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“Completely Ridiculous Fear-Mongering”: Stop With The Zombie Lies: No, Social Security Is Not ‘Going Broke’

Even though last night’s Republican debate featured precious little discussion of the size of the candidates’ hands, there was plenty to be disappointed and angered by. The moment that perturbed me the most was when CNN’s Dana Bash, who ought to know better, said that “Social Security is projected to run out of money within 20 years.”

The discussion about America’s most successful and beloved social program had some interesting implications for the general election. But before we get to that, I need to say this slowly and clearly, so there’s no misunderstanding:

Social Security is not going to “run out of money.”

The idea that the program is going to “run out of money” or is “going broke” is a zombie lie, one that deserves to have its head lopped off with a quick slice of Michonne’s katana.

We’re going to have to get a little wonky for a bit, but I’ll try to make this as painless as possible. The short version: under the worst-case scenario, meaning that a poor economy in coming years deprives the system of money and no changes to the program’s financing are made, then Social Security recipients will find themselves getting smaller checks than they ought to. And that would be a bad thing — if you rely on Social Security as your main or only source of income, it would be terrible to get only 77 percent of what you should (I’ll reveal why I’m using that number in a moment).

But if the program were only able to deliver 77 percent of its benefits, it would not be “broke” or have “run out of money.” When the entitlement doomsayers use those words, they want everyone to believe that the program will be, well, broke, which would mean it would be able to pay nothing to the recipients. And that’s a lie.

Let’s remind ourselves how this program works. Workers pay Social Security taxes, which are then distributed to today’s recipients as benefits. But when the taxes (and the interest the program earns on the bonds it holds) exceed the benefits, what’s left over goes into a trust fund, commonly known as the “Social Security surplus.” According to the latest report from the Social Security Trustees, in 2014 the program took in $769 billion and paid out $714 billion. The extra $55 billion went into the trust fund, which at the end of that year contained $2.729 trillion.

We’re going to need the trust fund, because the very large Baby Boom generation has just started to retire, meaning more people are going to be drawing benefits. The Trustees’ projections say that starting in 2020, the program will take in less than it’s paying out, and the trust fund will be exhausted in 2035.

Now this is important: the whole point of the trust fund is to be there when that year’s taxes aren’t enough to pay that year’s benefits. When we take money out of the trust fund, it isn’t some kind of crisis, it’s the system working as it was intended.

But won’t the system be “broke” in 2035? No. Under these projections, in 2035 we’d only be paying out to recipients what we take in through taxes. At that point, recipients would get paid only 77 percent of their promised benefits.

As I said, this would be a very bad thing. But is it going to happen? It’s important to remember that the trustees make projections, so there’s a good deal of uncertainty around the numbers. It all depends on what kinds of assumptions you make about the future, particularly on what you think the economy will look like. If the economy is stronger, that means more tax revenue coming in, and the program can pay more benefits; if the economy is weaker, the program has more challenges.

Because of that uncertainty, the Trustees actually make three sets of projections, what they call high-cost, low-cost, and intermediate. It’s the intermediate one that everyone reports, and that’s where the date of 2035 and the figure of 77 percent of benefits come from. Without going too deeply into it, everything depends on how optimistic or pessimistic you want to be about America’s economic future, in terms of things like economic growth, productivity growth, and unemployment. Many people argue that the Trustees are unduly pessimistic about the future, and the most realistic projection is not the intermediate one but the one they call low-cost. And under that projection, the surplus never runs out, and we have plenty of funds to pay all benefits essentially forever, or at least for the next 75 years, which is how far out they attempt to project.

We aren’t going to settle that right now, but there’s an important piece of this to understand, which is that here in Washington, the opinion of Very Serious People is that Social Security is headed for disaster (along with Medicare, which is its own story), and the only thing to do is to either make people wait longer until they retire or cut their benefits. Indeed, proclaiming that you want to do one of those two things (or both) is in some circles how you demonstrate that you’re Very Serious about this issue. There is an entire mini-industry of think-tanks and advocates devoted to convincing lawmakers and the public that entitlements are a disaster in the making, so we need to cut them.

But there are other ways you could solve the problem, if it indeed turns out to be a problem. You could increase the cap on Social Security taxes — right now you only pay them on the first $118,500 of your income, which means that someone earning below that pays 6.2 percent of their income in Social Security taxes, while a hedge fund manager making $11.8 million pays only .062 percent of his income. You could also increase the tax itself, say by a tenth of a percent per year over ten years, which people would find imperceptible. In other words, you could maintain (or even increase) benefits by bringing in more money.

In last night’s debate, Marco Rubio said: “Social Security will go bankrupt and it will bankrupt the country with it.” This is the kind of completely ridiculous fear-mongering that gets you rounds of applause from those who want to cut the program. He then explained that he wants to raise the retirement age from 66 to 70 and reduce benefits (but of course, he says these things will happen in the future and not affect current retirees, who vote in such high numbers and are rather protective of their benefits). Ted Cruz said that he wants to slow the rate of growth in benefits (they’re adjusted for the cost of living) and convert some part of them to stock market accounts. But it’s what Donald Trump said that’s genuinely interesting:

“The Democrats are doing nothing with Social Security. They’re leaving it the way it is. In fact, they want to increase it. They want to actually give more. And that’s what we’re up against. And whether we like it or not, that is what we’re up against.

“I will do everything within my power not to touch Social Security, to leave it the way it is; to make this country rich again; to bring back our jobs; to get rid of deficits; to get rid of waste, fraud and abuse, which is rampant in this country, rampant, totally rampant. And it’s my absolute intention to leave Social Security the way it is. Not increase the age and to leave it as is.

“You have 22 years, you have a long time to go. It’s not long in terms of what we’re talking about, but it’s still a long time to go, and I want to leave Social Security as is, I want to make our country rich again so we can afford it.”

Strip away all the Trumpian bluster, and what you have is 1) a pledge not to cut benefits or raise the retirement age; and 2) the assurance that the program’s cost will be covered because the economy will perform well. Trump sounds an awful lot like…a liberal!

When Trump says, “that’s what we’re up against,” he seems to be saying that because the Democrats want to increase benefits, they’ll be able to present themselves as the program’s protectors and criticize Republicans for trying to undermine it (unless he’s the nominee). And about that, he’s right. Democrats will do that, because that’s what they almost always do. It’s usually an effective attack, both because Americans love Social Security, and because it’s true.

So how does Trump compare to the Democrats, and what is the debate on this issue in the general election going to look like? Bernie Sanders’ position is that benefits should be expanded, particularly since so many Americans lack retirement savings. He has proposed keeping the cap, but having the tax kick in again above $250,000, essentially inserting a “doughnut hole” in the tax; he has also suggested applying the tax to wealthy households’ investment income, and not just wages as it is now. Hillary Clinton has a similar, though less detailed, position: she rules out increasing the retirement age or cutting benefits, and wants to raise the cap to some unspecified level in order to increase some benefits.

Trump has broken with Republican orthodoxy in a few areas where Republican orthodoxy is deeply unpopular, and this is one of them. He probably has the political calculation right: it will be hard for Clinton or Sanders to go after him on Social Security when he’s pledging to protect it without any changes. They’re not going to move to his right on the issue, and while they’ve staked out a position somewhat to his left, he’ll be offering much the same result, without having to pay for it. A tax increase, he’ll say, won’t be necessary because when I’m president gold will practically fall from the sky.

Is that going to work? Frankly, I suspect it will, at least in taking Social Security off the table as an issue of contention between the two party nominees. But don’t worry — the Democrats will have plenty of other things to criticize him for.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, March 11, 2016

March 14, 2016 Posted by | Democrats, General Election 2016, Social Security | , , , , , , , | 2 Comments

“The Young Are The Restless”: The Days In The Lives Of All Our Children Are Rapidly Changing

The surge of generational change continues in this country, altering the cultural landscape with a speed and intensity that has rarely — if ever — been seen before.

The latest remarkable change concerns the decriminalization of the use of marijuana. A poll released Thursday by the Pew Research Center found that for the first time more Americans support legalizing marijuana use than oppose it.

It was rather unsurprising that more young people would support the move, but it was striking how quickly they adopted a more liberal position. About seven years ago, millennials (defined by Pew as people born in 1981 or later), Generation Xers (those born between 1965 and 1980) and baby boomers (those born between 1946 and 1964) shared the same view on marijuana: Only about a third thought it should be legalized. Since then, the share of millennials supporting its legalization has risen more than 90 percent. Meanwhile, the number of legalization supporters in Generation X and among the baby boomers has risen by no more than 60 percent.

The millennial generation is the generation of change. Millennials’ views on a broad range of policy issues are so different from older Americans’ perspectives that they are likely to reshape the political dialogue faster than the political class can catch up.

I surveyed the past six months of Pew and Gallup polls, to better understand the portrait of a generation bent on rapid change — even if that means standing alone.

ON GAY MARRIAGE Much has been made of the growing acceptance of same-sex marriage in this country, but a Pew poll last month found that that the change is driven mainly by millennials. Theirs was the only generation in which a majority (70 percent) supported same-sex marriage; theirs was also the only generation even more likely to be in favor of it in 2013 than in 2012, as support in the other generations ticked down. The longer-term picture is even more telling. Support for same sex-marriage among Generation X is the same in 2013 as it was in 2001 (49 percent). But among millennials, support is up 40 percent since 2003, the first year they were included in the survey.

Some of this no doubt is the result of younger adults’ having more exposure to people who openly identify as LGBT. According to an October Gallup poll, young adults between 18 and 30 were at least twice as likely to identify as LGBT as any other age group.

But this doesn’t necessarily mean that millennials overwhelmingly agree, on a moral level, with same-sex relationships. In fact, a survey released last year by the Berkley Center for Religion, Peace and World Affairs at Georgetown University in conjunction with the Public Religion Research Institute found that they “are nearly evenly divided over whether sex between two adults of the same gender is morally acceptable.”

ON GUN CONTROL According to a February Gallup report, Americans ages 18 to 29 are the least likely to own guns, with just 20 percent saying that they do. That is well under the national average of 30 percent of Americans who own guns.

And in a Pew poll taken shortly after the Newtown, Conn., shootings, younger Americans were the most likely to say that gun control was a bigger concern in this country than protecting the right to own a gun. (Younger respondents barely edged out seniors with this sentiment.)

In fact, a Gallup poll found that the percentage of those 18 to 34 years old saying they want the nation’s gun laws and policies to be stricter doubled from January 2012 to 2013. No other age group saw such a large increase.

It is remarkable that young people’s opinions shifted so dramatically, especially since a December Pew poll found that young adults under 30 were the least likely to believe that the shootings in Newtown reflect broader problems in American society. This age group was, in fact, the most likely to believe that such shootings are simply the isolated acts of troubled individuals.

Young people also are the least religious (more than a quarter specify no religion when asked), and they are an increasingly diverse group of voters. Fifty-eight percent of voters under 30 were white non-Hispanic in 2012, down from 74 percent in 2000. Like it or not, younger Americans are thirsty for change that lines up with their more liberal cultural worldview.

Advantage Democrats.

 

By: Charles M. Blow, Op-Ed Columnist, The New York Times, April 5, 2013

April 8, 2013 Posted by | Cultural Issues | , , , , , , , , | Leave a comment

“Make Up Another Lie”: What To Do When A Talking Point Gets Taken Away

Every day for months, the attack on President Obama was the same: the unemployment rate is above 8 percent, so voters have no choice but to consider him a failure — no matter how severe an economic catastrophe he inherited.

This changed on Friday when recent gains pushed the jobless rate to 7.8 percent, the lowest rate in four years. Obama is now overseeing the best election-year improvement in unemployment figures since Reagan’s “Morning in America” re-election bid in 1984.

If you’re a Republican, what do you do? As it turns out, there are two schools of thought.

The first is, keep repeating the attack anyway, even though it’s no longer true. Restore Our Future, the Republican super PAC, expanded an ad buy this week in three swing states describing the jobless rate as “over 8 percent.” Karl Rove’s American Crossroads attack ad shows viewers an 8.1 percent unemployment rate, rather than the actual one.

Why let facts and good economic news get in the way of a perfectly good attack?

The second is the one adopted by Mitt Romney and Paul Ryan: move the goalposts. The Republican presidential hopeful is now arguing, “[I]t looks like unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day the president got elected, our unemployment rate would be around 11 percent.” Ryan said the same thing this week.

Like far too much of Romney’s rhetoric, this is wildly misleading:

[The charge] assumes all things are equal in the labor force, when in fact it is constantly churning and evolving. In particular, besides the aftermath of the Great Recession, the composition of the labor force has been affected by the retirement of the leading edge of the Baby Boom generation.

Our colleagues at WonkBlog explored this issue earlier this year, showing that the peak of the labor force participation rate, or LFPR, was reached during the end of President Bill Clinton’s term and that since then it has been on a downward track…. The Federal Reserve Bank of Chicago in March estimated that just over half of the post-1999 decline in the labor force participation rate was explained by long-running demographic patterns, such as the retirement of the baby boomers.

In other words, Romney/Ryan would have you believe the sharp improvement in the job market doesn’t count because of demographic trends. That’s marginally better than simply repeating false and out-of-date attacks, but there’s no reason to take the GOP rhetoric seriously.

 

By: Steve Benen, The Maddow Blog, October 10, 2012

October 11, 2012 Posted by | Uncategorized | , , , , , , , , | 1 Comment

“Unintentionally Revealing”: Paul Ryan’s Path To Nowhere

“Why don’t you balance the budget at 24 percent [of GDP] instead of 19 percent?” I asked.

“I think it would do damage to the economy,” Rep. Paul Ryan replied.

This simple exchange from a conversation I had with Ryan in his office last October captures the uber-debate the country needs to have. That is, once we get done dissecting the deceptions, hypocrisies and regressive priorities in the Wisconsin Republican’s latest blueprint.

For starters, Ryan’s assumption that higher levels of spending and taxation would automatically hurt the economy can’t be right. If it were, America would be a poorer country today than it was a hundred years ago, when the federal government taxed and spent less than 5 percent of gross domestic product. But we’re obviously vastly wealthier. That doesn’t mean there isn’t a limit beyond which higher taxes and spending would hurt. Just that we’re not close to that point. How can we be, when President Reagan ran government at 22 percent of GDP?

Federal spending has gone from recent norms of about 20 percent of GDP to 24 percent under President Obama, thanks to the lagging economy and spending on things like the stimulus and unemployment insurance. Ryan wants to get it back to 20 percent in the next few years and return taxes to their more recent norms of 19 percent, up from today’s recession-depleted 15 percent. (The nonpartisan Tax Policy Center said Tuesday that Ryan’s proposals would in fact fall dramatically short of 19 percent, but leave that aside for the moment.)

At first blush, Ryan’s plan sounds perfectly reasonable — until you remember that we’re about to retire 76 million baby boomers.

“I think the historic size [of government as a share of GDP] is about right, or smaller,” Ryan told me that day.

“But how can that be,” I asked, “when we’re doubling the number of seniors” on Social Security and Medicare, the biggest federal programs.

Because we can’t keep doing everything for everybody in this country,” he said. “We should trim down a lot of other stuff we’re doing.”

This was unintentionally revealing. Ryan has sounded this theme before. “We are at a moment,” Ryan said in his State of the Union response in 2011, “where if government’s growth is left unchecked and unchallenged . . . we will transform our social safety net into a hammock, which lulls able-bodied people into lives of complacency and dependency.”

But what hammock is Ryan talking about? The only thing slated to grow the size of government in the years ahead is the retirement of the baby boomers. The doubling of the number of people eligible for Social Security and Medicare is what is driving all the increase in federal spending — along with the spiral in system-wide health costs, which afflicts Medicare along with all privately financed health care.

If those programs for seniors haven’t been a “hammock” until now, simply doubling the number of people eligible for them can’t turn them into a “hammock” tomorrow. When it comes to fiscal policy, we have an aging population challenge, and a health-cost challenge. We don’t have a “hammock” challenge.

The upshot? Ryan wants to use an aging America and the bogus but superficially appealing constraint of “historic levels of spending and taxation” to force massive reductions in the rest of government. That’s why the Center on Budget and Policy Priorities and others Tuesday were already calculating that Ryan’s new plan would basically zero out everything in government a few decades from now, save for Social Security, Medicare and defense.

The crucial thing to understand about Ryan is that he is not a fiscal conservative. He’s a small-government conservative. These are very different things. The fastest-growing federal program in Ryan’s new budget is interest on the debt, which nearly triples from $234 billion next year to $614 billion in 2022. He doesn’t even pretend to balance the budget until 2040, and then only under utterly dubious assumptions.

These are not the choices a fiscal conservative makes. A fiscal conservative pays for the government he wants. Ryan wants government smaller than the one Reagan led even as America ages, and he doesn’t want to pay for it. Instead he adds trillions in new debt and makes no bones about it.

“Why would you choose to have debt, as opposed to saying we’re going to pay our own way now” via higher taxes, I asked Ryan back in October. This even after spending cuts that most Republicans think won’t command public support. “Why is that a conservative value?”

“Because of growth,” he said. “What I don’t want to do is sacrifice an entire generation to having less than optimal potential growth because their parents didn’t fix this problem.”

Huh? A cynic would say Ryan would do anything to avoid acknowledging the need for higher taxes as the boomers age. The conservative darling just won’t go there. The less charitable assumption is that the congressman is confused.

There’s more to say on Ryan’s blueprint, and, in spite of my general hostility to his thinking, he deserves credit for putting his party’s head in the noose by calling (rightly, if imperfectly) for Medicare reform. But the first order of business is to expose Ryan’s overall plan for the misguided, misleading and unacceptable vision it represents.

 

By: Matt Miller, Opinion Writer, The Washington Post, March 21, 2012

March 26, 2012 Posted by | Budget | , , , , , , , , | 1 Comment

The Fight Will Continue: Democrats Will Lose Now But They Can Win Later

Democrats are going to lose this one. The first stage of the emerging deal doesn’t include revenue, doesn’t include stimulus, and lets Republicans pocket a trillion dollars or more in cuts without offering anything to Democrats in return.

The second stage convenes a congressional “Supercommittee” to recommend up to $2 trillion in further cuts, and if their plan doesn’t pass Congress, there’s an enforcement mechanism that begins making automatic, across-the-board cuts to almost all categories of spending. So heads Democrats lose, tails Republicans win.

It’s difficult to see how it could have ended otherwise. Virtually no Democrats are willing to go past Aug. 2 without raising the debt ceiling. Plenty of Republicans are prepared to blow through the deadline. That’s not a dynamic that lends itself to a deal. That’s a dynamic that lends itself to a ransom.

But Democrats will have their turn. On Dec. 31, 2012, three weeks before the end of President Barack Obama’s current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is…nothing.

This scenario is the inverse of the current debt-ceiling debate, in which inaction will lead to an outcome — a government default — that Democrats can’t stomach and Republicans think they can. There is only one thing that could stand in the way of Democrats passing significant new revenues on the last day of 2012: the Obama administration.

Republicans — and even some Democrats — think that the Obama administration lives to collect revenue. The truth is closer to the opposite. Senior administration aides view the expiration of the Bush tax cuts as less of an opportunity than a chore. About four-fifths of the cuts go to households making less than $250,000 a year, and they don’t want to raise taxes on those folks. They don’t like the politics of the issue, either. It’s an article of faith among Democratic strategists that debates on taxes inevitably favor Republicans, allowing Democrats to be hammered from the right and undermined from the left. White House aides would rather focus on “win the future” issues like infrastructure, education and energy.

The White House’s strategy in the debt-ceiling negotiations has reflected its ambivalence, with Obama trying to extract either as much revenue as Republicans would allow or as little as Democrats would accept. Obama even offered Boehner a deal in which the Bush tax cuts would be extended right now, so Republicans wouldn’t have to fear a subsequent negotiation in which they lacked leverage. Boehner rejected that deal and, in doing, might have saved the safety net.

But the Obama administration doesn’t want to take its second chance. They argue that the economy will still be recovering in 2013, and so it’s not an ideal time for a large tax increase. True. But what happens in 2012 is not simply setting tax policy for 2013. It’s setting tax policy for decades to come.

Health costs are rising and the Baby Boomers are retiring. If taxes don’t rise, none of these commitments are sustainable. And Republicans, in normal times, are perfectly capable of blocking any and all attempts to raise taxes. For Democrats, the expiration of the Bush tax cuts presents a unique opportunity in which GOP intransigence will mean more new revenues rather than no new revenues.

The alternative has been on clear display in recent months. Republicans can’t necessarily sell the country on big cuts in federal programs, but they can make them necessary. All they need to do is hold the line aganst taxes, allow deficits will continue to mount, and then use forcing events like the debt ceiling or the budget to demand huge spending cuts. A world in which the two parties can’t agree on tax increases but can agree on spending cuts is one in which the government eventually shrinks dramatically. Republicans understand this. Do Democrats?

A year ago, I was less concerned about the Bush tax cuts. I assumed, as did many in Washington, that the Republicans’ antipathy to taxes was a negotiating stance. Eventually, we would strike a “grand bargain” that would reduce spending and raise revenue substantially. The past few months have proved me wrong.

Republicans have shown, that they will block any and all tax increases, no matter what incentives they are offered in return and no matter how dire the consequences of their refusal. Next year’s deadline offers Democrats their only chance to negotiate from a superior strategic position. Republicans will still be able to refuse to raise taxes. But if they do, it won’t matter. The only way they can succeed in keeping taxes from rising is if the Obama administration and the Democrats stand shoulder-to-shoulder with them to extend the Bush tax cuts.

By: Ezra Klein, The Washington Post, July 31, 2011

August 1, 2011 Posted by | Class Warfare, Congress, Conservatives, Consumers, Debt Ceiling, Debt Crisis, Deficits, Democracy, Democrats, Economic Recovery, Economy, Elections, GOP, Government, Health Care Costs, Ideologues, Ideology, Lawmakers, Middle Class, Politics, President Obama, Public, Republicans, Right Wing, Tax Increases, Tax Loopholes, Taxes, Teaparty | , , , , , , , , , , | Leave a comment

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