Meet the Man Who Perversely Argues for Cutting Social Security Benefits to "Take Care of the Lesser People in Society" (6/18/2010)
Social Security Works
Republicans wanted to privatize Social Security and allow you to manage your own money. You still think that is a good idea after the last couple of years of financial meltdown ? Well, guess what. They are still determined to do it.
Looting Social Security (1/5/2010) William Greider, The Nation.
The financial services industry has donated large amounts of money to both Republicans and Democrats, and the one thing that both parties can agree is that they need to fix Social Security. Well funded ( and right wing) ‘think’ tanks like the CATO Institute and the Concord Coalition have been promoting the idea that Social Security is in deep trouble, and that in another thirty years or so, that it will not be able to keep paying full benefits.
The mainstream press never questions that there is a problem.
Projections that Social Security will be in trouble rest on the
premise that the economy will grow at a rate considerably below its
long-term average. Low long-term rates of growth imply a period of
economic decline that would itself be news. At average long-term
growth rates, there is not much of problem and it is certainly not
an emergency. See the article, “Nine Misconceptions about
Social Security” in Atlantic for July 1998.
William Shipman of State Street Bank told the magazine Pensions & Investments that if privatization were to succeed “You could be staring at 130 million new accounts” and it would add millions in custodial fees to the pension assets it manages. Such a change will certainly benefit bankers and investment brokers with many millions of new accounts, but there is little chance that it will function as efficiently or as well as the present system when you consider the often very large private salaries, and expenses for sales, telemarketing, and advertising.
After a severe economic downturn in the 1930’s Social Security was designed as an insurance program, a stimulus for broad-based demand, and a damper for the business cycle. Paul Krugman in Foreign Affairs magazine wrote there is now an eerie similarity in today’s markets to those of 1929. George Soros has written that uncontrolled capital flows act like a wrecking ball that can destroy national economies and possibly render international mechanisms ineffective. The widening distribution of income is also likely to result in a more volatile economy. You may want to go it alone, but a lot of us don’t.
According to the privatizers, the Social Security guarantee would better be converted into a risk based program. Most people are not market savy, and, although investing can be educational, past returns are not assured for the future.
When the politicians say they will ‘fix’ Social Security, keep in mind that all proposals before the Congress will reduce benefits.
Anyway there are already sufficient numbers of ‘private accounts’ like 401K; IRAs, Roth IRAs, Medical Savings Accounts (MSA’s), and others so that adding a new species of account can only further complicate the tax code.
The privatizers ignore other functions of Social Security
including disability payments or survivors benefits.
In June, Rep. Charles Rangel, ranking member of the House Ways and Means Committee, released a Congressional Research Service (CRS) analysis on the extent to which three Social Security reform proposals would reduce defined Social Security benefits:
* a proposal by the National Commission on Retirement Policy, a panel of Members of Congress and private citizens organized by the Center for Strategic and International Studies (legislation recently introduced in the Senate by Senators Judd Gregg, John Breaux and a few other senators — S. 2313 — and in the House by Reps. Jim Kolbe, Charles Stenholm, and others — H.R. 4256 — is based on the NCRP proposal); and
* the bill introduced by Senators Daniel Patrick Moynihan and Robert Kerrey (S. 1792);
* a May 1998 proposal by Robert Ball, commissioner of the Social Security Administration under Presidents Kennedy, Johnson, and Nixon and a member of the 1994-1996 Social Security Advisory Council. According to the CRS, none of the proposed plans will improve benefits. Over the next 75 years, average Social Security benefits would be 23 percent lower under the NCRP plan than under the current benefit structure, 16 percent lower under the Moynihan-Kerrey plan than under the current benefit structure, and six percent lower under the Ball plan. (This was posted on the internet by CRS.)
Right now, SS tax only applies to the first $62,000 , so it is very regressive. Your Congressman, for example, pays a rate about half of most working people. Simply removing the cap would eliminate the problem. So would raising the rate by 1%. These solutions are not part of the agenda though, and are not up for discussion.
Trudy Lieberman’s (January 27, 1997) article in the Nation described Social Security privatization … “not so much a movement as an attempted heist, robbing Americans of perfectly good social insurance.”
Republicans are still anxious to 'privatize' it.
Myth #1: Social Security is going broke.
Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits—and again, that's without any changes. The program started preparing for the Baby Boomers' retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.
Myth #2: We have to raise the retirement age because people are living longer.
Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What's more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.
Myth #3: Benefit cuts are the only way to fix Social Security.
Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.
Myth #4: The Social Security Trust Fund has been raided and is full of IOUs
Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.
Myth #5: Social Security adds to the deficit
Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.8
Defeating these myths is the first step to stopping Social Security cuts. Can you share this list now?
Thanks for all you do.
–Nita, Duncan, Daniel, Kat, and the rest of the team of moveon.org
1."To Deficit Hawks: We the
People Know Best on Social Security," New Deal 2.0, June 14,
2. "The Straight Facts on
Social Security," Economic
3. "Social Security and the
Age of Retirement," Center for Economic and Policy Research, June
4. "More on raising the
retirement age," Washington
Post, July 8, 2010
5. "Social Security is
sustainable," Economic and Policy Institute, May 27, 2010
6. "Maximum wage
and the amount for a credit in 2010," Social
Security Administration, April
7. "Trust Fund FAQs,"
Security Administration, February 18, 2010
8."To Deficit Hawks: We the
People Know Best on Social
Security," New Deal 2.0, June 14, 2010
The People's Pension: The Struggle to Defend Social Security Since Reagan, Eric Laursen
Why are Democrats losing the Social Security Issue ?
Papers on Preserving and Strengthening Social