Social Security

You cannot make a good argument for cutting Social Security…


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From digby
Hulllabaloo

Mike Koszcal has efficiently pulled together all the relevant arguments in favor of the Chained-CPI — and then very properly demolishes them one by one.  He takes on the idea that that it’s a more accurate measure of the cost of living (which, if true, would mean that it wouldn’t require all these “fixes” to keep the elderly out of poverty), the idea that it’s no big deal, “not much a cut so nobody will really notice”, and the daft idea that we’ll be able to “fix” it down the road, the most fatuous argument of all.

But this gets to the fundamental stupidity of the politics:

You’ll hear arguments that a Grand Bargain is necessary, so it’s better to bring Social Security into long-term balance now, with Democrats at the helm, than in the future, when there will be less time and an uncertain governance coalition. You can get fewer cuts and more revenue than you would otherwise and take the issue off the table for the foreseeable future to concentrate on other priorities.

But if that’s your idea, then this is a terrible deal and sets a terrible precedent, because this deal would accomplish none of your goals. You’d cut Social Security without putting in any new revenue. And it wouldn’t be sufficient to close the long-term gap, so the issue would stay on the table. Indeed, the deficit hawks would probably be emboldened, viewing this as a “downpayment” on future cuts, and require any future attempts to get more revenue for Social Security, say by raising the payroll tax cap, to involve significant additional cuts.

Indeed it would.

This is the real point of this according to the CPBB, the head of which

Social Security Alert…


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From THOM HARTMANN

[Senator Bernie Sanders: “What the president is proposing is going to hurt a lot of people,” Sen. Bernie Sanders said Friday after the White House confirmed that President Obama’s budget will include cuts in Social Security. He called it a “bitter disappointment” that the White House budget proposal next week will call for changing how annual cost-of-living adjustments are calculated. As the chairman of the Senate Veterans’ Affairs Committee, Sanders added that the White House proposal also would cut benefits for disabled veterans and their survivors. As a candidate for the White House in 2008, Sanders noted, Obama pledged not to cut Social Security COLAs.]

It looks like President Obama is still open to negotiations with Republican economic terrorists. Details of the president’s budget, set to be released April 10th, show that he will offer significant spending cuts to so-called “entitlement programs”- like Social Security and Medicare – in hopes of attaining a “grand” budget bargain with Congressional Republicans.

The plan replaces the sequester with other spending cuts, and increases revenues by $580 billion. In a move that is sure to infuriate progressives and many Democrats, the president will propose lowering cost-of-living increases to Social Security benefits. This is insane. Instead of asking the wealthiest in our country to pay the same percentage of their income towards our social safety net, the President thinks that the elderly, disabled, and veterans should bear the burden of Republican austerity.

Our nation has a policy of not negotiating with terrorists, and economic terrorists shouldn’t be the exception. We must stand together to preserve our social programs. Tell Congress and the President that we won’t stand for balancing the budget on the backs of the poor. Sign the petition at no-cuts.com.
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Social Security going broke?


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From MoveOn.org

Myth #1: Social Security is going broke.

Reality: There is no Social Security crisis.  By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a ‘T’).  It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it’ll still be able to pay out 75% of scheduled benefits—and again, that’s without any changes. The program started preparing for the Baby Boomers’ retirement decades ago.2  Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What’s more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth #3: Benefit cuts are the only way to fix Social Security.

Trusting The Fund: A Citizen’s Guide To Social Security’s Trust Fund…


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From DOES IT HURT TO THINK?

Just as a smothering fog obscures the landscape, discussions of Social Security are inevitably enshrouded in impenetrable mythology, misunderstanding, and misinformation. Does anybody really know how the system works? Of course. And truth be told, it isn’t all that hard to grasp. It’s just that nobody ever bothered to properly explain it to the rest of us. The tropes you hear from time to time serve only to confuse, never to enlighten. Remember Al Gore’s “lock box?” What the heck was that?

Even worse, the topic is burdened with ideological baggage. How you prefer to think about it, and what you choose to believe, is likely influenced by your position on the left-right continuum, and by your place in the partisan political divide. (Wouldn’t it be nice if we relied instead on the facts?) Indeed, our politicians are as susceptible as anybody, maybe more so. Senator Tom Coburn from Oklahoma has no doubt about the severity of Social Security’s problem: “The fact is, is $2.8 trillion was stolen from Social Security. The money was spent. It’s broke. And we’re going to have to fund 2.8 trillion over the next 20 years just to make the payments that we’ve got. I think most people would think we ought to fix that.” And according to Rand Paul, Senator from Kentucky, “most young people acknowledge that it’s broken—it’s broken so badly that the only way we fix it, and the only way it can continue, is we have to look at the eligibility.”

Whatever they may “acknowledge,” I assure you that most young people know nothing factual about Social Security’s finances, or its future prospects. They’re not alone. The public at large is more or less clueless

Why Even President Obama Won’t Champion Social Security…



From DEAN BAKER
The Guardian

Although millions of middle-class Americans strongly support social security, big bucks campaign donors hate it. That’s why…

It is remarkable that social security hasn’t been a more prominent issue in the presidential race. After all, Governor Romney has proposed a plan that would imply cuts of more than 40% for middle-class workers just entering the labor force. Since social security is hugely popular across the political spectrum, it would seem that President Obama could gain an enormous advantage by clearly proclaiming his support for the program. After stock market shocks and housing bubble, social security has become an even more vital source of retirement income.

But President Obama has consistently refused to rise to the defense of social security. In fact, in the first debate, he explicitly took the issue off the table, telling the American people that there is not much difference between his position on social security and Romney’s.

On its face, this is difficult to understand. In addition to being good politics, there are also solid policy grounds for defending social security. The social security system is perhaps the greatest success story of any program in US history. By providing a core retirement income, it has lifted tens of millions of retirees and their families out of poverty. It also provides disability insurance to almost the entire workforce. The amount of fraud in the system is minimal, and the administrative costs are less than one 20th as large as the costs of private-sector insurers.

In addition, the program is more necessary now than ever. The economic mismanagement of the last two decades has left the baby boomers ill-prepared for retirement – few have traditional pensions. The stock market crashes of the last 15 years have left 401(k)s depleted

Why Social Security IS NOT a Ponzi Scheme


From ANDREW SULLIVAN
The Dish

[Here's the counter to conservative bullshit. See also: The Real Ponzi ~DS]

A reader writes:

What a silly argument made by Indiviglio. If a Ponzi scheme is “an economic arrangement where the money paid into the system by later entrants is paid right back out as benefits to earlier entrants,” that pretty much describes any form of insurance. The defining characteristic of a Ponzi scheme is that it is unsustainable, because it requires, like a chain letter or Amway, a geometrically increasing number of participants to deliver the promised returns.  (Amway stays afloat because most participants pay in a little – or a lot – but withdraw without ever receiving any return.) Neither insurance nor Social Security requires a geometrically increasing number of participants so long as the system is funded based on sound actuarial principles.

Another parses further:

Having represented the victims of actual Ponzi schemes in court, I feel compelled to point out an important distinction between Ponzi schemes and Social Security: a Ponzi scheme is just that, a scheme. The definition provided in Zaid Jilani’s dictionary omits this important component. The participants are kept in the dark about how the benefits are obtained. Thus, a Ponzi scheme is not really an economic “arrangement” in the sense that the participants have agreed to it. By contrast, we all know (or should know) how Social Security works. It is more akin to something else, namely an insurance program where the insured event (reaching the retirement age) is guaranteed (barring premature death).

Another:

Cry out! The Social Security benefit cut on the table in the debt limit talks


From JOAN McCARTER
DailyKos.com

Here’s some deficit reduction talk to make your eyes glaze over.

WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.

While that might “save” the government perhaps $220 billion, it could cost the nation’s seniors dearly. This is a shift to what’s called a chained CPI. The National Women’s Law Center explains what that means [pdf] for the people most reliant on cost of living increases.

Social Security benefits are adjusted annually to account for inflation—when the cost of living increases, benefits automatically increase so that their purchasing power does not erode over time. Shifting to the chained CPI would mean a cut in Social Security benefits for current and future beneficiaries, compared to the benefits

A Brief History of Attacks on Social Security


social-security-200From TED MARMOR
New Deal 2.0

As Obama’s Fiscal Commission prepares for its June 30 hearing, New Deal 2.0 invited leading thinkers to participate in our Social Security’s Fiscal Fitness series, which examines the soundness of the program, its relationship to the federal deficit, and the vital role it plays in America’s economic future.

The National Commission on Fiscal Responsibility and Reform set up by President Obama claims both that reducing the projected federal deficit should be a major national objective and that Social Security should be considered as one potential source of relief either through reducing benefits or enhancing revenues or some of both. That much is simply a fact.

But this commentary is about ideology. It is to remind readers that the same attacks on Social Security have been going on — in different guises — for at least four decades. The stagflation of the 1970s, precipitated by the oil crisis of 1973-74, provided long-term, ideological critics of social insurance an opportunity

Rosalind Peterson: Take Action! Social Security Alert!


From ROSALIND PETERSON
Redwood Valley

There are currently seventeen [8], bills pending in either the U.S. House of Representatives or the U.S. Senate that are related to changes in Social Security [1-2].  This staggering number of Social Security bills, now being considered in various committees, where amendments will be added or the bills changed, shows how determined many elected officials are in either privatizing or killing two of the most beneficial programs to protect the public ever created (with the exception of the U.S. EPA and our Clear Air and Water Act Laws).

President Obama and members of the U.S. House and Senate have placed Social Security and Medicare on the chopping block in ongoing debt ceiling negotiations.  In these secret negotiations, far away from public enlightenment or debate, deals are being cooked-up to undermine, cut or privatize these important and highly beneficial programs.

The income cap, for example, in Social Security should be increased so that the rich pay their fair tax share of these costs.  Instead more payroll tax holidays are planned allowing the rich to escalate their riches by paying less in taxes.

Social Security: Their numbers are bullshit, they’ll steal us blind, please pass this on!


From MANNY GOLDSTEIN
Democratic Underground

OK, by now we all know that the Social Security Trust Fund will be depleted in 26 years, and only a portion of benefits will be paid after that. Actually, that “known fact” is pure BS, a product of cooked numbers. What they aren’t telling you is that this projection assumes that over the next 75 years, the US economy will grow at a far lower rate than it has in the past. (They weren’t expecting us to check the calculations, were they?)

Since 1960, US GDP growth has averaged 3.2%. Even in the decade before the 2007 crash, which included a recession and jobless recovery, GDP growth averaged about 3.0%. However, in creating its publicized projection, the Obama administration assumes that the future US economy will grow at a rate of about 2.1%, much lower even than the 2.9% rate in 2010, which most of us would agree was a tough year for our economy. Even in this very pessimistic projection, Social Security is still able to pay more than 75% of promised benefits after 27 years. (Note that we need about 2.5% growth just to break even with our increasing population.)

And what if the economy stays the same as in 2010, and we continue to lurch forward at 2010’s 2.9% growth rate? The same projection showed that at a 2.9% rate, the Trust fund would remain flush with cash as far as they projected (75 years).

So, unless the US economy is about to get even worse than today and stay that way, Social Security should pay full benefits for our lifetimes and beyond.

If you believe otherwise, then the bad guys have already won: they now have a pretext for stealing you blind

Charles Hugh Smith: The Fraud at the Heart of Social Security



From CHARLES HUGH SMITH
OfTwoMinds.com
Mendocino

To understand the fraud at the heart of the Social Security Trust Fund, we start with a very simple fact: cash can only be spent once.

There are two frauds at the very heart of the Social Security system, and I am going to describe and source them in detail. After spending a number of hours poring over public data from the Social Security Administration (SSA), The U.S. Treasury and the Congressional Budget Office (CBO), and additional hours searching the Web for other published analyses, I can state with some authority that there are no published analyses or accounts of Social Security which incorporate the actual outlays and receipts from fiscal year 2010 in a context which includes the Social Security Trust Fund.

Michael Laybourn: Keep your filthy hands off our money

From MICHAEL LAYBOURN
Hopland

I just listened to Ross Murray on KZYX  rake the polititians and media over the coals while explaining why Social Security has nothing to do with the national deficit. Very well done Ross, glad you are in there still getting enraged about the state of American politricks.

The “National Commission on Fiscal Responsibility and Reform”consists of 6 Republicans; 6 Democrats and 3 CEOs …. has been dubbed as the “Catfood Commission” because its goal appears to be cutting benefits so drastically that retirees will only be able to afford to eat pet food.

The “bipartisan” deficit reduction commission — appointed by President Obama and led by millionaires — just made their ideas public recently. With ideas are simply ridiculous.  They recommend to Congress cutting Social Security benefits and raising the retirement age. (Well, naturally, this commission of millionaires didn’t focus on raising taxes on the wealthy or even raising the cap to pay into SSA.) Or getting out of wars we can’t afford.

And …the mainstream media’s is picking the chant up with warnings: Deficit, deficit deficit . CNN, Washington Post, Time Newsweek, Atlantic, Reuters, LA Times, everyone. All of a sudden everyone is talking about the deficit: We need to fix it.

In defense of Alan Simpson (Catfood Commission)


From GLENN GREENWALD
Salon

The President’s Deficit Commission is designed to be as anti-democratic and un-transparent as possible.  Its work is done in total secrecy.  It is filled with behind-the-scenes political and corporate operatives who steadfastly refuse to talk to the public about what they’re doing.  Its recommendations will be released in December, right after the election, to ensure that its proposals are shielded from public anger.  And the House has passed a non-binding resolution calling for an up-or-down/no-amendments vote on the Commission’s recommendations, long considered the key tactic to ensuring its enactment.  The whole point of the Commission is that the steps which Washington wants to take — particularly cuts in popular social programs, such as Social Security — can occur only if they are removed as far as possible from democratic accountability.  As the economist James Galbraith put it when testifying before the Commission in July:

Your proceedings are clouded by illegitimacy. . . . First, most of your meetings are secret, apart from two open sessions before this one, which were plainly for show.

Securing Social Security While Increasing Benefits


From THE AMERICAN PROSPECT

TAP talks with Rep. Ted Deutch about his plan to save Social Security

Yesterday, the Social Security trustees released their annual report. Though they announced the program will be able to pay full benefits through 2037 (and 75 percent of benefits through 2084), critics immediately tried to spin it as evidence of the program’s failures. “The reports released today again sound the alarm that spending on Social Security and Medicare is on an unsustainable path,” Republican Rep. Dave Camp said. While progressives are reluctant to privatize or support benefit cuts, protecting Social Security over the long term will require them to propose other solutions.

Yesterday, TAP caught up with Rep. Ted Deutch, a newly elected Democrat from Florida who has recently introduced legislation that creates a new measurement of inflation that more accurately reflects seniors’ cost of living and guarantees a $250 dollar payment to Social Security recipients if there is no upward cost-of-living adjustment. Perhaps most controversial, it gradually makes the Social Security tax apply to all wages — currently, any wages above $106,800 are exempted from taxation. While experts I spoke to suggest that this package would ensure long-term solvency, the political viability of the plan is a different question.

William Greider: If President Obama Thinks There’s Room for Austerity with Social Security, He’d Better Get Ready For A War


From CROOKS AND LIARS

William Greider has been writing about economic issues since the 1960s, and is best known for his book Secrets of the Temple: How the Federal Reserve Runs the Country. He’s been warning us that the Obama administration intends to cut Social Security (this video is a year old):

What’s extraordinary about this assault on Social Security is that a Democratic president is leading it. Obama is arm in arm with GOP conservatives like Wall Street billionaire Pete Peterson, who for decades has demonized Social Security as a grave threat to the Republic and has spread some $12 million among economists, think tanks, foundations and assorted front groups to sell his case. If Obama pulls the deal off, this will be his version of “Nixon goes to China”—a leader proving his manhood by going against his party’s convictions. Even if he fails, the president will get some protective cover on the deficit issue. After all, he is targeting Big Government’s most beloved and trusted program—the New Deal’s most prominent pillar.

Obama’s initiative rests on two falsehoods spread by Peterson’s propaganda—the notion that Social Security somehow contributes to the swollen federal deficits and that cutting benefits will address this problem. Obama and his advisers do not say this in so many words, but their rhetoric implies that Social Security is a big source of the deficit problem. Major media promote the same falsehoods. Here is what the media don’t tell you: Social Security has accumulated a massive surplus—$2.5 trillion now, rising to $4.3 trillion by 2023.

Hey, Catfood Commission: 86% of Americans Would Not Reduce Social Security



From FIRE DOG LAKE

In a poll just released today, Time provides results that show Americans staunchly opposed to cuts in Social Security, Medicare or healthcare, but in favor of cutting spending on the wars in Afghanistan and Iraq. With Alan Simpson and the Catfood Commission so determined to cut Social Security and Medicare, we can now state that they are going directly against over 80% of citizens in this effort.

The question posed was “If Congress and the President had to reduce spending, which of these areas would you reduce spending?”  The areas included were Social Security, Medicare, wars in Afghanistan and Iraq, education, unemployment compensation for people out of work and looking for jobs, healthcare, Medicaid (which provides health care for low income families)  and defense spending other than the wars in Iraq and Afghanistan.  Here are the results for these questions:

Category Would reduce, % Would not reduce, %
Social Security 12 86
Medicare 16 82
Wars in Afghanistan and Iraq 55 41
Education 17 82
Unemployment compensation for people out of work and looking for jobs 34 63
Healthcare 28 68
Medicaid, which provides health care for low income families 20 77
Defense spending other than the wars in Iraq and Afghanistan 46 50

The full poll can be read here.

Michael Laybourn: The Real Facts About Social Security


From MICHAEL LAYBOURN
Hopland

This letter from FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794 hit the internet a couple of years ago and I answered it. Maybe we need to do it again…

The letter starts:
Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program.  He  promised:
1.) That participation in the Program would be completely voluntary,
2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the program,
3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year,
4.) That the money the participants put into the independent “Trust Fund” rather than into the general operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other government program, and,
5.) That the annuity payments to the retirees would never be taxed as income.

ML A: Wrong. Originally, President Roosevelt called for “social insurance.” He envisioned a plan through which workers would contribute and provide for their own future economic security. He specifically disdained the idea of reliance upon welfare. The original SSA embraced the idea of Social Security being an insurance program under which a group of individuals were insured against identifiable risks: disability and old age. Workers paid for their own insurance.

The original 1935 statute paid retirement benefits only to the primary worker. Many types of people were excluded, mainly farm workers, the self-employed, and anyone employed by an employer of fewer than ten people. These limitations, intended to exclude those from whom it would be difficult to monitor compliance, covered approximately half of the civilian labor force in the United States.

This had to change of course: In 1939, the 1937 Federal Insurance Contributions Act (FICA) tax was amended in three important ways:
1. The widowed, nonworking spouse of a someone  entitled to an old-age benefit also became entitled to an old-age benefit.
2. Survivors (widows and orphans) became eligible for a benefit. This feature was very popular among the millions of elderly Americans hard hit

The Bullshit Lies of Alan Simpson about Social Security


From FIREDOGLAKE

[...] Let me elucidate some of the ways that Simpson is wrong about Social Security:

SIMPSON: It’ll go broke in the year 2037.

FACT: The Social Security program faces a modest long-term financing shortfall of tax revenue and interest on Trust Fund assets. The Social Security Trustees estimated in 2009 that the Old Age, Survivors, and Disability Insurance program will continue to add tax revenue to their Trust Funds up to 2016. The Trust Funds will continue to grow because of interest earned through 2023, at which time total assets will be $4.3 trillion. Subsequently, Social Security will gradually draw down all reserves before the end of 2037, if Congress takes no action whatsoever, it will have sufficient resources to pay about three-quarters of scheduled benefits. Hardly “going broke.”

SIMPSON: All of them have to do with stabilizing the system, which we are told is insolvent, it’s paying out more then it’s taking in.

FACT: Social Security is currently running a surplus. In 2009, an estimated 94 percent of Social Security tax revenues were spent to meet current expenditures (benefits and administrative costs). The surplus tax revenues, along with interest credited to the Trust Fund, contribute to a growing Trust Fund balance.

SIMPSON: It’s 2.5 trillion bucks in IOUs which have been used to build the interstate highway system and all of the things people have enjoyed since it has been setup.

FACT: The interstate highway system was built in the 1950’s when Social Security’s income and outgo were equal. The build up of the trust fund began after 1983 when Congress consciously chose that route as part of the 1983 amendments.

SIMPSON: When I was your age there were 16 people paying into the system and 1 taking out and today there are 3 people paying into the system and 1 taking out.

FACT: This is the same misleading information that Bush used to sell his privatization plan. The 16 to 1 ratio is a figure plucked from 1950, the year that social security expanded to cover millions of farm and other workers. All pension programs that require a period of employment for eligibility show similar ratios at the start or when expanded because all newly covered workers are paying in, but none of them have yet qualified for benefits. By 1955, the ratio was 8 to 1 and by 1973 the ratio was where it is today…

More here.
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