Friday, February 6, 2015

Senate Budget Committee Takes Aim At Social Security Again!

Well, we knew it couldn't last long. That is, before the scurvy lowlifes in congress reprised their attacks on Social Security - with the objective to "save It" by cutting it.  Next week, the Senate Budget Committee is holding its first hearing on Social Security benefits. Their plan is to declare a "crisis" and insist the only way out is to cut benefits now. Of course, this is all the most transparent BS to anyone who really understands Social Security and especially that its enemies have been gunning for it for over 80 years now. 
This invented myth of impending and catastrophic insolvency is well-worn and predictable, but still dangerous. The new Republican majorities are emboldened and anxious to show their Koch backers that they are serious.  

Of course, Social Security is not going broke. In fact, it has a $2.8 trillion surplus. Yet seniors who depend on the system they paid into find their benefits failing to keep up with their real expenses. Indeed, a valid economic argument can be made that given the persistent specter of  too low aggregate demand, Social Security benefits should be increased - not cut. Those benefits, after all, pay for billions of dollars in goods and services that otherwise might never be transacted - with the result that the GDP would contract even more.
Hence, any successful effort at cuts is assuredly going to send the economy into the clinker again - where only the richest 1 percent will benefit. But this is exactly what the likes of the Kochs and Pete G. Peterson and other austerity fetishists want.

Of course, the enemies of Social Security - and there are many - continually go back to the same old tool box to make attacks- hoping that some of the shit will stick, and alas, a lot of it has- including that the Trust Fund is full of useless IOUs. But this is why smart people need to do themselves a favor and inform themselves on the facts. No better book can be found right now than 'Social Security Works' by Nancy J. Altman and Eric R. Kingson, which in their Chapters 8, 10 totally demolishes this "IOU" nonsense, showing these bonds carry the same weight as those dispensed to other countries, including China. In other words, they carry "the full faith and credit of the U.S. government" and - if ever betrayed - will show this nation can't be trusted to pay its just debts.

As to the staying power and importance of Social Security, we read (p. 23):

"Social Security transformed the nation. It eradicated what was once a primary anxiety for the majority of Americans: the terror of growing old penniless,  dependent and vulnerable. It provided basic economic protection previously not available to most households."

This basic economic security is exactly what drives Social Security's opponents nuts. They hate to see anyone collecting a check just for breathing. At the very least, they insist, the money ought to be "privatized" - put into special investment accounts (with the costs of administration vastly greater than the 1 penny per dollar rate for S.S.) and subject to the vagaries of the stock market. Well, we saw how that worked out with 401ks back in 2008 with the financial meltdown didn't we?

In a previous blog post I explained much of the reasoning behind Neoliberal economic thinking  (based on the Pareto distribution) and why it is convinced Social Security is a bad idea, e.g.

For example, arguing that (as former Fed Chairman Alan Greenspan asserted in an appearance before congress in 2003): "Social Security benefits need to be cut to pay for Bush’s tax cuts."

The thinking being that tax cuts leading to re-investments are more critical than social insurance.

Then there have been the outright attacks on beneficiaries - among which the most vile have emanated from scumball former Reepo Senator Alan Simpson - who Obama (in some delirious haze- maybe a leftover from his "Choom gang" days) - actually appointed to be on his deficit commission. As the authors note (p. 39) Simpson referred to older recipients as:

"those greedy geezers...old cats 70 to 80, who live in gated communities who drive their Lexus to the Perkins restaurant to get the AARP discount"


"They don't care a whit about their grandchildren...not a whit".

And believe it or not, this pig was taken seriously by many! Yet the facts of old age are not of glitz and luxury at all, as the authors also note (p.40):

"It is false that most older Americans are on "easy street". A very small percentage are, many more are poor or near poor, while some maintain a modest, middle class life style, often struggling to make ends meet."

In the graphic shown on page 47, the authors present the actual income distribution for the elderly which shows nearly three out of four senior households have incomes below $50,000 - which is not a princely sum. Not when a senior might be one bad fall from a nursing home stay  that will suck up $70k a year. Or,  one major medical catastrophe can savage  frugal savings. (Dunned by continuous zero interest rates for years.) These are problems the young don't have, and the young always have time to get back on their feet - most seniors do not  - say after a major medical calamity.

Anyway the income distributions are indicated a follows:

- 72.5% have less than $50,000 /yr.

- 18.5% have from $50,000 - 99,000

- 5.3% have $100,000 - 149,999

- 2.0 % have $150,000 - 199,999

- 1.9% have more than $200,000

In other words, barely 9 percent of elderly - or 1 in 11, has more than what is regarded as a middle class income.

Other objections to seniors' benefits as being "too much" I already skewered in this blog post, which I invite people to read:

As the authors of 'Social Security Works' put it (p. 4), our politicos may have polarized us  on just about every issue - from immigration reform to taxes-  but on one we are fiercely united: we support Social Security. This unity forges our future security and is something the Neolibs and their conservo austerity cousins dare not mess with - as they learned back in 2005 when Bush tried his privatization scheme.  It is this unity we'd all do well to remember and also cultivate in gearing up for the next wave of attacks!
  Further facts on Social Security:

1) Social Security's  Trust fund has historically taken in more money than it pays out in benefits. Currently it is at $2.76 trillion and continues to grow.

2) Without making any changes whatsoever, current projections show Social Security will be able to pay full benefits through 2033.

3) With just a minor tweak to the payroll tax cap - raising it to a mere $300,000, full benefits would be able to be paid through 2100.

4) The system could easily be rendered 100 percent secure, even with higher disability benefits paid out, if congress would cease raiding Social Security moneys for current expenses, including wars.

See also:


No comments: