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How The Rich Created The Social Security “Crisis”

Now and then, George W. Bush told the unvarnished truth—most often in jest. Consider the GOP presidential nominee’s Oct. 20, 2000, speech at a high-society $800-a-plate fundraiser at New York’s Waldorf-Astoria. Resplendent in a black tailcoat, waistcoat and white bow tie, Bush greeted the swells with evident satisfaction.

“This is an impressive crowd,” he said. “The haves and the have-mores. Some people call you the elites; I call you my base.”

Any questions?

Eight months later, President Bush delivered sweeping tax cuts to that patrician base. Given current hysteria over what a recent Washington Post article called “the runaway national debt,” it requires an act of historical memory to recall that the Bush administration rationalized reducing taxes on inherited wealth because paying down the debt too soon might roil financial markets.

Eleven years later, the Post warns in a ballyhooed article, reading like something out of Joseph Heller’s “Catch-22,” that Social Security—the 75-year-old bedrock of millions of Americans’ retirement hopes—has “passed a treacherous milestone,” gone “cash negative,” and “is sucking money out of the Treasury.”

Anybody who discerns a relationship between these events, that is, between a decade of keeping the “have-mores’” yachts and Lear jets running smoothly and a manufactured crisis supposedly threatening grandma’s monthly Social Security check must be some kind of radical leftist.

That, or somebody skeptical of the decades-long propaganda war against America’s most efficient, successful and popular social insurance program. It’s an effort that’s falsely persuaded millions of younger Americans that Social Security is in its last days and made crying wolf a test of “seriousness” among Beltway courtier-pundits like the Post’s Lori Montgomery, who concocted an imaginary front page emergency out of a relatively meaningless actuarial event.

All in service, alas, of a single unstated premise: The “have-mores” have made off with grandma’s money fair and square. They have no intention of paying it back. That’s the only possible interpretation of the Post’s admonition that “the $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.”

Little relief? In fact, the law’s working precisely as intended. After 28 years of generating huge payroll tax surpluses to cover the baby boomers’ retirement benefits, the system must now begin to draw upon those funds to help pay current benefits—the vast majority still covered by current payroll tax receipts.

“Rather than posing any sort of crisis,” explains Dean Baker of the Center for Economic and Policy Research, “this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission.”

Again, this is the beneficiaries’ money, invested by the Social Security trustees in U.S. Treasury bonds drawn upon “the full faith and credit of the United States.” Far from being “meaningless IOUs” as right-wing cant has it, they represent the same legally binding promise between the U.S. government and its people that it makes with Wall Street banks and the Chinese government, which also hold Treasury Bonds.

A promise not very different, the Daily Howler’s Bob Somerby points out, from the one implicit in your bank statement or 401K (if you’re lucky enough to have one). Did you think the money was buried in earthen jars filled with gold bullion and precious stones?

Raise taxes, cut spending or borrow? What other options does the U.S. government, or any government, have?

On his New York Times blog, Paul Krugman dissects the Catch-22 logic behind the Post’s bogus crisis. You can’t simultaneously argue “that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program.” For practical purposes, it’s got to be one or the other.

So is Social Security a “Ponzi scheme”? No, it’s group insurance, not an investment. You die young, somebody else benefits. Its finances have been open public record since 1936. Do fewer workers support each beneficiary? Sure, but who cares? It’s denominated in dollars, not a head count. The boomers were nearing 40 when the Reagan administration fixed the actuarial tables. No surprises there.

Are longer life expectancies screwing up the numbers? Not really. Most of the rise is explained by lower infant and child mortality, not by old-timers overstaying their welcome. Kevin Drum points out that gradually raising the payroll tax 1 percent and doubling the earnings cap over 20 years would make Social Security solvent forever.

But that’s not good enough for the more hidebound members of the $800-a-plate set. See, over 75 years Social Security has provided a measure of dignity, security and freedom to working Americans that just annoys the hell out of their betters.

By: Gene Lyons, Salon, November 2, 2011

November 3, 2011 Posted by | Class Warfare, Conservatives, GOP, Middle Class | , , , , , | Leave a comment

Fact Checking The CNN And Tea Party Express Debate In Tampa

The Republican presidential debate in Tampa, Fla., co-hosted by CNN and the Tea Party Express, was feisty and provocative, with many of the candidates relying once again on bogus “facts” that we have previously identified as faulty or misleading.

The debate marked a remarkable shift in tone by Texas Gov. Rick Perry on the issue of Social Security, barely five days after he labeled the venerable old-age program “a Ponzi scheme” doomed to fail. This week, he said it was a “slam dunk guaranteed” for people already on it.

Last week, we explained why the Ponzi scheme label was not true — and also provided readers with a primer on Social Security for those who want to learn more. In Monday night’s debate, Perry and former Mass. Gov. Mitt Romney tangled over the issue again, and Romney had better command of the facts, as far as the two men’s books were concerned.

“The real issue is that in writing his book Governor Perry pointed out that, in his view, that Social Security is unconstitutional, that this is not something the federal government ought to be involved in, that instead it should be given back to the states … . Governor Perry, you’ve got to quote me correctly. You said ‘it’s criminal.’ What I said was Congress taking money out of the Social Security Trust Fund is like criminal, and that is, and it’s wrong.”

— Mitt Romney

Romney gets points for correctly quoting both Perry’s book, “Fed Up,” and his own book, “No Apology.” On page 58, Perry labels Social Security, Medicare, Medicaid and even unemployment insurance as “unnecessary, unconstitutional programs.” While promoting his book last year on MSNBC’s “Morning Joe,” Perry went further, suggesting Social Security should be dismantled and  simply become a state responsibility.

“Get it back to the states. Why is the federal government even in the pension program or the health-care delivery program?” Perry said on Nov. 5, 2010. He said that ending the federal government’s role in Social Security would be “one of the ways this federal government can get out of our business.”

(Perry also added: “I wouldn’t have written that book if I wanted to run for presidency of the United States. … I have no interest in going to Washington.”)

Romney’s book, by contrast, contains mostly a sober description of various ways to fix the long-term funding problems of Social Security, with the exception of the suggestion that members of Congress are doing something criminal with Social Security funding (page 158). People can differ, but we think comparing Social Security (a government retirement and disability insurance program) to a trust fund managed by a bank is an inappropriate analogy.

“We know that President Obama stole over $500 billion out of Medicare to switch it over to Obamacare.”

— Rep. Michele Bachmann (Minn.)

“He cut Medicare by $500 billion. This, the Democrat president, the liberal, so to speak, cut Medicare — not Republicans, the Democrat.”

— Romney

Bachmann in particular loves to make this claim, but we have repeatedly explained why it just isn’t correct.

Under Obama’s health-care law, Medicare spending continues to go up year after year. The law tries to identify ways to save money, and so the $500 billion figure comes from the difference over 10 years between anticipated Medicare spending (what is known as “the baseline”) and the changes the law makes to reduce spending.

The savings actually are wrung from health-care providers, not Medicare beneficiaries. These spending reductions presumably would be a good thing, since virtually everyone agrees that Medicare spending is out of control.

In fact, in the House Republican budget this year, lawmakers repealed the Obama health-care law but retained all but $10 billion of the nearly $500 billion in Medicare savings, suggesting the actual policies enacted to achieve these spending reductions were not that objectionable to GOP lawmakers. So it is misleading for Romney to say that Republicans did not make these cuts.

For a more detailed explanation, please see our longer examination of this subject in June, when we gave Bachmann two Pinocchios for making this claim at the first GOP debate.

“Let me say I helped balance the budget for four straight years, so this is not a theory”

— Former House Speaker Newt Gingrich (Ga.)

Gingrich at least indicates there was a president — Bill Clinton — when the nation briefly began to run budget surpluses. And certainly the Republican Congress led by Gingrich prodded Clinton to move to the right and embrace such conservative notions as a balanced budget.

But the budget was balanced in part because of a gusher of tax revenues from Clinton’s 1993 deficit-reduction package, which raised taxes on the wealthy and which Gingrich vehemently opposed. The budget was also balanced because the Democratic White House and Republican Congress were in absolute legislative stalemate, so neither side could implement grand plans to increase spending or cut taxes.

Gingrich is wrong to suggest there were four years of balanced budgets when he was speaker. He left in January 1999; the budget ran a surplus in the fiscal years 1998, 1999, 2000 and 2001. So he can at best claim two years.

During the surplus years, moreover, the gross debt (including bonds issued to Social Security and Medicare) rose by $400 billion. Gross debt is the figure that conservatives tend to use. During Gingrich’s time as speaker, the public debt was essentially flat and the gross debt rose $700 billion.

Obama “had $800 billion worth of stimulus in the first round of stimulus. It created zero jobs.”

— Perry

Perry is wrong. The surplus created jobs; it also saved jobs. But there has not been a net gain in jobs because so many jobs were lost early in Obama’s presidency. Since the stimulus bill was signed, the number of overall jobs in the United has declined by about 1.9 million.

Economists differ on the effectiveness of the stimulus, but most say it has at least some effect (ie, created at least some jobs.) A recent review of nine different studies on the stimulus bill found that six studies concluded the stimulus had “a significant, positive effect on employment and growth,” and three said the effect was “either quite small or impossible to detect.”

“I was one of the only people in Washington that said: Do not raise the debt ceiling. Don’t give the president of the United States another $2.4 trillion blank check. You’ve got to draw the line in the sand somewhere and say: No more out-of-control spending.”

— Bachmann

Ever hear of a “blank check” with a number attached to it? In any case, Congress has already committed to spend much of this money, under budgets passed in previous years. Lifting the debt ceiling merely means that the Treasury now has the authority to make good on bills that are coming due.

“We have cut taxes by $14 billion, 65 different pieces of legislation.”

— Perry

That’s one side of the ledger. We are not sure if Perry’s figure is correct but as Politifact Texas has documented, he has also raised taxes repeatedly, including on cigarettes, to make up revenue for cuts in local property taxes.

“What we saw with all of the $700 billion bailout is that the Federal Reserve opened its discount window and was making loans to private American businesses, and not only that, they were making loans to foreign governments. This cannot be.”

— Bachmann

Bachmann is significantly overstating the case. Bloomberg News, which filed the Freedom of Information Act request that resulted in the disclosure of the Fed loans to foreign banks (some of which had had some government ownership), noted: “The Monetary Control Act of 1980 says that a U.S. branch or agency of a foreign bank that maintains reserves at a Fed bank may receive discount-window credit.” All of the loans were paid back, according to Fed officials.

“And I happen to think that what we were trying to do was to clearly send the message that we’re going to give moms and dads the opportunity to make that decision with parental opt-out. Parental rights are very important in the state of Texas. We do it on a long list of vaccines that are made.”

— Perry

Perry skated close to the edge of the truth here as he tried to defend his controversial order to require the vaccine that is said to prevent cervical cancer. As Politifact Texas reported in 2010, Perry “ordered the Department of State Health Services to allow parents dissenting for philosophical or religious reasons from all immunizations — not just this one — to request a conscientious objection affidavit form.”

Just 0.28 percent of students filed such forms, which must be updated every two years to remain viable — and not all private schools accept the form. So as many as 15 percent of girls did not have the possibility of opting out of the requirement to receive the vaccine if they wanted to continue in their schools.

While Romney denied Bachmann’s charge that there was a connection between his order and a $5,000 campaign donation, Texas media reported that Perry’s chief of staff held a meeting on the vaccine plan on the same day the donation was received. Perry’s aides said the timing was a coincidence.

“This is the election that’s going to decide if we have socialized medicine in this country or not. This is it. Why? I just have to say this. It’s because President Obama embedded $105,464,000,000 in Obamacare in postdated checks to implement this bill.”

— Bachmann

It’s wrong to say the health-care law — which builds on the existing private system — will result in socialized medicine, but apparently some people will never be convinced.

But Bachmann’s assertion of $105 billion “embedded” in the health-care law is another bogus claim for which she has previously earned four Pinocchios. We looked closely at her assertion in March and concluded that her charge that this money was “hidden” does not have credibility. The money for these programs was clearly described and analyzed by the Congressional Budget Office before the legislation was voted into law. And since then, the Obama administration has issued a new release every time it spent some of the funds.

 

By: Glenn Kessler, The Fact Checker, The Washington Post, September 13, 2011

September 13, 2011 Posted by | Affordable Care Act, Banks, Class Warfare, Congress, Conservatives, Constitution, Consumers, Corporations, Democrats, Economic Recovery, Economy, Elections, Federal Budget, GOP, Government, Health Reform, Ideologues, Ideology, Jobs, Lobbyists, Medicaid, Medicare, Medicare Fraud, Middle Class, Politics, Public Opinion, Republicans, Right Wing, States, Taxes, Tea Party | , , , , , , , , , , , , , , | Leave a comment

This Texan Ain’t Shooting Straight: Rick Perry’s Double Talk On Social Security And The Constitution

This we know: Texas Gov. Rick Perry, the apparent GOP 2012 front-runner, doesn’t like Social Security.

He has, for example, described it in his recent book as not only a “Ponzi scheme,” but “by far the best example” of a program “violently tossing aside any respect for our founding principles,” and as having been put in place “at the expense of respect for the Constitution and limited government.” Elsewhere he has said that the Constitution’s “general welfare” clause does not cover Social Security and Medicare. In other words not only is Social Security bad policy, Perry believes, but actually in defiance of our founding principles in general and the Constitution in particular.

While he and his campaign had appeared to dance away from these characterizations, Perry was at it again in Iowa over the weekend, calling the program a “monstrous lie,” and saying that he stood by everything in his book (including, presumably, Social Security’s unconstitutionality).

So here’s what I want to know: What would President Rick Perry do about Social Security?

It’s one thing to note that Perry makes crazy comments. As Washington Monthly’s Steve Benen notes, “Perry is positioning himself well outside the American mainstream. It’s going to impress the Republican Party’s far-right base, but it won’t impress anyone else.”

But there is a necessary connection between views and policies. What would Perry’s policy toward Social Security be in the White House?

As it happens, he answered that question, in part, during his Iowa campaign swing. This from the Houston Chronicle:

He told the Ottumwa crowd that for people who are drawing Social Security or near eligibility “like me,” he wasn’t proposing a change in the program. But he said there should be a national conversation about potential changes for others, including raising the age of eligibility and establishing a threshold based on a person’s means.

“Does Warren Buffett need to get Social Security? Maybe not,” he said.

Huh? Let me see if I understand this. Social Security “violently tossed aside any respect for our founding principles,” and was instituted at the “expense of respect for the Constitution.” And his solution to these problems is … means testing? And a national conversation about entitlement reform?

Those responses seem awfully conventional for a pol who is so self-consciously talking such a big, radical game about one of the nation’s beloved government programs. Either he’s tossing cow chips when he decries the program, or has something else under his hat when he spouts mealy-mouthed solutions to what he sees as its problems. But either way, this Texan ain’t shooting straight.

Reporters should press Perry on Social Security—does he really believe the program is unconstitutional? If so, doesn’t he have an obligation to defend the Constitution by ending the illegal program (including for people drawing it or nearing eligibility)? And if not, what exactly does he mean when he says that the program violently tosses aside respect for the Constitution? And if it is constitutional, what is its constitutional basis, if not the general welfare clause?

If that all seems a bit much, maybe the moderator of the next GOP debate can boil it down simply: “Raise your hand if you think Social Security is unconstitutional.”

 

By: Robert Schlesinger, U. S. News and World Report, August 29, 2011

August 30, 2011 Posted by | Class Warfare, Conservatives, Constitution, Democracy, Elections, GOP, Government, Governors, Ideologues, Ideology, Journalists, Middle Class, Neo-Cons, Politics, Press, Public, Pundits, Republicans, Right Wing, Social Security, Teaparty, Voters | , , , , , , , , , , , | Leave a comment

   

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