The Social Security Pledge Versus the Old Politics
Monday 11 October 2010
by: Dean Baker, t r u t h o u t | News Analysis
(Image: Jared Rodriguez / t r u t h o u t; Adapted: BozDoz, mikedemers)
President Obama made a big point during his campaign of running against the old style of politics. He promised to bring a new atmosphere of bipartisan cooperation and openness to the political system.
The bipartisan cooperation part has not turned out very well, primarily because the Republican leadership has shown very little interest in cooperation or compromise on anything. However, it looks as though President Obama is prepared to jettison the openness part of his commitment himself.
This comes in the context of the president's deficit commission, which is carrying through most of its work in secret. The current plan is to have this commission make a report, which will then be given a rushed up or down vote after the election. This means that a lame duck Congress, including dozens of member who were just voted out of office, will be making crucial decisions on Social Security, Medicare, and other essential programs.
The two co-chairs of the commission, former Wyoming Sen. Alan Simpson and Morgan Stanley board member Erskine Bowles, have both explicitly advocated cuts to Social Security and raising the retirement age. If they can get the commission to support their agenda, then they will rely on President Obama and the Congressional leadership to do the necessary arm-twisting to gets Congress to approve the cuts to Social Security.
This would be about as old style as politics could ever get. We have an election next month. The point of elections is let the public decide on issues like whether or not we should cut Social Security benefits or raise the retirement age.
If President Obama believed in "new politics" then he would encourage members to say where they stand on cutting Social Security benefits. Then voters would be given the opportunity to set the country's agenda, not a bunch of political hacks and Wall Street cronies who were too incompetent to see the $8 trillion housing bubble that wrecked the economy.
Of course, the public does not have to wait for President Obama to pass judgment. There is a pledge to protect Social Security that has already been endorsed by more then 100 members of Congress. The pledge is very simple. It commits members of Congress, or candidates, to oppose cutting Social Security benefits or raising the retirement age. It doesn't get any simpler than this - even a member of Congress can understand it. The full text is available at the Campaign for America Future's web site.
Given the simplicity of this statement, it is reasonable to assume that any member of Congress or candidate who does not sign on supports cutting Social Security benefits. There really is no other plausible conclusion.
This is just like if someone accuses you of killing your spouse. Any normal nonmurderer would immediately deny the accusation and express outrage at the accuser. In the same way, if members of Congress or candidates find themselves unable to sign a pledge saying that they will not support cuts to Social Security, then we should assume that they do support cuts. Voters can then go to the polls knowing that the person wanting their vote wants to cut Social Security.
If we didn't have such a separation between the people who make policy and the people who suffer the consequences, then there is no way anyone would be considering cuts to Social Security right now. All projections show that the program is completely solvent long into the future. The program does exactly what it is supposed to do - it provides a core retirement income to people who have spent their life working.
Social Security is also extremely well run and efficient. We know this because its opponents highlight incidents of fraud that are trivial relative to the size of the program. For example, The Washington Post recently ran a major story calling attention to inappropriate payments to federal employees that amounted to less than 0.005 percent of the program's spending. Opponents of Social Security wouldn't highlight such trivial errors if they had serious abuses to tout.
The administrative costs of Social Security are less then one-twentieth the cost of private insurers. That is because it has no shareholders getting dividends and no executives drawing eight and nine figure paychecks.
And thanks to the ineptitude of the folks running economic policy, the huge baby boom cohort that is about to retire is in desperate need of Social Security. The Wall Street crew and their friends in Washington managed to destroy their home equity and their 401(k)s.
But former Senator Simpson, who is also the son of a senator, has his pension and inheritance to live on. Bowles gets $430,000 a year from Morgan Stanley, the bailed out investment bank, to attend a few meetings a year. These are the people who want to cut our Social Security. And they are betting that their similarly situated friends in Congress will go along.
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Comments
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Go OFFENSIVE (too): DEMAND
Mon, 10/11/2010 - 14:53 — Vic Anderson (not verified)Go OFFENSIVE (too):
DEMAND that candidates for Congress promise to make everyone pay
Social Security taxes in full on every dollar earned, whether in
wages or from investing.
DEMAND that candidates for Congress support lowering the age for
retiring on full Social Security benefits back to 65.
Give the boot to any member of Congress, and any President, who talks about privatizing Social Security, or about “tinkering”
with the system by raising the retirement age, cutting benefits or reducing the cost-of-living adjustment formula.
Otherwise. Go back to street politics and take the fight directly to these Executive and Congressional lawbreakers Washington!
If the Catfood Commission really wants to cut the nation’s huge budget deficit, THIS is where they should be pulling out the knives: the military budget, which is the real “discretionary” item
in the national budget, taking almost half of every tax dollar collected, and stealing it from schools, health care, environmental protection, parks, alternative energy research, housing programs
and all the other things this nation desperately needs.
If not, prepare a Cat FOOD-FIGHT of CATACLYSMIC proportions!
Bravo Go OFFENSIVE!! You are
Mon, 10/11/2010 - 16:16 — ER444 (not verified)Bravo Go OFFENSIVE!! You are too right. get the hell out of Afghanistan etc. 700,000,000,000 a year is too much to "protect" us from nothing. It is all about oil etc. Close half of the bases, end the wars, bring our young people home !!! Then we can begin to afford to fix the problems at home.
Social Security is widely
Mon, 10/11/2010 - 16:38 — Kevin Schmidt (not verified)Social Security is widely supported by 80% of voters. That is the only reason why the upper 1% can't get Congress to cut it so they can transfer even more wealth up to them from the impoverished middle class.
Oh well, I guess Congress will have to cut the TRILLION DOLLAR Military Budget instead. But of course, that is where the Plutocracy derive most of their blood money profits. That and their multinational corporations who out sourced US manufacturing jobs for third world country slave labor and unlimited pollution.
On top of the threats
Mon, 10/11/2010 - 18:13 — Anonymous (not verified)On top of the threats mentioned in this article now they are refusing to give a COLA for senior citizens. Everything has gone up and we did not get a COLA last year either. For those who have fancy retirement plans this may not be a problem but for those of us who only have Social Security and a small one at that, this is disastrous. Medicare doesn't cover costs and Medicaid is beyond the reach of many of us caught between. To not get a COLA is really a hardship.
In this article, the author
Mon, 10/11/2010 - 19:17 — Pete (not verified)In this article, the author states "All projections show that the program is completely solvent long into the future." That is a bold statement to make considering this from the Social Security Administration website: "The last 5 Trustees Reports have indicated that Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds would become exhausted between 2037 and 2041". I hardly consider the next thirty years to be "...long into the future". Semnatics aside, I appreciate the information on the pledge. I will be using it as a guide when I go to the polls. Thank You.
It seems Social Security is
Mon, 10/11/2010 - 20:17 — Mg (not verified)It seems Social Security is an issue that can rally millions of Americans to take to the streets, if that's what is required to stop an unnecessary, illegitimate, and immoral assault on one of the few truly successful government programs to have existed. HANDS OFF, the public just may awaken, to the surprise of almost everyone.
The "social securtiy issue"
Tue, 10/12/2010 - 05:33 — Anonarcmous (not verified)The "social securtiy issue" is pedaled to distract citizens' energy & time from REAL understanding their problem:WE DONOT PRODUCE ENOUGH in this country. China is ahead BECAUSE THEY PRODUCE. Even countries that have substanital resource, BUT DONOT PRODUCE do not get ahead--they just get pillaged.Countries who do not have substantial resources, but import to produce get ahead. When you are introduced to anyone, 1st question "what do you do?" Republicans-the sell-out-import-cheaper-no-protection-no-taxes-rule for 30+ years get us to today's results.When I see native american or latinos putting up Republican signs--you just have to wonder?? Small business survives on tax dollars collected from all->it is government policy to use as many small business as possible. Not taxes=no clean water or health. If insufficient production is the problem, then no-ending-war is indeed the death blow. All this money we try to capture dwindling resources is not worth it. The only way forward is to the abundant future resources we are disregarding.It is not written anywhere that USA will survive??
Pete wrote: "The last 5
Tue, 10/12/2010 - 06:13 — brunssd (not verified)Pete wrote:
"The last 5 Trustees Reports have indicated that Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds would become exhausted between 2037 and 2041".
Well, given the economic forecasting methodology used by the Trustees, the US economy would have to be in a near economic depression for the entire 30 years for the Trust Fund to be exhausted by 2041. It is based on economic growth rates that are half of the historic rate. It is a worst, worst case scenario and as such, of little value other than political.
And "exhausting the Trust Fund" only means that the alleged prepayment made on benefits by the baby boomers will be gone (as will likely the baby boomers). SS will still be bringing in the contributions of current (2041) workers and employers.
There is no crisis except in the plutocracy's willingness to pay for its wars.
It is a fact that SS does
Tue, 10/12/2010 - 07:58 — Berry Ives (not verified)It is a fact that SS does not contribute to the deficit one dime. Their main reason for wanting to cut it is because they borrow from the SS trust funds to finance the deficit. To address the deficit, they needed to actually keep focused on the true causes. I can't believe Obama has not fired the chairmen, especially Alan Simpson, who gave him ample opportunity to do so by insulting Americans who draw SS. But the commission has lost all credibility at this point. Obama could help the Dems in November if he completely revamped it, because it is a runaway train headed for disaster.
You can't get blood out of a
Tue, 10/12/2010 - 14:16 — Erich von Freemason (not verified)You can't get blood out of a rock. It doesn't matter what people want... SS (and MediCare) will not be around, as any significant benefit to seniors, in 20 years. By then, there will be 80 million people drawing SS/MediCare benefits, and it is estimated that each recipient will cost 120% of the average working person's pay (these estimates are based on pre-crash pay levels, which are going down and probably will not go back up). IOW, it will take the combined, total economic output of >96 million workers to provide all those benefits. If pay levels continue their current decline, it will take 140%, or the combined economic output of 112 million workers. It's not going to happen, even if 100% of the people want it to and even if Congress passes 1000 laws mandating the continuation of benefits. The manpower required to provide the benefits will not be there. They might as well pass a law mandating that every person have the same standard of living that Bill Gates has.
Tue, 10/12/2010 - 00:17 — Pete (not verified)
In 2008, SS estimated that the SS fund would go into the red, and they would have to start redeeming the US bond that makes up the fund, in 2016. This year the fund will go into the red. I wouldn't place too much stock in their estimates, especially as any estimate of how long the fund will last would have to have knowledge of future inflation rates (as the fund is a fixed-interest bond and benefits are cost-of-living adjusted) and nobody knows what the inflation rate will be 5 or 10 years from now.
Mr. Baker, Today, there
Tue, 10/12/2010 - 18:34 — Anonymous (not verified)Mr. Baker,
Today, there millions of angry workers in the streets of France (many towns and cities, the capital) on indefinite strike protesting the "neoliberal" agenda of President Nicolas Sarkozy, who is calling for going further than OUR system does. Not just discounted retirement at age 62, but lengthening the full retirement to 70! So it's not just "going from 60 to 62" partial benefit retirement but a very unfair system that does not take into account the hardship factor of the workers' careers. I would love to see such action here, but our labor movement has been so weakened, since Ronald Reagan, that we are "just a pawn in their game", as Bob Dylan sang.
the lies being broadcast far
Tue, 10/12/2010 - 19:11 — Anonymous (not verified)the lies being broadcast far and wide by the so-called main stream media - and some of our representatives, let alone the chairs of the Obama Deficit Reduction Commission may be believed by the policy makers of corporations and government, but we the people know the truth of social security. that not one cent of deficit has ever been caused by this most effective, useful and caring program in our history. The same ugly arguments were used in the 30's as are being used now by the thugs who stole our country's finances and jobs. Roosevelt just spoke directly to the people and they heard him. We must take to the streets and speak the truth to power and challenge our so-called representatives to work for us. We elected them - know where they stand - demand appointments with their local offices, gather around you the folks in your community and go in solidarity. Only when we work together, can we achieve our goals. See you in the streets folks - it's the best place to meet some of the finest people you could imagine. At 76, I still find it exhilarating to do my civic duty together with my neighbors and friends. DEMOCRACY IS NOT A SPECTATOR SPORT - ORGANIZE AND THEN VOTE!
Wed, 10/13/2010 - 00:11 —
Wed, 10/13/2010 - 14:27 — Erich Von Freemason (not verified)Wed, 10/13/2010 - 00:11 — Anonymous (not verified)
"...not one cent of deficit has ever been caused by [SS]."
How can you say that? Do you know that there is NO MONEY in the SS trust fund? It's nothing more than a government bond, and the only way to convert the bond into cash to make SS payments is to take money from the general tax fund and buy it? Do you know that the general fund currently owes ~$2.5 trillion to the SS fund? Do you know that the interest on that bond is also paid out of the general fund? You don't have to take my word for it; go to SS's own web site. They have all the info there.
http://www.socialsecurity.gov/OACT/ProgData/fundFAQ.html
If you are 76 years old, and started drawing SS at 65, you've been living on the taxpayer's dime for 8 years, as you drew out every penny you put in, including the interest, by the time you were 68. Between SS and MediCare, your generation will spend every cent you earned, half of what your kids will earn, and half of what your grandkids will earn. America will be reduced to third-world status because of your greed, and nobody in your generation seems to care at all what you are doing to your children and grandchildren. Shame on you.
The SSI predictions may be
Wed, 10/13/2010 - 18:16 — Crichton (not verified)The SSI predictions may be pretty good, but, honestly now, is any prediction that extends 30 or more years into the future and which depends on a petroleum-based economy in collapse really solid?
SSI, writ deeply, buys social peace. Oh yes, the working class pays for it - but the deep political meaning of SSI, no matter how it's paid for, is that it is in the interests of the working class to invest themselves in the way things are. Is this to continue?
Some might say, any "reduction" in SSI is attended by some incremental increase in class conflict - and they are so very few of "them" - and so many lamp-posts...
They have "borrowed" from SSI and They don't want to pay back the loans. That's the unspoken gamble - will They survive class war? It seems that They think They can. Maybe so. It's a terrible gamble. Pity!
Wed, 10/13/2010 - 23:16 —
Sat, 10/16/2010 - 20:21 — Erich von Freemason (not verified)Wed, 10/13/2010 - 23:16 — Crichton (not verified)
"SSI, writ deeply, buys social peace."
There was no social peace before SS?
"They have "borrowed" from SSI and They don't want to pay back the loans."
The SSA, known for being wrong in every prediction they've ever made*, even says that Social Security's net cash shortfall over the next 75 years will total $25.33 trillion (the real amount will undoubtedly be much higher). How do you propose to pay it back? Almost every FED-watcher says that the FED is going to start massively increasing the money supply again, soon. This will cause high inflation. SS benefits are COLA-adjusted, while the bond that makes up the SS trust fund has a fixed interest rate. Do the math.
Our biggest problem is that people think that Congress can create prosperity simply by passing a law demanding it. They can't. We're screwed. Even if they taxed the rich or cut defense spending to pay for it (they won't), the resulting demand will drive up prices on everything related to providing the benefits (primarily health care), adding to the inflationary collapse of the government's SS/Medicare promise to old
people.
* - SS "fixed" in 1961, said to be solvent for 75 years. Fixed again in 1977, President Carter said, "Now this legislation will guarantee that from 1980 to the year 2030, the Social Security funds will be sound." Fixed again in 1983, said to be solvent for 75 years.
OK, Erich and all the other
Wed, 10/20/2010 - 14:05 — Frances in California (not verified)OK, Erich and all the other conceited rightwingers who would gamble on Wall St with working Americans' rightful savings: I have paid into Social Security for 54 years; when I retire, if it doesn't start coming back to me, I will find a way to get it directly from YOU. Hint: I won't be the only one.
Vic? Did I just read you
Wed, 10/20/2010 - 14:13 — Frances in California (not verified)Vic? Did I just read you recommending a tax on investment income? I'm going to have to change my mind about your posts; I like the way your mind works!
Wed, 10/20/2010 - 19:05 —
Fri, 10/22/2010 - 12:48 — Erich Von Freemason (not verified)Wed, 10/20/2010 - 19:05 — Frances in California (not verified)
"OK, Erich and all the other conceited rightwingers who would gamble on Wall St with working Americans' rightful savings: I have paid into Social Security for 54 years; when I retire, if it doesn't start coming back to me, I will find a way to get it directly from YOU. Hint: I won't be the only one."
A) I'm not a rightwinger; I'm a libertarian (small 'L').
B) Nobody's gambling on Wall Street with your money. The money you put into SS is gone. It's not there. Don't blame me, blame the politicians that YOU voted into office... they're the ones who took the money to pay for all those government programs that YOU demanded. Blame those who convinced you that you can consume more than you produce, and blame your own greed and gullibility for believing that there's a free lunch.
C) Are you threatening to rob me by force? Good luck, honey. Hint: I'm well armed. Let's be real... rioting seniors aren't much of a threat.