CORONA VIRUS AND SOCIAL SECURITY, ANOTHER GRAND BARGAIN?
by Dale Coberly; CORONA VIRUS AND SOCIAL SECURITY, ANOTHER GRAND BARGAIN?
Republicans are showing what they are made of. After claiming that the Corona Virus was not serious, or was well contained, or was Democrat fake news; they are now admitting it is serious and calling it a Chinese virus.
Fox News explained to a reporter they don’t expect “turning the ship around” to cause any problem with their viewers. They did not say that is because their viewers will believe anything they tell them to believe. Nor did they tell the reason for their turnaround of their seeing how to make money out of the pandemic. Even more so, they have seen how to use it to destroy Social Security.
These guys are akin to inviting your boss to dinner and noticing he couldn’t take his eyes off of your teenage daughter. Well, you think, at least he has kept his hands off her. Then your daughter comes over and says, ”Dad, Mr Peterson has been telling me about his house on the beach. It sounds so cool. And guess what, he said I could come and spend the weekend there if I want to. Can I? Can I? Please.”
So Trump has said he will spend some money fighting the epidemic, but he wants to get the money from Social Security. He wants a “payroll tax holiday.” The government won’t collect the payroll tax, and people can keep the money and spend it to help stimulate the economy.
This is a very bad idea. In the first place, why Social Security? If they are going to have to pay the money back to the Social Security Trust Fund, why not eliminate the middle man and just borrow the money the usual way and give it to the people directly? Well, here is what is so dangerous about their scheme . . . er, plan: If they borrow money from the Trust Fund, the law says they have to pay it back. But if they never put the money into the Trust Fund in the first place, there is no law that says they have to make up the shortfall that this will create. SS will run out of money sooner than it would have, and without a payroll tax increase it will not be able to pay benefits promised to the people who have already paid for their benefits. Neither will they be able to pay benefits going forward for people who are going to need them badly.
Nancy Altman discusses how Donald Trump Is Using the Coronavirus Crisis to Attack Social Security and the problems (idiocies) associated with his scheme. Essentially his plan would put about a hundred dollars a month into the hands of people who have high incomes, about twenty dollars a month into the hands of people with low incomes, and nothing into the hands of people who have lost their jobs. Since high income people can, and will, save more of the money they get than poor people will, this “tax holiday” will do little to ease the damage the epidemic is doing to the economy.
But all the Republicans can think of is “tax cuts for every reason,” and of course killing Social Security. With, I am afraid, the help of at least some Democrats.
Probably NO tax cut will help the economy. Taxes are paid by people who are making money. They won’t enable people who are not making money to spend more.
But hey, that’s not the point: the point is to get more money into the hands of people who already have too much, so that when the economy recovers, they will have the means to make even more money out of the recovery.
As for paying “back” the money they withheld from Social Security, Trump has never shown any willingness to follow the law, or the intent of the law, if he can get away with it. And the Democrats have not shown the ability, or much intention, of keeping him from getting away with it.
Oh, the “grand bargain”? The first time we heard that phrase it was Obama’s offer to Republicans: “we will cut Social Security if you let us raise taxes a little.” That was a DEMOCRAT offering to sell your grandmother for ten bucks. Fortunately, at the time the R’s decided to keep their ten bucks.
And remember, that Social Security has NOTHING to do with the deficit, yet this was the centerpiece of Obama’s “Deficit Commission” proposal to fix the budget, Worth pondering.
“Donald Trump Is Using the Coronavirus Crisis to Attack Social Security,” Our Future, Nancy Altman, March 12, 2020
I have an idea. Have the government suspend credit card interest, penalties and payments for 60-180 days. The Financial institutions can support the economy and the Fed can funnel needed cash to them. Issuing checks is dumb. Imagine the panicked crowds overwhelming financial institutions, causing a run on banks, riots and further infection spread.
Credit cards and equipment can be cleaned. The “cash” give away will heighten the spread via contained cash. China was burning cash!
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Think of it as atonement for 2008.
One more piece of evidence that the GOP is intent on repealing history as far back as possible, preferably to about 1929.
The revisionist history that spouts out of a devout Republican I work with is enough to make your head spin. He’s an intelligent person, which makes his mindless devotion to talking points mind boggling.
“He’s an intelligent person, which makes his mindless devotion to talking points mind boggling.”
In humans, the traits of high intelligence and good judgement are unlinked.
Isn’t “mindless devotion” and “intelligent person” ispo facto an oxymoron?
I wonder if Obama now realizes what a terrible mistake he almost made? Or does he still think that, but for Mitch McConnell and those recalcitrant Republicans, it would have been a “grand bargain”?
P.S. Obama’s reputation among all Democrats — which justifiably is overall very high among all but the very leftist of Sanders people — would be greatly enhanced if he publicly admitted he has come to realize proposing cuts to Social Security benefits as part of the Grand Bargain (slowing growth equals cuts) was a big mistake. He will give a huge and massively watched speech at the Convention — if there is one, or a virtual convention if there is not. Such an admission would draw in more Bernie supporters, for many of whom that infamous proposal sticks in their craws.
There is no shame in admitting mistakes.
I agree with you on the admission to a mistake. I held my breath when he offered us up as part of the proposal (wasn’t on it then). Eventually the Repubs would have reneged on the Grand Bargain and we would have not been able to recoup what we had given to achieve the agreement. Besides this was not even a part of deficit spending as it was pay back of what they spent to balance out tax breaks to corporations and the one-percenters. Good to read your comments.
just to make more clear what you said about “pay back of what they spent to balance out tax breaks to corporations:
in 1983 SS was indeed close to not taking in as much money as it needed to pay out as benefits, the reason for that was the inflation combined with unemployment that appeared following the oil shocks of the seventies.
at that time (Reagan presidency) some smart people saw the need to not only raise the payroll tax to pay for near term benefits, but to raise it high enough so the boomers would end up paying for their fair share of their higher per-year costs (as a cohort) when they retired . because the extra tax would collect more money than would be needed for another forty years, it was put into an enlarged Trust Fund. The money was than lent at interest to the government, enabling the government to spend more without raising taxes on things like defense. this was all normal saving, borrowing and lending. except the enemies of SS immediately started looking at the future date when the Trust Fund would be drawn down to pay for the boomers, and calling it “looming bankruptcy,” and convincing everyone including themselves that SS was going broke. And when the first boomers began to retire and money was drawn out of the Trust Fund to pay their benefits, the Big Liars and all the reporters and commentators who believe them started pointing at “negative cash flow” and screaming “SS is broke, flat bust.” And it went on like that, with Bush II proposing “private accounts” to make up for the “broke SS,” incidentally the same proposal he had made in 1970 something when he first ran for Congress in Texas… saying “SS is broke, flat bust.”
30 years later, it was still fine, but Obama, a Harvard man, decided where there’s smoke, there must be fire and decided he needed to save Social Security by cutting the benefits of the people who had paid for those benefits.
By the magic of stupidity, the “actuarial deficit” in SS finances (predicted almost to the penny by the 1983 commission) that would result as a result , not of the boomer retirement, but of increasing life expectancy, began to be screamed about as if it was a real deficit: somehow increasing the “debt” owed by the Federal Government… and the “taxpayers” (not all the same people as those paying the FICA “tax” which is really a savings and insurance account.
and of course the “cure’ for this deficit was to cut benefits…. and spend the money on defense?… no word on how the people who had paid for their benefits were going to live when they retired.
i suppose this is not especially clear either. but those who are being lied to by their leaders, of both parties, would do well to clear it up in their own minds. and then ‘splain it to their senators and congressmen in terms they can understand.
The only other comment that I might make, which is BTW of the dark humor form, would be that the bright side of the Republican Party’s scheme might work to radically lower future SS liabilities. SS death benefits are barely a pittance compared to the liability of all those boomers surviving the Covid-19 pandemic. Problem solved.
Coronavirus recession may change things quite a bit.
Answer may be the opposite of payroll tax holiday:
Deep recession will mean lots and lots of people not working.
Not working means not paying payroll tax.
Because SS is “pay as you go”, lack of payroll tax income will exhaust Trust Fund rapidly, and then lack of payroll tax income will leave SS unable to pay benefits to people who have already paid for their own benefits (via payroll tax in their turn), and leave future retirees unable to pay (via payroll tax) for their future needed benefits.
Best answer would be for the Federal Government to LEND money TO Social Security until the economy recovers enough for payroll tax to resume pay as you go for present benefits as well as pay back the money SS borrowed FROM the government. Note this is not welfare, not even “government funding,” it is government LENDING to a separate entity and then being paid back.
It would be better if the payroll tax … on people who still have jobs… was increased to about the level that was going to be needed anyway by about 2035 (about a 2% increase each for worker and employer). This would not be a huge burden, and the people paying the increased tax will get their money back, about threefold, when they collect their retirement benefits for their longer life expectancy.
The payroll tax money and the money borrowed from the government would pay benefits to people currently retired. They would spend the benefits on their current needs, providing a big part of the stimulus needed to help the economy recover.
Yeah, I roughly got all that from what you had already written leading to “excellent.” A lot will depend upon November 3, 2020. Perhaps (he said darkly) that the youth vote will dominate, because they are the only ones not afraid to leave the safety of their homes to go vote. The youth vote may not care about SS yet, but will likely be glad to have us old farts gone and out of their way.
I thought I had said more in my last comment than I had said in the prior one or the main post
If you got what I subsequently said from what I previously said, you are more prescient than most.
I have no doubt the youth will be glad to see us old for gone and out of their way. I used to be stupid myself, and I did not even have a whole industry of non partisan expert liars telling me that greedy geezers were stealing my future and imposing crushing burdens on the young.
In my state we have vote by mail. I assume it is still honest, but how would I know. There’s a lot to be said before November.
“old folks gone,” not “old for gone.”
Did you ever see the movie “Logan’s Run?” Peter Ustinov played the part of the old man. During the encounter between the Old Man, Logan, and Jessica; the Old Man often quotes poems out of Eliot’s “Old Possum’s Book of Practical Cats.” Once outside, the citizens see the old man, the first human they have met who is older than thirty, proving that they can, indeed, live their lives much longer. and still be human . . .
never saw it. will look for DVD.
as for the kids, i may not be able to outrun them, but I can offer them a few words of advice some guy thought worth writing down about three thousand years ago.
“Honor your father and your mother, so that your life may be long in the land.”
Focus on that “so your life may be long in the land” bit. That’s the key.
library has DVD. library closed until 12/31/2020.
i wonder if i should ask for my taxes back.
i ask that because people always act like you slammed the car door on their hand if you suggest raising the payroll tax,
after all, prices never go up on anything else. interest rates never go up or down, stock prices never go down. if the price of steak goes up you can eat chicken, or beans, or turnips. you never lose your job, or take a cut in pay (hidden by staying the same while prices go up.
yep, only Social Security is like mom. always there for you, and never asks for anything herself. ’cause you’ll yell if she does.
You and I are experiencing an event similar to what our parents experienced, a coming Depression and there is no Roosevelt there to help us through it. It is a pandemic complicating an economy. I am sory you could not get the movie and now I am afraid you may be disappointed in it when you do find it. It is science fiction and not so great a movie. People phased out of life at 30 and realized their reality was false.
Yes, Logan’s Run was one of the great dystopian pics of my own post-apocalyptic journey. I took the electric Kool-Aid acid test after returning from Viet Nam. I must have failed the test because I kept taking it over and over again.
Coberly and you are not the only old ones around here. I have not had a bunch of young people or women come up and want to touch me like they did Peter Ustinov. Hmmm, T.S. Eliots “The Practical Cats.” During my final year in the Marines, I was tasked with picking up others and taking them to the to disbursement, to the PX, to the Brig, and to their court martials. Mostly for drugs. Many of them I knew Ron. Finally, my license expired and I did not renew it. I never did the drug scene.
To each his own.
“…more prescient than most…”
[‘Prescient’ is not the semantic that I would use, too spooky, but more perceptive than most by a long ways. Give me the facts and the implications just follow along. I use ‘prescient’ to refer to any great predictive observation made by anyone including myself, but ‘perceptive’ to refer to people.
In 2004 I bought my home. It was a 1958 built fixer that my wife loved at first sight, but I disdained as a money pit. A month later I put an offer on it, because the market was not buyer friendly. Along the way I told my bank loan manager, my RE buyer’s agent, and my wife that the US economy was headed for a deep prolonged recession which I easily perceived from the available facts of the home mortgage market. I put down $85K for the home mortgage rather than hold cash because I knew that the Fed was going to keep the interest rate low on my 90% total LTV prime rate HELOC for years to come. I had wanted to put down $100K , but I let my loan manager talk me out of it. I had planned to use that HELOC over and over again paying down and borrowing back to the limit until my home had been adequately restored.
The only thing that I missed was that BoA would stop the draw on my HELOC early in 2009 because of their purported underwater suspicions. BoA really just wanted to renege on my HELOC’s prime interest rate. My job having been outsourced in 2006 and my wife gone thru another Anthem merger then I chose to save rather than refi into a higher interest rate just to borrow my way into the renovations. So, I still have money in the bank that I will hold onto for a while longer thanks to a far bigger recession and a lot more uncertainty about the future. Like will there be one for me and my wife at ages 71 and 62, respectively?]
“…To each his own.”
[Yes, we each go our own way, mostly in small steps from where our journey started. I started off in an undereducated household with a tendency to evangelical Christianity. Given the timing, then that naturally lead to social activism first with civil rights and then the antiwar movement. Back then I was also an anti-drug evangelical. I told my fellow activists that drugs were an establishment plot to make us vulnerable to police intervention. It made sense given the number of times that I had been stopped and searched considering I never did drugs back then. I did have beautiful long hair though. Then came 1968 – MLK and RFK assassinated – and Chicago. Next spring I was drafted and that fall off to Viet Nam. When I got home my wife decided to leave me for “Jody.” All my friends, my support network, had been smoking pot and dropping acid for years. The rest was inevitable. I straightened out a little when I raised three girls whose father had died of cancer from Agent Orange exposure. As my employer outsourced my work area to Northrop Grumman then I went totally clean. ]
our own way…
not so different perhaps.
i did manage to skip vietnam… mostly by accident, so i can’t claim credits either for being smart or for being brave. and i did skip most of the drugs, not entirely by accident… they didn’t do anything for me that i felt i couldn’t wait for until senility produced the same effects.
no need to go into all this, and this is not the place. the question is, where did, or will, all these small steps lead us. i can’t get too religious about it because it seems that in many cases for many people those steps led to literally nowhere, and i haven’t figured that one out yet.
but i would suggest don’t get too confident in “give me the facts and the implications just follow along.” that’s the way everybody “thinks,” and mostly, i suppose, they arrive in a place that works for them, but by no means is that “natural logic” reliable.
Logic in and of itself is reliable as long as the underlying requirements have been met. Logic requires sufficient actual facts to reach an accurate conclusion, which facts must be accepted and understood rather than biased or taken either too narrowly or too broadly. In the contexts that we are considering here for the application of logic, then those requirements can only be met by a detached and voracious autodidactic intellect that is accustomed to ceaselessly fact checking their “factual” sources and not only recognizing the inherent biases but also understanding those biases enough to gauge normalizing principles utilizing multiple sources. In this way we can extract useful information from the cacophony of lies to which we are subjected.
I was not at all surprised by either 9/11 (remember talking with a former NSA friend about that one coming back in 1970 while working in Phu Bai SVN) or Covid-19, the inevitability of globalizing the fallout of wet markets and other third world practices in animal husbandry. Even the 2008 financial crises did not happen in 2006 as I had expected. Inevitable things may occur late, but they always occur eventually. Just wait for the inevitable effects of anthropogenic climate change. Saw that one coming while I was just in grade school it was so obvious.
I more or less agree with you about the steps to keep your “logic” a little more honest than most. Still, I have seen a lot of smart people assume their logic is Truth and proceed to cause great suffering because they ignore “irrelevant” facts and rely on false assumptions… facts and assumptions are too many and too subtle for anyone to account for all of them.
So bless your heart, and good luck to you.
Sure, thanks. Individual results may vary.