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“We Can’t Afford To Weaken Social Security”: President Obama Just Changed The National Debate On Social Security

Speaking in Elkhart, Indiana, President Obama made a significant policy statement, one that may get lost in all the talk of the campaign to replace him. He argued that Social Security not only shouldn’t be scaled back, as many believe, but that it should be expanded.

You can look at this as a move to the left. But here’s a better way to see it: as more like a digging in, a resistance to a decades-long effort to lay the groundwork for significant cuts to the program.

Now that Obama has taken this position, it makes it much more likely that most or all Democrats will adopt it as well, which could truly change a debate that up until now has been dominated by an alliance of Republicans and supposedly centrist advocates whose mission is to scale back the most successful social programs America ever created.

Here’s what Obama said in his speech:

But look, let’s face it — a lot of Americans don’t have retirement savings.  Even if they’ve got an account set up, they just don’t have enough money at the end of the month to save as much as they’d like because they’re just barely paying the bills.  Fewer and fewer people have pensions they can really count on, which is why Social Security is more important than ever. We can’t afford to weaken Social Security.  We should be strengthening Social Security.  And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous, and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned.  And we could start paying for it by asking the wealthiest Americans to contribute a little bit more.  They can afford it.  I can afford it.

Here’s why this is important. For a long time now, the way you’ve shown you’re a Very Serious Person about fiscal matters is to gravely intone that Social Security is “going broke” and say that we must cut back benefits, either by reducing retirees’ payments or raising the retirement age. There’s an entire industry of think tanks and advocacy groups whose mission is to create the intellectual and political environment that will make such cuts possible.

Liberals have only been pushing back against that coalition in a serious way for a few years now. There are some high-profile voices debunking the myth that Social Security is “going broke,” most notably Paul Krugman’s (I won’t bother to go over again why it’s a myth, but if you’re interested I explained it here). But they’ve been hampered by the fact that so many Democratic politicians want to communicate that they too are Very Serious, so they accept some of the premises of the other side’s argument, ceding half the battle over the existence of the program.

And make no mistake: it is a battle over the existence of the program. Despite their assurances that they only want to “strengthen” Social Security, many Republicans would like nothing more than to see it disappear, for two reasons. The first is that they’re simply opposed to large social programs on ideological grounds. The second is that by virtue of its success and popularity, Social Security is an ongoing rebuke to conservative arguments about government. It’s awkward to say, “Government can’t do anything right and should be cut back as much as possible” to a voter who has health care because of Medicare and isn’t eating cat food because of Social Security — and thinks both programs are terrific.

So the political situation is this. Republicans can’t mount a direct assault on the program because it’s spectacularly popular, particularly with those who get checks every month (and who vote in large numbers). At the same time, their campaign against it has been extremely successful in shaping public opinion. Large portions of the public have been convinced that the program is in crisis and is about to go broke, and young people in particular think Social Security won’t exist by the time they retire. The hope of the anti-entitlement forces is that if they can convince enough people of that, when they propose a specific plan to cut back the program, people will say, “Sure, whatever — it’s going broke anyway, so we might as well.”

Until recently, the debate around Social Security consisted of one side saying it was going broke and needed to be slashed, and the other side not disputing those basic assertions too strongly, but saying that we shouldn’t do anything rash. What we are moving toward, however, is the Democratic side saying not only that the program is essentially healthy, but that instead of cutting it we should be expanding it. That’s a profoundly different debate, one that produces an entirely different set of policy options.

Right now you have the president of the United States taking that position, as well as the two leading Democratic presidential candidates. Hillary Clinton has proposed some targeted expansions of Social Security benefits, for widow/ers facing a benefit cut when a spouse dies and for those whose benefits are smaller because they spent time out of the workforce raising children or caring for other family members. Bernie Sanders advocates an increase for all recipients: “expand benefits by an average of $65 a month; increase cost-of-living-adjustments; and lift more seniors out of poverty by increasing the minimum benefits paid to low-income seniors.”

With the exception of Donald Trump, all the Republican presidential candidates this year signed on to some form of Social Security cuts, either through increasing the retirement age or cutting benefits. Trump, however, said we just shouldn’t touch it. In one debate, he said, “It’s my absolute intention to leave Social Security the way it is. Not increase the age and to leave it as is.” Trump doesn’t say how he’d pay for the program, which should undercut the idea that his position somehow challenges conservative orthodoxy; in reality, all Trump is saying is that he’ll make everyone so rich that we won’t have to make tough choices about such things.

By contrast, Democrats feel an obligation to explain how they’re going to pay for the benefits they propose. Obama described “asking the wealthiest Americans to contribute a little more.” That isn’t very specific, but there are a couple of ways you could do that, the most obvious of which is to raise the payroll tax cap. Right now you pay Social Security taxes only on the first $118,500 of your income, which means that beyond that level the wealthy pay a lower portion of their income than poor and middle-class people do.

Hillary Clinton says she would pay for increased benefits by “asking the highest-income Americans to pay more, including options to tax some of their income above the current Social Security cap, and taxing some of their income not currently taken into account by the Social Security system.” That would probably mean applying payroll taxes to investment income and not just wage income as it is now. Sanders wants to do that too, and is more specific about the cap: he would remove it entirely, though he would include a doughnut hole between the current cap of $118,500 and $250,000; you wouldn’t start to pay more payroll taxes until you reached that higher income.

Unfortunately, it’s a little hard to tell exactly how much in greater benefits we could afford with these kinds of measures, because how much the system takes in is heavily dependent on things we can only guess at, like what income growth, inflation, and immigration levels are going to be 10 or 20 or 50 years from now. But now that the most prominent Democrats in the country all agree that we should be expanding Social Security and not cutting it back, we could have a whole new debate on the issue.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, June 2, 2016

June 6, 2016 Posted by | President Obama, Republicans, Social Security | , , , , , , , , | 2 Comments

“A Cancer Growing On Our Society”: Progressives Must Stand Up Against The Right Wing War On Public Employees

For many years the American Right — and many of the most powerful elements of corporate and Wall Street elite — have conducted a war on public employees.

Their campaign has taken many forms. They have tried to slash the number of public sector jobs, cut the pay and benefits of public sector workers, and do away with public employee rights to collective bargaining. They have discredited the value of the work performed by public employees — like teachers, police and firefighters — going so far as to argue that “real jobs” are created only by the private sector.

Last week a conservative court ruled that by going through bankruptcy the city of Detroit could rid itself of its obligation under the state constitution to make good on its pension commitments to its retirees.

It should surprise no one that the Republican Chairman of the U.S. House Budget Committee, Paul Ryan, is demanding that a budget deal with the Democrats include a 350 percent increase in pension contribution by all civilian federal employees. That would effectively mean a pay cut of about 2 percent for every federal worker. And that cut would come after a three-year pay freeze and multiple furloughs caused by the Republican “sequester.”

Unbelievably, in Illinois the right wing Chicago Tribune and the state’s corporate elite snookered the Democratic-controlled legislature into passing changes in that state’s pension laws that slashed the pensions of its public employees. The changes affected all state employees and many of Illinois’ teachers. All of them had faithfully made their required contributions to the state’s pension funds for years, even though the legislature regularly failed to make its required payments so it could avoid raising taxes on the state’s wealthiest citizens.

Illinois cut teacher pensions, even though many do not participate in the Social Security system and the state pension is their only source of retirement income.

All of these attacks on public employees — and cuts in public sector expenditures in general — are premised on two myths that are simply untrue.

Myth number one. The Right claims we live in a period of scarcity that requires extreme public sector austerity. They claim “we just can’t afford” to pay people like teachers the pensions that we had agreed to in the past, because “America is broke.”

This, of course, is simply wrong. In spite of the hardships brought on by the Great Recession that resulted from the reckless speculation of Wall Street banks — and even though George Bush thrust our country into an unnecessary war that cost our economy a trillion plus dollars — America is wealthier today than ever before in its history.

Per capita income in America is at an all-time high because productivity per person has gone up 80 percent since 1979.

Of course the Right is able to make the case that “we can’t afford” to pay our teachers as much as we once did, because everyday Americans feel like they have been losing ground – which of course they have. That’s because virtually every dime of that increase in our per capita national income went to the top 1 percent.

The solution to this problem is, of course, to change the rules of the game that have been rigged over the last three decades to bring about this result. By cutting the incomes, pensions and collective bargaining rights of middle class public employees rather than raising taxes on the wealthy, we make the problem worse.

But from the standpoint of the corporate Wall Street elite, that is precisely the idea. They want to continue to siphon off more and more of America’s bounty. And they want to shrink the public sector, because they don’t want to pay taxes at rates like they did back in the ’40s, ’50s and ’60s when the American middle class was born and the portion of our national income going to the top 1 percent actually dropped.

That gets us to myth number two.

Myth number two. The right wing is doing its best to convince ordinary voters that the only way to make our economy grow and create “real jobs” is to cut public sector spending and allow big corporations and Wall Street to control a bigger and bigger portion of the country’s wealth.

Unfortunately, even the most basic understanding of economic history — or a shred of common sense — make clear that this is categorically untrue.

Historically, spending by government has been a critical engine for long-term economic growth.

America’s investment in universal public education has provided the indisputable foundation for our economic expansion.

The public infrastructure of roads, airports, and public transportation are essential to all economic activity. Rural electrification, our system of farm to market roads, the agricultural extension service — and a whole system of federal programs to stabilize the agricultural economy — have made possible the most productive food production system in the history of humanity.

The Internet was invented by the American government. GPS navigation that is essential to modern commerce, was developed by our government, and depends on a system of government-run navigation satellites.

Anyone who has ever been to a third world country that is ravaged by starvation and disease understands that the nutrition and health of a population is a prerequisite to vibrant economic activity. People can’t work hard if they are hungry or sick. Government provides the public health infrastructure that gives us sanitary water, picks up our garbage, disposes of our wastes, protects the quality of the air we breath and invests in the research that underlies most new medicines. And the government food stamp program is intended to prevent a significant number of our people from going hungry.

And just try to engage in productive economic activity in a society where there is no physical security, where there is no functioning police or fire protection, or that is constantly threatened by war or conquest or civil strife.

People who argue that investments by government do nothing to create economic growth — or that the only “productive” economic investments are made by a bunch of investors on Wall Street, many of whom are nothing more than professional gamblers — are just plain nuts.

Cutting back on the public sector — and demonizing public employees — has nothing whatsoever to do with economic necessity — or with “redirecting” our resources into “more productive” uses. In fact, just the opposite.

The greatest threat to our economy is the shrinking buying power of everyday Americans and the growing concentration of wealth in the 1 percent. Economic inequality is a cancer growing on our society.

Fact is that if ordinary people don’t get a proportionate share of the income from increased economic productivity, it stands to reason that they won’t have the money to buy the products the economy produces. That leads to economic stagnation and recession, it’s that simple.

Every economic and political decision we make should be viewed through the lens of whether it reduces or increases that economic inequality. When it comes to public employee pensions and wages, the corporate elite tries to convince ordinary people that the choice is between “lavish” benefits to public employees or education for our kids. They play upon the resentment that most ordinary people feel that their incomes have been stagnant for three decades to pit them against middle class public employees.

Of course the real choice is not whether ordinary people must fight over the crumbs, while the Wall Street’s “masters of the universe” jet off to gamble in Monaco on their private jets. It is whether to further reduce the share of income going to middle class teachers, fire fighters and police officers or to increase taxes on millionaires.

It’s time for Progressives — and Americans of all stripes — to wake up and smell the coffee. Without a robust, efficient, well functioning public sector, our economy will fall behind in the world and our standard of living will drop.

Government is the name we give to the things we choose to do together.

We have to attract the best and the brightest to staff our government. That requires that the teaches, firefighters, police officers, maintenance people, researchers, clerks, constituent service workers, programmers, air traffic controllers, managers, construction workers, corrections officers, policy analysts, and everyone else who works for our governments must be respected, well compensated, and have the right to collectively bargain over the wages and working conditions.

It’s time for us all to stand up against the Right Wing war on public sector employees.

 

By: Robert Creamer, The Blog, The Huffington Post, December 9, 2013

December 10, 2013 Posted by | Collective Bargaining, Economic Inequality, Public Employees | , , , , , , | 1 Comment

“Throwing Their Own Under The Bus”: CEO’s With Massive Retirement Fortunes Push Social Security Cuts

With budget negotiations on the horizon, a buzz is building around Social Security, from Elizabeth Warren and other Democrats calling for an expansion of benefits to The Washington Post arguing that seniors must be sacrificed for the good of the “poor young.”

Two of the biggest players in the debate are largely behind the scenes: Business Roundtable and Fix the Debt, corporate lobbies that use deficit fear-mongering to sell benefit cuts. These groups are made up of CEOs of America’s largest corporations—people with retirement accounts that are more than 1,000 times as large as those of the average Social Security beneficiary.

Each of the 200 executives of Business Roundtable has retirement savings averaging $14.5 million, according to a new report from the Institute for Policy Studies and the Center for Effective Government. That’s compared to the $12,000 that the median US worker near retirement age has managed to put away. Once Business Roundtable CEOs start drawing Social Security themselves, they’ll be cashing a monthly check that is sixty-eight times larger than an ordinary retiree’s, ensuring that they’ll never bear the burden of the cuts they’re advocating.

“I find it hypocritical to see CEOs sitting on massive retirement fortunes of their own saying that the solution to the country’s fiscal challenge is to put an even greater burden on retirees, many of whom already struggling,” said Sarah Anderson, director of the Global Economy Project at IPS and one of the report’s authors.

One of those CEOs is David Cote, the vice-chair of Business Roundtable and a member of the steering committee for Fix the Debt. After eleven years at Honeywell where he’s now the chief executive, his retirement assets are worth $134.5 million. That means that as a retiree he’ll draw a monthly pension of nearly $800,000.

Cote is a deficit hawk, and claims to be worried about the long-term stability of Social Security. A member of the Bowles-Simpson commission and President Obama’s debt committee, Cote has called for $3 to $4 trillion in spending cuts over the next decade, “especially when it comes to entitlements.”

To make some of those reductions via cuts to Social Security, Business Roundtable has proposed raising the retirement age to 70, restricting benefit growth and changing the way inflation is calculated in a way that amounts to a benefit cut for seniors. (Read George Zornick on why this change, called Chained CPI, is a bad deal.) At the same time, Business Roundtable and Fix the Debt are calling for more corporate tax breaks.

“If Congress approves of proposals like ones that Business Roundtable are pushing, we could see severe cuts that could mean the difference between any kind of dignified retirement and absolute poverty,” Anderson said. Two-thirds of retired Americans rely on Social Security for the majority of their income, and more than 40 percent would be in poverty without those benefits.

These CEOs aren’t just trying to short the average American retiree; they’re throwing their own under the bus. While raising alarm about the federal debt, Business Roundtable CEOs have run up massive deficits in their employees’ pension funds. According to the report, ten companies led by members of Business Roundtable have shortfalls in their employee pension funds of between $4.9 and $22.6 billion. The largest of those belongs to General Electric, run by Business Roundtable and Fix the Debt member Jeffrey Immelt, the prospective beneficiary of a $59.3 million retirement fund.

GE stopped offering traditional pension plans for new employees in 2011, forcing workers to switch to 401(k) plans. Many other companies have shifted the burden of retirement savings to their employees in this way in recent years, and that’s been a significant driver of the retirement crisis. Just 18 percent of workers can expect traditional pensions today, compared with 38 percent in 1985. Instead of getting a fixed check, retirees are at the mercy of the market—making the assurance of Social Security benefits even more essential. But Business Roundtable continues to put the responsibility for the retirement crisis on retirees themselves. “[T]rue retirement security will be achieved only if Americans save more,” reads the group’s 2013 CEO Growth Agenda.

Saving more is an increasingly unworkable solution for the millions of workers whose wages and benefits are being undercut by some of the same CEOs directing them to do so. As the report lays out, many of the most effective ways to strengthen Social Security involve asking more of executives, not employees. Eliminating the cap on wages subject to Social Security taxes (currently set at $113,700) would eliminate 95 percent of the projected shortfall for seventy-five years, according to the Congressional Research Service. That’s three times the deficit reduction achieved by raising the retirement age to 70. Subjecting stock-based compensation to Social Security taxes would raise billions more.

Don’t expect to hear about those proposals from Business Roundtable, however. “I do think that it is a real weakness of these corporate lobby groups, that they’re making the public face of the agenda to cut Social Security these CEOs that are sitting on massive nest eggs of their own,” said Anderson. “It undercuts their credibility and influence in these debates, and I’m hoping it will make it difficult to achieve the cuts they’re proposing.”

 

By: Zoe Carpenter, The Nation, November 19, 2013

December 1, 2013 Posted by | Corporations, Social Security | , , , , , , , | 1 Comment

“Usurping The Will Of The People”: The Dirty Tricks That Rushed Detroit Into Bankruptcy

Governor Rick Snyder (R-MI) was so desperate to make Detroit the largest American city to declare bankruptcy that his lawyers apparently used deception to make sure their filing was in before a judge could block it.

Ronald King, an attorney for Detroit’s General Retirement System and the Detroit Police and Fire Retirement System, said that he agreed to delay a hearing on an injunction that would have prevented the city from filing for bankruptcy for five minutes at the request of Snyder’s lawyers. In that five minutes, attorneys filed papers to put Detroit under bankruptcy protection, placing all legal action against the city in a temporary stay.

“It was my intention to grant your request,” Ingham County Judge Rosemarie Aquilina told the pensioners’ attorneys.

“There’s no denying this was a race to the courthouse this afternoon and yet another example of usurping the will of the people,” King said.

Pensions are protected under Michigan’s constitution, but this protection has not been tested in federal court. The city has about $18 billion in debt.

The Michigan Republican Party’s eager embrace of emergency manager powers has left about half of the state’s African-Americans without elected local representatives.

When voters repealed the emergency manager law in 2012 by 53 to 47 percent, the state’s Republican-dominated legislature quickly restored it, including a provision that made it impossible for votes to repeal the law again.

Part of the argument for these laws, which allow state officials to replace all elected city officials in municipalities deemed to be in “emergency” with an unelected bureaucrat, was that this process would prevent bankruptcy, which would be too disruptive.

When Snyder selected bankruptcy expert Kevin Orr to be Detroit’s emergency manager, however, it became clear what path the governor, who faces re-election in 2014, had in mind for the Motor City. Orr  – who has already hinted at his intention to cut pensions – will manage the bankruptcy, carrying out the governor’s wishes.

Unions who have seen Snyder and a lame-duck legislature rush in a law designed to weaken unions along with tax increases on pensioners are not hopeful about  the bankruptcy process.

“Every step of the way, the citizens of Detroit were told that they had to give up their right to democratic representation in order to avoid bankruptcy,” Metro Detroit AFL-CIO president Chris Michalakis and Michigan State AFL-CIO president Karla Swift said in a joint statement. “Now that this filing has come anyway, it is clear that either state control has failed or that Governor Snyder and his emergency manager appointee were not honest about their intentions in the first place.”

As the city’s debts are discharged, the question is who will be asked to pay: workers — who were promised a retirement and have already offered concessions — or investors — who knew they were taking a risk?

UPDATE: Judge Rosemarie Aquilina has ruled the Detroit bankruptcy filing violates Michigan’s state Constitution and must be withdrawn, noting that the there had been a “rush” to bankruptcy.

 

By: Jason Sattler, The National Memo, July 19, 2013

July 22, 2013 Posted by | Bankruptcy, Detroit | , , , , , , , | 1 Comment

Scott Walker’s Bogus “Mission Accomplished” Moment

National conservatives and Wisconsin Republicans have settled on a new talking point that they’re flogging relentlessly in the recall wars: Scott Walker’s proposal to bust public employee unions is already a success. Mere days after it became law.

In making this claim, it seems that Walker and conservative pundits are singing from the same sheet music. Walker made it on Face the Nation this Sunday; Rush Limbaugh has pushed it on his show; and Wisconsin GOP’ers facing recall campaigns are hammering away at it on the stump and in local media.

The notion that they’re pushing, however, is laughably bogus.

The basic claim focuses on a single school district out of hundreds — the Kaukauna School District, near Appleton, Wisconsin. After Scott Walker’s law went into effect last week, school officials announced new policies that they say will turn a deficit of $400,000 into a surplus of $1.5 million. Conservatives are claiming that this is because of Walker’s reforms to collective bargaining rules — the savings are the result, they say, of the fact that teachers and other school staff will pay more in health care costs and pension costs.

On Face the Nation this weekend, Walker amplified this claim, pointing to this specific school district as proof that his reforms had given schools and local governments the “tools” they need to turn their budgets around. “Those are the things we promised,” Walker exulted.

Limbaugh has also pushed this claim hard, arguing on his show recently that this proved Walker’s critics wrong. “Remember all of those fights, all of those protests, and all the bickering, and all the caterwauling, and all the complaining from these public employees in Wisconsin about taking their collective bargaining rights away?” Rush said. “That law goes into effect and immediately turns a $400,000 budget deficit into a one-and-a-half-million-dollar surplus in one school district.”

But here’s the thing: The collective bargaining ban, in and of itself, was not responsible for achieving these savings and this surplus. As the Appleton Post Crescent reports, the teachers union had already offered up financial concessions that would have produced almost identical savings and an almost identical surplus.

What’s more, the use of this one district to declare Walker’s policies a success is almost comical in its cherry-picking. There are 424 school districts in Wisconsin, and as the AP recently noted, Walker’s policies mean draconian budget cuts to 410 of them, with labor officials and school districts predicting increased class sizes and layoffs.

Walker’s premature declaration of victory — and the right wing echo chamber’s flacking of it — could look awfully silly when the full bill for his policies really comes due. And the notion that this one school district’s fiscal success is in any way a referendum on the most controversial aspect of Walker’s union busting proposal is laughable. This fight has never been about public employees’ unwillingness to make fiscal concessions — and always about stripping them of their rights.

By: Greg Sargent, The Washington Post, July 6, 2011

July 7, 2011 Posted by | Class Warfare, Collective Bargaining, Conservatives, Democracy, Economy, Elections, GOP, Gov Scott Walker, Government, Governors, Health Care Costs, Ideologues, Ideology, Labor, Lawmakers, Media, Middle Class, Politics, Press, Public Employees, Republicans, Right Wing, State Legislatures, States, Union Busting, Unions, Wisconsin, Wisconsin Republicans | , , , , | Leave a comment

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