"Attacking Social Security"

[Project Grudge]

In his latest article, "Attacking Social Security by Paul Krugman," Paul Krugman articulates a position not heard nearly enough:

"Social Security’s attackers claim that they’re concerned about the program’s financial future. But their math doesn’t add up, and their hostility isn’t really about dollars and cents. Instead, it’s about ideology and posturing....

Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund. The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 — and there’s a significant chance, according to their estimates, that that day will never come...

Meanwhile, an aging population will eventually (over the course of the next 20 years) cause the cost of paying Social Security benefits to rise from its current 4.8 percent of G.D.P. to about 6 percent of G.D.P. To give you some perspective, that’s a significantly smaller increase than the rise in defense spending since 2001, which Washington certainly didn’t consider a crisis, or even a reason to rethink some of the Bush tax cuts."

===============

Where's that "journalism" I hear so much about; I just want someone to report the truth.

[laughingliberal]

1. K & R for sanity

[leftstreet]

2. K&R

[Suich]

3. K&R!

Thanks!

[sandnsea]

4. We're going to have to raise taxes to pay back the trust fund

And we're going to have to raise more taxes to keep social security at its current rate after 2037 or 2043, depending on whose numbers you look at.

Of course the trust fund went to the wealthy in the form of the Bush tax cuts so we should get that back. But they're going to pitch a fit if we raise those taxes and FICA on top of it.

And so many people either want to deny these two problems exist, or won't get out there and educate the people so they can fight with accurate information.

[Project Grudge]

5. On your second "problem"

are you saying it's an issue that "the wealthy," will have there taxes go back to normal and will "pitch a fit" because of it? I can see that affecting a small percentage of people, but it won't rise to public outcry. I don't think it's really a problem.

[sandnsea]

7. That would be the first "problem"

They took our FICA with the Bush tax cuts and I want it back. That's not a problem but people aren't getting properly educated on that issue. They're just being told social security has $4 trillion dollars in it

After the trust fund runs out in 2037, and the income can only fund 75% of benefits, is another issue. It can be fixed by taxing FICA on all income, but if you let the Bush tax cuts lapse to fix the first problem, it'll be harder to argue for another "tax hike" to fix the second problem.

Voters, rich or poor, aren't going to understand why there needs to be two tax hikes if we don't get the facts straight. Unlike some people at DU, there are voters out there who don't think the rich should have to pay for everything. We can't lose them.

[Hannah Bell]

31. 75% of 2037 benefits = 100% of today's in real dollars. plus the 2037 scenario = a projection,

not a fact.

there *doesn't" need to be two tax hikes except in your imagination.

[newspeak]

40. I'll never forget Little Boot's maniacal chuckle, basically

stating he hit the trifecta after 9/11. I cannot believe people still voted for what I term as the sicko psycho. He made that statement more than once, like some kind of joke-after not protecting us on 9/11. So, he hit the trifecta and now he could raid the box. That's how I interpreted it.

[Usrename]

41. Why not tax wealth instead of income.

I think most people agree that the wealth disparity issue is a real concern, so it doesn't really make a whole lot of sense to continue to tax income, does it? Even a progressive tax on income seems like the wrong approach to me. Why not tax wealth instead? It does make more sense, doesn't it?

[Faryn Balyncd]

51. Asserting that "people at DU" think "the rich should have to pay everything" is a false, ad hominem

...unnecessarily personal attack.

The worst part of this smear is that it is false.

There is a big difference between believing that the rich, as well as everyone else, should pay their fair share, and believing that "the rich should have to pay everything".

The reality is that many on the commission want to chisel people who have paid 40+ years of payroll & self-employment taxes out of their retirement, primarily by the further rigging of the (already rigged) CPI and COLA calculations.

Paul Craig Roberts, who wrote Reagan's first tax cut bill while in the Treasury Department, is one of the few speaking out about the rigging of the CPI, which understates inflation because of numerous changes made in recent years. Yet those that desire to renig on obligations to those who have paid a lifetime of payroll taxes now falsely assert that the CPI overstates, rather than understates inflation and seek to use further rigging of the CPI as a means to cheat Americans of their retirement.

[girl gone mad]

8. There is no need to raise taxes.

Our government can easily meet its obligations to pay the SS bonds.

[sandnsea]

9. Well that's good news

Who has that budget figured out?

[girl gone mad]

10. Galbraith, Stiglitz, Krugman..

etc.

[sandnsea]

11. Where?

All I've seen any of them say is that the social security trust fund will grow to $4 trillion. I haven't seen any of them say how we'll get that money out of the federal budget. I'd really like to see those numbers if someone has them.

[Kurt_and_Hunter]

12. Not a complete answer, but a good link

You have probably read this, but offered for others as a concise intro to the "budget item or trust fund?" question.

http://krugman.blogs.nytimes.com/2010/08/13/social-security-finances/

[sandnsea]

15. Yeah, I read that a couple days ago, really disagree

I understand his point in theory, that you can just look at social security as a part of the whole government and just throw all the money together.

I just think that is so dangerous to even put to paper. That's exactly what Republicans want to do, just pretend that those of us low income people, you know, the ones who don't pay taxes -- haven't been paying FICA all these years. Well we have. And it went to the Bush tax cuts. I don't want those figures compromised.

So the question becomes, where does the federal budget get the money to pay that FICA debt (in benefits) when it comes due.

The only theory I've seen is that the federal government can just keep borrowing the money, sort of a Keynes Gone Wild. But I think one should be able to look around the world at the collapsed economies and know that's a stupid idea.

[girl gone mad]

22. We can argue that the government has made very poor spending decisions..

the wars, for example, or senseless education "reform".

But I don't think anyone can make a good argument for why the government should cease borrowing while interest rates are so low.

However, to suggest that any liberal economist has proposed "endless borrowing" is completely false.

[sandnsea]

23. That is the plan, though, right?

Borrow the money to pay the social security. That's what I understand it to be.

[girl gone mad]

29. Those SS bonds that the trust fund holds..

are payable to American citizens. That is money which will go straight back into our economy. Those debts represent the savings of regular Americans.

What about this is so frightening or upsetting?

[girl gone mad]

13. Taxes don't fund spending at the federal level.

A fiat currency regime can always meet its fiscal obligations.

These economists understand how monetary systems operate. Right wing operatives take advantage of the fact that the average person doesn't understand monetary theory and use the idea of large deficits and debt levels to frighten people into acting against their own best interests by pretending that the federal government must run a balanced budget, as households do.

[sandnsea]

14. Yes I've read the endless borrowing theory

Sorry that I don't think that is such a good idea, looking at Greece and similar countries. It's based on American exceptionalism and arrogance, that we can just borrow into infinity and not have the same consequences every other country has that has tried that.

[Name removed]

16. Deleted message

Message removed by moderator. Click here to review the message board rules.

[sandnsea]

17. What??

I really don't know what you're referring to in your comments AT ALL. And I did alert because I resent the shit out of trying to have an honest conversation and having you throw that wing nut shit in there.

Galbraith's theory is to just borrow the money. That's a fact. I think that's a dangerous idea. Now either discuss that or don't. But don't bring your wing nut bullshit into it.

[Kurt_and_Hunter]

18. Alert away. I was talking about ideas, and in plain language.

Is it your contention that when somebody spouts ideas that are hardcore tea-party we are not allowed to correctly identify them as tea-party because doing so might offend the person espousing ideas that are hard-core tea-party?

I am not insinuating that you are a RW person.

I am assuming, having read you for years, that you are a Democrat.

And I am noting, for your benefit, that you have fallen into a mode of thought on social security that is the tea-party way of thinking about the topic, and that recognizing that fact might suggest to you that you may want to ask why the Republicans are right and Krugman is wrong on this issue because that would be the first time it had ever happened.

Boehner may be right on this and progressives dead wrong. That is possible.

But for heavens sake... do you think it is likely?

[sandnsea]

20. No, I haven't

Again. I don't know what the hell you think I'm saying. But maybe you better go back and read again.

Do you think it's okay to look at "entitlements" as one big lump of government money, thrown in with defense and everything else?

[Kurt_and_Hunter]

21. Not my choice, but there's nothing outrageous about doing so

"Do you think it's okay to look at "entitlements" as one big lump of government money, thrown in with defense and everything else?"

I prefer to think of them separately but either way it adds up the same.

(That also means we would have to think of SS payroll taxes as general revenues.)

You have government responsibilities on one side and revenue to meet the obligations on the other.

Unlike defense and everything else, however, social security has a huge revenue stream and it in pretty good shape. It takes only a small increase on the revenue side to make SS wholly solvent going out a very, very long time.

On the other hand, not one penny of the cost of the Iraq War has ever been paid for. But that isn't social security's fault!

Is the suggestion that we should reduce future Social Security benefits to pay for the Iraq War? That is what it boils down to.

SS is not a big part of any fiscal doom scenario because unlike everything else it is almost all paid for.

Why scapegoat SS for a deficit/debt it had nothing to do with?

[sandnsea]

24. That is the... "there is no trust fund" model

Go ahead. Concede the point that there is a trust fund that must be paid back. It's all one big pot of money.

Then what happens? Oh yeah, they'll come after social security because we have a $13 trillion dollar debt. Another instance of not knowing how this country thinks. Oh yes, they will gladly cut their own social security to pay for the Iraq War. WTF? Where the hell have you been for the last 10 years?? Red state Repubs and conservadems do it over and over and over. They're PROUD to make the sacrifice. It's their PATIOTIC DUTY.

IF, however, you frame it as FICA that they paid and deserve back, that went to the Bush tax cuts -- then you have a prayer of getting it back.

I'm not using the Republican frame. Krugman is. Only he doesn't know it because he doesn't know how the working class thinks, Republican or Democrat.

Lumping it all together is the dumbest thing to do. People have been begging for social security to be put in its own fund for decades.

[Kurt_and_Hunter]

26. If we frame it as FICA then why are we talking about a crisis?

SS is solvent at least until 2037 and possibly solvent forever. The fact the govt stole all the money does not change the SS accounting. It is not SS's problem.

We will have a huge deficit/debt at point x in the future.

Why concede today that SS benefits down the road should be cut in order that FICA payroll taxes be diverted to some other use?

That is what we are talking about ultimately.

Before we were borrowing money from the bogus trust fund.

If we cut benefits then we will have stolen that money for real... it was collected to payout certain benefits and cutting those benefits is to renege on the deal.

Note that Krugman has not chosen either frame. He only demands that the frame chosen be consistent.

In your frame (which I agree with as politically best) the FICA taxes were paid and the govt stole the money.

Okay... so the govt has an obligation, the same as it has an obligation to pay the interest on T-bills we have sold. So no special attention to SS is called for.

There will not be a commission to consider defaulting on bonds we have sold because they are considered real promises.

So why do we have a commission talking about how to handle the promises SS made?

It's a debt. Pay the money.

If a crisis arises from paying out that money it is not a social security crisis. That's the point.

Ask the voters, even the worst red-state knuckle-dragger's, "Should Social Security benefits be reduced to pay for the Iraq War?" and it wouldn't get 5% of the vote.

So politically the only way the pugs can steal from the SS trust fund retroactively to fund their heinous excesses is to pretend that SS is the cause of a big fiscal problem and that seniors should get the bill.

But that is false.

Perhaps the pugs could put that over on everyone someday. (They've sold worse ideas.)

But why are we helping them?

[sandnsea]

27. I'm not talking about a crisis

I said we'll have to end the Bush tax cuts to get the FICA money back.

If we raise the FICA on the rich to cover social security after 2037 or 2044, that problem is solved too.

The only thing I said would be a problem is convincing people we weren't hitting the rich twice because there are working people who will buy into the idea that the rich are being made to pay for everybody's "entitlements".

I told you to go read what I actually said and not play the tapes in your head of what you think I said.

[Hannah Bell]

35. "the rich" don't pay fica. "the rich" make their money from capital.

there's no need to raise fica.

the only reason certain parties want to raise fica is so they can keep stealing it, & expanding the trust fund debt.

[Hannah Bell]

34. "People have been begging for social security to be put in its own fund for decades"

what are you talking about?

[girl gone mad]

19. We are not Greece.

Greece does not use a sovereign currency.

What consequences would those be?

Monetary theory has nothing to do with "American exceptionalism and arrogance". Japan and Australia, for instance, both operate under a virtually identical monetary system.

[sandnsea]

25. Right right. It can't happen here

Bla bla bla. Tell it to AIG et al.

So fucking arrogant.

And off to neverneverland with you again.

[girl gone mad]

28. Does AIG print its own currency?

As the issuer of fiat currency, our government quite literally cannot default on its debt obligations.

Greece is constrained by the Maastricht straightjacket. The neo-liberal nightmare Greece is suffering through was quite predictable (and predicted by... whaddya know?... Galbraith and Stiglitz).

[Hannah Bell]

33. it's not a "theory," it's a fact. the us has run deficit budgets for all but a few years of its

existence.

balanced budgets = recession & stagnation.

[Art_from_Ark]

55. Greece and the US are apples and oranges

Greece is a small country that cannot issue its own currency-- it must rely on Brussels (or is that Frankfurt?) to determine its allocation of euros. The United States, on the other hand, still enjoys the benefit of having the world's reserve currency, so that provides some degree of protection for the dollar since it automatically guarantees a market for dollars, even if they are seemingly issued in excess. The problem with reserve currencies, however, is that they don't stay on top of the heap forever, and once they are pushed off, they tend to become a shell of their former selves.

[Hannah Bell]

30. rescinding the bush tax cuts on the top 1% = no need to raise fica.

there is no problem such as you insist exists.

[Greyhound]

32. For at least the thousandth time, no we're not. The so-called "trust fund" is a rather large pile

of treasury bonds, something like $4T worth, all bearing interest. There's no difference between the bonds that SSA holds and the bonds that the Chinese, Japanese, English, Saudis, and every state and federal pension plan, hold. The only way SS will not have enough money is if the U.S. defaults on it's debts, and the world will not allow that to happen, at least not yet.

Should that happen, the Rube Goldberg Ponzi scheme known as the global banking system would collapse and bring down everyone along with us and SS would be the least of our concerns.

This entire non-issue is a scam to get your money, that is the only truth involved in this whole non-crisis.

[glitch]

38. "This entire non-issue is a scam to get your money, that is the only truth involved in this..."

K & R for a very informative thread.

[Greyhound]

42. Thank you. This poster is absolutely convinced that giving the thieves even more

will somehow allow her to escape our fate.

[glitch]

50. Youth, probably.

There is some benefit to have seen it all before.

[sandnsea]

43. So you want to borrow the money

I'm just trying to get clear on the various plans. I agree that the trust fund will have $4 trillion in bonds at some point in the next ten years.

I am just trying to clarify where the federal budget funds will come to cover that $4 trillion, that's all. Borrow it from China. Okay. That's a plan.

Although I kind of recall a lot of griping around here about "spending like drunken sailors" during the Bush years. But I guess that's all gone now. Like I said, just getting clear.

[Greyhound]

44. Do you understand that those bonds do exist,, are 'earning' interest,

and are the very medium of international trade?

Again, this is a lie to get you to go along with your own victimization.

[sandnsea]

45. Absolutely I understand they exist

$4 trillion dollars of working people's money. Damn skippy I understand that is real. We should have used the Bush tax cuts to pay down debt so we wouldn't be $13 trillion in debt when we had to borrow the money to pay that $4 trillion. Yes, I understand that that is exactly how this is supposed to work. The social security money went into the federal budget and the federal budget by god owes it back.

Unfortunately, they gave away trillions in the Bush tax cuts - AND - they didn't pay for the wars. So how do we resolve those two issues?

[Greyhound]

46. They are unrelated. The bonds are an existing commitment, there is no option to pay.

The DoD for example, is not. All of the money being contributed into the SS fund grows it further, and expands that commitment. That fund is inaccessible to the thieves, and that's why this mythological non-issue was manufactured and has been pushed for decades.

If they fail to con you out of your money, they will have to pay those obligations from where it went, there is no choice. Collapsing the world economy is not a choice because the very richest would be hurt the most, therefore they have no choice and they know it.

All of these lies and irrelevant distractions have only one purpose, to fool you into pouring those trillions into the Wall Street casino so that their bankster friends can steal it, period.

[sandnsea]

47. "Commitment" doesn not equal "Cash"

Go ahead and add the $4 trillion to the $13 trillion. Right? That's what you're saying. Let's deal in numbers for the moment, not ideology.

[Greyhound]

56. That's what's wrong with this whole myth, that this is a debt that must be paid back.

As the bonds mature, they are "cash", that is, the money exists and is simply stored for a period and is used to create more $.

They are using intentional mis-statements, lies, to make you think of this huge asset as a liability. This is why the growing $4T doesn't matter.

All they want is to get your retirement money for their Wall Street criminal friends. They are liars, plain & simple, that are betting on the fact that so few understand how this works, that they can be panicked into surrendering.

[sandnsea]

49. Why can't we talk about the $4 trillion & $13 trillion?

I don't get it. Yes the federal government buys the social security funds. It sells treasuries to China. In other words, borrows the money. To the tune of $13 trillion. So we bought the excess social security and spent it. Plus sold treasuries to China.

Are you saying we should just keep doing that?

[girl gone mad]

53. China holds only a small portion of our debt.

I don't get the hysteria over China owning our bonds. We give them fiat dollars for finished goods, then they invest those dollars back into our economy to earn a very modest return. Sounds like we're getting the better end of the bargain in this relationship. I don't understand why this is so troubling to you.

What's more, our government certainly doesn't need to borrow to spend. The government can and does spend without borrowing, if it chooses to do so.

[steve2470]

6. k&r nt

[disidoro01]

36. Ok, Ok

So this degenerated pretty quickly.
What happens when the Treasury notes are redeemed? They are backed by the Government and I do believe they will not default. Where does that money come from? What are the options?
Because of the sudden changes in health of the SS system, I do have concerns. Up until a year ago, 2017 was seen as the tipping point between payments and money collected. Yet we've seen that we are already there 2010 was the tipping point.
This seems like it would give pause and is a cause for concern.

We haven't even started talking about Medicare.

[Jeffersons Ghost]

37. K&R

[Enthusiast]

39. K&R

Paul Krugman-the voice of reason.

[fogonthelake]

48. good on Paul. I wish he had Obama's ear.

[joe black]

52. I don't hear anything about it.

Really scary when the left leaning radio stations don't talk about it. I expected Thom Heartman to be all over it.

[amborin]

54. K&R