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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

“Uberize The Federal Government?”: Uber Isn’t A Model For Government, Despite What Republicans Argue

A couple of years ago, Republicans made no secret of their love for Uber – not just as a service, but as a model. “Republicans love Uber,” Politico noted. “The Republican Party is in love with Uber, and it wants to publicly display its affection all over the Internet,” National Journal added. Uber has become a “mascot” for Republicans “looking to promote a new brand of free market conservatism,” The Hill reported.

Vox noted late last week that John Kasich is making this affection for Uber a central rhetorical element of his struggling presidential campaign.

At the Conservative Political Action Conference [Friday], long-shot Republican presidential candidate John Kasich argued that we should “Uberize the federal government.”

Kasich didn’t go into much detail about what this means, but it’s a line that he’s been using for weeks on the campaign trail.

Much of this is symbolic, not substantive. Republican policymakers at the local level actually tend not to like Uber much at all, but at the national level, where presidential candidates tend to paint with broad brushes, the car-service technology has come to represent a breakthrough against regulations and against organized worker rights.

And with this in mind, when a presidential candidate like Kasich says he wants “Uberize the federal government,” it’s worth asking what in the world such a model might look like.

The New York Times’ Paul Krugman’s answer rings true.

Bear in mind that the federal government is best thought of as a giant insurance company with an army. Nondefense spending is dominated by Social Security, Medicare, Medicaid, and a few smaller social-insurance programs (now including the subsidies in the Affordable Care Act.) How, exactly, is an Uber-like model supposed to do anything to make that work better?

And don’t say it would remove the vast armies of bureaucrats. Administrative costs for those federal programs are actually quite low compared with the private sector, mainly because they’re not trying to deny coverage and don’t engage in competitive advertising.

If Kasich means anything, he means “privatize”, not Uberize – convert Social Security into a giant 401(k) plan, replace Medicare with vouchers. But that wouldn’t poll very well, would it?

No, it wouldn’t. Uber is popular with voters Republicans are trying to reach, so it’s become a vehicle (no pun intended) for conservative policy goals the party has long wanted anyway – only now GOP candidates can wrap unpopular ideas in a tech-friendly package.

Of course, Kasich isn’t alone on this front: Marco Rubio has been eagerly touting the service for years, while Ted Cruz last year described himself as the Uber of Washington, D.C.

 

By: Steve Benen, The Maddow Blog, March 7, 2016

March 8, 2016 Posted by | Conservatism, Federal Government, John Kasich, Republicans | , , , , , , , , | Leave a comment

“You Damn Millennials Don’t Get Socialism”: Hillary Is The Sausage-Maker, And Bernie Is The Eggman

Once upon a precious old time, socialism actually meant something, distinct from liberalism. A socialist was somebody who wanted the state to own the means of production. The British Labour Party, say, was genuinely socialist. Its socialism had a specific (and since abandoned) source—Clause IV of the 1918 party constitution, which described the new party’s goal thus: “To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution, and exchange, and the best obtainable system of popular administration and control of each industry or service.”

Back in those days, when by today’s standards most people were poor or close to it, this was actually a pretty popular position. Even the ruling classes tolerated a bit of common ownership. For example, in London between the wars, as in New York, the underground/subway systems were taken public, because what had existed before was a mish-mash of privately owned lines that didn’t coordinate schedules and so on.

After World War II, when Labour swept in with a clear mandate, the party really did set about nationalising-with-an-s all the major public services and industries. Can you imagine?! The coal industry was nationalized, just wrenched right out of the scheming hands of several hundred little (and big) Don Blankenships!

The United States never had a major socialist party. If you don’t believe me, conservative readers, go back and read some of preacher and Socialist Party presidential candidate Norman Thomas’s criticisms of Franklin Roosevelt. Aspects of the New Deal were of course quasi-socialistic. But real socialists hated Roosevelt more than they hated the Republicans in a way: Roosevelt saved capitalism. And broadly speaking, socialists also tended to be pacifists (even as they were militant anti-fascists).

Well, to make a long story short, times changed. In America we had deindustrialization, deunionization, Reagan; in Britain, Thatcher won, and a fellow named Arthur Scargill whom you ought to Google if you’re interested did some terrible damage.

Then in 1989, the Soviet Union collapsed. Through the 1990s, there were still a number of countries in the world that called themselves socialist. But that began to dwindle, and over these past 25 years, the memory of the distinction between liberalism and socialism has dwindled along with it. The evanescence of this memory has of course been accelerated by the roughly 89 kajillion hours of American talk radio in which any mildly left-of-center politician or proposal was reprehended as socialistic.

I say all this of course by way of talking about the popularity of Bernie Sanders, and especially the generational divide thereof. Some observers appear to be a little surprised that Sanders, the crotchety old guy, leads Clinton among young people. A Rock the Vote poll of millennials that came out this month shows Sanders leading Clinton by 11 points among voters under 35 I’ve seen others where the spread is higher.

It all makes total sense. If you’re my age, you remember a time when the distinction between liberal and socialist mattered. If you were one or the other and lived in a place populated by many of both, you got into lots of beer-spittled arguments about the merits and demerits of each. And incidentally, you also remember a time when Bernie Sanders was this interesting, basically admirable, but only-in-Vermont mayor, and then later, this interesting, basically admirable, but for the most part inconsequential back-benching member of the House of Representatives.

But say you’re 28 and a liberal. All you know about socialists is that these eye-bulging racist vampires you see on TV keep calling Barack Obama a socialist. And you think, “Hey, I like Obama, so socialist is okay by me!” And remember that in his one big speech in which he defined what socialism means to him, Sanders—probably somewhat disingenuously, given that he chose to be a socialist rather than a liberal back when the differences were stark, but also wholly understandably—basically kinda said socialism to him means the stuff that Roosevelt did and free college and so on.

Besides all that, you have no memory of a time when Sanders was a marginal character on the national stage. For all of your adult lifetime, he’s been a United States Senator! There are important senators and unimportant ones, smart ones and dumb ones, sober ones and drunk ones, but all that doesn’t really matter. Once people have to call you “Senator,” you’re a respectable figure.

So differences in perspective on Sanders between young and old is Grand Canyon-ic in scale, and it is both ideological and personal. By the way, Clinton wallops Sanders in their own older cohort. In one recent poll, Clinton was leading Sanders among voters 50 and older by 40 points, 64-24.

Now of course young voters are responding to Sanders’s positions and his rhetoric, and they’re responding to his thundering assertions that sweeping change is a matter of political will, which older voters (this one included) tend to disbelieve. My point is just that they aren’t put off from jump street by the S-word in the way that older voters who knew the original meaning of the word are more likely to be.

So we had this Des Moines Register poll last week showing that 43 percent of Iowa Democrats thought of themselves as socialists. No age breakdown was released, but I’d bet the generational divide is clear. Oddly enough, “liberal” wasn’t a listed option on the question; just “socialist” or “capitalist.”

Since no one’s talking about the state seizing the means of production today, what’s the remaining difference, you might ask? Fair question. These days, with socialists having dropped the core thing that made socialism socialism, it’s probably mostly a mindset, an emotional-psychological sense of how confrontational and disruptive and anti-establishment people want their leaders to be. The only distinctly socialist (as opposed to liberal) thing about Sanders’s platform is his call for Medicare-for-all, which directly echoes what the socialist Labour Party did in the UK in 1946.

In an ideal world most Democratic voters would prefer that, surely; but how many will see it as preferable to the Clinton position of just slowly, and admittedly much more boringly, building on Obamacare? Art Goldhammer had a terrific column at The American Prospect this week in which he divided us into sausage people and egg people—the sausage people, after Bismarck’s famous quote, know that making change is hard, slow, and messy. The egg people want to break eggs to make omelets, and they want to break them now.

Hillary is the sausage-maker, and Bernie is the eggman. Egg-breaking is a lot more fun, hence its attraction, especially to younger people. But then you have to make the omelet. Sometimes people forget that that part can be really hard.

 

By: Michael Tomasky, The Daily Beast, January 22, 2016

January 23, 2016 Posted by | Bernie Sanders, Hillary Clinton, Millennnials, Socialism | , , , , , , , , , | 3 Comments

“When Is It Okay To Exploit Fear?”: Deliberately Increasing People’s Sense Of Insecurity To Make Them Vote For You

When I saw that President Obama had remote-psychoanalyzed Trump voters, I knew that the right would go crazy and say that it reminded them of his infamous bitter-clinger comments from 2008. At this point, it’s Pavlovian. What I saw from right-wing blogger Tom Maguire was a little unexpected, however.

He took a screenshot of the New York Times headline, which read: Obama Accuses Trump of Exploiting Working-Class Fears. And then he posed a rhetorical question for all of us:

The headline is baffling – exploiting fears is now a political no-no? – and shows a failure of nerve somewhere in the editorial process.

For a moment it was me who was baffled. It took a second to process what exactly Maguire was getting at. To me, “exploiting fears” is a moral failing. Full stop.

For Maguire, exploiting fears is a given in the political process and unworthy of notice.

At first, I was offended. Then I realized that we’re both probably correct in our own way, but with limitations.

I’m sure if I challenged him, Maguire would recite countless examples of Democratic politicians exploiting the fears of the electorate. These would be fears about the Supreme Court overturning Roe v. Wade, or fears about NSA surveillance, or fears about grandma losing her Medicare or Social Security. No doubt, talking about the bad things that may result if the other party wins is a core element of all political campaigning, and it always has been.

I think this is different in kind, though, than using fear itself as a political tool. It’s hard to draw a hard line, and it’s partly about the merit of the threat you’re talking about. Jim Geraghty tried to get at the distinction in a piece he just wrote at the National Review that complains about Democratic accusations of fear-mongering.

…all of other threats that we’re told are more likely to kill us than a terrorist — other drivers, the ladder at home, the stove, the local swimming pool – aren’t deliberately trying to kill us.

…You may fall off your ladder while putting up the Christmas lights on the roof, but it’s not like there’s a sinister group, al-Laddera, plotting to wobble when you’re leaning over to put that last string up above the gutter. There’s not much the government can do to stop you from falling off a ladder, other than PSAs saying “be careful!” But there’s an awful lot the government can do to target terrorists and mitigate the threat they present.

In other words, for Geraghty, it’s legitimate to continually alarm the electorate about a very low-probability threat to their personal safety because there is at least something the government can do to minimize that threat.

For me, though, the responsible thing to do as a political leader is to calm people’s fears both so that they won’t be needlessly or disproportionately afraid and so that they don’t freak out and make unreasonable demands on their political leaders.

What’s really bad, in my opinion, is to deliberately increase people’s sense of insecurity not primarily so that they will demand policies to keep them safe but to make them more inclined to vote for you and your political party. Making people afraid for political gain is cynical and almost cruel.

So, naturally, I see it as dubious when someone like Donald Trump ramps up people’s anxieties and provides nothing solid as actual policy prescriptions. To me, that’s totally different than arguing that electing Hillary Clinton will result in a Supreme Court less inclined to overturn Roe v. Wade or energy policies less favorable to coal. You can scare and motivate people to vote based on accurate information. That’s not a political no-no, and it never has been.

But “exploiting” fears is a little different, especially when part of your pitch is to create fear when none ought to exist (“The president is a secret Muslim”) or to ramp fear up beyond any rational level, which is what the terrorism vs. wobbly ladder comparison is meant to illuminate.

 

By: Martin Longman, Political Animal Blog, The Washington Monthly, December 22, 2015

December 23, 2015 Posted by | Donald Trump, Fearmongering, Politicians, Terrorism | , , , , , , | 3 Comments

“Marco Rubio Has An Arithmetic Problem”: Anyone With Access To A Calculator Should Recognize Just What A Joke This Scheme Is

At first blush, it’s tempting to see Marco Rubio’s economic plan as a dog-bites-man story: Republican presidential campaign proposes massive tax breaks for millionaires and billionaires, even while saying the opposite. The Florida senator isn’t alone on this front, and it all seems sadly predictable.

But in this case, there’s more to it. Even if you’re unmoved by Rubio’s odd inability to handle his own personal finances in a responsible way, the way he intends to deal with the nation’s finances as president is arguably a national disqualifier.

The trouble started in earnest at the last debate for Republicans presidential candidates – the one pundits decided was a triumph for Rubio – when CNBC’s John Harwood pressed the Florida senator on his tax-cut plan.

HARWOOD: The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale. Since you’re the champion of Americans living paycheck-to- paycheck, don’t you have that backward?

 RUBIO: No, that’s – you’re wrong.

It turns out, analysis from both the left and right scrutinized Rubio’s plan and found that he was completely wrong. I can’t say whether he was deliberately trying to deceive viewers or simply unaware of the details of his own policy, but in either case, the senator’s claims were false.

In the days that followed, scrutiny of Rubio’s plan intensified. Vox’s Dylan Matthews talked directly to Rubio staffers and discovered that the senator’s plan includes even more generous tax breaks for the top 1% than Jeb Bush’s and Donald Trump’s plans. An analysis for Citizens for Tax Justice also found that the bulk of the benefits in the Rubio plan would go to the very, very wealthy.

Indeed, New York’s Jon Chait added, “Rubio’s proposal deliberately provides some benefits to Americans of modest income, which means that its enormous tax cuts for the very rich come alongside some pretty decent-size tax cuts for the rest of us. All told, Rubio’s plan would reduce federal revenue by $11.8 trillion over the next decade. The entire Bush tax cuts cost about $3.4 trillion over a decade, making the Rubio tax cuts more than three times as costly.”

It’s against this backdrop that Rubio has also proposed a vast expansion of the U.S. military, while leaving Social Security and Medicare benefits for current retirees untouched.

In any version of reality in which arithmetic exists, Rubio’s plan is simply indefensible. Massive tax breaks for the rich, coupled with significant increases in military spending, leads to ballooning budget deficits. It’s not theoretical – we tried this in the Bush/Cheney era and it led to predictable results that we’re still trying to address.

The difference is, Rubio wants tax cuts that are triple the size of the ones created by George W. Bush and Dick “Deficits Don’t Matter” Cheney.

As this relates to the 2016 race, the central problem relates to policy: Rubio’s numbers don’t, and can’t, add up. Anyone with access to a calculator should recognize just what a joke this scheme is.

But the other problem is what we’re learning about Rubio as a candidate. There is, like it or not, a character aspect to presidential hopefuls’ platforms – because they offer Americans an opportunity to learn about candidates’ honesty, priorities, values, and candor. The Florida senator who talks about his ability to appeal to maids and bartenders has gone to almost comical lengths to craft a plan that benefits CEOs and hedge-fund managers, all while pretending to be an expert on fiscal responsibility.

Marco Rubio’s economic plan tells us something important about his candidacy, and it’s not flattering.

 

By: Steve Benen, The Maddow Blog, November 9, 2015

November 10, 2015 Posted by | Economic Policy, Marco Rubio, Tax Policy | , , , , , , , , | 1 Comment

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