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“A Manufactured Crises”: Republicans Want You To Think Social Security Has A Funding Problem. Don’t Believe Them

The ongoing Republican plot to cut Social Security is shaping up to be a major story. As Dylan Scott has documented at Talking Points Memo, through a totally unnecessary change in accounting rules, Republicans are trying to ensure Social Security Disability Insurance (SSDI) runs short of money in less than two years, which would require a one-fifth cut in benefits.

Most recently, there are hints that Republicans may top up the SSDI fund by merely a little bit, similar to what they have done with the debt ceiling. The point is to create a series of manufactured crises, and each time the SSDI program runs short of money, they can use their leverage to ratchet down Social Security as a whole.

The way Republicans spin all this will be critical. Social Security is very popular, so conservatives will have to avoid the perception that they want to cut it, even though they clearly do. Dispelling their squid-ink nonsense will be crucial in protecting the program.

At National Review, Veronique de Rugy gives us a taste of how conservatives will frame their argument for cuts. “We’re broke,” says the headline. The SSDI fund “will be empty in a year” (no mention why), and “we can’t ignore the issue for much longer.” Regular Social Security “is also on an unsustainable path.”

She links to a report by Chuck Blahous, an argument against patching up the SSDI fund with money from general Social Security funds. Regular Social Security “now faces a bigger shortfall in both absolute and relative terms than [SSDI]” over the next 75 years, he says, concluding it would be irresponsible to transfer money to the less-solvent program.

What he doesn’t mention is that the regular Social Security fund won’t come up short until 2034. Plugging the holes in SSDI would advance that date by only about one year, since SSDI is only a small fraction of the overall program. In this country, having some 18 years of breathing space for a government program counts as nearly miraculous.

This complicated talk of actuarial shortfalls and inescapable accounting burdens is meant to obscure the fact that this is a question of ideology, nothing more. Social Security, in contrast to the dread Big Government bureaucracies, is a very simple program that takes in money and kicks it back out again. If the revenue source is insufficient, we could find money someplace else.

The actual worry here, just like any spending program, is whether the cost of the program is getting out of line with the productive capacity of the rest of the economy. All retirement programs take from the currently working and give to the non-working, so we might worry that the elderly and disabled are getting more claims on stuff than the economy can churn out.

Fortunately, as Dean Baker always points out, continuing economic growth keeps expanding our capacity to provide benefits. We can easily “afford” to maintain or expand Social Security, if we want to.

It would be easy to find such money. Indeed, we don’t even have to leave the world of retirement policy! We could simply scrap the 401(k) tax credit, which does not work as advertised to increase savings and sends the vast majority of its benefits to the rich. We could then plow the savings into Social Security. The 401(k) credit and similar programs cost something like $100 billion yearly, as compared to the total cost of Social Security of about $820 billion. Hey presto, we’re done.

The underlying reality is that opinions on any spending program inescapably rest on a judgment about whether that spending is worthwhile. I believe Social Security is excellent policy and its benefits should be increased. Conservatives like de Rugy and Blahous believe benefits are too high and should be reduced. It’s as simple as that.

 

By: Ryan Cooper, The Week, January 26, 2015

January 27, 2015 Posted by | Republicans, Social Security, Social Security Disability Fund | , , , , | Leave a comment

“Everybody Over 40 Has A Little Back Pain”: Watch Out, Grandpa! Republicans Are Coming For Your Social Security

Hey, Rand Paul, why don’t you tell us how you really feel?

Last week, the junior senator from Kentucky mocked people on Social Security Disability Insurance (SSD), suggesting their ailments are not worthy:

What I tell people is, if you look like me and you hop out of your truck, you shouldn’t be getting your disability check. Over half of the people on disability are either anxious or their back hurts. Join the club… Who doesn’t get up a little anxious for work every day and their back hurts. Everybody over 40 has a little back pain. [Huffington Post]

This is just the prelude to the GOP’s plan to roll back the whole of Social Security. Paul’s remarks are part of a PR campaign to portray the program as riddled with lazy deadbeats and cheats.

Don’t believe me? Earlier this month, the Republican Congress adopted a rule change regarding the disability portion of Social Security. It has occasionally run short of money, which last happened in 1994 and will happen again in late 2016. Typically, the disability side is topped up with money from the (much larger) general Social Security funds. But Republicans have changed the rules to prevent this, which means disability payments will be cut by a fifth when the money runs out.

Now, they’re beginning to argue this is a great time to “reform” the system as a whole:

One of the co-sponsors of the rule change, Rep. Tom Reed (R-NY), said that his intention was to “force us to look for a long-term solution” to the disability program. But the rule itself says it will allow a revenue transfer if the “overall health” of Social Security, encompassing both the retirement and disability programs, is improved. That’s what Democrats are warning about, but some conservative analysts who have consulted with House staffers are also hoping that the GOP uses the threat of benefits cuts to go big. [Talking Points Memo]

If you examine the history of conservative animosity towards Social Security, as Dylan Scott does in a great piece, the long game here is obvious. Conservatives hated the program when it started, tried to abolish it for a generation, rolled it back slightly when it became firmly politically entrenched, and tried to privatize it in the Bush years. Conservative activists have been plotting this move for years.

The political entrenchment of Social Security explains the slyness of their tactics today. Social Security is one of the most popular programs in the country, and attempting to privatize it was a political disaster for Bush. Thus, passing bill after bill scrapping the program altogether a la ObamaCare would be committing political suicide. Much better to use a manufactured funding crisis to force a complicated political bargain that most people don’t understand. Better still to maneuver Democrats into accepting cuts, and then blame them for it and run against them on the issue.

Let’s look at the policy. Are conservatives right about SSDI being riddled with fraud, as an episode of This American Life squirmily argued two years ago? They are not. As a Center for Budget and Policy Priorities analysis shows, the increase in disability payments is mainly due to demographic factors. There is little fraud in the program (in reality, a large majority of applicants are rejected). The program doesn’t pay out much per beneficiary. And the general Social Security fund can top up the disability fund with only a tiny overall effect.

How about Social Security in general? Contrary to Republican anti-tax zealotry, the problem with Social Security is that it is not nearly generous enough. American retirement security used to rest on pensions, the 401(k) system, and Social Security. The first of those is almost dead, the second has been an utter failure, and the third is simply not big enough to provide a genuine retirement for most people. Boosting the program substantially would be simple and good policy.

Many years ago, it was widely accepted that as our country got richer, we could afford to work less as a whole. Disabled people could be kept out of poverty, and old people could retire. But conservatives are increasingly abandoning this idea. There is no reason Paul’s logic about the disabled couldn’t be applied to retirees, too. Can your grandma stack shelves at Walmart? Maybe she should, the lazy parasite.

In reality, we can easily afford to boost Social Security. Indeed, we can easily afford to eliminate poverty altogether. That we don’t is a political choice, nothing more.

 

By: Ryan Cooper, The Week, January 20, 2015

January 22, 2015 Posted by | Rand Paul, Republicans, Social Security | , , , , , , , | Leave a comment

“Uh Oh, Republicans Are Trying to ‘Protect’ Social Security Again”: A Misleading Argument To Tee Up Benefit Cuts

Whenever Republicans start talking about protecting Social Security, warning bells go off in my head.

Remember President George W. Bush’s ill-fated plan in 2005 to privatize Social Security? It was pitched as a way to protect Americans from what the then-president and his supporters falsely claimed was the system’s impending collapse.

The bells have started up again. Buried in the new rules being adopted by the House Republican majority for the current session of Congress is one that the drafters say will “protect” Social Security retirement benefits from being raided to pay for Social Security disability benefits. What this boils down to is using a misleading argument to tee up benefit cuts.

This bulletin from the Center on Budget and Policy Priorities explains the ruse in detail.

In brief, Social Security has several parts. The biggest part, by far, is the retirement system. Another smaller part, Social Security Disability Insurance, pays benefits to disabled workers.

On eleven different occasions in the past, Congress has allocated money from one system to the other whenever one of the funds was running short. Such shifts have historically been noncontroversial, as well they should be: They are basically housekeeping maneuvers.

The new Republican rule, however, bars the House from doing a straightforward shift of  money from the retirement system to the disability system. That could cause havoc. The disability system is currently strained, for two main reasons. One, disability claims rise with the aging of the population. Two, a tax change in 1983 was only partially reversed in later years, leaving the disability system underfunded. If money is not shifted from the retirement system to the disability system, severe cuts to disability benefits will be needed starting in 2016.

In their new rule, Republicans say they are protecting the retirement system from being robbed. What they don’t say – because it is the truth – is that reallocating money from the retirement system to the disability system would put the disability fund on a firm footing while barely denting the retirement fund, for the simple reason that the retirement fund is far bigger than the disability fund.

A reasonable reallocation could enable both the disability system and the retirement system to pay full benefits through 2033.

That is plenty of time for reasonable politicians to enact modest reforms in taxes and benefits that could ensure the solvency of both systems well into the 21st century.

The real challenge is to shield the systems from deliberate destruction by today’s Republicans until cooler heads prevail.

 

By: Teresa Tritch, Taking Note, The Editorial Pages Editor’s Blog, The New York Times, January 7, 2014

January 11, 2015 Posted by | Republicans, Social Security | , , , , | Leave a comment

“Paying Back Campaign Donors”: Whose Presidential Campaign Will Your Pension Finance?

Wall Street is one of the biggest sources of funding for presidential campaigns, and many of the Republican Party’s potential 2016 contenders are governors, from Chris Christie of New Jersey and Rick Perry of Texas to Bobby Jindal of Louisiana and Scott Walker of Wisconsin. And so, last week, the GOP filed a federal lawsuit aimed at overturning the pay-to-play law that bars those governors from raising campaign money from Wall Street executives who manage their states’ pension funds.

In the case, New York and Tennessee’s Republican parties are represented by two former Bush administration officials, one of whose firms just won the Supreme Court case invalidating campaign contribution limits on large donors. In their complaint, the parties argue that people managing state pension money have a First Amendment right to make large donations to state officials who award those lucrative money management contracts.

With the $3 trillion public pension system controlled by elected officials now generating billions of dollars worth of annual management fees for Wall Street, Securities and Exchange Commission (SEC) regulators originally passed the rule to make sure retirees’ money wasn’t being handed out based on politicians’ desire to pay back their campaign donors.

“Elected officials who allow political contributions to play a role in the management of these assets and who use these assets to reward contributors violate the public trust,” says the preamble of the rule, which restricts not only campaign donations directly to state officials, but also contributions to political parties.

In the complaint aiming to overturn that rule, the GOP plaintiffs argue that the SEC does not have the campaign finance expertise to properly enforce the rule. The complaint further argues that the rule itself creates an “impermissible choice” between “exercising a First Amendment right and retaining the ability to engage in professional activities.” The existing rule could limit governors’ ability to raise money from Wall Street in any presidential race.

In an interview with Bloomberg Businessweek, a spokesman for one of the Republican plaintiffs suggested that in order to compete for campaign resources, his party’s elected officials need to be able to raise money from the Wall Street managers who receive contracts from those officials.

“We see (the current SEC rule) as something that has been a great detriment to our ability to help out candidates,” said Jason Weingarten of the Republican Party of New York—the state whose pay-to-play pension scandal in 2010 originally prompted the SEC rule.

The suit comes only a few weeks after the SEC issued its first fines under the rule—against a firm whose executives made campaign donations to Pennsylvania Gov. Tom Corbett, a Republican, and Philadelphia Mayor Michael Nutter, a Democrat. The company in question was managing Pennsylvania and Philadelphia pension money. In a statement on that case, the SEC promised more enforcement of the pay-to-play rule in the future.

“We will use all available enforcement tools to ensure that public pension funds are protected from any potential corrupting influences,” said Andrew Ceresney, director of the SEC Enforcement Division. “As we have done with broker-dealers, we will hold investment advisers strictly liable for pay-to-play violations.”

The GOP lawsuit aims to stop that promise from becoming a reality. In predicating that suit on a First Amendment argument, those Republicans are forwarding a disturbing legal theory: Essentially, they are arguing that Wall Street has a constitutional right to influence politicians and the investment decisions those politicians make on behalf of pensioners.

If that theory is upheld by the courts, it will no doubt help Republican presidential candidates raise lots of financial-industry cash—but it could also mean that public pension contracts will now be for sale to the highest bidder.

 

By: David Sirota, Senior Editor, In These Times, August 15, 2014

August 22, 2014 Posted by | Campaign Financing, Public Pension Funds, Wall Street | , , , , , , , | Leave a comment

“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

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