Greenspan Hawks Bush's SS Plan As A Solution To The Mess He Helped Make

[bigtree]

Greenspan Pushes for Social Security Fixes

http://abcnews.go.com/Business/wireStory?id=582357

WASHINGTON Mar 15, 2005 — Federal Reserve Chairman Alan Greenspan issued a fresh call to Congress Tuesday to move promptly to put Social Security on firm financial footing, warning that doing nothing would lead to massive budget deficits and cause the "economy to stagnate or worse."

Greenspan, in prepared remarks to the Senate Special Committee on Aging, said the looming retirement of 78 million baby boomers will put a huge strain on the Depression-era retirement program and aggravate the country's already bloated budget deficits.

"Unless the trend is reversed, at some point these deficits would cause the economy to stagnate or worse," Greenspan said.

Greenspan once again endorsed a key part of President Bush's Social Security overhaul to set up private investment accounts. But he said Congress needed to do other things to fix the retirement program's financing problems.

Congress will need to consider possible benefit cuts and higher tax rates before the baby boomers begin retiring, Greenspan suggested yet again.


How can anyone take this shill seriously? First he lauds Clinton for deficit reduction, then scours him for the surpluses which he said needed to be given away through Bush's tax cuts to his wealthy benefactors, putting us in record deficit territory again. Now he's shilling for another drain on the treasury to support these private accounts (another boondogle for his wealthy broker friends) under the guise of deficit reduction. Consider this account by Krugman:


The Maestro Slips Out of Tune
By PAUL KRUGMAN

Published: June 6, 2004

{snips}

>>>>In the first days of the Bush administration, as we've seen, Greenspan gave decisive aid and comfort to the new president, urging Congress to cut taxes in order to prevent excessive budget surpluses. Three years and at least $900 billion in additional debt later, that argument seems ludicrous. And besides giving bad advice, Greenspan was engaging in highly questionable behavior. Since then, rather than make amends, he has compounded the sin.

So was that 2001 testimony partisan? Yes. Greenspan argued on the basis of budget projections -- which he must have known are notoriously unreliable -- that the federal government would pay off all its debt in a few years. If this happened, the government would be forced to invest future surpluses in the financial markets -- which, he argued, would be a bad thing. To avoid this outcome, he claimed, surpluses had to be reduced with tax cuts.

It was a peculiar, tortured argument, full of holes. For example, partial privatization of Social Security -- which Greenspan supports -- would impose ''transition costs'' in the trillions of dollars, easily taking care of the supposed problem of excessive budget surpluses. As many warned at the time, Greenspan was also completely wrong about the budget prospect -- projections of huge surpluses quickly gave way to projections of huge deficits.

Above all, Greenspan's fear-of-surpluses argument was at complete odds with what he had said in the past. All through the Clinton years, Greenspan preached the virtues of fiscal restraint, and he did not change his views when the budget deficits of the 80's and early 90's vanished. Just six months before his 2001 testimony, Greenspan saw no problem with large projected budget surpluses. ''The Congress and the administration,'' he said in July 2000, ''have wisely avoided steps that would materially reduce these budget surpluses. Continued fiscal discipline will contribute to maintaining robust expansion of the American economy in the future.'' But then a Republican entered the White House, brandishing a tax-cut proposal -- and Greenspan suddenly developed an elaborate theory of why it was necessary to reduce those surpluses, after all.

Any doubts that Greenspan holds George Bush to different standards than he held Bill Clinton were dispelled in the years that followed. He didn't call for a reconsideration of the 2001 tax cut when the budget surplus evaporated. He didn't even offer strong objections to a second major round of tax cuts in 2003, when the budget was already deep in deficit.

more:
http://www.nytimes.com/2004/06/06/magazine/06GREENSPAN.html?ex=1111035600&en=36a4b3f7fd9c16e1&ei=5070&ei=1&en=ed53da65be977088&ex=1087559008&oref=login&pagewanted=print&position=

[VirtualTruth]

1. Greenspan DOES NOT support Bush's plan!

The US Government will go Bankrupt, NOT Social Security
Here is the Solution

Sean Lewis
February 3 2005

The US Government will go bankrupt, not Social Security. There I said it, but someone had to.

Bush is hiding the fact that his fiscal economic plan of tax cuts, tax refunds, deficit spending and pre-emptive war agenda has put the US on the verge of Bankruptcy.

The Social Security Trust Fund has a surplus of 1.8 Trillion Dollars invested in US Government Bonds earning interest. Social Security will not be issuing funds greater than it is taking in until 2018 or later. At that point Social Security should be able to begin to Redeem the 1.8 Trillion PLUS in US Government Bonds.

Does this sound insolvent to any one?

So what is the REAL issue?

The emperor has no clothes.

Bush has hidden the severity of the National Deficit and the National Debt by cooking the Government Books.

Bush has taken the Social Security Receipts we all pay every day in our paychecks and has replaced them with US Government IOU's. Understand, in and of itself there is nothing wrong with this. However, Bush has used this funds to hide the true depth of the Budget Deficit. When Bush calculates his Budget, he erroneously includes the Social Security Receipts. The Budget Surplus Bush inherited, which bought Bush the election when he promised to give it back to Americans; were the Social Security Receipts. In essence the tax cuts, and refund checks were financed by Social Security Receipts. Bush raided Social Security and gave the money disproportionately to the richest Americans, Buying the Election. In Doing this Bush Bankrupted Social Security doing a reverse Robin Hood, stealing from the poor to give to the rich. Bush replaced these funds with the US Government IOU's.

Those IOU's are representation of cash available to pay the Baby Boomers once they start retiring. When do they start retiring? In 3 years beginning 2008. The Baby Boomers will start cashing in those US Treasury Bonds or IOUs. Problem is, there is no money to pay back the IOUs.

You see the Treasury is running in the Red, we do not have the money to finance all of the Expenses of the US Government NOW! How will Bush find the funds to start paying off the Baby Boomers IOUs? By issuing more IOUs to someone else!

Think of it this way. You are a bank and depositors make monthly deposits for safe keeping. The bank however is not making enough money to pay it's bills, so it dips into the deposits and 'borrows' money with unsecured IOUs saying it will pay back the loans with interest once things turn around. Buts things do not turn around, they only get worse. To not pay the bills would bring ruin to the bank, so the bank 'borrows' even more money from the depositors! Now a vicious cycle has begun. Outwardly all is well, however one day the depositors begin to no longer make deposits, but begin to withdraw their funds with interest! Now the Bank faces not only a short fall to pay existing Bills because fewer funds are coming in, but also the amount going out has increased. The only way to make ends meet is to issue additional unsecured IOUs to individuals outside the Bank. As more people retire the greater the escalating unsecured IOUs grow. This is the house of cards Bush has built.

How has this happened?

Bush has not vetoed one single spending bill.

Bush has given tax cuts in a time history has shown taxes should be raised. We are at war, and in every instance of war in the past Presidents understood the importance of keeping the War Chest full to finance the Troops.

Believe it or not the Countries financing the American War on terrorism are the Chinese, the French, The Germans, Saudi Arabia, Egypt and many other countries that voted against the invasion of Iraq. How? They are buying the US Government Bonds that Bush is issuing to pay for the Deficit that Social Security is now financing.

Talk about hat in hand!

Bush needs to change Social Security because under the guise of reform Bush can 'borrow' funds to hide the impending financial incompetence of this Administration. If Bush does not 'reform' Social Security BEFORE 2008 the US citizens will see the Republican incompetence NAKED in it's raw ugly epochal squandering. Bush had everything a President could ask for, A strong economy, A strong low unemployment rate, strong GDP growth, A hard won Surplus. With this Bush could have paid BACK Social Security and the unfunded liability of Medicare, yet another 2008 issue that had a dirty sloppy overpriced band aide applied. Instead Bush has placed this the US on the slippery slope to financial ruin.

Bush needs to fix the real problem, The National Deficit and The National Debt. Bush needs to allow the ill advised tax cuts to sunset. If Bush does not deal with the real issue, Republicans being fiscally irresponsible, not only will Bush and the Republican Party go down in flames but so will the US dollar, the US standard of living, the US economy and the US.

OK now how do we solve this?

Social Security needs to be tweaked, but it is not broken.

For Social Security to continue paying out benefits all that needs to be done is this.

Increase the SS payroll deduction by 1/2 to 1%.

Increase the annual SS payroll deduction cutoff to $120,000.

Means test payout's to retirees.

Gradually increase the retirement age to 70.

Allow new workers entering the labor market to have the OPTION of having additional funds taken out of their payroll checks to be applied to the Private Accounts.

Investments in the Private Accounts are limited to these options:
Money Market
US Treasuries
INDU index fund
SPY index fund
QQQQ index fund
Gold/Silver/Platinum

All or any option in combination will keep SS solvent for decades to come. As it stands SS will continue for decades without and changes.

Time will tell all the Truth.

VT

Virtual Truth
Sean Lewis

[e-mail]
Founder Open Debate Forum
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We are Americans first. Not black or white, conservative or liberal, Republican or Democrat. We are Americans first. Until this fact is understood we will be a nation divided and ineffective. We need to forget our differences and stop blaming each other for the errors of the past. We need to be non partisan about the future of this country. Our greatest enemy is from within. We have turned upon each other. . We need to change our old way of business as usual and be united for the common good. Which is, we are all Americans first.

[bigtree]

2. or,

repeal the Bush tax cuts to the wealthy, or make them temporary. Shift our priorities away from militarization, back to investing in education, affordable health insurance, and new environmental technologies including conservation and alternative fuels.

[cornermouse]

3. Right on.

[VirtualTruth]

9. quick and dirty

You gave the quick and dirty synopsis. Thank you

[BurtWorm]

4. That is so outRAGEOUS!!

:grr:

Maestro my ass!

[CindyDale]

5. I don't understand the privatization thing at all

How does Greenspan or anyone else know how many younger workers there will be in the future? What they need to do is focus on getting the surplus back to take care of the coming Boomer retirement. This administration's insolvency should not be our problem. I'm not sympathetic to their difficulties after all they have looted for their cronies. Let them pay it back.

BTW, here is an excerpt from an article I saw today. It was published in the St. Petersburg Times and is credited to Cox News Service. It is not available on the Web that I can find:

Social Security funds are not now, and have never been, used for any purpose other than Social Security, said Patti Patterson of the Social Security Administration.

She explained how the system works by saying all Social Security taxes go into the general funds of the Treasury Department. Then they're distributed automatically to three trust funds: one each for old-age and survivors insurance and hospital insurance (part A of Medicare).

A fourth trust fund, for medical insurance, is financed through the premiums paid by people enrolled in the supplementary medical insurance program (part B of Medicare) and contributions made by the federal government from general revenues.

The Treasury Department keeps these four trust funds separate from its general funds. The law requires that these trust funds be used only to pay Social Security benefits and related administrative expenses.

Trust funds assets not needed for current benefits and administrative expenses are invested in special obligations of the U.S. Treasury, "the safest form of investment available," Patterson said.

edit: typo

[bigtree]

6. The fund has been used to project lower deficits. Look at this accounting:

CBO: Social Security funds needed to balance books
August 29, 2001
http://archives.cnn.com/2001/ALLPOLITICS/08/28/budget/

{snips}

The CBO projected Tuesday that, if current spending habits aren't changed, the Social Security surplus would be dipped into again in 2003, for $18 billion, and in 2004, for $3 billion. The congressional accounting office projects a return to overall budget surpluses large enough to spare the Social Security fund in later years.

Here's the math behind the Congressional Budget Office prediction:

$153 billion = Total budget surplus
$162 billion = Off-budget surpluses*
$9 billion = Shortfall

*Includes Social Security trust funds as well as the net cash flow of the Postal Service

Money taken out of the trust fund would be credited to the Social Security account.

For the 10-year period from 2002 to 2011, the CBO calculates the nation will have a total surplus of $3.4 trillion -- three-quarters of which would be made up of excess monies in the Social Security trust fund. That number, however, is $2.2 trillion less than was projected just last May, and the reason for most of that drop is the $1.35 trillion tax cut championed by President Bush.

The new numbers offer a dimmer view of the federal budget than that provided by the White House Office of Management and Budget last week. The Bush administration has pointed out that the overall surplus is the second largest in the nation's history, and argues it is just big enough this fiscal year -- which ends September 30 -- to barely avoid use of Social Security funds.


I don't think Greenspan actually believes that the privatization plan will save Social Security. What he's really hawking are the personal savings accounts which will mostly benefit investment agents and foreign investors who hold our nation's debt.

[applegrove]

7. Create a Crisis and then force your solution.

[VirtualTruth]

8. Now you know the name of the game

Exactly. WMDs crissis, secruring 'friendly'oil fields reason, High cost of Prescription Drugs and medical care, crissis Medicare Corporate welfare for Bush Backers payback reason, Social Security in trouble crissis, reason hide fiscal irresponsibility.

[applegrove]

10. And they really did bankrupt the government. The rich do not care..

they are heavily invested outside the USA at this juncture.