Social Security as you know it, it’s over, forget about it.
I caught a bit of Jennifer Granholm’s The War Room for 2/23/12. She was talking gasoline prices and had Ron Klain on for his ideas. He is a past chief of staff for Gore and Biden as VP’s. Mr. Klain also published his thought at Bloomberg2/20/12.
This post is not about solving the rising gasoline costs. This post is about the further screwing of the 99% by further reducing their security from the risk of life and living.
Let’s cut to the chase:
One idea might be a “pocketbook protection” plan, which would work as follows: If the average price of gas exceeds $4 a gallon, an additional, automatic payroll tax cut of 1 percent would kick in, as much as $50 per month, per person. The cut would stay in place for at least 90 days; it would disappear when the price fell below $4.00 per gallon.There are three advantages to this approach. First, because the plan is of limited duration and is capped at $50 a month, its cost is relatively modest — about $5 billion a month, or $20 billion total, assuming the usual four-month gas-price surge. Second, because it isn’t a reduction in gas taxes, it doesn’t weaken any incentives for fuel conservation or efficiency: All workers get $50 to soften the blow of higher gas prices, but the less fuel they use, the more money they save. And third, the relief provides the greatest relative help to lower-income workers who need gas to commute and feel the price pinch the hardest.
I have to assume our Colberly’s head has just popped. What Mr. Klain has proposed is the exact danger many have warned about regarding the use of SS as a means to make up for what is a major functional problem of our current economy: lack of share of income to the masses.
I have pointed out many times that we can not make up for the $1.1 to $1.4 trillion per year of income no longer in the hands of the 99% that is in the hands of the 1% with tax reductions. It can not be done. With that fact, considering taxation reduction in any form as a method to address this specific issue is nothing more than the continuation of the false economy that financialization created as observed from the position of those in the labor part of the economy. It quite literally is the government now using the mathematical gymnastics pioneered by Wall Street to trick the masses into believing that home equity was the same as earned income. Getting a tax cut anywhere is not the same as receiving a greater share of the nation’s income. It is money, by the way, that you are more than justified to receive because you helped to create it. The rich used to have an opportunity to relearn this lesson every time there was a major strike, say the NY City trash collectors going on strike.
People, I hope we have learned that one’s home, your house has a more important roll to play in your life other than that of asset appreciation. The home is one of the foundations used to reduce the risk of living, of having a life: shelter. Social Security is another one of those life’s risk reducing foundations: longevity. I have asked often here: How many times to do we have to relearn a lesson?
Using SS as a means to offset the results created over the long term from bad policy is the polluting of a very good policy. We can look at the housing crisis as another already experienced pollution. The good policy was promoting home ownership. The bad policy was setting up an economy that changed the perception of home ownership from a life risk reduction activity to an asset building activity. Now that SS has been used once as a solution to an unrelated problem and extended once in a manor that moves it further from the original purpose (reduction of risk of living), with Mr. Klain’s proposal, the use of SS as a back stop for non-related policy results has become an unquestioned and considered reasonable use.
Mr. Klain’s proposal so exemplifies what our politico’s now consider acceptable for SS’s use that he even proposes to pay for it via a general funding solution:
The plan could be almost entirely paid for with a modest, no-loopholes surcharge on corporate taxes on profit derived from the higher gas prices. The administration would be able to avoid pejorative terms such as “windfall” or “excess” profit tax, because the tax is neither confiscatory nor punitive. With higher gas prices, oil companies will make record profit — and a partial surcharge will still leave that profit at record high levels. In other words, the plan isn’t vulnerable to suggestions of creeping, soak-the-rich redistribution. It would leave in place all incentives for oil companies to increase production, do more research and development, and explore alternative fuels. But a modest surcharge would help fund at least a partial pocketbook protection program to make sure the cost of the oil companies’ gain isn’t excessive pain for the rest of us.
Just to be clear, that Mr. Klain proposes using SS for anything other than SS is the problem. The only difference in such action compared to the housing crisis which was tied to the removal of specific banking regulation is that it took us 10 year or so to experience the warning of Senator Byron Dorgan.
For those warning about the proverbial slippery slope phenomenon of using SS as a back stop for bad policy results leading to furthering the destruction of SS, it’s only been about 3 years since this application of SS first became a reality. This use is now acceptable. Social Security has now officially been changed from a purpose specific funded program to an general revenue program. The establishment is so comfortable within this frame of use for SS we get a proposal such as Mr. Klain’s. We also have on the record a warning in the vein of Senator Dorgan’s from Senator Harkin:
“This Congress will be making a grave mistake — a grave mistake — and reinforcing a dangerous precedent,” Harkin said in a dramatic Senate floor speech late Thursday.
Mr. Klain freely proposing another application of a SS tax cut is proof of the truth to Senator Harkin’s warning. The precedent stands. It is “codified”. And, with this precedent the conservative/monied movement has neutralized another barrier protecting SS and it’s status as the end-all be-all of the New Deal: the Democratic Party.
The Movement has also successfully completed the instillation of it’s virus known as Financialization into the nervous system of our government. Social Security no longer thinks as the mind of one living in a labor economy; as the 99%. It thinks as the mind of one living in a money from money economy; as the 1%.
Daniel
Thanks for thinking of me. My head did not pop. Maybe my heart broke. I certainly feel sick to my stomach.
You are right. SS is dead. We may have a welfare program called SS in the future, but it won’t be SS.
The people will feel the difference, but they won’t know they are feeling a “difference” because, of course, as Mr Romney promises, the difference won’t happen to anyone who knows what SS is. Only to their children. Which is, actually, you.
It was the best of times, it was the worst of times …..
….. near the end of the 18th century and near the beginning of the 21st ….
. The French elite did not expect the razor nonlinearity that occurred in their circumstances over a such a short period during the (working Citizen’s) 1793-1794 Reign of Terror.
In the dark days of the 1930’3 social security more than anything else was the future promise of a nervous elite designed to sustain the system. SSI ultimately benefitted the elite the greatest with the maintenance of head neck body connectivity.
On 24 February 2012 a historical deterministic patterned saturation peak valuation occurred in the composite Wilshire with follow-on asset-debt-money system historical nonlinearity expected.
The bankruptcy of the weaker European PIIGS who can no longer print their own money to sustain local sovereign economies is exactly paralleled by Stockton California, other American cities and counties near the tipping point, and US states who likewise cannot print their own money to meet their past promises (Many of the local governmental promises were to their own public servants and both unfair and ridiculous in their self-voted bloated retirement packages.)
However, the federal government can print money and maintain the reasoble and modest promise of basic life risk reduction. The relatively small amount of printed federal money is critically important and helps to provide a floor underneath an otherwise debt burdened asset saturated crumbling private economy.
The country’s long term IOU to the working class supported by 70 years of a national earmarked tax will be maintained and continued by the politicians owned by the elite – or the elite will very likely share the 18th century destiny.
In the end the both party owned Goldman Sachs’ politicians will consider their own survival and make the right decision.
As I kept trying to point out over the past few years, it all comes down to “only Nixon could go to China.” There are things only a president with the Republican handle could do, and things only a Democrat handle could get done.
GW couldn’t touch SS as much as he wanted to. But a Democrat who has thus followed GW’s policies very closely (nevermind the rhetoric and the small sops that mean nothing – pay attention to the tax burden and the absolute lack of accountability for white collar crime) could “fix” SS. Give him another four years and he’ll fix it once and for all.
lammert
i appreciate your sentiment. but i guess i am one of those who thinks that SS, as designed by FDR, did not so much “preserve the system” as modify it in a way that was both humane and “just” in one of the easier senses of that word.
i don’t want to see a Reign of Terror. and I don’t think some real version of “socialism” is the answer. SS allows workers to save their own money safe from the worst evils of hard capitalism. That is a good start… was a good start. What is happening now may need a hard fix… but that may not happen for a thousand years, and it won’t be “just” when it happens. The innocent tend to get hurt along with the bad. I don’t think there is any likelihood of fixing it now. I would say the people are too stupid… but that just makes them mad at me. The fact is that humans as a species are not smart enough to understand what is happening, and they never will be until it has been happening long enough for them to at least understand the effects. Then they will try to change it. Without a great deal of luck, and a leader like Roosevelt, they will not likely change it for the better.
This appears to be Rick Santorum’s view. I don’t thnk it is very different from any of the Republicans, or Pete Peterson’s. I suppose they are sincere about it…. another one of those limitations of human intelligence things.
“I’ll tell you what Harry Reid, Nancy Pelosi and Barack Obama are telling me. What they’re telling me is that you may not like it now but Americans love their entitlements. And once we get you hooked on the entitlement you’ll never go back. Now I closed my eyes and thought, I’m standing in front of the school yard with a guy and a dime bag saying once I hook you, once I numb you, once I stop you from reaching great heights and protect you from falling…we got you. We’ll hook you.” former Senator Rick Santorum
and for the benefit of those who don’t already know
SS is not welfare. it’s not socialism. it’s not a drug.
it is an insured savings account. protected from inflation by pay as you go financing. it works because it is not voluntary and because the government is in a position to manage the pay as you go.. manage but not pay for. the workers pay for their own benefits. it cannot be voluntary because most people are not smart enough to know they need it until it is too late for them to save enough of their own money, however protected, to be able to retire.
it is not going broke. the workers can continue to pay for their own benefits… either with no changes at all, or with about a forty cents per week increase in the payroll tax each year to keep up with their own rising standard of living.
that’s the short version. to really understand it would take about an hour of your time, with someone to help you through the words and numbers.
i think you ARE intelligent enough to tell the difference between understanding it and swallowing the clever lies…IF you take the time to really think about it systematically.
but you won’t. and Mike is right. Obama and his friends will take it away from you. literally like taking candy from a baby.
Nobody asked me at the time, but I never thought Nixon should go to China. Now, we have a President that for all his intelligence and education somehow doesn’t understand why we should just leave SS alone. It’s clearly the case that now that this President has messed with the payroll taxes that support it, SS is up for grabs. Coberly said it would happen. Even I could see it coming.The President should have asked before messing with SS. But, he didn’t. Just another one of Twain’s people who know all kinds of stuff that ain’t so.
But, as Dean Baker and others smart people have noted, Congress and other pols can think of all kinds of things to do with the money just in the TF–forget FICA. Why, with 2.6 trillion dollars we could fight at least two new colonial wars each lasting more than 5 years and hire a bunch of new contractors to support the wars instead of instituting a draft which ultimately would get people interested in the war business again. Needs new management, that DOD, and where’s the ROI, people?
Nobody would suggest making the DOD smaller, leaner and meaner. Nope. Only SS. Why? Old people can’t fight back and young people don’t care. Look, guys. Bruce, who is Hella smart and knows his stuff, and Dan and Da Bears and various knowlegeable public intellectuals have been fretting about the potential for disaster in the FICA holiday since Gene Sperling thought it up. The WH econonomics wonks take advice from Heritage and AEI, not to mention hordes of Peterson’s other minions and have come down on the side of cutting benefits. Forget raising taxes–Heaven forfend! Coberly’s notion of paying for SS in perpetuity with a tax boost of (brace yourself!) forty cents a week is out of the question.
Well, say what you will, but the Republicans have just gotten away with weeks of tedious “debates” in which precious few candidates have talked about SS. None of them has said–hey,”SS is ok. It’s the least of our worries.” Not one. Well, ladies and gentlemen this is what you get when you give politicians an infinite supply of hot air and let them use it for free. A great big mess of our own creation.
Remember when Robby the Robot would say, “DANGER, DANGER, DANGER, Will Robinson!!” Well, here we are, Lost in Space again. NancyO
Coberly:
Santorum is a fearmongering idiot. There is no solution offered up by Santorum, Romney or “putting ‘our’ lives at risk” Gingrich.” There ia a wealth of rhetoric meant to stir the emotions of those who have not taken the care to know the issues and understand the impact of the decisions being made around them.
But coberly, aren’t we discovering that there is no way to save people from their own contributions to their own destruction?
Anna
sadly, yes. but we still have to try.
run
that’s true. but the problem is that neither the President, nor the Democrats, nor the “progressives” nor the “social insurance experts” have offered any leadership.
the people will not “understand” explanations, but they wlll follow a leader who sounds believable… being honest helps with that. and offering something they need.
and there are no honest leaders on any “side.” the progressives are probably honest but they can no longer think outside the “welfare” paradigm.
just to be sure there is no misunderstanding. that is forty cents per week per year. it adds up, but it never adds up to much. but trying to explain future costs to people who can only think in terms of present income is asking way too much of human intelligence.
sorry i keep coming back to that. i need to say that i am no more intelligent than they are. i just happened to come into the problem without a lot of preconceptions and with a set of tools… a compulsive ability to do simple arithmetic and read language carefully. not brilliant, but careful… so i could see the “problem” with SS amounts to no problem at all.
there are lots of things i could be wrong about, but SS is not one.
The political correction needed to end this sordid march to middle class destruction is a two step process. Sadly, like Coberly, I don’t think the average American is knnowing enough, aware enough, intelligent enough to understand their own best economic interest. Emotion requires no effective though process and emotion stands in the way of understanding what is best for one’s self.
Step one is for the voting public to decimate the current Republican Party. See what I mean about the process being too unlikely to take hold and move forward. At least three current fromt runners for the Republican nomination have been fabricating virtually every aspect of their description of what is right or wrong with the US economy. In addition those same three have been playiing to the lowest common denominator of fear, bigotry and religious fervor. That any of the three is actually regarded as a viable choice for President by any percentage of Americans does not speak well for our future. But that’s only step one.
If step one were ever accomplished, that is the total rejection of neo-conservative ideology from American politics, the next step two would be less unlikely to be possible. By such a rejection of a reactionary ideology those still in office will recognize a reckoning come to pass with the voters. Then a real Democratic Party with ideals suited to the working and middle classes would grow stronger. The neo-Democrats of DLC ilk would eitiher change their stripes or be over whelmed by a progressive ideology, a government that respects the needs and efforts of all its citizens.
Will it ever happen? Not likely. Remember a citizen’s point, “when the rich and the government stop bribing treacherous pens and tongues to deceive them.” If we don’t see a correction of the Citizen’s United court decision, we won’t see any real progress.
Stupidity like this continues to inch me closer to the idea that we ought to just remove the wage cap on SS. It obviously doesn’t prevent the rich from attacking SS–nothing will. Instead, it apparently strengthens attacks from both sides. First, for many rich conservatives, SS benefits go mostly to them there workers, and those lazy losers don’t deserve anything (ignore who pays). Second, for many rich liberals like Klain, the tax falls mostly on them there workers, and should be maximally reduced (ignore who benefits). I’ve long felt that the cap should be higher, but now I’m wondering what purpose it serves to weaken some phoney-baloney political arguments and strengthen other phoney-baloney political arguments. Please enlighten me.
coberly,
It doesn’t matter. The 40 cents a week won’t fix it because Obama is going to China. I didn’t expect him to get this far in his first term, so if he does have a second term, he’ll be able to get started on Medicare too.
PJR
you will always have phoney-baloney political arguments. What matters is if they are true.
Currently “the rich” (by no means all of them. only a criminal subset.) are lying about Social Security,
Raise the wage cap and tax people that will not get a commensurate benefit, and the lies become trues.
That matters.
Similarly, though you did not ask, currently SS is not welfare. Even though most people are none too clear about this, it matters. All of the people I know like a clear “chain of ownership” between the work they do, the money they get, and what they buy with it (including their groceries after retirement).
They don’t want to live on the dole, though they would accept welfare in an emergency, and they understand that some people have life-long emergencies. They don’t want a handout from the rich. And when it comes time to collect their SS benefits, they are proud to be able to say they paid for it.
I assume this psychology could change. I don’t think Americans at least would like the results of the change. If for no other reason, the workers of Europe have some leverage in keeping their “entitlements”. Americans don’t. Once something is “welfare,” the knives come out, and it is easy to convince even poor people not yet on welfare that their taxes need to be cut and those welfare bums need to get a job. Even if the welfare bums are 85.
The glory and beauty of Social Security is that over about forty years of working, you can pay for your own retirement. You don’t have to ask the rich man, please. Or even write a letter to your Congressman. You paid for it. It’s yours. If you don’t want to retire yet, you don’t have to. But if you need to retire, it’s precious beyond any accounting.
implicit in this is a rejection of what appears to be the unconscious assumption of “liberals.” they appear to believe that the entire national “product.” is “ours.” and the distribution of income is only accidental, if not criminal. and therefore justice entitles them to redistribute income more “fairly.”
to some extent they are right. but the fact is that just taking money from the rich and giving it to the poor will not work. even the poor (in America) don’t like the idea. And the insane and evil Right plays on that dislike to prevent normal and necessary welfare and to pretend that Social Security is just a giant welfare scheme.
Even the rich think that they earned their money fair and square. they will fight you taking it away from them… and they have the power to win…in order to give it to people for no better reason than to “promote equity.” They will, on the other hand, I believe, pay a reasonable share of taxes (more than they do today) if they are approached with the idea of making their own country a better place to live, making their own chance of making money better, and seeing that money to the poor goes either to the “truly needy” or at least in an honest effort to better the condition of the poor and raise them to a level where they can pay for their own needs.
so you see I am neither a liberal nor a conservative, but both, as needed. currently the “conservatives” are off on a loony dishonest course, led by evil men. the ‘liberals’ appear to me to be just rather careless in the way they think about things, and they are led by dishonest, if slightly less evil, men.
We already have “commensurate benefit” lies everywhere. And they contradict each other. I agree that I don’t want to make one of them true, but truth seems to be a slippery concept on this issue. That is in part caused by the difficulty of quantifying some of the system’s value, along with different ways of judging “commensurate,” but it also is in part reflecting political BS.
PJR
perhpas i don’t understand.
once you get away from the lies, people get out of SS just what they paid in plus interest that comes automatically from pay as you go: but the time you collect your benefits, the pay as you go tax is being collected on incomes that are bigger than the one you paid on. essentially exactly “inflation plus average growth in the economy.”
from this basis an adjustment is made so that there is an insurance effect: you are insured against excessive poverty in old age. the people who don’t make enough money over a lifetime to have saved enough for even minimum retirement get a boost from those who have made more than enough. this is no more welfare than fire insurance is welfare. BUT for that to be true the the insurance “premium” needs to be a reasonable approximation of the risk of the rich guy having ended up the poor guy. i don’t know that it has to be an “exact” calculation, but it needs to be intuitively “close enough.” in fact there really is no exact calculation… but one needs to remember that it’s always easier to take a few bucks off your income when you have an income, than it is to add a few bucks to your income when you don’t have one.
it may be that the current “cap” is too low, but scrapping the cap entirely is way too hight. and since the cost of keeping the cap where it is amounts to forty cents per week for those under the cap, it does not seem reasonable to take the political risk of raising the cap at a time when SS is being told to the people as “a huge tax burden”.
it turns out that people who earn at the cap every year of their lives get a benefit that is just about equal to what they paid in.. plus that adjustment for inflation and average growth of the economy. that seems to me to be a pretty good place to “call it even.” in any case, i think the matter could be “explained” with simple numbers that were not subject to much in the way of “lies” and just let the people be the judge.
that may be overoptimistic, by the time the bad guys are done playing with “present value” and their hidden assumptions, the people will have no idea who to believe.
it’s not that they can’t do the arithmetic. even those who can, don’t be able to think clearly about what it means. they get so far and then a circuit blows and they keep comparing future costs to present income.
sorry if this is incoherent, but i’ll leave it in case it starts some thoughts.
PJR
perhaps i don’t understand.
once you get away from the lies, people get out of SS just what they paid in plus interest that comes automatically from pay as you go: by the time you collect your benefits, the pay as you go tax is being collected on incomes that are bigger than the one you paid on. essentially exactly “inflation plus average growth in the economy.”
from this basis an adjustment is made so that there is an insurance effect: you are insured against excessive poverty in old age. the people who don’t make enough money over a lifetime to have saved enough for even minimum retirement get a boost from those who have made more than enough. this is no more welfare than fire insurance is welfare. BUT for that to be true the the insurance “premium” needs to be a reasonable approximation of the risk of the rich guy having ended up the poor guy. i don’t know that it has to be an “exact” calculation, but it needs to be intuitively “close enough.” in fact there really is no exact calculation… but one needs to remember that it’s always easier to take a few bucks off your income when you have an income, than it is to add a few bucks to your income when you don’t have one.
it may be that the current “cap” is too low, but scrapping the cap entirely is way too high. and since the cost of keeping the cap where it is amounts to forty cents per week for those under the cap, it does not seem reasonable to take the political risk of raising the cap at a time when SS is being told to the people is “a huge tax burden”.
it turns out that people who earn at the cap every year of their lives get a benefit that is just about equal to what they paid in.. plus that adjustment for inflation and average growth of the economy. that seems to me to be a pretty good place to “call it even.” in any case, i think the matter could be “explained” with simple numbers that were not subject to much in the way of “lies” and just let the people be the judge.
that may be overoptimistic, by the time the bad guys are done playing with “present value” and their hidden assumptions, the people will have no idea who to believe. [the present value folks will assume a “return on investment” that is higher than the average growth of the economy. and they will assume that they can provide such an investment with “risk” less than the risk in SS. they can’t, but most people won’t even know to ask the question.]
it’s not that they can’t do the arithmetic. even those who can, don’t seem to be able to think clearly about what it means. they get so far and then a circuit blows and they keep comparing future costs to present income.
sorry if this is incoherent, but i’ll leave it in case it starts some thoughts.
Social security is an abomination. It aligns the interests of the elderly with the plutocrats (rentier mentality) and creates the possibility of generational warfare which the plutocrats can use to divide-and-conquer the 99% (Republicans are already targeting the elderly as the replacement for the southern strategy). No one should be paid by the government for doing nothing, regardless of what they did in the past. The elderly and the disabled should be guaranteed government jobs appropriate for their abilities, that is all. For most elderly people, these jobs will need to be indoor sit-down jobs that aren’t too stressful (taking care of pre-school kids with a very high adult to child ratio, sitdown security monitor/greeter type jobs, clerks who are allowed to work slowly, etc). The elderly should also have the option for part-time work with part-time pay, given their typically reduced need for high income with which to raise families and impress the opposite sex. For the sick or senile elderly, or those who are so disabled they can’t do anything worthwhile for society, the “job” would consist of being present in a nursing facility–this has the side-benefit of eliminating fraud, since few able-bodied person would want to hang around as a patient in a nursing facility rather than doing a normal job.
frank r
you are an idiot. people have always worked hard and saved for their retirement. all SS does is provide them a way to protect part of their savings from inflation and market losses.
no sane person wants to work for the boss until they die, at however “easy” a job.
SS recipients are not “paid by the government.” they are “paid” by their own savings. the fact that you can’t understand how it works does not make it untrue.
i think i was too kind.
frank is not only an idiot. he is inhuman. he seems to think the purpose of life is to have a job.
the idea may just be that anyone who doesn’t make enough money to afford to gamble on wall street doesn’t deserve to be able to retire… even if they could pay for it themselves if their savings were protected from inflation.
and i guess he thinks paraplegics ought to be hooked up to a computer and a food pellet dispenser and they can provide full time security monitoring, or direct drones, by remote sensing. just so they earn their keep.
after all, if they don’t, it will really deprive frank of all he can be… all the money he might have gotten.
it’s one thing for an old person, or handicapped, to “do what he can” for the family. it’s quite another to force him to work for the boss until he drops in his traces.
frank’s is the economics of hell.
frank r
In case you feel that coberly is being too severe in his assessment of your ideas please be aware that that would only be because you are too stupid to realize that your ideas deserve such severe criticism. Is it really your idea that people should work until they are too infirm to work any longer and need to reside in a nursing home? Do you not understand that that is one of the dumbest thoughts ever. How about the idea that the old should make way for the young in the work place?
How about the idea that senior citizens who have worked a life time deserve some period of work free retirement. That is what social security is all about. Work and save in a government protected account that you can draw on when you’re ready to retire. Do you not think that 66 is old enough to give it up to the young? Or are you a tenured university professor who has too much time on his hands and an idle mind?