents are currently toddlers.

who's to say there won't be another baby boom and/or immigration boom, which would make funding social security easy-peasy?

[sabrina 1]

11. I think you need to read the article linked in the OP.

But more importantly, read the expert opinions of almost every reputable economist in the country. All agree that the surplus will cover retirement funds fully until at least the '40s.

They HAVE considered factors such as an increase in retired population which is why, rather than recommend raising the Retirement checks now since the fund has a huge surplus, it is more responsible to keep that surplus to cover any future emergencies.

I don't think it's too difficult to predict retirement numbers, population growth is another matter.

[unblock]

14. we agree. you have to make a whole lot of pessimistic assumptions before there's a problem.

most of the obvious factors you can be fairly confident in the statistics, e.g., longevity and demographics of those currently living and so on. projecting that far out gets dangerous because small annual errors compound into quite large errors after several decades. 30 years is a long time, long enough so that a real epidemic (as opposed to one of the many scares) during that time is a real possibility and could cut the number of retirees dramatically.

but social security has always really been funded by today's workers paying for today's retirees (the deliberately accumulated surplus notwithstanding, it's still never been today's workers funding THEIR OWN retirement). so by 2041, who will be working? people who are today under 40 plus quite a lot of people who haven't even been born yet. it's very difficult to predict what future population and net immigration will be. again, small annual errors compound. and those future workers could be injecting quite a lot into the system just when we need it.

when payroll taxes were jacked up under reagan, it was clear and pretty easy to predict the baby boomer retirement problem, so some sort of fix was reasonable. not a big fan of the chosen fixes, but at least it was reasonable to say, hey, looks like we're underfunded.

but today's scare is complete nonsense. certainly no reason not to wait 5-10 years and revisit, see if there really is a problem.

[sabrina 1]

27. Good post, I agree with you. No one is saying that

the fund has shouldn't be constantly monitored and adjusted when needed. But it is the most successful program we have and it is a shame that we have to constantly ward off these attempts to meddle with it. If eg, Bush had succeeded in 2005, any money they would have taken and put in the Stock Market would be gone. I don't know why Democrats are not using some realistic scare tactics to explain to the American people exactly what Republicans want to do with their money.

This fund belongs to the American people. It is not meant to be used for anything but retirement.

[jtown1123]

77. Don't forget disability and survivor's insurance :) Great post

[sabrina 1]

83. Yes, thank you. It is one of the most successful government

programs ever. Brilliantly thought out to provide for the most vulnerable citizens and it is a shame that since its beginnings it has been under assault and continues to be. Which is why we need a strong opposition party always ready to ward off the thieves who steal from the mouths of the elderly and disabled.

I wish a law would be passed to put this fund off the table as a means of making points to win an election. It should never be discussed by a Commission like this, as Obama himself said in the campaign. It is far too important and should be viewed as something no politician dare touch. Off limits to greedy banksters and Wall St. gamblers.

[DCKit]

12. The Ponzi scheme that is Wall St. could have gone on for another decade...

as it was, had they the hundreds of billions from SS to loot.

After SS is privatized (if we let them do it), they'll be buying yachts for their tots and jets for their pets.

[sabrina 1]

13. 'yachts for their tots and jets for their pets'! Lol!

Seriously, I think that when Bush tried to privatize SS it was because they knew what they had done with the economy and would have used that huge fund to prop up the failing Wall St. crooks. Eating up the SS money they would have gambled to cover their Casino debts.

Maybe that's why they were so desperate to do it in 2005. They knew it was all going to come crashing down. The Democratic Party and he American people need to fight fiercely to stop them from getting their hands on this fund. So far, I'm not hearing much from Democrats in the way of real commitment to protecting SS from Republican thieves.

[LiberalAndProud]

55. I believe whole heartedly that that was their plan.

Their looting would still have gone unnoticed if they could get their hands on the healthy monthly donation that is OURS NOT THEIRS.

Sorry for yelling. This is just infuriating.

[sabrina 1]

76. Yell away. I feel like screaming especially since we're

not seeing Democrats slam them as Galbraith and Krugman and Dean Baker have. And that makes me very nervous.

[defendandprotect]

86. ... and note the Wall St. Journal decades long campaign to label Social; Security

as a "Ponzi Scheme" --

Democrats have for too long been too quite on this issue --

which has a lot to do with corporate infilatration into the Democratic Party --

Many short term rewards for selling out citizens and the nation!!

[laughingliberal]

16. K & R nt

[kentuck]

18. That needs to be beat into the skulls of Democrats...

before they do something stupid once again.

It is a strategy of the Repubs to tear down Social Security piece by piece. They are lying. If the deficit is a problem, there are other areas they may want to look?

[sabrina 1]

19. Every economist agrees, the Financial Crisis is the cause of the

deficit.

Democrats need to get some short talking points which have been helpfully supplied free of charge by Galbraith, Krugman and a host of others.

"There is no Social Security Crisis" and

"The Republican induced collapse of the economy is the cause of the Deficit".

Going into long explanations, conceding points such as 'sometime in the future we will have to 'fix' SS and/or 'we will tweak SS now' simply plays into the false claims. Nothing needs to be done right now and that is all they should say.

[Enthusiast]

20. K&R Thanks for this.

I'm trying my best to remain positive and objective. This is a more difficult task with every passing day.

If Obama told his opponents that 'these kinds of commissions' are a stealth way to get around Congress debating an issue what the fuck is he doing creating such a commission?

They don't think we are stupid, they know we are stupid and they are right. I don't mean 'we' specifically, I mean as a whole. Just turn on the fucking TV or read the right wing comments on any website for further confirmation.

[sabrina 1]

25. He did say that. Here is a transcript of a speech

he gave dismissing McCain's suggestion of using Commissions. I would have to look for the debate transcript where he called Commissions 'a stealth way to by-pass Congress'.

Obama dismisses McCain commission as 'stunt'

Just today, Senator McCain offered up the oldest Washington stunt in the book – you pass the buck to a commission to study the problem. But here’s the thing – this isn’t 9/11....

History shows us that there is no substitute for presidential leadership in a time of economic crisis. FDR and Harry Truman didn’t put their heads in the sand, or hand accountability over to a Commission. Bill Clinton didn’t put off hard choices. They led, and that’s what I will do.

[Enthusiast]

53. So, from this we can see that Obama

didn't just use poor judgment by creating the commission, he had given it a lot of thought beforehand. That even makes it worse.

[sabrina 1]

98. Yes, he had but for some reason he had a change of heart

and as far as I know, he has not explained that. Worse, he put some of the most well-known enemies of SS on this Commission. I really would love to know what he was thinking, if he thought we would not remember his original position on this? Or maybe he just doesn't care.

[customerserviceguy]

21. I have to take issue with some of your points

First, Social Security does have something to do with deficits, it partly finances them. If Social Security trust funds were invested in something real besides a special category of non-negotiable Treasury bond, the lack of their availability would mean that there would be less spending and more taxes in the Federal budget.

It is precisely this excess that is borrowed/stolen that is the subject of this commission. The baby boom generation that got taxed to death to prevent Social Security from going bankrupt in the mid-1970's is now about to clamor at the gates for their payback. There's no sufficient "echo boom" behind them to keep the thing going with the taxes/benefits as they currently stand.

You talk about those who want "to get their hands on the Social Security fund", but there is no big pile of loot sitting around to grab. There are only these IOU's (special purpose Treasury bonds, if you wish) that can only be redeemed by a government budget that is in surplus year after year. And those holdings in the trust fund are standing behind the regular Treasury securities, especially if the Chinese stop refinancing the ones they hold.

The only way to truly pay off any government debts of the kind that the Treasury issues securities on is to raise taxes, cut spending, or print money to redeem the securities. The inflation that would result would be catastrophic.

[xchrom]

22. Do you have links to support your 'echo-boom' notions?

Inwas paying taxes in the 70s and we were - as a whole - no more
Over taxed then as now.

That is a RW talking point attached to the emergence
Of Well-Fare queen rhetoric.

[customerserviceguy]

37. Will this chart help?

It's from the Urban Institute, not some reich-wing 'think' tank.

As for the rise in Social Security taxes, try this chart:



As you can see, the line on the wage base really takes an upward tilt in the late 1970's, the taxes people paid before that were a pittance in comparision. The peak of the baby boom (born in 1957) hit their earning years about the time that the wage base headed for the stratosphere.

As you know, the FICA percentage went from 4.95% in 1977 to 5.7% less than ten years later, at the same time the wage base was accelerating, here's a link from Social Security, itself:

http://www.ssa.gov/OACT/ProgData/taxRates.html

You can dismiss the above as "welfare queen" rhetoric, or you can just accept it as fact.

[Recursion]

62. The notion that the cohort born after 1964 is smaller than the cohort born before it?

Try here for starters: www.census.gov

The government will have to come up with money to pay back the $2.5 trillion. They can do that by taxing, cutting spending, borrowing, or printing money. Any of the four choices has downsides.

[LiberalAndProud]

56. "There is no big pile of loot sitting around to grab."

There is a big pile of money paid in every MONTH. Every single month. They want to divert those dollars to fund our damned and damnable wars. They won't raise taxes on the very wealthy to do it. Instead, they will break our government's covenant with our people. That is looting. That is thievery. That is ... oh god I can't find the word to express the CONTEMPT.

[customerserviceguy]

108. Well, compared to what you and I make

I guess those monthly piles of money do look relatively big. But comparing the monthly inflows (even before taking away the outflows) with the total amount of debt represented by the IOU's would dwarf them.

Yes, that diversion happens, and Congress has 535 reasons why those diversions will continue, no matter what they have to do to make it happen. This is why the reich-wing salivates over privatization, it's a bit more difficult to get the money if individuals own it.

[pattmarty]

58. Two wars, huge defense budged, extra huge "national security"...........

.............bureaucracy (especially since 2001), unrealistically LOW taxes on investment income, the corporate/business tax rate is unrealistically low or non-existent, how long do you want me to go on for? Just because the ass holes "borrowed" from the SS fund we are supposed to cut it? Tax the shitheads who "stole" from the economy to put it back in a truly "stand alone" fund. I really love these "wannabe" economists saying the fund is broke and the SS world is ending yesterday.

[customerserviceguy]

109. I'm all in favor of rewriting the tax laws

I used to be a tax accountant, enrolled to practice before the IRS. Gave it up about twenty years ago, because of rewriting of the tax laws during the Raygun administration. Working class and middle class people started using tax strategies that only the rich seemed aware of, and after that, the tax breaks had to go. Of course, the rich didn't worry, Ronnie cut the tax rates for them, all while FICA taxes were going up on the little people.

Yes, there are ten thousand loopholes, but every one of them has a sizable number of congresscritters out there defending it. If you can think of a way to change that dynamic, we can have meaningful tax reform that would start to get this country's bills paid.

[sabrina 1]

79. Social Security does not cause deficits. That is the most

important point that should be made by Democrats. It may end up being used to bail them out, that is an entirely different thing than claiming, as the right is doing, that the Deficit is caused by SS.

As for IOUs, no, there are Treasury Bonds which must be paid, and there has never been a time when the U.S. Government did not pay interest on its Treasury Bonds. If they fail to honor them now, it would be a first and probably would create havoc in this country. They will pay them.

The 'IOUs is all we have' argument comes from the right.

I won't go into it here, but as far as finding the money, even if they did steal it already, many economists have outlined ways it can and probably will be done without any catastrophic results.

[customerserviceguy]

110. Agreed, Social Security does not cause deficits

But the way that it is financed invites politicians to create them, knowing that there's a source of money out there to raid.

[Hansel]

127. I take issue with the point you seem to be making that it is okay

for Social Security money to be passed out to the wealthiest Americans in tax cuts and that, even though they paid the lowest percentage in FICA taxes, that they should not be put upon now to pay the money back.

They were supposedly suppose to create jobs with that money. That was a farce. They are taxed at the lowest rates in well over 100 years yet they can't eek out that 3 points on their top margin for fear of inflation? They can pay it back and we could raise taxes 10 points and they still would not be hurting nor even be close to paying historic highs in taxes.

Nothing will hurt the economy more that reducing Social Security and other entitlement programs thus causing even less consumer spending. The money borrowed from the Social Security trust fund is sitting in the money coffers of the wealthiest Americans. Taxing that money away from them and giving it back to the seniors it was STOLEN from would do far more for the economy than what it is doing now. Collecting dust.

[jgraz]

23. The only crisis is that the uber-rich and their friends are trying to steal it.

[SlipperySlope]

24. There is a crisis regarding SS; whether it is a "social security crisis" is a matter of semantics.

Let's be honest with each other.

When Social Security starts drawing down the trust fund it is going to cause a crisis in our government unless some change is made. We don't have to call that a "social security crisis", but we should at least acknowledge it. As Paul Waldman points out, it will be an even bigger problem when Medicare starts drawing down its trust fund, but for some reason the powers that be want to lump Medicare and Social Security together and label it the "Social Security Crisis".

This article by Waldman was written in February 2009. Things have obviously changed dramatically in our economy since then. When this article was written, the prediction was that Social Security wouldn't draw against the trust fund until 2017. Due to our "great recession" that occurred this year instead. This is not good news.

Yes; there is a Social Security Trust Fund that holds trillions of dollars of US government bonds. Yes; these are supposed to effectively be "the safest possible investment in the world". So, yes, if one looks at Social Security and the Social Security Trust Fund alone things look pretty sustainable.

But we cannot ignore that all the dollars that were put into the Trust Fund were borrowed and spent by our government. That is how those bonds got there in the first place. It is going to require a major financial adaptation when we shift from these programs generating a large surplus that funds the general government, to a large deficit that has to be paid out of general government revenue. That is the crisis, and it is real.

Pretending there is no crisis does not serve us well. If we pretend there is no crisis, if we ignore the general finance problem, then we almost invite other interests to "solve" the crisis for us. I believe a better approach would be to shift attention from Social Security to the real crisis; that the government needs to figure out how it is going to pay back the loans that it took from Social Security.

I read a very interesting article the other day. It made what I thought was a simple point. The article claimed that western-style governments effectively make three kinds of financial promises:

• Governments promises citizens certain social benefits; Social Security, Medicare, Pensions, education, etc.
  
• Governments promises taxpayers that their taxes will remain relatively unchanged.
  
• Governments promises bondholders that bonds will be paid back with positive real interest.
  

When government finances are running well all three of these promises can be kept. But if the promises government makes outstrip its ability to pay for those promises, then one or more of those promises have to give.

• Governments renege on their promises to citizens by reducing or delaying their social benefits.
  
• Governments renege on their promises to taxpayers by dramatically raising taxes or expanding the nature of what is taxed.
  
• Governments renege on their promises to bondholders by paying them back less than promised, later than promised, or in currency worth less than expected.
  

The article did not say that the United States would be forced into these sorts of tradeoffs, but it speculated the risk is there if we cannot turn the economy around. A depressed economy means reduced tax income, increased costs of social benefits, and increased bond payments due to increased borrowing. The longer the recession continues the greater the risk that a government is forced to start breaking promises.

Here is the part that especially intrigued me.

• We are speaking openly about reducing our social benefits.
  
• We are speaking opening about raising our taxes.
  
• We are not speaking openly about modifying our bond payments.
  

So far, our government has treated its promises to bondholders as sacred, even while looking for ways to modify its promises with its citizens and taxpayers. This is merely a sign of where the true power in our country is today; with the banks. But if public opinion were to turn strongly against the banks, then we could begin to discuss how the banks could take their share of the suffering. While outright default on debt is catastrophic, modification of debt is not. We would not be the first country to modify our sovereign debt, nor would it be the first time the United States had modified its sovereign debt.

If we are going to force our Social Security and Medicare beneficiaries to take a haircut...
If we are going to force our taxpayers to take a haircut...
then when are we going to force our bondholders to take their haircut?

Upon further reflection; Social Security beneficiaries are really just another bondholder. The beneficiaries are paid from the trust, the trust holds the bonds. So to the extent that the government is trying to avoid paying back those bonds they are already talking about giving bondholders a haircut. It just turns out that some bondholders are more equal than others, and apparently our citizens are "least equal" while the banks are "most equal".

[sabrina 1]

29. Ending the Bush tax cuts and cutting the Pentagon

budget would fix the deficit. SS is a completely separate fund from the Federal Budget. Any borrowing that too place, will have to be paid back. And that can be done by doing what I said, end the Bush tax cuts, raise taxes on the top 3% and cut the Pentagon budget.

There will NOT be a SS crisis even when the surplus is drawn down. It will always have funds. It will need adjustment, and we can start increasing the surplus right now by taking back some of what the wealthiest have borrowed and/or stolen.

SS is NOT the problem, the Financial Meltdown is and those who caused it would like to make the rest of us pay for it. You go ahead and enable that if you wish, I do not accept their attempt to duck out of paying their fair share and taking it from Seniors who paid into all of their lives.

[customerserviceguy]

43. I've heard the "cut the military budget" arguments

and while we need for many reasons to get the hell out of Afghanistan and Iraq, the simple truth is that most other defense spending is probably not cuttable. We've already had many base closings, and we will constantly have overseas threats that will seek to wreak havoc and vengence here in the US. Way too many Congressional Districts have military facilities that will be permanently defended, no matter whether the congresscritter elected from that district has a (D) or an (R) next to their name.

While it's good to declare that the borrowing be paid back, where do you want to cut besides the military to get the money to pay those bonds back? We all want to raise taxes on the rich, but there are many, many more middle income Americans whose taxes will have to be raised to really get the amounts needed to redeem the IOU's. Who's going to raise their taxes?

Blindly believing Social Security will always be there, no matter what, is a kind of irrational religious belief. If there is no way to finance it with spending cuts and/or tax increases, then it will be financed by default from inflating the currency. With COLA's, the Social Security recipients might always be protected against losing ground, but the burden of high inflation will be borne by the people still working, especially those who haven't the power of unions to negotiate better wages.

[sabrina 1]

47. When has the U.S. Government ever defaulted on its

Treasury Bonds?

It is NOT a blind belief. I don't think you understand how the SS program works. It will always be there unless Republicans like Dick Armey or people like Ben Bernanke have their way and manage to end it. It will always be funded and it will always be earning interest. And the only way that the U.S. government might default on its Treasury Bonds would be if the entire country collapsed.

As for what to cut, there is plenty that can be cut from military spending. Starting with dealing with the corruption that people like Rep. Alan Grayson was working on as an attorney before he ran for Congress. Finding the missing trillions that is missing from the Pentagon.

Not to mention the weapons systems, the private contractors, the mercenaries etc. If its a choice between allowing Americans to starve, and closing bases in foreign countries, I think the choice is clear.

[SlipperySlope]

100. The US Defaulted on Treasury Bonds in 1933.

I'll grant it depends on how you define default. Saying "I won't pay" is the extreme case, but saying "I won't pay as promised" is another case. Default includes not paying as scheduled or not paying as promised. A typical case of a company defaulting on its bonds would be when instead of paying bondholders back in cash, they pay bondholders back in stock - where the value of the stock is diminished from the promised cash.

Prior to 1933, US bonds promised holders that they could demand payment in gold. After 1933, the government repudiated that debt and would only pay back in currency, where the value of the currency was devalued 40% against the original promise.

That is a default.

Another example of default that comes to mind is around 1888 when the United States repudiated the legal tender status of trade dollars.

Finally, although some claim that inflation is a form of default, I don't take that position. I look inflation as the alternative to default - even if the net effect on the bondholder can be the same.

[customerserviceguy]

106. Oh, I understand how the system works

Current workers pay for retirees, the money they paid while they were working went to people who retired before them. The earliest retirees got paid many, many times more than even the inflation-adjusted value of the taxes they and their employers paid.

As we approached the late 1970's, adding COLA's to Social Security benefits really tossed the thing off of the track, and Social Security was widely viewed as going bankrupt. Jimmy Carter made it his mission to save the system, and he took advantage of the fact that the baby boomers were starting to really enter the workforce in large numbers. By raising the wage base dramatically, and the tax rates, the system was able to survive, although it took a hit during the recession of the early 1980's. At that time, benefit cuts were made, and taxes on Social Security benefits were enacted for the first time.

Now, the baby boom generation that made the survival of Social Security possible for the last thirty years is coming to the pay window for their checks. The number of FICA-paying workers is insufficient to support them for their promised benefits, as it stands under current law.

You and I can agree on something: The system won't be allowed to fail, at least for the next couple of decades. There are too many in Congress who love sweeping the surpluses off to pay for their pet spending projects or tax cuts. That's why this commission will indeed come up with ways to raise taxes, and slow the growth of future benefit payouts.

If we don't acknowledge that this is going to happen, we will lose the power to shape the changes that are inevitably coming. If there are no changes, then inflating the currency is the only possible default in this situation. The US doesn't technically default on paying an obligation when they print enough money to cover it. It doesn't matter that the money will be on the path to worthlessness as they print enough of it.

[Hansel]

130. Raise the cap on FICA. Problem solved.

It's better than what you seem to be advocating for and that is raising the income tax on the middle and lower classes by using tax money they paid for their retirement to fund the general fund instead. That's a 6% tax increase.

[liberation]

59. Sorry, but your argument strikes me as a bit of doublethink

Military budgets, according to you, can't be cut any further as a matter of self evidence, but expecting your contributions to SSI to be there when you retire is irrational?

Okkkkaaaaayyyy....

[customerserviceguy]

107. I'm just recognizing the reality

that just about every Congressional district has military bases and projects in it, and as long as radical Islam is pissed off at us, then there will be a 'need' that can be sold to keep the military budget going at some fairly high level.

I didn't say that those budgets cannot be cut, I specifically said that stopping the bleeding in Afghanistan and Iraq should be done, but as a practical matter, we will never cut the military budget enough by itself to have the surplus needed to redeem Social Security IOU's.

[Hansel]

131. So the burden for defense should fall disportionately on the middle and lower

income classes. By using the taxes they paid into FICA for social security and medicare, a tax that is not paid on earned wages over $106,000, that is exactly what would happen. The wealthy in this country pay no where near the level of taxes on their income that the middle class does because of FICA taxes.

Why is your 1st inclination to take that extra money the middle and lower income pay in FICA taxes and redistribute to the general fund? Why isn't your inclination to recognize that the middle class seems to be able to pay that level of taxes so why aren't people making over $106,000 a year?

Your propensity to think taking large chunks of EXTRA tax money from those who make less than $106,000 a year to pay back money mostly given to or spent by those making well over that amount is bordering on bizarre.

If the middle and lower class can afford to give up an extra 6% to the general budget than those making over $106,000 definitely can. There seems to be a double standard in your tax philosophy.

[Hansel]

129. Not to mention if the money from SS is taken to pay for military spending

that is, in effect, a 6% income tax increase on the middle and lower class that seems to be something that is unacceptable for those making over $106,000 who have stopped paying that 6% in FICA tax.

[defendandprotect]

89. You're predictions are true if we have a fascist takeover of the nation ---

Otherwise, the public understands their stake in a socially responsibile government --

After we urge the firing of Simpson and an end to this commission which is a trail of

betrayal, we should be looking for a new presidential candidate in 2012 -- someone who

actually supports the New Deal -- Social Security/Medicare -- and PEACE!!

Your post is a great argument for tossing the DLC out of the Democratic Party and the

"New Democrats" as well --

Your spiel on MIC is also nonsense -- we can immediately save 28% by simply merging the

services as every other nation has done --

PLUS, Bush DOUBLED the MIC and started two wars -- !!

And, how many new intelligence agencies added -- plus the fascist new design of Homeland

Security?

These are the real "entitlement" programs -- MIC and elites still fighting for tax cuts!!

[sabrina 1]

91. Well said n/t

[Hansel]

128. I guess it's a difference in philosophy in how the Treasury Bond should

be honored. Because they HAVE to be honored or that would mean the total collapse in the United States economy to start reneging on the bonds.

You seem to think that seniors and the lower income Americans should bear the burden of paying them back. After all it was their money that was borrowed to give to the rich and fund the wars. So surely they should feel guilty in expecting the money and feel proud to just fork it over so that those how borrowed it won't have to be put upon to pay it back. How sweet that would be of them.

It also would, in effect, make their tax rate for paying for everything the government spends higher, by far, than they tax rate of the wealthiest Americans who you seem to say could come up with enough to pay the money back. Because they paid by far the highest percentage for FICA and income taxes so that they would have that money in retirement.

I think that not only can the wealthy afford to have their taxes increased to the Clinton year rates, that they also can afford to have them jacked to the rates the middle class have to pay by completely lifting the cap on FICA taxes.

If you are willing to allow social security to be taken to pay for the general fund, what is your problem with instead forcing people who make over $106,000 to pay that over 6% FICA tax on all of their income. That would take care of the issue without having the seniors and disable pay the bill.

Your hesitancy to raise taxes on those making over that $106,000 but boldly accepting that they should be, in effect, raised on the middle and lower class by a rate of 6% to pay off a mess largely caused by the rich seems a bit strange.

[slipslidingaway]

38. I agree with this statement, calling a SS crisis leads one to believe...

that SS is the reason our government needs money now. The issue needs to be addressed, shifting attention away from SS will have people looking at other areas for cuts. The Dems should be talking about the 2+ trillion surplus and how that money was spent on other items, they should have been talking about it every time they voted for billions of dollars for war.

"...I believe a better approach would be to shift attention from Social Security to the real crisis; that the government needs to figure out how it is going to pay back the loans that it took from Social Security..."

[customerserviceguy]

44. The dirty little secret

about the supposed two trillion dollar surplus is that each party, when in power, voted for budgets that raided that money. Neither party wants to have to admit that by fixing the problem. They only want to kick the can down the road for a few more years by raising payroll taxes and cutting benefits.

[sabrina 1]

46. It is not a 'supposed' t wo trillion dollars, it IS two trillion and more

by the year 2023. In fact it will be way more. The surplus is in treasury bonds and is safe. The U.S. Government has never missed a single interest payment on its debts. I am not going go into a long explanation of this right now, but that 'myth' that the Social Security Trust fund has been raided and will not be repaid is a rightwing scare tactic and is simply not true.

There is not a sing reputable economist who has concerns about this.

[customerserviceguy]

57. Again, I ask you

How are those Treasury securities ever going to be repaid without a Federal budget that runs a surplus, as it did for awhile at the end of the Clinton Administration? To get to that sort of a budget, there needs to be tax increases and spending cuts. I'd love to see us stop the bleeding in Afghanistan and Iraq, but even that's not going to fix things, those military expenses will be paid anyway, even though the servicemembers and their expensive equipment might be sitting in bases at home or in safer places.

Imagine that you hold a promissory note for $500K that I borrowed during my last mortgage refinance (I didn't, but I would suppose that you can imagine it). That promissory note is backed by a mortgage on my house, but right now, I can't sell the house for even $150K.

Yes, you have a pretty piece of paper that says that I owe you half a million dollars, but only my ability and willingness to earn money and pay you back that money is where that promissory note really gets its worth, because the home that I've put up as collateral for that loan just isn't going to make you whole if I say, screw it, here's the keys.

Now, I've never missed an interest payment on that loan to you, but I've been paying those payments with other promissory notes, secured by the same house. Are you starting to feel a bit vulnerable now? That's the way I feel about the Social Security Trust Fund's non-negotiable Treasury securities.

You can either use some sort of facts or logic to dispute everything I've said above, or you can simply retreat behind the phrase, "Right wing talking points" as so many here like to do when presented with the realities of the situation.

[Statistical]

60. Treasury bonds are paid every single year without a surplus.

If the govt defaults on a single treasury bond we instantly go to third world nation status. If it happens you have a lot more to worry about than SS.

The federal govt isn't going to default on treasury bonds. Not the ones held by Chinese, not the ones held by major banks, not the ones held by insurance companies & pensions, and not the ones held by Social Security Administration.

It would be the utter collapse of our financial system (making the 2008 scare look like a Disney movie) and would cripple the entire world financial system. It isn't going to happen. Worrying about it simply gives Republicans fuel for their false "SS is bankrupt" claims.


Would you be concerned right now if you personally owned a $50,000 30 year treasury bond? If not then why are you concerned that SS administration has a 30 yr treasury bond?

[SlipperySlope]

104. I would be very concerned

> Would you be concerned right now if you personally owned a $50,000 30 year treasury bond?

I would be extremely concerned if everything I had spent nearly $50,000 in cash to purchase a 30 year bond, especially if it was implied I was going to hold that bond to term. I wouldn't be so concerned if I had the ability to sell it at any moment. Currently US bonds are in a bubble. I'd be especially pleased if I had ridden that bubble up.

30 year bonds are paying about 3.7% right now. The implied inflation rate for the next 30 years is around 2 percent. I do not believe that is an adequate inflation assumption.

[sabrina 1]

112. All of your points may be valid in terms of the deficit and

you have already answered your own questions regarding how that relates to SS and this Commission. You said in one of your above posts that in order for the government to be able to back up its treasury bonds, the government would have to do certain things. Yes, it would and it will. In fact that is what makes the whole argument that SS is a problem INVALID.

As Galbraith, Krugman, Baker, Waldman and others have said, the Government's Budget Deficit has nothing to do with SS which is a separate fund. The problem is NOT SS. The government owes lots of money, it has treasury bonds it must back up. It always has because it must.

It is the job of the government to take care of the budget. You are basically saying that it is incapable of doing that. That is NOT true, not only is it capable, it is not that difficult. As all economists have said, the Government will have to cut back spending, increase taxes on the wealthy and a do a myriad of other things, as they usually do in situations like this. But none of that has anything to do with the SS fund.

Cutting SS benefits will not help with what the Government has to do. They are two separate entities.

It would be like me having lent YOU $50,000. Then YOU get into financial difficulties from overspending. But YOU have assets you can sell which maybe you don't want to sell, like say your hobby is hunting eg. Now you will have to stop buying any more toys for your hobby and maybe sell a few you already own. Rather than end up in court, if you have any sense at all and do not want to completely destroy your reputation and your future credit, you will sell your assets, cut back on spending on your hobby and pay me back.

But you can see that I in no way created your problem. And we are two entirely different entities each with their own separate accounts.

For the U.S. government to default on backing its Treasury Bonds would mean a catastrophe of epic proportions. If we ever get to that point, we will have more to worry about than the SS fund.

[customerserviceguy]

116. The "it would and it will" is what the Social Security Commission is tasked with

They will raise payroll taxes and cut benefits. There was the perception of a recession still continuing in 1977, and the Greenspan Commission did it then, too.

The government already has the problem of dealing with the rest of the $13 trillion national debt, most of which does not consist of Social Security IOU's. Any spending cuts or income tax increases that eventually get enacted will be used to deal with that. It's not going to spare Social Security along the way.

Here's the problem with your analogy as explained to me: What if I've totally piddled away the $50K you lent me, and the fair market value of my toys is only a few thousand bucks? If you go to court to take my wages, I just file for bankruptcy.

Of course, if I can convince you that I have artistic talent, I just might be able to make some prints that I might convince you were worth something. However, other people will see the truth that I don't have any artistic talent, and the prints I've sold you will be of minimal value. Of course, I have to keep making more and more prints, and the very nature of there being so many of them means that the ones I've already made will be worth even less and less.

That's what inflation is like, and that's the default position for Social Security and the entire Federal budget if absolutely nothing is done because of political paralysis.

[sabrina 1]

118. It is NOT a 'Social Security Commission'.

As Galbraith pointed out the fact that they have tried to turn it into one is what makes it totally invalid. See the link in the OP.

But your calling it that shows how successful they have been in influencing the thinking of some of the people, though fortunately not many.

It was set up as a 'Fiscal Commission' and it was sold to Congress as a Commission that would deal with the Government's deficit. The people's fund does not have a deficit. SS is completely irrelevant to what they were supposed to do.

Let me ask you this. If they cut SS benefits, how will that affect the deficit? SS already has more than enough money so there is no need to cut anything in that fund.

Are you suggesting that the Government, having gotten itself into debt, should be able to take money from the People's fund to bail themselves out? Iow, make the people pay for their overspending on wars and bad investments and additionally, make sacrifices from the small amount of money they depend on right now?

As for your analogy, it fails. Because the Government CAN find the money, unlike the person in your analogy. Economists across the nation have shown them how as if they didn't know already.

What they are trying to do, having borrowed from the SS fund, is NOT pay it back. They want to default on the debt to the American people. But too bad, they will have to stop spending on their favorite toys, wars, weapons and investing in the Casino on Wall St. And they will have to pay more taxes. This is more than possible, they just don't like it.

And it would be wise of you not to help them default on what they owe the American people. They can more than afford it.

[customerserviceguy]

121. Fine, call it "Cat Food Commission" if that is your preference

Whatever you call it, the result will be the same.

Cutting Social Security benefits while raising payroll taxes provides the means to keep the 'cushion' going for a couple more decades. That cushion is something that will be used to mask a part of future annual deficits, just like it always has been.

The government already took that money from what you call "the people's fund". It spent most of them on Social Security benefits, many recipients have collected far more than they have paid in. The rest got used for pet projects and tax cuts. It's gone.

As for your assertion that the government CAN find the money, you're right. It will be at the far end of a printing press. Did my "artistic" analogy escape you? I thought surely that you'd be able to figure that out from the word 'prints'. Maybe I should have been clearer and said they were prints of dead Presidents.

Hyper-inflation is the ultimate backup option here. Check out histories of Weimar Germany, Argentina, and even present-day Zimbabwe to see what that leads to.

[sabrina 1]

122. No it didn't escape me.

SS has worked the way it was supposed to. Some people will get more than they paid in, and some will die before they get anything. You forgot about those people, and some will die before they make up the amount they paid in. All this was calculated and it is one of the most successful Government run programs ever and will be far into the future.

Now you are attempting to help the Government become dependent on money that is not theirs, and to default on debts they ran up and guaranteed with the 'full faith of the U.S. Government'.

Why don't they just take their greedy eyes off the SS fund, pretend it doesn't exist except for the money they owe and start from there.

The government does not need to keep printing money. Is that your only solution? They got into a mess, now they need to find an ethical way out of it. They can do it, and they will, because they have to. And they need to forget about SS, it has nothing to do with their problems and it cannot help them get out of their problems. And that is what this Commission was supposed to be about. But they cannot get their minds off that huge fund that belongs to the American workers. So we have to help them do that.

[customerserviceguy]

124. The only reason that the Social Security program has worked so far

is because Congress has been successful in finding more wages to tax, and more ways to cut benefits. They also managed to take advantage of the fact that a large baby boom generation would be a huge flock of sheep to shear, and kick the can down the road for a few more decades, when those who voted for those taxes and cuts would be dead. We've finally hit the point where they kicked it to.

I don't advocate keeping business as usual with this, I'd like to see Social Security excesses invested in Treasury bonds and notes that are tradeable on the open market. Al Gore talked about a 'lockbox' for a very good reason. He was part of the problem when he was in Congress, and as President, he wanted to effectuate a solution. At the time, the Administration that he and Bill Clinton were a part of had engineered a surplus in the budget, and that was the perfect time to really begin to deal with the problem that the election of Bushco moved out a full decade.

If there is no political courage to cut expenses (and we are talking cuts way beyond the military), or raise taxes in a recession on rich people who own congresscritters, then you have exactly two options for redeeming the Social Security IOU's available. One is what you consider unthinkable, which is simply refusing to pay any obligations. This would truly bring down the entire world economy, it's as palatable as nuclear war. That leaves the only other option, the government prints checks to send out that are created out of thin air. It's the only entity in the world that can unilaterally create United States dollars, and it will do that to avoid meltdown.

The commission is an attempt to deal with the entitlements part of Federal expenditures. It's following the model for the base closings commission that was used in the 1990's to deal with the fact that every congresscritter has some military spending in their district. The thinking was that if most Congressional districts could be spared, then their representatives would vote to kill military bases in the other districts on a simple up-or-down vote. It worked, because it got votes from people who thought their district's bases would live to see another day. Of course, the congresscritter who didn't have a base to defend the next time around had nothing to lose by voting for the next round of base closings.

That's the twist here. The Democratic Party knows that it is going to lose seats in the coming election. They walked off that cliff when they voted for this crazy HCR plan that doesn't bring any benefits until later. What better time to enact taxes and cuts that will take effect after the Pukes have taken functional control of Congress?

If it works, then the tea party Rethuglicans can be blamed, Democrats can come back into power when President Obama is at the top of the ticket in 2012, and Social Security will be 'fixed' for at least the rest of the time the baby boomers will be collecting it. Perhaps you can see why I'm so deeply cynical.

[sabrina 1]

147. Social Security is not a Federal Expenditure.

And as such it is not part of what this Commission is supposed to deal with. The only mention of SS by this Commission should be 'how are we going to repay the debt we owe the American Workers from whom we have been shamelessly borrowing?'

It's time for them to pay the piper. You are still refusing to accept the fact that the myth of the baby boomers crashing the system, is a lie. That will not happen as it was calculated on, they themselves more than paid for their retirement while working, many still are.

And you forgot a third options. Political courage to do the right thing. Good leaders succeed in doing what is needed regardless of whether Congress whines about it. It's happened many, many times and it will have to happen again. Because any politician who touches SS and attempts to lie to the American people won't be in DC for long. So on this issue, they better be more afraid of the people, 80% of whom do not want them messing with their retirement fund, than of their corporate masters.

Taxes on the rich will have to be raised. There is simply no way around it. And that is what this is all about. They don't want to pay into the system that they have taken so much from. Well, too bad. It is not their decisions. If money has to come from somewhere, it better not be coming from the people who did not cause these problems to begin with.

[customerserviceguy]

152. Ok, you broke the code

When Congress (and the President) want to change A,B,C, they establish a commission to change X,Y,Z. That's simply the way it's done, and you have to admit, this issue was under the radar for a lot of Americans until Simpson uttered his intemperate remarks.

The more heat that can be put on the President to dump him from the commission, the more the message about what it's truly set up to do can get out. In short, Simpson's big fat mouth is the thing you needed to bring some attention to the cause you're trying to make.

[customerserviceguy]

111. Treasury bonds are paid by issuing more Treasury bonds

And yes, I'd be concerned about a 30 year Treasury bond. I have all my 401K bucks in money market funds, which are composed of securities with extremely short maturities.

Your analogy fails in another way: the IOU's in the Social Security Trust Fund are not negotiable securities. The kind of 30 year Treasury bond I could own would be tradable on the open market, and that gives it a worth that a nontradable security doesn't have.

[SlimJimmy]

66. Be careful there

As you might recall from John Adams, "Facts are stubborn things." And it is pretty clear from your posts on this subject that some folks here don't like your facts and are trying to change them to something more akin to their liking. But I'm with you. Facts are facts are facts and not really subject to change. As I see it, we can continue to play the SS is A-OK game, or can do what you've obviously done, look at the facts and make a common sense determination. I just wish our critters in Washington would do the same.

Does this make me a "Blue Dog" Democrat? Yeah, probably.

[customerserviceguy]

113. I feel that by looking at facts, we can reach better conclusions

There are solutions that we can live with.

1) Raise the wage base, but only gradually on individuals, however the sky should be the limit as far as the employer's share. If some megabank wants to pay it's CEO $10 million a year, maybe we should only tax the first $200-300K of his pay from his check, knowing that it will raise his maximum benefit, but perhaps that megabank should consider it a cost of hiring him to pay 6.85% of the ten million as it's share.

2) Who says that the employer and employee shares should be equal? We could have a graduated scale where the most successful companies pay 1, 2 or even 3 percent more than the employee share. It would also raise revenue while creating no raises in the maximum benefit.

3) Consider moving the Social Security Disability program out of the SSA, and on to the general budget. I'm all for helping out disabled individuals, but why should that be solely the burden of a tax on wages, rather than on all income?

4) Recognize that some jobs can be done until 70 (like mine, for instance) and that 67 is too old to work in other ones. Establish a five-point scale for job difficulty (worker's comp figures should be helpful) and if you have the lousiest jobs, you get full benefits at 65, while the pencil pushers have to go to 70 to get the full benefit.

5) Revise the COLA's to reflect the cost of living as a senior, not as a member of the general public. As it is, most COLA's go to Medicare premium increases, a reform of that program could possibly reduce Medicare costs. That's the next bomb to blow up in our faces, anyway.

6) Finally, establish something that Al Gore was talking about when he used the word 'lockbox'. Put future surpluses in places where Congress cannot finance deficit spending with it. And that might require a balanced budget amendment to really be enforceable.

[sabrina 1]

96. Your analogy comparing the U.S. to a mortgage

company makes zero sense. The U.S. Government has not ever defaulted on Treasury Bonds. Give me one example of where that has happened. If it ever does, we can kiss this country goodbye. You are making a rightwing argument whether you care to admit it or not, and every reputable economist in the country disagrees with you.

[SlipperySlope]

102. Example of US defaulting on treasury bonds is posted above.

Search for 1933

[customerserviceguy]

114. How does it not apply?

I'm talking about insufficiently collateralized securities in both cases, coupled with a potential inability to pay. The only place where there's a difference is that I cannot issue my own currency to pay you back, but the US government can.

If an economist agreed with me, he or she would not be reputable in your eyes, right? Is it only the economists who agree with you who are to be considered reputable?

[sabrina 1]

119. When economists make sense, I agree with them. When they

can and do back up their claims, and when so many of them agree, and when I can see for myself that they are making sense, and when the counter arguments are coming from known enemies of SS who have a vested interest in lying and who are known to have lied in the past, then I know who is making sense and who is not.

The U.S Government will have to start being responsible about fiscal matters. They will have to stop wasting money on wars and weapons and the vast, wasteful newly created agencies like Homeland Security eg, and start doing things like raising taxes on the wealthy, ending the Bush tax cuts for the wealthy and stop thinking they can make the American People pay out of THEIR fund, which has been handled responsibly, for their debts.

That is what this Commission was supposed to be doing, but since it is filled with Rightwing enemies of SS, like Pete Peterson, naturally they diverted the goal to attacking SS. No one should be surprised, but they should be ready to fight them every step of the way.

[customerserviceguy]

125. Well, I guess I pick which economists to regard as reputable

by the way they construct their arguments, not by which partisan organization trots them out.

My favorite one on the subject is Allen W. Smith, Ph.D. Yes, you can find his works quoted on websites that sell ads to gold bugs, but why wouldn't those in the gold business want to sponsor webpages that support their sales strategy? His book, "The Looting of Social Security" has been out since 2003, and he's been sounding the warning ever since. He's predicted that the thing will go bust by 2018, and at the time, he didn't even see the depths of the recession we've been fighting for the last two years.

The information's been out there, but if you live in the childlike state of "My mommy and daddy (the government) are always going to protect me, no matter what," then it's difficult to even pick up books like Professor Smith's. I've been trying to plan my life since 2007 (when I read the book) as though the government is NOT going to look out for me, that the only person who will look out for me is me.

[sabrina 1]

139. If he made that prediction, that SS would go bust by 2018

I'm not surprised he's advertising on gold those sites. Your false claim that anyone concerned about the issue of Rightwingers getting their hands on the SS fund is childlike and looking to the government as 'mommy and daddy' smacks of rightwing ignorance. SS is exactly NOT the Government protecting anyone. The issue is to protect the people FROM the Government.

And who do you know who plans their lives hoping that the government will take care of them? SOCIAL SECURITY is NOT a Government giveaway program!! It is a fund paid for by working Americans. The fund belongs to them. It is NOT Welfare! You should stay away from those rightwing sites. They can cause damage to the critical thinking part of the brain.

[customerserviceguy]

144. He's not the one advertising the gold

His remarks are used (taken a bit out of context) on websites that are right wing scare sites, that sell advertising to gold dealers.

Here's a remark from page 192 of the book I mentioned: "Apparently George W. Bush intends to impose his low-tax, low-service philosophy on all of the American people, whether they want it or not. He is trying to starve the government into turning its back on responsibilities it has held for decades."

Does that sound like right wing BS to you? Republicons despise Professor Smith.

As for those who are depending on Social Security, here's something from the Bureau of Labor Statistics from 2005, from the results section of a study conducted by them on retirement savings:

"There was at least one retirement account in 57 percent of the households. The average or mean amount in the retirement accounts was $49,944, but the standard deviation was $174,193, suggesting that the dollar amount held in retirement accounts varies widely by individual households. The median amount held in retirement accounts--$2,000--provides another indication of the wide variation in the amounts held by households."

http://www.bls.gov/opub/cwc/cm20050114ar01p1.htm

That tells me that there will be a LOT of dependence on Social Security by the baby boom generation, since they haven't managed to put too much away. That encompasses me, because I never put anything permanently away until 2008, having one crisis after another drain my meager IRA's. Since this study is from 2005, I would imagine that the recent recession has even worsened these statistics.

You should spend a bit more time getting to know this problem from progressive sites and books, like I have.

[sabrina 1]

146. He is right about George Bush and I misunderstood your

statement about how he was connected to those sites. But, the fact that they 'use' him demonstrates that they approve of some of what he says. He is wrong about SS. For decades similar predictions have been made, none of them have come true. They are scare tactics from people who hate FDR's social progams and irresponsible people who have no plans to take care of those in society who are old, or disabled or otherwise vulnerable. Their only plan is to let them die.

You are still not getting it about SS. Even if people are dependent on SS, that is NOT being dependent on the government. SS is a fund, paid into by working Americans. And it is a very very successful retirement program. It's similar to a pension fund. When people retire, they collect on their pension funds. Same thing with SS.

You just mentioned IRAs. How many people lost money they put into their IRAs? I know a few. Because it was 'invested' which is what the Right wants to do with the SS Retirement Fund. If Bush had succeeded in 2005, all that money would be gone, and retirees would have nothing right now.

As for your research on who is dependent on SS, it doesn't matter how many people are. THEY PAID for it. So 'dependent' is an inappropriate way to describe them. They are collecting now on what they set aside during their working years. As you yourself admit, you couldn't save for various reasons. And that is always the case for many people. That is why FDR instituted this program. Thanks to him you DID save, if you paid into SS and that will be there for you when you retire, unlike your IRAs which you were persuaded was a great way to save and it turned not to be.

The only real difference between IRAs and SS is that so far the right has not been able to turn SS accounts into private savings accounts to invest in the Stock Market. And we must fight hard to make sure they never do.

[customerserviceguy]

148. Anybody can be taken out of context and used to make a RW point

Certainly, the Shirley Sherrod incident of this last month proves that without a doubt. The only reason I mentioned the gold advertisements is that if you went to Google search Professor Smith, you'd find a sizable number of rightwing websites that use his book, without attributing blame to Dubya. He's actually a pretty articulate writer about what's happened to the Social Security Trust Fund, and when key sentences are lifted from his books, those who would destroy Social Security (and are sponsored by gold bugs) find him convincing.

I'm sorry, if you are primarily dependent on Social Security, then you are primarily dependent on a government program. Congress and the Social Security bureaucracy are the only ones with the power to write the rules under which you will live, when it comes to your financial well-being. There's just no denying that.

Many people did lose money in IRA's and 401K's, but only if they invested in the stock market. I've almost always kept my retirement money in money market funds (always invested in securities with extremely short maturities), and for a little while here and there in bond funds, when I thought they were somewhat safe. I had about $5K from a rollover IRA that I put into stock funds that my ex-wife was selling, and it lost a bundle in 2001. At that point, other than a bit of side 'gambling' money (no more than a reasonable person would put down on a Super Bowl betting pool), I've sworn totally off the stock market. People can indeed save for retirement in safe alternatives.

Here's where we disagree: People who paid into Social Security their whole lives principally paid for their parents' and grandparents' generation to receive it, hand-to-mouth. The little bit that was left over was swept into these non-negotiable IOU's, to cover deficit spending over several decades, by presidents and Congresses from both parties. Redeeming them was always kicked down the street for some other time, when magically, future politicians would have more courage than the ones doing the kicking, in some prosperous day to come.

You seem to think that just because they borrowed/stole it, that there is some mighty justice out there that is automatically going to kick in and cause heaven and earth to bend to pay them back, simply because "it's the right thing to do." I'm sorry, this is Congress we're talking about here, after watching how the HCR sausage was made, I simply cannot have the faith that you do.

Yes, the reich-wing wants to shave off the last quarter of the money going into Social Security for three reasons:

1) The brokers want the commissions off of buying and selling.
2) They'd like to help their rich clients take advantage of the bull market that would exist when Social Security money will flow into equities, then have the richites sell quick.
3) They want to bleed the Social Security System to death by sucking away a quarter of it.

If we do nothing at all, that just gets them what they want at point #3, only a bit slower. Maybe the recession makes that happen a bit faster.

Now, not even a load of Rethuglican congresscritters want SS to go away that quickly, and nobody on our side wants that, either. The only politically feasible answer is to find a way to work with some GOP'ers to keep kicking that can down the street. Simpson's commission is exactly that mechanism. It would take advantage of the lame duck Congress to pass legislation that is politically impossible any other way. As we've seen with HCR, President Obama will sign anything presented to him that he can get through Congress, he certainly doesn't have the ability to sway the debate, or he would have at least gotten us a robust public option.

We have two choices, we can roll around on the floor, pounding our fists, and scream, "Unfair, unfair!" while threatening to vote out of office either congresscritters who are either already out on their butts, or know that we have nowhere else to go. The other choice is to propose making the changes in ways that are fair and equitable IN COMPARISON to the ways that the Blue Dogs and the Rethugs would do it. And that has to happen at the commission level.

[Mimosa]

149. ^ Good points here ^

Customer service guy said:


Yes, the reich-wing wants to shave off the last quarter of the money going into Social Security for three reasons:

1) The brokers want the commissions off of buying and selling.
2) They'd like to help their rich clients take advantage of the bull market that would exist when Social Security money will flow into equities, then have the richites sell quick.
3) They want to bleed the Social Security System to death by sucking away a quarter of it.

If we do nothing at all, that just gets them what they want at point #3, only a bit slower. Maybe the recession makes that happen a bit faster.


Woo Hoo. I figured that out too.

[slipslidingaway]

93. I agree that both parties are to blame, very few members of Congress

talked about how the surplus was being spent and that it would need to be repaid. But it is not because SS did not collect enough money - we need to change the framing of the discussion.

[sabrina 1]

40. I have reread your post and just wanted to say

I completely agree with this:

Pretending there is no crisis does not serve us well. If we pretend there is no crisis, if we ignore the general finance problem, then we almost invite other interests to "solve" the crisis for us. I believe a better approach would be to shift attention from Social Security to the real crisis; that the government needs to figure out how it is going to pay back the loans that it took from Social Security.

I think that is what all the economists are saying. They are not saying 'there is no crisis'. Quite the contrary. But SS did not cause it as the Rightwing are constantly claiming.

So yes, Democrats should be howling about the REAL crisis, which is as Galbraith, Krugman, Baker et al have all said, the result of the Financial Collapse and those responsible should be made to accept the full blame for that.

As for covering any shortfall in SS caused by corruption, again, that can be taken care of by taxing the rich, ending the Bush tax cuts for the rich and cutting other programs, like the military budget. But no way should the American people have to cover for what may have been stolen from them.

[customerserviceguy]

45. Well stated, except one thing leaves me puzzled

When we start to stiff the Chinese who have financed our deficits for the last couple of decades, what will they do about it, and can we live with whatever that is?

[SlipperySlope]

101. I think we hold the stronger hand right now

What could China do about it?

They could choose a military option. That would be unfortunate, but it is an extreme choice.

They could stop trading with us. But right now they depend more on exports then we do on imports. Blocking trade would trigger a deep recession there.

They could stop buying treasury bonds. But since they have already been reducing their positions this wouldn't be something new.

They could begin selling treasury bonds in mass. But since the fed is already trying to drive down the dollar, this would actually be what the fed wants. Cheaper dollar equals more US exports equals more US jobs.

I think the time China could be most dangerous would be if inflation starts to appear. China could act contrary to any Fed action to bring that inflation into control.

[customerserviceguy]

115. At this point, I agree

But military options would always be on the table for China. At some point, we might be unable or unwilling to retaliate.

You make a good point about China trying to cause deflation to counter Fed efforts to inflate. It's really the worst scenario for them, it would devastate them. Inflation always helps borrowers, it always hurts lenders.

They might just try to buy political control. There's been a history of Chinese money making its way into the campaign funds of candidates of both parties.

[Hannah Bell]

51. it's not a crisis.

[amborin]

26. knr

[craigmatic]

28. You're right there isn't. The administration just wants to give the

appearence of fiscal disipline and is looking for something to cut. Here's a solution to the so called social security problem if there really is one. The US should let more immigrants gain citizenship to pay into the system. This way we have more active workers paying for the Boomers' retirement.

[sabrina 1]

34. That's a good idea. I think that was Reagan's thinking

when he granted amnesty to undocumented workers.

But as far as the Boomers, there won't be a problem with them retiring, that is a Republican scare tactic. Reagan's increase in SS tax in the eighties, took care of the Boomers' retirement as they paid for it while they were still working.

[SammyWinstonJack]

64. The Boomers pre-paid their retirement.

[customerserviceguy]

117. Only if there is another generation behind them

willing to do the same thing. And it's going to take a lot more out of the paychecks of that generation than it did out of the Boomers, who had greater sums taken from them than their parents and grandparents did.

[Hansel]

133. Or if only those who borrowed the money from the fund paid it back.

[customerserviceguy]

138. "We" are the those who borrowed the money

Through our Congress and our Presidents signing budgets for almost fifty years. Both parties have done it, and both parties will need to legislate tax increases to pay for it.

[Hansel]

132. The boomers already paid for their retirement.

Taxing were doubled in the 1980s by Reagan and Alan Greenspan so that we were not only paying for our parents retirement but our own. At a tune of 2.5 trillion dollars.

The issue isn't social security and it not having been paid for. It has. The issue is that Bush borrowed all of the money for wars and tax cuts mostly for the wealthy and they don't want to have to pay it back.

[NMMNG]

30. BTW

Where are all the Teabaggers screaming about how the Gub'mint wants to kill Grandma (and my disabled baby too)!1!1? They were all out in force during the healthcare debate, but now that SS is at real risk of being significantly altered, if not completely dismantled, they're nowhere to be found.

[sabrina 1]

31. Maybe because Teaparty Leader Dick Armey hates SS?

And maybe because he's counting on his Republican buddies on the Commission to do the job for him?

Dick Armey Lays Out Proposal To End Social Security And Medicare ‘As You Know It’

But on CNBC this morning, former GOP House Speaker cum tea party leader Dick Armey had no qualms about calling for cutting Social Security and Medicare. He advocated making these critical programs optional — and even suggested they are “flab” and “waste” — something that would almost certainly destroy them, despite his “guarantee” that that social security under his scheme would be “as you know it today”:

ARMEY: Let me say that flab is a good word in government. It is wasteful, counter-productive flab that not only does not good for America, but actually diminishes America’s ability to function. <...>

HOST: If you had your druthers, where would you cut?

ARMEY: Where would I cut? First thing I’d do…let Social Security be a choice. … I will give you a guarantee you will get your social security as you know it today, with no change other than a proper cost of living index if you choose to stay if you let those of us who want to leave it. And if it’s such a great deal, why can’t it be voluntary? Why must the government force people to accept their benefits whether they need them or not or whether they want them or not.

Let Medicare be voluntary. I mean, why is that so hard?

What he is pushing is the Republican wet dream of private savings accounts, which would end up being invested in the Stock Market, like pension funds. And we all how that turned out.

And much like the many other doomed conservative privatization schemes, replacing Social Security savings with private market funds could be disastrous during a period of financial turmoil. As a Center for American Progress Action Fund analysis found, under a privatization plan like the one proposed by President Bush, an October 2008 retiree would have lost $26,000 in the market plunge of that year, and if the U.S. stock market had behaved like the Japanese market during the duration of that retiree’s work life, a private account would experience “an effective -3.3 percent net annual rate of return.”

Good question, I hadn't noticed the teaparty mob wasn't screaming about SS. They probably haven't received instructions to scream as that might ruin the current scheme to do exactly as Armey wants.

[NMMNG]

32. It was a rhetorical question really

The RRRW is a bunch of hypocrites. They don't give a shit about grandma or the children. They only whip them out as political pawns when it's convenient for their agenda. They'd gladly get rid of SS, food stamps, Medicaid, Medicare, and everything else that helps people in need and let them all die in the streets. Anybody who is unable to contribute to the corporate machine is useless in their eyes.

[sabrina 1]

33. I know and agree they are soulless ghouls and why anyone

believes a word they say is beyond me. I guess some people are masochistic enough to keep voting against their own interests.

But your question made me aware of the fact that they have not been screaming about SS. I think the message is to stay quiet about it until after the election. Republicans don't want to be questioned on SS.

Which is why it is a such a winner for Democrats. If they challenge their R opponents on this issue, I believe they will win. Over 70% of the population supports leaving SS alone. It's a real problem for a Republican who shares Dick Armey's views.

[scarletwoman]

35. K&R - I wish everyone on DU would read this post. We HAVE to fight! nt

[slipslidingaway]

36. knr - the crisis is not SS, it is spending on other things...

and that is how it needs to be framed. We need to repay the bonds, but SS did not cause this shortfall.

[sabrina 1]

39. Exactly. 'SS did not cause this shortfall'

And if we let them use SS to bail themselves out, we will only contribute to a bigger shortfall.

Democrats need to zero in, with short, easy to grasp statements on the claims being made and take an offensive position rather than defensive.

[slipslidingaway]

41. Yes, we need to re-frame the discussion, there is a general budget ...

problem, which we cannot ignore, because we need to pay our obligations to workers of this country. The Dems need to address the 2+ trillion surplus, hard to do when they were also spending the SS surplus on Bush's wars :(

They should have been telling the American people this each and every time during the war funding and Bush's tax cuts. And there was almost a trillion in surplus during Clinton's term. I have little faith that the Dems will do this now :(

"You want another 100 billion! Then you are spending social security money."

[ProgressiveEconomist]

42. Agreed. But there IS a Social Security SCAM that has been going on since 1983,

when Reagan's Greenspan Commission set in motion the generation of massive positive FICA cash flows, ostensibly to be used to pay Baby Boomer pensions.

And this SCAM will have to change when the FICA cash flow turns negative in a few years.

Trouble is, Greenspan saw to it that there would be no assurance that the FICA surplus actually WOULD be used for Baby Boomer pensions. He could have set up a Sovereign Wealth Fund, like state employee pension funds, that could pay out the money only for pensions. Alternatively, he could have ensured that FICA surpluses would be used to buy publicly tradeable Treasury bonds, that Congress would have to repay with interest on dates certain or endanger the full faith and credit of the US Treasury worldwide.

But he did neither of these things. Greenspan always had thought that the poor paid too little in taxes. So he set up a system where Reagan and all his successors but Clinton and Obama used FICA surpluses just as if they were just another form of general revenue, paying for big tax cuts for the rich, war and "defense" waste, and corporate welfare. FICA payroll taxes grew to outstrip federal income taxes for most workers.

But, just as the Greenspan Commission predicted, the FICA cash flow is slated to turn negative in a few years. The "trust fund" scam will have to change. Congress will have to engage in combined strategies of--

(1) appropriating funds each year to repay non-publicly-tradeable Trust Fund bonds--or
(2) legislating lower payouts to pensioners than they are expecting, letting the Trust Fund grow fatter and fatter to no avail for Boomers.

Which strategy will be the dominant one is a matter of politics. Clinton tried to ensure that (1) would be the dominant strategy, by reducing deficits to free up future borrowing power that would let Treasury swap trust fund bonds for cash from tradeable Tresury bonds. Dubya irresponsibly reversed this strategy and ensured that implementing strategy (1) would be painful.

But things still could go either way, in countless combinations of outcomes.

[sabrina 1]

48. Why will the FICA cash flow turn negative in a few years?

[ProgressiveEconomist]

54. Demography is predictable. Men were away at war from 1941-46

in huge numbers. The "steady state" distribution of age was disrupted, as couples could not conceive children as they had planned with husbands thousands of miles away for years.

Whwen the war ended, and the men came home, couples could carry out their delayed plans to form families. The period of catch-up was from 1946 to roughly 1964. The age distribution bulged for 0 to 18-year olds compared to what it had been before 1941.

Exactly 62 years later, from 2008 to 2026, the bulge in the age distribution must shift to entail more 62 to 80-year olds compared to what it had been before 1941. And those extra people (Baby Boomers) are eligible for Social Security, while younger generations still working and paying FICA are too few to support benefits for the entire Baby Boom generation.

See http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9024748 for the rest of the story, involving Reagan's Greenspan Commission creating massive FICA surpluses ostensibly to fill the gap and pay for all Boomers' pensions.

[sabrina 1]

80. The 'boomer' retirement has already been taken care of.

That is a rightwing scare tactic. The Boomers paid for their own retirement and more already. That is why we have a surplus.

The word 'boomer' sets off the right like a red flag to a bull for some reason. But the boomer retirement is covered by the surplus which they paid for.

[customerserviceguy]

120. Again

More of the "right wing scare tactics" talk. It's not a logical argument, it's just an attack on the words without refuting their substance.

That surplus has been spent and borrowed away from. What's your choice for redeeming them, spending cuts, tax increases, or inflation? That's the only way the IOU's get redeemed.

There are way too many in Congress who will not let that happen in their lifetimes.

[sabrina 1]

123. What's yours? Take it from the elderly?

And give it to the very people who wasted it already? That would be like stealing from your grandmother to buy drugs for addicted friend.

Thanks, but I like Galbraith's solution better thank you. He doesn't reward the addicts, and he doesn't take money from the elderly to do it. He presents a logical economic plan to deal with the Government's budgetary problems. Read it.

[customerserviceguy]

126. I have some solutions listed above

at this post:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9021996&mesg_id=9029588

If we don't work on solving the problem, because we want to deny it's existence, then we become marginalized while our enemies craft the solutions that our Democratic lame-duck representatives will have before them when they're in the mood for a bit of revenge on the voters.

[Hansel]

135. No one is denying that there is a problem.

Saying that there is not a Social Security crisis is not the same as saying that there isn't crisis. But the crisis is not one caused by Social Security obligations. The problem was caused by under taxing and over spending during the Bush years.

It has nothing to do with social security other than the robber barons think they have figured out another way to get something for nothing by simply not paying the money they borrowed from it back.

Your argument that is we need to frame it as a social security crisis in order to acknowledge that there is a crisis is kind of silly.

The crisis is one of a mindset in this country that you should get everything for nothing. It's long past time to raise taxes because they are clearly too damn low at this point.

[customerserviceguy]

136. I have seen considerable denial of the problem

But you are right, it is not just a Social Security problem. However, Medicare and Social Security are the first places that are going to feel the effects of the bleeding edge of the financial problems.

The simple reality is that Social Security is now paying out more than it's taking in. The small slack of cash reserves it has will run out in a very short time. Add to that the looming baby boomers starting to turn of age for full benefits, the very first of those boomers will be 65 in a bit more than four months from now.

Like an invading army that simply sends larger and larger waves of soldiers, the baby boomers will continue to hit retirement age until the peak of the boom that was born in 1957 gets to 67 in 2024. Then, while the numbers of boomers clamoring at the window for their Social Security check starts to subside, it won't truly do so until after we've passed the end of the boom years with those born in 1964, some seven years later.

The Social Security System, as currently configured, is going to deal with an onslaught for the next 21 years, there's no way around that mathematical certainty. Maybe most of the boomers who take full benefits next year will be dead by then, but it's not unimaginable that many of them will still be alive and kicking when they're 86. Most of the current baby boom generation will still be collecting checks in 2031, when the last of them is eligible to enter the system at full benefits.

Something will have to be done, and here are the only possible options:

1) Inflate the currency, when the government prints Social Security checks that have no money (or even creative accounting) behind them.

2) Cut spending (in more places than just the military), and raise taxes in order to redeem the IOU's. Of course, they'll need to do that to redeem marketable Treasury securities at the same time, don't think that the Chinese are going to wait in line to become junior creditors. All they have to do to step to the front of the line is to simply stop reinvesting in US Treasury securities as their bonds and notes become due for payment.

3) Put together a package of Social Security benefit cuts and tax increases that is solely Republicon in nature, because we refuse to acknowledge that something has to be done, which will surely keep a borrowable cushion to finance further deficit spending.

4) Put together a more equitable package of slowdowns of benefit raises, a set of graduated ages for full benefits (based on the physical difficulty of various types of jobs) a tax structure that doesn't allow the well-off to get increased monthly benefit maximums, puts more of the tax burden on the employer share of FICA tax, and invests any surpluses in fully marketable Tresury securities. Why should the Chinese be the only ones at the head of the line?

[sabrina 1]

140. This post is full of fallacies. Rightwing scare tactics.

The boomer retirement has been covered, get it? There is no need for your austerity measures. In fact it would help the economy more to increase benefits and there is enough to do that, including the entire boomer generation up to the last one to retire. Everything you suggest would only make things worse. Raise taxes, yes, but on the wealthy and end the Bush tax cuts for the wealthy.

Every one of your posts reads like it came from the a rightwing playbook on how to cheat the American worker out of the retirement fund that THEY PAID FOR.

No Cuts. Increase benefits, make the Government repay the loans they took, which they do not want to do, and pass a law making it illegal for the Government to touch this fund in the future. But there is no problem with Social Security. The problem is the Financial Meltdown and that is where the focus should be. Prosecute the corrupt, criminals who caused it and retrieve the money they stole to start with. And then regulate strictly the financial industry because they've demonstrated that they cannot be trusted with the people's money.

[customerserviceguy]

143. Again, tell me exactly what right wing websites

mention the ideas I've set forth. They are progressive in nature.

Instead of a broad smear, why not deal with them logically, one by one? What's wrong with my idea that employers need to pay 1, 2, or 3 percent more than the employees for FICA taxes, based on their size and profitability? That's not a right wing idea.

Just take ONE of my ideas and explain what's bad about it, rather than simply saying that there's no problem paying for the baby boomer retirement, because there is one.

[sabrina 1]

145. Your continued claim that the boomer retirement will

break SS is not true, it is a rightwing scare tactic. Maybe you didn't know that, but that is a fact.

I have no problem with your idea of having employers pay more in FICA taxes than employees. However this would place a huge burden on small businesses. I have been involved in the running of two small businesses and just paying the SS tax was a major chunk out of the bottom line for such a small business whose profits are very small to begin with.

For Big Corps, fine, but many small businesses would go under if they had to pay any more in taxes. If it could be done in a fair way, with small businesses getting the same tax breaks as big Corps on a pro rata basis, it might work.

Just reread your post and you did say 'based on their size and profitability' so yes, I don't have a problem with that. Otoh, it might drive these bigger corps to hire even more foreign workers. Which is why it is imperative to eliminate the Bush tax cuts for the wealthy. They are currently rewarded for sending jobs overseas.

[customerserviceguy]

151. I'm glad that you find at least one idea

sensible (sorry for the use of that word, woodchuck fans!) and I do understand that this might be a burden on small businesses. However, if there are any tax increases (and I believe there probably will be), isn't it fair to ask the employers to go first? We could make an exception for businesses that contribute a match to their employees' 401K's.

Of course, the whole visa thing needs to be reworked, I'm a guy with a degree in computer networking who is working a customer service line in a call center, that has nothing to do with the training I received. While I'm very, very likely to stay put in this job until retirement, I do feel for those Americans who have a lot of training and an expensive student loan to pay off, so I'm empathetic with the person who loses a job because it went overseas.

[sabrina 1]

141. They are not solutions, they

rightwing propaganda since you are basing all your solutions on the fallacy that SS is in crisis, and that the baby boomer retirement is a problem. Once you start from that premise, there is no way to deal effectively with the REAL PROBLEM, because you are ignoring it. The REAL PROBLEM is NOT Social Security. It is the most successful program EVER and is good for decades.

Any solution that makes the people pay for the corruption and theft of the government asking those who own the fund to take cuts, is NOT a solution.

Interesting that you have no problem with giving so much to CEOs and so little to the workers. All you are suggesting is to keep this corrupt system running for the benefit of those who create all of our financial problems.

I'll stick with the eminently more logical and factual solutions of the multitude of economists, both right and left, who are actually focused on where the problem is and how to fix it.

You are like a mechanic who has been told there is a problem with the steering, and who suggests getting a new steering wheel.

[customerserviceguy]

142. There you go

with the "right-wing propaganda" thing again. Show me a website from the reich-wing that advocates even a single one of the ideas I've presented above.

The reason you'll never find them is that the Rethugs WANT to see Social Securtity go down the tubes. They feed off the fear of the coming crisis. And they, other than a few really safe ones, will NOT be voting for whatever the lame duck session gets in front of it, it will be Democratic representatives that will enact it.

Where did you get the idea that I'm OK with paying CEO's and other banksters loads of money they didn't earn? All I'm saying is that if stupid corporations want to pay their muckety-mucks way too damned much money, they can help rescue Social Security at the same time. Also, I'm explicitly NOT in favor of keeping it running as it is, I want the 'cushion' invested in an open market, in securities that are publically tradeable. I don't want it hiding deficit spending anymore.

And you sound like a mechanic, who has been told that a car is getting poor gas mileage, and suggests that all the people with the SUV's should do the right thing and buy your gas for you.

[Hansel]

134. It was not spent on Social Security.

The Social Security for the baby boomers has already be paid. Enough was paid in to cover the retirements of the baby boomers. That fact that is was borrowed doesn't change that fact.

You can advocate for basically a 6% income tax hike on the middle and lower class by saying that it's okay for that money to be used for the general fund and not be paid back. That's your prerogative. But it doesn't change the fact that the crisis is not one of social security. It's one of the vast majority in this country thinking they can get something for nothing.

There is a revenue crisis because people want everything for nothing. And you seem to want the only people who actually paid for what they want to bear the burden of fixing that.

Why not focus on having this country be more responsible by not whining about the taxes that need to be paid to cover all of the other expenses? The tax rates right now are the lowest in a very long history of rates. If people in this country want the budget deficit reduced then they can pony up a couple extra pennies on the dollar. But those who created this mess with massive greed need to pay the money back.

Taxes need to be raised and raised more now than they would have needed to be if the American people weren't such chronic cry babies about paying taxes. The Bush tax cuts and his poor budget decisions caused this crisis, not social security.

[customerserviceguy]

137. Social Security is constructed as a hand-to-mouth system

Most of what has come in every month is paid out every month. Now, the system pays out more every month than it takes in. That's just simply reality. The baby boomer retirements are only partly covered by the supposed surplus in specialized Treasury certificates (what I call IOU's, for simplicity's sake) that are sitting in a drawer someplace. Not a single one has ever been redeemed.

I have never advocated financing deficit spending with the surpluses. I wish that money had been solidly invested in the economy, as an engine for improving our technological base, keeping good jobs and industries here in the US. But that didn't happen.

When you say "those who created this mess with massive greed," who are you talking about? How would you suggest they be identified, and what political strategies do you favor for overcoming the congresscritters that they have bought and paid for, and will have more of after the November elections? Squeeze too hard, too fast on the rich, and they'll be more than happy to take their asses and their money to foreign tax havens.

Letting the Bush tax cuts expire for everyone would be a start at a solution, wouldn't you agree?

[Hannah Bell]

50. needs to be repeated over & over. once they've got you believing there's a crisis

(& they've talked up that angle for years), they've got you ready to sign on to a "solution".

& it will be the solution they devised, for reasons of their own, for their benefit.

[GoneOffShore]

63. Have to print this out and put it in my wallet

[asdjrocky]

65. Hoodwinked.

Bamboozled. Lied to. Misled. Thrown under the bus.

Take your pick America.

[valerief]

67. There were no WMDs either. They kill off whomever they want.

They've got soldiers.

[TBF]

69. It's one of the few programs that helps normal people -

not just the uber-wealthy. Of course THEY consider that a crisis. Great OP. :applause:

[daleanime]

81. "Fired Up..."

They've got to go!:evilgrin:

[Faryn Balyncd]

84. Only MASSIVE OUTRAGE can can stop the PERMANENT THEFT of SS funds for non-SS expenditures

Simpson & his gang of thieves want to NEVER HONOR the bond obligations of the Treasury to the SS Trust fund.

He is NOT making that threat to Chinese bondholders (or anyone else for that matter) that they accept less than promised "because we've already spent the money".

Simpson & Co. are only making that demand to Americans who have paid a lifetime of payroll & self-employment contributions in good faith to the FICA/SS Trust Fund, which has invested those funds in loans (bonds) to the Treasury, minimizing the amount the Treasury had to borrow from other sources (or acquire from raising taxes or other revenue enhancement). These loans have benefitted the Treasury by keeping interest rates much lower than otherwise would have been the case.

Now that Wall Street crooks have been bailed out to the tune of tens of trillions of dollars. Simpson & Co want to steal the $2.5 trillion surplus in the SS Trust fund. This surplus was created by your lifetime contributions, for the specific purpose of funding your retirement. This surplus is sufficient to pay SS benefits in full until at least 2037, yet Simpson et al want the Treasury to default - - to renege on honoring these obligations - - not to Chinese bondholders, not to oil sheik bondholders ...... but only to the SS Trust fund.

What Simpson's Theft Commission is advocating is nothing short of the permanent diversion of payroll taxes to non-SS government expenditures --- expenditures that by law & morals should be paid by income tax & other federal revenue.

By diverting permanently payroll tax to deficits in other programs (wars, bailouts, corporate welfare) this is nothing less that the theft from the poor and middle class to reduce the income taxes of the top 1%. It replaces a mildly progressive income tax with a harshly regressive payroll/self-employment tax.

By the dereliction of their duty - by passing a special rule giving the un-democratic Simpson-Bowles Commission the properly legislative responsibility of crafting legislation which must be voted on WITHOUT AMENDMENT by the lame duck Congress before January 11, 2011 - our leadership is running our country & party OVER A CLIFF.

The minority Republicans have already achieved the remarkable feat of conning Democrats into passing (and taking sole responsibility) a No-Public_Option Corporate-Insurance-Only mandate (despite overwhelming support for a public plan by the middle class).

If Simpson & Co. now manage to achieve their longstanding goal of gutting SS, and managing to con DEMOCRATS into taking responsibility for this betrayal, the loss of the Democratic majority will be but a small & nauseating omen for things to come.






The American public is longer impressed by empty words. But if there is one ACTION that would both energize the disillusioned Democratic base and re-establish a bond with Americans embattled working & middle class, it would be to immediately REPEAL the undemocratic special rule that provides for NO AMENDMENTS and lets the gang of thieves on the Simpson-Bowles Commission write a bill that gets an up-or-down vote by a lame duck Congress.

This undemocratic rule was literally...

...sneaked language into the rule that the House is voting on tonight regarding war funding.

Embedded in the rule is the requirement that the House will vote on the deficit commission’s recommendations in the lame duck session if they pass the Senate.

The commission, co-chaired by Erskine Bowles and Alan Simpson, is packed with members who favor the raising the retirement age to 70, means testing, and private accounts. Many also support investing 20% of the Social Security trust fund in the stock market.



...The rule is only good for the 111th Congress — it expires Jan 5, 2011, so a lame duck Congress would have to vote on it.



http://firedoglake.com/2010/07/01/breaking-pelosi-sneaks-approval-of-vote-on-debt-commission-recommendations-into-rule-regarding-war-funding

If the Democratic leadership is to stop their suicidal stampede over the cliff, they must be forced by massive public outrage to REPEAL THIS RULE before the November elections, and demonstrate that they are, in fact, Democrats.






:kick:

[defendandprotect]

87. Late K&R ...thank you, especially for the info on Galbraith's testimony ...!!!

Great post -- as usual!!

:)

[truedelphi]

94. Simpson himself told the young reporter he was belittling that

Social Security will not be in trouble until 2038.

Please let me emphasize that:

2038...

With information most scientists now have, the population will be much smaller by then. Due to Global Warming Plagues, due to infertility, and all of that.

So it might be that a whole new way of governing will be in place. Or it could be a world of "Mad Max."

But having older Americans eating Cat Food now to prevent whatever crisis that Simpson thinks he foresees two generations out is really ridiculous.

And it really is all about taking Social Security funds so that the Banking Elites' BailOuts, (ThievingOuts,) can be covered.

And of course, also to cover the obscene costs of the two wars.

[sabrina 1]

95. I doubt Simpson cares one bit about future or present

generations. The goal is to eventually get their hands on this huge fund to gamble in their big Casino on Wall St. To convince Congress to set up private savings accounts for younger people, a disastrous suggestion since we know what has happened to pension funds invested in the Stock Market.

They have pulled back from the 'privatization' argument as a result of the huge pushback politicians are getting, but are still pushing to tie SS to the Deficit and to get cuts in benefits to make the fund even bigger for later looting.

They MUST be stopped.

[florida08]

97. thank you sabrina

your posts are always enlightening and untangling the lies we hear. We have a class warfare problem. When the middle class grows
so does the democracy. The elites don't like that or want it. They want to run things they way they did in the early 1900's. To reduce our power over them they crash us. Move jobs and develop phony derivatives. It works. No one goes to jail except the token ones slated to appease.

The elite don't pay SS. They don't work. Not self employed. They make theirs thru Wall Street commodity trades and feel we don't
deserve to receive what we've already paid in. Again it allows us to have a say for a longer time and who are we to question them?
Not all are like this but the ones that do outnumber the ones that don't. In the middle are the ones trying to catch up and become like them. They can't do that if we continue to want what is rightfully ours.

They seem to suggest that in the future there will less people working and more on SS thus causing a crisis. Like what has already been said it's a pay as you go system. There are people now in their 60's and 70's still working. What we have is a theft problem.
Just like in cities across the nation who steal from the pension funds for personal projects and cronyism. I believe a judge recently told the AZ governor she couldn't do that. But it's rampant. They overspend they tap into our retirement.

If there was a problem they would end the wars..rescind the money they give to placate our allies. (I use the term loosely as Bush was paying some of the insurgents in Iraq not to bomb other Iraqis) Haliburton, Blackwater, the list is a long one. The largess in Iraq that are private contractors. Stop subsidizing the CIA to overthrow other governments. Star Wars projects..hell the military industrial complex alone could be held at bay. But in the name of this bogus "national security" which didn't do a damn thing to protect us in Sept. 2001 they don't. Thus the big fat lie. Like someone up thread said..they're not going to default on the treasury bonds. It's not a financial problem it's about removing the power of the middle class.

This article said what yours did but with less detail. Thanks so much for posting the truth. Our media should be claiming this everyday.

http://www.ianwelsh.net/social-security-trustees-report-no-social-security-crisis/

[sabrina 1]

99. Thank you very much for your kind remarks florida08

Your post could be an OP itself. Everything thing you say is true. The waste of tax dollars on those wars is a crime in itself. Not to mention the other crimes of torture and the murder of civilians.

As you said, if there really was a problem with SS they could very easily find the money in the waste that is spent on the War Machine alone.

I will check out the article you linked to. The more people yelling about this the better, as many people do not know what to believe. I hope the Democrats will start fighting before it's too late.

[earth mom]

103. Social Security is NOT broken. They are LYING-we can't let them control the message or

we will be totally screwed, no doubt about it.


p.s. Sorry I'm too late to rec this thread!

[scarletwoman]

105. Kick for the truth! nt

[Mimosa]

150. K&R an excellent thread n/t