I have a new column:
It's a defense of social insurance against Republican attempts to dismantle it.
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Baby boomers is probably the luckiest generation and still be able to enjoy Social security benefits. Later generation might not be so lucky.
Dec 05, 2018 | www.kiplinger.com
Social Security Social Security Tips to Maximize Your Benefits
Answers to real-life questions about Social Security claiming strategies.
By the Editors of Kiplinger's Retirement ReportQ If I take Social Security at age 62 and then pay back the benefits within 12 months to erase the penalty for claiming early, is it true I get to keep the interest I earned while I had the money? SEE ALSO: 10 Things You Must Know About Social Security
March 9, 2017
A Yes, but don't get too excited. Prior to 2010, when Social Security imposed the 12-month limit for withdrawing an application and repaying benefits, it was often advised that people who didn't need the money use this "do over" procedure to get what amounted to an interest-free loan from the government. If you claimed benefits at 62 and repaid them at 66, you might be playing with $100,000 or more of "house money." The 12-month window restricts that opportunity. Also, note that if you receive benefits in one calendar year and pay them back in the next, you'll likely have to pay tax on the benefits in year one. You can recoup the tax, but it's complicated.
Q I understand how delayed-retirement credits boost Social Security benefits by 8% for each year that one delays claiming between age 66 and age 70. But do cost-of-living adjustments during the years you wait amplify the advantage to more than 8% a year?
A Yes. COLAs are built into benefits starting at age 62, the earliest age at which you can claim benefits, even if you don't claim at that time.
Here's an example worked up for us by Baylor University professor William Reichenstein, head of research for consulting firm Social Security Solutions. Let's say your benefit at age 66 is estimated at $2,000 a month, but you decide to wait until age 70 to claim. You'll get eight years of compounded COLAs based on the full retirement age benefit of $2,000 -- bringing the monthly benefit up to $2,533, assuming an average annual COLA of 3%. You'd also get four years of 8% delayed-retirement credits calculated on the $2,533 benefit. That extra 32% brings the total monthly benefit at age 70 to $3,343. (Yes, a 3% COLA may seem high considering 2016's 0% and 2017's 0.3%. But the annual average COLA since automatic adjustments started in 1975 is 3.8%.)
1. Re: the professor's hypothetical example... don't kid yourself. He shows a hypothetical 20% increase ($2000 going up to $2500.) Just observing the past 3 years, COLA's have been 0% twice,( so says social security) and & .3% this past year.. And a few years before that, there were a few more 0% years, along with minimal COLA increases. Myself, having been forced to retire in 2009, I've discovered what social security says the COLA is, (on which they base your yearly increase in benefits) and what the CPI is in REAL LIFE are ridiculously far apart.)
2. The payback question states, "it's complicated." Here's the quick and short answer: TO START, you must be able to ITEMIZE your tax return ( and not take the standard deduction) in the year you enact your do over, to even have a CHANCE to recoup some of the taxes you paid on your social security benefits. The dollar amount you pay back in the "do over" to SS that exceed the benefits you received from SS during the current year, is the amount on which you can include as an itemized deduction on your tax return for the current year. And remember, itemized deductions will only reduce your taxes by 15 cents or 25 cents on the dollar (depending on your marginal tax bracket.) There is no such thing as a tax credit, nor an amended tax return, when it comes to trying to recoup income tax you paid on social security benefits. My credentials? I'm a CPA & retired college accounting professor.
Nov 08, 2018 | www.moonofalabama.org
donkeytale , Nov 7, 2018 9:09:40 AM | link
One little discussed aspect of Social Security is the modest wealth redistribution resulting from disability benefits. The upward trend of disability in previous decades mirrors the decline in working class and lower middle class jobs and income.
SSDI has been a target of the cutters for years and puts Trump in the middle between his conservatives and his more lumpenproletariat base members, an increasing number of whom live off SSDI benefits .
The number of SSDI recipients has tripled since the 1980s.
Democrats should continue to exploit the divergence between GOP policy and the grim reality of a significant share of the Trumpist base.
Nov 05, 2018 | dissidentvoice.org
How Ronald Reagan and Alan Greenspan Pulled off the Greatest Fraud Ever Perpetrated against the American People
by Allen W. Smith / April 14th, 2010David Leonhardt's article , "Yes, 47% of Households Owe No Taxes. Look Closer," in Tuesday's New York Times was excellent, but it just scratches the tip of the iceberg of how the rich have gained at the expense of the working class during the past three decades. When Ronald Reagan became President in 1981, he abandoned the traditional economic policies, under which the United States had operated for the previous 40 years, and launched the nation in a dangerous new direction. As Newsweek magazine put it in its March 2, 1981 issue, "Reagan thus gambled the future -- his own, his party's, and in some measure the nation's -- on a perilous and largely untested new course called supply-side economics."
Essentially, Reagan switched the federal government from what he critically called, a "tax and spend" policy, to a "borrow and spend" policy, where the government continued its heavy spending, but used borrowed money instead of tax revenue to pay the bills. The results were catastrophic. Although it had taken the United States more than 200 years to accumulate the first $1 trillion of national debt, it took only five years under Reagan to add the second one trillion dollars to the debt. By the end of the 12 years of the Reagan-Bush administrations, the national debt had quadrupled to $4 trillion!
Ronald Reagan and Alan Greenspan pulled off one of the greatest frauds ever perpetrated against the American people in the history of this great nation, and the underlying scam is still alive and well, more than a quarter century later. It represents the very foundation upon which the economic malpractice that led the nation to the great economic collapse of 2008 was built. Ronald Reagan was a cunning politician, but he didn't know much about economics. Alan Greenspan was an economist, who had no reluctance to work with a politician on a plan that would further the cause of the right-wing goals that both he and President Reagan shared.
Both Reagan and Greenspan saw big government as an evil, and they saw big business as a virtue. They both had despised the progressive policies of Roosevelt, Kennedy and Johnson, and they wanted to turn back the pages of time. They came up with the perfect strategy for the redistribution of income and wealth from the working class to the rich. Since we don't know the nature of the private conversations that took place between Reagan and Greenspan, as well as between their aides, we cannot be sure whether the events that would follow over the next three decades were specifically planned by Reagan and Greenspan, or whether they were just the natural result of the actions the two men played such a big role in. Either way, both Reagan and Greenspan are revered by most conservatives and hated by most liberals.
If Reagan had campaigned for the presidency by promising big tax cuts for the rich and pledging to make up for the lost revenue by imposing substantial tax increases on the working class, he would probably not have been elected. But that is exactly what Reagan did, with the help of Alan Greenspan. Consider the following sequence of events:
1) President Reagan appointed Greenspan as chairman of the 1982 National Commission on Social Security Reform (aka The Greenspan Commission)
2) The Greenspan Commission recommended a major payroll tax hike to generate Social Security surpluses for the next 30 years, in order to build up a large reserve in the trust fund that could be drawn down during the years after Social Security began running deficits.
3) The 1983 Social Security amendments enacted hefty increases in the payroll tax in order to generate large future surpluses.
4) As soon as the first surpluses began to role in, in 1985, the money was put into the general revenue fund and spent on other government programs. None of the surplus was saved or invested in anything. The surplus Social Security revenue, that was paid by working Americans, was used to replace the lost revenue from Reagan's big income tax cuts that went primarily to the rich.
5) In 1987, President Reagan nominated Greenspan as the successor to Paul Volker as chairman of the Federal Reserve Board. Greenspan continued as Fed Chairman until January 31, 2006. (One can only speculate on whether the coveted Fed Chairmanship represented, at least in part, a payback for Greenspan's role in initiating the Social Security surplus revenue.)
6) In 1990, Senator Daniel Patrick Moynihan of New York, a member of the Greenspan Commission, and one of the strongest advocates the the 1983 legislation, became outraged when he learned that first Reagan, and then President George H.W. Bush used the surplus Social Security revenue to pay for other government programs instead of saving and investing it for the baby boomers. Moynihan locked horns with President Bush and proposed repealing the 1983 payroll tax hike. Moynihan's view was that if the government could not keep its hands out of the Social Security cookie jar, the cookie jar should be emptied, so there would be no surplus Social Security revenue for the government to loot. President Bush would have no part of repealing the payroll tax hike. The "read-my-lips-no-new-taxes" president was not about to give up his huge slush fund.
The practice of using every dollar of the surplus Social Security revenue for general government spending continues to this day. The 1983 payroll tax hike has generated approximately $2.5 trillion in surplus Social Security revenue which is supposed to be in the trust fund for use in paying for the retirement benefits of the baby boomers. But the trust fund is empty! It contains no real assets. As a result, the government will soon be unable to pay full benefits without a tax increase. Money can be spent or it can be saved. But you can't do both. Absolutely none of the $2.5 trillion was saved or invested in anything. I have been laboring for more than a decade to expose the great Social Security scam. For more information, please visit my website or contact me.
Dr. Allen W. Smith is a Professor of Economics, Emeritus, at Eastern Illinois University. He is the author of seven books and has been researching and writing about Social Security financing for the past ten years. His latest book is Raiding the Trust Fund: Using Social Security Money to Fund Tax Cuts for the Rich . Read other articles by Allen , or visit Allen's website .
This article was posted on Wednesday, April 14th, 2010 at 9:00am and is filed under Economy/Economics , Social Security , Tax . 5 comments on this article so far ...
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bozh said on April 14th, 2010 at 10:07am #
Still, this is only symptom or really quite legal act by US. So, appears to me of the system. So, what's wrong-right with the system of which governing the country by laws is integral part? Apparently nothing; even to allen smyth.
So, why bother complaining ab an a legal act? Beats me! Why not change the system that allows this? tnx
Mike 2 said on April 15th, 2010 at 4:40am #
I think politics is, has and always will be the problem and it seems to have creeped in to Dr. Smiths article.
The American people through decades of political rhetoric have come to believe all the lies that have been told by politicians and duly reinforced by a compliant media.
Reagan proposed cutting benefits to fix social security. On 5/12/81 HHS Secretary Richard Schweiker sent Congress the Administrations plan to rely on benefit cuts. You know what happened next – the Democrats pounced with the elderly lobbies not far behind. Reagan gave up and not unlike todays President, formed the commission mostly for political cover and to take the heat off. And remember Congress passes the law, the President does not get a vote.
The reserve fund build up for the boomers is also a myth. That is if we can believe the Congressionsl Research Service:
"In fact, it has become conventional wisdom that Congress deliberately intended to built up large balances in the trust funds, not just for the near term, but to help finance the benefits of the post World War II baby boomers and later retirees." "To the contrary, a review of the record of congressional proceedings would suggest that the goal was
not to create surpluses, but to assure that the system would not be threatened by insolvency again in the event adverse conditions arose." ( CRS Report for Congress – Social Security Financing Reform: Lessons From the 1983 Amendments – 97-741 EPW )
Or if we choose to believe Robert J Meyers:
Q: As we look at it today, some people rationalize the financing basis by saying that it's a way of partially having the baby boomers pay for their own retirement in advance. You're telling me now this was not the rationale. Nobody made that argument or adopted that rationale?
Myers: That's correct. The statement you made is widely quoted, it is widely used, but it just isn't true. It didn't happen that way, it was mostly happenstance that the Commission adopted this approach to financing Social Security.
( http://ssaonline.us/history/myersorl.html )
Senator Daniel Patrick Moynihan may have become outraged but he was on the commission. He never realized that all cash surpluses have to be invested in debt – since Social Security began? I find that hard to believe, but he was right to recommend cutting the FICA tax, which of course went nowhere in CONGRESS.
If this new commission comes up with a plan to "extend the life" of the trust fund, as happened with the new health care bill, it's just kicking the can down the road again. Let's let them use the "trust fund" and run it down to zero. How? cut spending elsewhere.
perris said on April 15th, 2010 at 10:56am #
this is a great article alan, you missed one of the most important things greenspan did to destroy the economy
he went to war on what he termed "wage inflation"
every time you see the prime go up that means there is upward pressure on wages and he is trying to keep businesses from having money to offer higher wage
when you see wages go down it's because wage pressure is either stagnant or negative
of course there are other factors that make the prime go up or down but wage pressure is the big reason you see it happening
when greenspan said "the economy is heating up" what he meant is "people are asking for and getting a raise"
important stuff and one of the main reasons the middle classes wages have been stagnant
siamdave said on April 16th, 2010 at 12:00am #
– the US was not alone – this scam was taking place in most if not all western faux-democracies. For the Canadian perspective – which has cost Cdn taxpayers some two trillion dollars over the last 30+ years in "debt service" whilst government after government claims 'no money!!' and slashes the social programs Cdns worked generations to establish – What Happened? http://www.rudemacedon.ca/what-happened.html . And thus it will continue until people catch on to this scam, this fraud, and put a lot of people in jail. ABout the same time I find my way out from behind the looking glass, I expect. We're all in cloud cuckooland now. Dorothy. The wizard is dead and the black witch rules.
AaronG said on April 16th, 2010 at 4:39am #
"Both Reagan and Greenspan saw big government as an evil, and they saw big business as a virtue. They both had despised the progressive policies of Roosevelt, Kennedy and Johnson"
Republicans BAD ..Democrats GOOD.
"When Ronald Reagan became President in 1981, he abandoned the traditional economic policies, under which the United States had operated for the previous 40 years"
The 'traditional' economic policy of 'capitalism' (are economists allowed to utter that word in public, or is 'traditional' a better oxymoron?) was rampant before 1981 and was going about its destructive business. This article paints a picture of the pre-1981 world being the 'glory days'.
Nov 05, 2018 | angrybearblog.comPolitics US/Global Economics From an interview on NPR's Here and Now comes:
"The official actuaries of the Social Security system say in order to get our Social Security and retirement funds in balance, they'd have to cut benefits by 25 percent indefinitely into the future," he says. "Do I think it's going to happen? Well I don't know, but this is one of the reasons why inflation is the major problem out there. So long as you don't do it, you're going to cause the debt overall -- the total government debt -- to rise indefinitely, and that is an unstable situation."
He adds: "In the book discussing what the long-term outlook is all about, we say that the issue of the aging of the population and its consequences on entitlements is having a significant negative deterioration over the long run. The reason for that is what the data unequivocally show is that entitlements -- which are mandated by law -- are gradually and inexorably driving our gross domestic savings, and the economy, dollar for dollar. And so long as that happens, we have to borrow from abroad, which is our current account deficit."
He also said:
"When you deal with fear, it is very difficult to classify," he tells Here & Now 's Jeremy Hobson. "But you can look at the consequences of it, and the consequence is basically a suppressed level of innovation and therefore of capital investment and a disinclination to take risks."
I agree with this, but not just as it relates to " a suppressed level of innovation " but instead as it relates to the 2005 World Bank report on what produces wealth in a developed economy like ours. It comes down to trust. Trust in your judicial system and trust in your education system. I discuss this in the following 3 posts: 2007, 2009, 2011
Human capital is where it's at!Attention Republicans/Blue Dog Democrates: Tax cuts as stimulus work against your goal
It's not the tax and spending cuts, it's the destroyed trust that has doomed our eco
This election at it's core is about trust. Destroy that, and we have no democracy, we have no economy. It's that simple. That McConnell et al has decided he will not abide by the rules agreed to in conducting the business of the Senate means we have no currently functioning democracy. That is how fragile democracy in the US is. Our democracy comes down to two people, the leaders of each party in the Senate agreeing to the rules. When one decides not to, there is nothing that can be done other than vote.
You can hear the full interview here:
Sandi , November 5, 2018 10:48 am
Trust – I could't agree more. Thanks for shining this light.
Paul Krugman has been pounding the drum for years about the GOP's repeated con game of creating deficits when they are in power, then running through the room with their hair on fire on how deficits are going to be our downfall and so we MUST, MUST, MUST cut entitlements. And yet we never seem to catch on.
It seems to me we should make all income, not just wages, subject to FICA. Of course we could never touch what gets shipped off-shore anyway, so we'd just have to let that slide, I suppose ..still, as long only the 'wage slaves' are taxed, things will only get worse.
You still have trust? I gave that up after the Iraq War, the bailouts the Obama Betrayal and Citizens United. Now I just assume the worst, no matter who is in power, and rarely am I disappointed.
Oct 18, 2018 | angrybearblog.com
Cut Social Security, Medicare, and Medicaid McConnell Says
run75441 | October 17, 2018 10:36 amHot Topics Politics Taxes/regulation After instituting a $1.5 trillion tax cut and after signing off on a $675 billion Defense budget, Senate Majority Leader Mitch McConnell said yesterday, Tuesday, October 16, 2016;
"The only way to lower the record-high federal deficit would be to cut entitlement programs like Medicare, Medicaid and Social Security1."
More McConnell: "It's disappointing but it's not a Republican problem." The deficit, grew 17 percent to $779 billion in fiscal year 2018. "It is a bipartisan problem and a problem of the unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future."
The deficit has increased 77 percent since McConnell became majority leader in 2015.
A new Treasury Department analysis on Monday revealed that corporate tax cuts had a significant impact on the deficit this year. Federal revenue rose by 0.04 percent in 2018 which is a nearly 100 percent decrease from the previous year's 1.5 percent. In fiscal year 2018, tax receipts on corporate income fell to $205 billion from $297 billion in 2017.
Still, McConnell insisted the change had nothing to do with a lack of revenue due to the tax break or increased spending resulting from new programs since 2015. Instead he insists the deficit increase is due to entitlement and welfare programs. Now he does the old switcheroo from the yearly deficit to the national debt.
McConnell said, the debt is very "disturbing and is driven by the three big entitlement programs that are very popular, Medicare, Social Security and Medicaid. There has been a bipartisan reluctance to tackle entitlement changes because of the popularity of those programs. Hopefully, at some point here, we'll get serious about this."
What McConnell does not tell you is 8 years out those tax decreases will go away for much of the population and many will see tax increases. McConnell and Republicans needed a way to keep the 60% of the total tax break going to the 1% of the Household Taxpayers making greater than $500,000 annually since this tax break was passed under Reconciliation rules (Democrats could not block it without 60 votes). Robert Reich has called this a Trojan Horse tax break.
Recently, Mitch McConnell has been considering his legacy. I think it would be adequate to paraphrase it as: "I saved the 2018 tax break for the 1 percenters. To hell with the rest of you."
1. PGL pointed out the variance is barely audible on scale of the deficits. " I have skipped the chest thumbing about the economy from Mnuchin and Mulvaney to focus on the stupidity ala CNBC . Real government spending barely kept pace with inflation, which is why outlays relative to GDP fell from 20.7% to 20.3%. Real tax revenues clearly fell in absolute terms and as a percent of GDP went from 17.2% to 16.5%. I guess this is what one gets when one lets Lawrence Kudlow become a chief economic adviser. But this kind of dishonesty is well known ever since Kudlow and his ilk tried to pull this intellectual garbage in the 1980's. Does anyone at CNBC not realize the Trump White House is playing the same games with numbers? "
I kept my post the same because it is just another ruse by McConnell to get something done for no reason what-so-ever. It is a lie by McConnell.
EMichael , October 17, 2018 11:00 amlittle john , October 17, 2018 12:02 pm
And it will cost them exactly zero votes among the working class.
I wonder why that would be?pgl , October 17, 2018 12:26 pm
Maybe he'll get serious and endorse the NW Plan.run75441 , October 17, 2018 1:20 pm
A CNBC Federal spending SURGED. As in a 3.2% increase in NOMINAL spending, which means real spending barely went up. As I noted under that post of mine on the CNBC/Treasury dishonesty, Paul Ryan tried this same dishonest trick but the CBS guy nailed him. Well he tried to but Ryan cut him off and repeated the same line.
Now how many people are stupid enough to not realize that Paul Ryan lies 24/7?run75441 , October 17, 2018 9:19 pm
I read your post earlier and recognized your point of spending barely rising. It is a ruse of cut spending inside of a much larger ruse being precipitated by McConnell. If he can get them to cut spending now, then maybe, maybe, they do not increase taxes down the road as planned. I should have looked further and I did not.
I am thinking of adding your point in the text of my post. It is a great point and also reinforces my point of the lies the Republicans tell the public. Thanks!Joel , October 17, 2018 12:28 pm
Noted . . . Just added your comment. Thanks again.pgl , October 17, 2018 3:04 pm
"Maybe he'll get serious and endorse the NW Plan."
Co-terminus with the first verified report of porcine aviation.Amateur Socialist , October 17, 2018 7:17 pm
Trump blames the rise in the deficit on hurricanes and forest fires:
Someone fact check this please. But let's humor the Idiot in Chief for a comment by assuming that the rise in the deficit is due to some temporary surge in FEMA spending. That undermines the call for permanent reductions in Social Security and Medicare.
Point made – these clowns cannot keep their lies straight!
McConnell: "It's disappointing but it's not a Republican problem."
Not as long as people keep electing these clowns. I guess we'll find out in 3 more weeks.
Sep 15, 2018 | www.thebalance.com
By Dana Anspach Updated August 17, 2018 When a spouse dies, their Social Security benefits may become available to their current or former marital partner, depending on certain circumstances. A Social Security spouse benefit is called a "spousal benefit" and is available to:
Before applying for spousal benefits, you should understand how your spouse's benefit may be affected if you take your Social Security benefits early, and what happens upon the death of a spouse. Eligibility for a Spousal Benefit Current spouses and ex-spouses (if you were married for over 10 years and did not remarry prior to age 60) both have eligibility for the spousal benefit. You must be age 62 to file for or receive a spousal benefit. You are not eligible to receive a spousal benefit until your spouse files for their own benefit first. Different rules apply to ex-spouses . You can receive a spousal benefit based on an ex-spouse's record even if your ex-partner has not yet filed for his or her own benefits, but your ex must be age 62 or older. Note: Taking a spousal benefit does not reduce or change the amount your current spouse, ex-spouse, or ex-spouse's current spouse may receive. How Much You Get As a spouse, you can claim a Social Security benefit based on your own earnings record, or you can collect a spousal benefit that will provide you 50 percent of the amount of your spouse's Social Security benefit as calculated at their full retirement age (FRA). Check the Social Security website to determine your FRA, as it depends on your year of birth. If you file before you reach your own FRA, your spousal benefit will be reduced because you are filing early. You are automatically entitled to receive either a benefit based on your own earnings or a spousal benefit based on your spouse's or ex-spouse's earnings. Social Security calculates and pays the higher amount. If you were born on or before January 1, 1954, after you reach FRA, you can choose to receive only the spousal benefit by filing a restricted application. By doing this you delay receiving your own retirement benefits based on your earnings record, until a later date. For example, at age 70 you could switch from receiving a spousal benefit to receiving your own potentially higher benefit amount. Due to recent Social Security laws that went into effect Nov. 2, 2015, if you were born on or after Jan. 2, 1954, you will not be able to restrict your application and only receive spousal benefits. For anyone born on or after Jan. 2, 1954, when you file you will automatically be deemed to be filing for all benefits for which you are eligible.
- Current spouses
- Widowed spouses
May 18, 2016 | www.elderlawanswers.com
If you could receive more from Social Security based on your own earnings record than through the spousal benefit, the Social Security Administration will automatically provide you with the larger benefit.
If you have reached your full retirement age (and turned 62 before January 2, 2016), you may also elect to receive spousal benefits and delay taking your benefits, allowing your own delayed retirement credits to accrue, and switch to your own benefit at a later date.
However, you cannot elect to receive spousal benefits below your retirement age and later switch to your own benefits.
Individuals who turn 62 on or after January 2, 2016, will not be able to choose to take spousal benefits at their full retirement age.
Jan 29, 2017 | www.fool.com
However, spousal benefits should still be taken into consideration when planning your own retirement strategy.
For example, let's say you and your spouse are both 66 and are still working, so you are considering letting your Social Security benefit grow for another few years. However, if your spouse anticipates collecting a spousal benefit on your work record, you might be better off filing at your full retirement age instead of waiting.
As I mentioned earlier, there are no delayed retirement credits for spousal benefits. And one of the requirements for collecting a spousal benefit is that the primary worker must be collecting his or her own retirement benefit. Therefore, it rarely makes financial sense to delay Social Security beyond your spouse's retirement age, if they expect a spousal benefit.
This is just one example of how a spousal benefit can affect your overall retirement strategy. The bottom line is that Social Security spousal benefits will affect the retirement income of millions of American workers, so it's important to know what they are and how they work.
The $16,728 Social Security bonus most retirees completely overlook
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Feb 05, 2013 | www.marketwatch.com
Many couples can significantly enhance their lifetime Social Security earnings by having one of the pair claim spousal benefits at 66 years and delay personal benefits until 70 years of age.
This claiming strategy, which we call free spousal benefits , has been discussed here and elsewhere as one of the best ways to avoid the otherwise inevitable trade-off between getting money sooner (early claiming) and a larger benefit later (delayed claiming).
Having drunk the free-spousal-benefit pool-aid, an inquisitive client asked if the claiming strategy would work in the reverse. Instead of claiming spousal benefits first and then switching to personal benefits later, Karen wanted to know if she should claim her modest Social Security retirement benefits early, say at 62 years of age, and then switch to claiming her husband's larger spousal benefits later on. On its face, her idea seems to make sense.
However, let's look at how this actually works for Karen and her husband Burt. They are both 62 and their full retirement age is 66. Karen's full retirement benefit is $400 a month and Burt's is $2,000. Karen's maximum spousal benefit is $1,000 at 66 (that is half of Burt's age 66 retirement benefits). Burt plans to file for retirement benefits at 66, at which point Karen will be eligible to claim spousal benefits. Karen knows that she can claim retirement benefits early at age 62 and get $300/month (75% of the $400 she could get at her full retirement age). She also believes that at 66 she can switch to her spousal benefits and get $1,000.
On this last point Karen is wrong. When getting supplemental spousal benefits at 66, her full retirement age, her benefit will be $900, not $1,000.
The reasons for this are very convoluted. (A more complete description of the issues can be found at socialsecuritychoices.com/blog/?p=391 .) While Karen was hopeful that the reduction in benefits from early claiming will be temporary, confined to benefits during her 62nd to 66th years of age, unfortunately this is not the case.
While claiming at 62 will provide Karen with income sooner, there is a cost. First, claiming at 62 means that she will receive only 75% of her retirement benefit. Secondly, the total benefit she will receive after getting the spousal supplement will be smaller than it would have been if she had waited until full retirement age to claim her retirement benefits. If she opts for this strategy, she will receive this smaller benefit for the rest of her life.
Approach the strategy of taking your own retirement benefits now and a supplemental spousal benefit later with caution. The rules here are especially complicated and Karen's example may not apply in your case.
It would be wise to consult an expert before pursuing such a strategy. The long-term benefit of claiming early might be lower than you expect.
Aug 23, 2018 | www.unz.com
You may remember my dictum: If you are fatter than you want to be, eat less.
That post led to an outpouring of deeply lived personal experience, of almost French complexity, extolling the virtues of eating particular food types in particular combinations at particular times, and not paying too much attention to calories. Fine. If you wish to be befuddled, that is your perfect right.
So, with some trepidation, here is a summary of the current state of knowledge regarding intelligence and health. Indeed, it is my summary of a summary paper. A pointless redundancy, you may say, but I know you are busy, and I would not like to interrupt your lunch break.
Intelligent people lead healthier lives, and that is not just because they intelligently make healthy decisions, but also, it would appear, because they are inherently healthier. Spooky.
What genome-wide association studies reveal about the association between intelligence and physical health, illness, and mortality
Ian JDeary 1 Sarah EHarris 12 W DavidHill 1
1 Centre for Cognitive Ageing and Cognitive Epidemiology, Department of Psychology, University of Edinburgh, 7 George Square, Edinburgh EH8 9JZ, United Kingdom
2Medical Genetics Section, Centre for Genomic & Experimental Medicine, MRC Institute of Genetics & Molecular Medicine, University of Edinburgh, Western General Hospital, Edinburgh EH4 2XU, United Kingdom
The associations between higher intelligence test scores from early life and later good health, fewer illnesses, and longer life are recent discoveries. Researchers are mapping the extent of these associations and trying to understanding them. Part of the intelligence-health association has genetic origins. Recent advances in molecular genetic technology and statistical analyses have revealed that: intelligence and many health outcomes are highly polygenic; and that modest but widespread genetic correlations exist between intelligence and health, illness and mortality. Causal accounts of intelligence-health associations are still poorly understood. The contribution of education and socio-economic status -- both of which are partly genetic in origin -- to the intelligence-health associations are being explored.
Until recently, an article on DNA-variant commonalities between intelligence and health would have been science fiction. Thirty years ago, we did not know that intelligence test scores were a predictor of mortality. Fifteen years ago, there were no genome-wide association studies. It was less than five years ago that the first molecular genetic correlations were performed between intelligence and health outcomes. These former blanks have been filled in; however, the fast progress and accumulation of findings in the field of genetic cognitive epidemiology have raised more questions. Individual differences in intelligence, as tested by psychometric tests, are quite stable from later childhood through adulthood to older age. The diverse cognitive test scores that are used to test mental capabilities form a multi-level hierarchy; about 40% or more of the overall variance is captured by a general cognitive factor with which all tests are correlated, and smaller amounts of variance are found in more specific cognitive domains (reasoning, memory, speed, verbal, and so forth). Twin, family and adoption studies indicated that there was moderate to high heritability of general cognitive ability in adulthood (from about 50–70%), with a lower heritability in childhood. It has long been known that intelligence is a predictor of educational attainments and occupational position and success
In addition to mortality, intelligence test scores are associated with lower risk of many morbidities, such as cardiovascular disease, cerebrovascular disease, hypertension, cancers such as lung cancer, stroke, and many others, as obtained by self-report and objective assessment. Higher intelligence in youth is associated at age 24 with fewer hospital admissions, lower general medical practitioner costs, lower hospital costs, and less use of medical services, and intelligence appeared to account for the associations between education and such health outcomes. Higher intelligence is related to a higher likelihood of engaging in healthier behaviours, such as not smoking, quitting smoking, not binge drinking, having a more normal body mass index and avoiding obesity, taking more exercise, and eating a healthier diet.
All this work launched a new field: cognitive epidemiology. When studying health, factor in intelligence. If you read any research about a health problem, like for example obesity, always ask yourself the question: how much of this problem is associated with intelligence? Do they have early childhood data on ability and health? Without that, there is probable confounding.
The associations which are found between health and intelligence could be due to a direct genetic pathway shared by intelligence and health, and/or by better, more educated and wealthy intelligence choices.
Genome-wide association studies transformed the field. Box 1 summarises all the different statistical methods. This is a very good guide to the field. The main one is GWAS, which finds regions of the genome which are correlated with the trait in question and statistically significant at a P-value of <5 × 10−8 to control for the multiple comparison being made.
Here are all the correlations between the genetic code and health.
Table 1 here
Another part of understanding the genetic contribution to intelligence health correlations concerns other predictors of health inequalities, and intelligence's correlations with them. Intelligence is related to education and socio-economic status (SES), and those were known to be related to health inequalities before intelligence was known to have health associations. Although education and SES are principally thought of as social-environmental variables, both have been found to be partly heritable, by oth twin based and molecular genetic studies, both have high genetic correlations with intelligence, Mendelian Randomisation results show bidirectional genetic effects between intelligence and education, and both have genetic correlations with health outcomes
What does all this mean? It may mean that the underlying causes of health, happiness, morbidity and mortality are unequally distributed, and favour some people more than others. Evolution does not have to conform to our imaginings or our notions of fairness. If genetics is a significant contributor within a genetic group, it is plausible that it contributes to between group variance. Perhaps the Japanese live longer because they are Japanese. This remains to be proved, but is worth testing. If we ever achieve the noble ambition of creating healthy environments all over the inhabited world we may yet have a residuum of health differences due to purely genetic causes.
Meanwhile, you may be wondering what is the intelligent thing to do about your health. Don't smoke, don't get fat, and don't read too many health warnings.
Jun 08, 2018 | angrybearblog.comDean Baker at Beat-the-Press has pointed out (sorry, not able to link to it) that Associated Press put out a tweet that presents an essentially hysterical story about future prospects for Social Security following the recent release of the Trustees. This report says that as of 2026 Medicare and as of 2034 Social Security will face a "shortfall." However, the AP tweeted that what they face is "insolvency." Needless to say, "insolvency" is much more serious than "shortfall" and simply feeds the overblown hysteria that so many think about these programs, feeding political pressures to mess with them.
The new report provides the latest update on what would happen if the forecast happens and nothing is done. Given that the projection is that Social Security benefits are set to increase by about 20% by 2034, if somehow nothing were done and benefits were set to be reduced so that they could be paid by expected tax revenues, the benefit would be cut back by about that amount to about what they are now in real terms. In short, this is not the hysterical crisis AP suggested or that so many think is out there. We have seen this nonsense before.
Of course, Dean accurately points out that by law the benefits must be paid. This may also be a time to remind everybody that the US is really in much better shape demographically in terms of life expectancies, retirement ages, and expected population growth rates than most other high income nations, with such cases as Japan and Germany in much worse shape than the US. However, all these nations are making their public old age pension payments. In the case of Germany the payments are higher than in the US, but the payments are being made, and its economy is humming along very well. There simply is not basis for any of this hysteria in the US regarding the future of Social Security.
Mar 07, 2018 | www.unz.com
peterAUS , March 5, 2018 at 7:07 pm GMT@Thorfinnsson
... The maximum monthly social security benefit is $3,538. caught my eye, though.
Thorfinnsson , March 5, 2018 at 7:59 pm GMT@peterAUSiffen , March 5, 2018 at 8:46 pm GMT
That number, though, if correct, is a good one.
Social Security benefits are based on your lifetime contributions and what age you choose to begin taking them. So a higher earner will get more benefits (up to the cap, around $106k if memory serves) than a modest earner–simply because he paid more into the system.
You can elect to take benefits as early as 62, or as later as 70.5.
The system was designed with psychological, political intent. The idea was that the program would be impossible for conservatives to eliminate because all wage earners would feel entitled to pensions that they themselves had paid for (though strictly speaking it is a pure tax and your taxes are paid to current retirees).
In act early economists recommend the system be funded out of general revenues and said there was no need for a payroll tax. FDR said he wanted people to take ownership in the system so no one could ever destroy the system.
It is remarkably effective. It's remarkable effective and neither Ronald Reagan nor George W Bush lasted more than a few weeks when they tried to roll back the system.
The only wins conservatives have scored against it are taxing some of the benefits (began in the 80s) and making some changes to cost-of-living inflation adjustments in the 90s. It's called the third rail of politics here and every old person is outraged by any suggestion that benefits should be reduced. There is however a lot of propaganda about the alleged future unaffordability of the system, and it now strikes me that there is an elite consensus in favor of modifying the system to reduce benefits.
It's "known" that the US "social safety net" is the worst in West.
I mean, with that amount of available money provided by the State , how do we see all that visible homelessness and poverty in US? I know that drugs and alcohol, with general stupidity, can do that.
I guess my question is:
A family of four, breadwinner losing his/her job (offshoring, outsourcing, downsizing) getting on that "net", renting would they lose their accommodation and effectively have problem with food, shelter and medical help, while on that net while finding another job? And, how long can they be on that net?
I know I can read about that a lot, but condensed info from a person on the ground there would be much more helpful.
As a general rule of thumb the safety net is very weak for those in the middle class, whereas in many other Western countries there are universal social insurance systems intended to cover everyone regardless of income. Healthcare is an obvious one across the West, and much ink has been spilled about the outrageous cost of college in America. The government's safety net here is simply to allow young folks to go into unlimited state-guaranteed debt.
Something of a stealth middle class safety net is provided by the corporate sector in the form of health insurance, pensions, maternity leave, etc. This has been reduced since the 80s but still exist, and government tax policy encourages it. As an example if you leave your employer you have the right to keep your employer-sponsored health insurance through something called COBRA.
A number of programs also exist to provide tax-deferred investment accounts for various social purposes. These are available for retirement, healthcare, and higher education. The programs cost the government nothing in expenditures, but reduce tax revenue (probably by less than the public benefit however).
There is much more of a safety net for the poorer classes, but as a general rule of thumb many of these programs run through women since they're dependent on the number of children you have (and, of course, household income). If you're a single man or your baby mamma doesn't want you around anymore, tough luck.
Programs that exist for the poor include:
Additionally some of the states have additional welfare programs.
Actual cash transfers to the poor have largely been abolished since the 90s, though the Obama Administration revived them in stealth form by greatly expanding disability payments.
As far as the homeless go, if you see them in the winter in cold cities they're probably mentally ill.
If they're somewhere warm that's still possible, though then there are other factors such as a lifestyle choice, temporarily down on luck, single man unable to find any work or charity, etc.@peterAUSpeterAUS , March 5, 2018 at 9:15 pm GMT
Social Security benefits, January 2018
Type of beneficiary
Total monthly benefits (millions of dollars)
Average monthly benefit (dollars)
1,290.46 Average Benefit
The table format does not paste correctly. See the table here:
https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/@ThorfinnssonpeterAUS , March 5, 2018 at 9:32 pm GMT
Comprehensive and informative. Didn't know a couple of things.
there is an elite consensus in favor of modifying the system to reduce benefits.
Of course. It's the in their nature.
As a general rule of thumb the safety net is very weak for those in the middle class, whereas in many other Western countries there are universal social insurance systems intended to cover everyone regardless of income.
Interesting re former and true around here re later. The level of "assistance" depends on assessed needs of a person/family, not on their previous income.
There is much more of a safety net for the poorer classes, but as a general rule of thumb many of these programs run through women since they're dependent on the number of children you have (and, of course, household income). If you're a single man or your baby mamma doesn't want you around anymore, tough luck.
single man unable to find any work or charity, etc.
Interesting too. I will sound simplistic and naive, but it's really hard to reconcile those extremes in US. I mean, I have no problem with capable, talented, or just ruthless and greedy, or just lucky, having all those zillions. Good on them. But, at the same time, in the same place, people who are going through the trash cans. Yes, I've heard all the explanations, all sound very reasonable, some don't even understand (stupid me), but , still
I was in Hawaii recently and watching that was .well .interesting. You walk around and see extraordinary opulence, often gluttony really, and at the same time all those homeless. Yes, I do know the story about them, but, still Plenty of those, apparently, vets.
I haven't got the slightest how to fix that, or even is it possible, but, still ..something simply does not compute.
... ... ...@iffenThorfinnsson , March 5, 2018 at 9:40 pm GMT
Well, that's helpful.
Still, a couple of things are eluding me.
I'll use an example:
A man, single, late 20s, professional, worked in, say, corporate environment, got "restructured/downsized/outsourced". Salary at the time of being "let go" around 80K. Worked in similar capacity for, say, 6 years. Renting, of course. No savings (kid likes to travel).
So, where I am, well, he does get an "assistance" which will pay for a rent, 3 decent meals per day and he'll have a (state, not private, of course), medical help. Especially in emergencies. And this can last for quite a while, actually.
Bottom line, no need to be homeless, no need to be hungry, and he'll get the basic and emergency medical help.
All the rest, well, that's precisely the initiative to get a job, and do it fast. I mean, not much fun living like that. But, at the same time, no need to sleep rough, beg and go through trash cans.
So..the same guy in US, how would that look like?@peterAUSiffen , March 5, 2018 at 10:21 pm GMT
I will sound simplistic and naive, but it's really hard to reconcile those extremes in US.
I mean, I have no problem with capable, talented, or just ruthless and greedy, or just lucky, having all those zillions. Good on them.
But, at the same time, in the same place, people who are going through the trash cans.
Yes, I've heard all the explanations, all sound very reasonable, some don't even understand (stupid me), but , still
It's a political choice, pure and simple. And some of the political choices are unrelated to the welfare state–some municipalities have statutes against vagrancy and enforce them. Others don't.
I was in Hawaii recently and watching that was .well .interesting.
You walk around and see extraordinary opulence, often gluttony really, and at the same time all those homeless. Yes, I do know the story about them, but, still
Plenty of those, apparently, vets.
Hawaii, for obvious reasons, is a place with a lot of voluntary homeless. The state has been trying to get rid of them by buying them tickets to the mainland.
Many other voluntary homeless are found in California, Colorado, and Las Vegas. The California ones may be quasi-involuntary as it seems many arrived from the Midwest to get into paid rehab programs, then after running out of money moved into tent cities. But they weren't homeless in the Midwest and panhandling enough for a Greyhound bus ticket is not hard (though embarrassing, or at least it would be for me).
Bear in mind that Americans also donate a lot to charity, both in absolute and per capita terms. So almost every community (besides rich-only suburbs) has a food bank which people donate to, even if there's no social need for it. My secretary for instance is a very kind person and as such is always trying to organize canned food drives for the food bank. The many users of the food bank are what Victorians would call the undeserving poor who are already on the federal SNAP program. The food bank lets them increase their purchases of marketable commodities (such as soda), which can then be traded for supplies not covered by the SNAP program (alcohol, tobacco, and illegal drugs).
Note that my community does not have homeless people as it's a rural small town.
Lots of churches, including here, will also do things such as offer free Thanksgiving and Christmas dinners to the indigent and purchase toys for their children.
Larger cities have a mix of public and private homeless shelters. There generally isn't enough capacity for all homeless, but that works as many homeless don't like the rules these shelters impose.@peterAUS
So.. the same guy in US, how would that look like?
First, you are dealing with 50 different systems. Only Social Security is uniform throughout the country.
As a general rule an able-bodied male would receive no permanent assistance in a state like mine (Alabama).
He could get unemployment compensation for 26 weeks provided he complied with the job search rules.
Other than pregnant women, adults in Alabama do not receive Medicare so if he was unable to pay his Cobra insurance premiums he would have no insurance. There are public health clinics but the availability varies by county.
Many that are under 62 try to get approved for Social Security Disability. It is a bit of a racket. The rate goes up during times of high unemployment and is trending higher even though most jobs are less physically demanding. "Mental" disability is one of the best tickets available. This is the route most druggies take.
Playing it straight is a real disadvantage. As a general rule people lose assistance as they earn more. As was pointed out, the ones who do not work and have no "income," wink, wink, do best with regard to the available assistance.
Many of the "homeless" have mental, alcohol or drug problems (or all three) plus the charitable organizations devoted to providing services for the homeless are extensive. Around the cities free meals are widely available.
Apr 12, 2017 | economistsview.typepad.comRC AKA Darryl, Ron , April 11, 2017 at 03:38 AMRE: Expand Social Security, don't revive 17th century tontinesGerald Scorse , April 11, 2017 at 10:57 AM
...Tontines, like Social Security, traditional pensions, and life annuities, insure against the risk of living longer than expected in retirement. The problem of outliving one's savings has gotten worse as Social Security benefits have been trimmed back and private sector employers have replaced traditional pensions with 401(k)-style savings plans. In theory, 401(k) savers can insure against longevity risk by purchasing life annuities, but few actually do. There are several reasons for this, starting with the fact that few have significant savings to begin with-a problem exacerbated by current low interest rates that lock annuitants into low annual payments. In addition, potential buyers must navigate complex and tricky insurance markets and face prices driven up by adverse selection and asymmetric information, the classic problem of markets for individual insurance whereby people at greater risk (of living longer, in this case) are more likely to purchase insurance and have an incentive to conceal information to avoid higher risk-adjusted premiums, leading to higher prices for all consumers and a shrinking market
Potential annuity buyers also behave in ways are hard to square with fully-informed and rational behavior, such as overvaluing lump sums relative to their equivalent in annuitized benefits and exhibiting loss aversion-in this case, the tendency to dwell on the potential financial losses associated with dying prematurely rather than the potential gains from living a long life. Could tontines at least counter these behavioral challenges? One psychological hurdle for would-be annuity buyers is the fact that insurance companies profit from annuitants' early death, which puts people in a pessimistic and suspicious frame of mind. Advocates say tontines could be structured so that only investors-not issuers-would benefit from the deaths of others in the pool, which might or might not alleviate these concerns. (Tontine murders were once a common melodramatic plot device in plays and murder mysteries)...
[A fairly thorough discussion of the pros and cons of various investment and private insurance options for retirement security are discussed concluded by the obvious solution.]
...Unlike a tontine scheme, where payments simply increase in inverse proportion to the share of surviving investors, such longevity and return-smoothing adjustments are complex and require trust in the system, so may be better suited to government-sponsored plans than private sector ones. The simplest solution, of course, is simply to expand Social Security, an increasingly mainstream idea among Democrats but not one that is likely to fly in the current Congress.
Re "Expand Social Security..."sanjait -> Gerald Scorse... , April 11, 2017 at 01:54 PM
"The problem of outliving one's savings has gotten worse as Social Security benefits have been trimmed back and private sector employers have replaced traditional pensions with 401(k)-style savings plans."
Social Security benefits have been trimmed back? When did this happen? (Are you referring to the changes made back in 1986, which gradually lengthened the full-benefit retirement age to 67? It would have been helpful to say so.)
And it's not entirely accurate to say that 401(k)-style retirement plans have worsened the problem of outliving one's savings. For millions of retirees, the opposite has been true; with the cooperation of the stock market (we're in the second-longest bull market in 85 years), they're withdrawing tens of thousands every year and seeing their total holdings *increase* at the same time. Traditional defined-benefit plans do provide greater security, but they're no match for 401(k)s, IRAs and other similar plans at actually increasing in value.
This aspect of defined-contribution retirement plans hasn't gotten nearly the exposure that the negative aspects have. It's just as true though."we're in the second-longest bull market in 85 years"
Sure ... after the biggest crash in 80 years. And since when is the length of time a bull market lasts, rather than long term compound annual returns, the important metric?
You're attempt to describe the upside of retirement savings in at-risk equity investments seems to be built on a shaky and selective view of recent history.
Mar 10, 2017 | www.nakedcapitalism.comPosted on March 9, 2017 by Yves Smith Yves here. This Real News Network interview is from a multi-part series about Michael Hudson's new book, J is for Junk Economics. And after a lively discussion by readers of the economic necessity of many to become expats to get their living costs down to a viable level, a discussion of the disingenuous political messaging around retirement seemed likely. Among the people in my age cohort, the ones that managed to attach themselves to capital (being in finance long enough at a senior enough level, working in Corporate America and stock or stock options) are generally set to have an adequate to very comfortable retirement. The ones who didn't (and these include people I know who are very well paid professionals but for various reasons, like health problems or periods of unemployment that drained savings, haven't put much away) will either have to continue working well past a normal retirement age (even charitably assuming they can find adequately compensated work) or face a struggle or even poverty.
SHARMINI PERIES: It's The Real News Network. I'm Sharmini Peries, coming to you from Baltimore. I'm speaking with Michael Hudson about his new book J Is For Junk Economics: A Guide to Reality in the Age of Deception.
Thanks for joining me again, Michael.
MICHAEL HUDSON: Good to be here.
SHARMINI PERIES: So, Michael, on page 260 of your book you deal with the issue of Social Security and it's a myth that Social Security should be pre-funded by its beneficiaries, or that progressive taxes should be abolished in favor of a flat tax. Just one tax rate for everyone you criticize. We talked about this earlier, but let's apply what this actually means when it comes to Social Security.
MICHAEL HUDSON: The mythology aims to convince people that if they're the beneficiaries of Social Security, they should be responsible for saving up to pre-fund it. That's like saying that you're the beneficiary of public education, so you have to pay for the schooling. You're the beneficiary of healthcare, you have to save up to pay for that. You're the beneficiary of America's military spending that keeps us from being invaded next week by Russia, you have to spend for all that – in advance, and lend the money to the government for when it's needed.
Where do you draw the line? Nobody anticipated in the 19th century that people would have to pay for their own retirement. That was viewed as an obligation of society. You had the first public pension (social security) program in Germany under Bismarck. The whole idea is that this is a public obligation. There are certain rights of citizens, and among these rights is that after your working life you deserve to live in retirement. That means that you have to be able to afford this retirement, and not have to beg in the street for money. The wool that's been pulled over people's eyes is to imagine that because they're the beneficiaries of Social Security, they have to actually pay for it.
This was Alan Greenspan's trick that he pulled in the 1980s as head of the Greenspan Commission. He said that what was needed in America was to traumatize the workers – to squeeze them so much that they won't have the courage to strike. Not have the courage to ask for better working conditions. He recognized that the best way to really squeeze wage earners is to sharply increase their taxes. He didn't call FICA wage withholding a tax, but of course it is. His trick was to say that it's not really a tax, but a contribution to Social Security. And now it siphons off 15.4% of everybody's pay check, right off the top.
The effect of what Greenspan did was more than just to make wage earners pay this FICA rake-off out of their paycheck every month. The charge was set so high that the Social Security fund lent its surplus to the government. Now, with all this huge surplus that we're squeezing out of the wage earners, there's a cut-off point: around $120,000. The richest people don't have to pay for Social Security funding, only the wage-earner class has to. Their forced savings are lent to the government to enable it to claim that it has so much extra money in the budget pouring in from social security that now it can afford to cut taxes on the rich.
So the sharp increase in Social Security tax for wage earners went hand-in-hand with sharp reductions in taxes on real estate, finance for the top One Percent – the people who live on economic rent, not by working, not by producing goods and services but by making money on their real estate, stocks and bonds "in their sleep." That's how the five percent have basically been able to make their money.
The idea that Social Security has to be funded by its beneficiaries has been a setup for the wealthy to claim that the government budget doesn't have enough money to keep paying. Social Security may begin to run a budget deficit. After having run a surplus since 1933, for 70 years, now we have to begin paying some of this savings out. That's called a deficit, as if it's a disaster and we have to begin cutting back Social Security. The implication is that wage earners will have to starve in the street after they retire.
The Federal Reserve has just published statistics saying the average American family, 55 and 60 years old, only has about $14,000 worth of savings. This isn't nearly enough to retire on. There's also been a vast looting of pension funds, largely by Wall Street. That's why the investment banks have had to pay tens of billions of dollars of penalties for cheating pension funds and other investors. The current risk-free rate of return is 0.1% on government bonds, so the pension funds don't have enough money to pay pensions at the rate that their junk economics advisors forecast. The money that people thought was going to be available for their retirement, all of a sudden isn't. The pretense is that nobody could have forecast this!
There are so many corporate pension funds that are going bankrupt that the Pension Benefit Guarantee Corporation doesn't have enough money to bail them out. The PBGC is in deficit. If you're going to be a corporate raider, if you're going to be a Governor Romney or whatever and you take over a company, you do what Sam Zell did with the Chicago Tribune: You loot the pension fund, you empty it out to pay the bondholders that have lent you the money to buy out the company. You then tell the workers, "I'm sorry there is nothing there. It's wiped out." Half of the employee stock ownership programs go bankrupt. That was already a critique made in the 1950s and '60s.
In Chile, the Chicago Boys really developed this strategy. University of Chicago economists made it possible, by privatizing and corporatizing the Social Security system. Their ploy was to set aside a pension fund managed by the company, mostly to invest in its own stock. The company would then set up an affiliate that would actually own the company under an umbrella, and then leave the company with its pension fund to go bankrupt – having already emptied out the pension fund by loaning it to the corporate shell.
So it's become a shell game. There's really no Social Security problem. Of course the government has enough tax revenue to pay Social Security. That's what the tax system is all about. Just look at our military spending. But if you do what Donald Trump does, and say that you're not going to tax the rich; and if you do what Alan Greenspan did and not make higher-income individuals contribute to the Social Security system, then of course it's going to show a deficit. It's supposed to show a deficit when more people retire. It was always intended to show a deficit. But now that the government actually isn't using Social Security surpluses to pretend that it can afford to cut taxes on the rich, they're baiting and switching. This is basically part of the shell game. Explaining its myth is partly what I try to do in my book.
SHARMINI PERIES: If the rich people don't have to contribute to the Social Security base, are they able to draw on it?
MICHAEL HUDSON: They will draw Social Security up to the given wage that they didn't pay Social Security on, which is up to $120,000 these days. So yes, they will get that little bit. But what people make over $120,000 is completely exempt from the Social Security system. These are the rich people who run corporations and give themselves golden parachutes.
Even for companies that have engaged in massive financial fraud, the large banks, City Bank, Wells Fargo – all these have golden parachutes. They still are getting enormous pensions for the rest of their lives. And they're talking as if, well, corporate pensions are in deficit, but for the leading officers, arrangements are quite different from the pensions to the blue collar workers and the wage earners as a whole. So there's a whole array of fictitious economic statistics.
I describe this in my dictionary as "mathiness." The idea that if you can put a number on something, it somehow is scientific. But the number really is the product of corporate accountants and lobbyists reclassifying income in a way that it doesn't appear to be taxable income.
Taking money out and giving it to the richest 5%, while making it appear as if all this deficit is the problem of the 95%, is "blame the victim" economics. You could say that's the way the economic accounts are being presented by Congress to the American people. The aim is to popularize a "blame the victim" economics. As if it's your fault that Social Security's going bankrupt. This is a mythology saying that we should not treat retirement as a public obligation. It's becoming the same as treating healthcare as not being a public obligation.
We have the highest healthcare costs in the world, so out of your paycheck – which is not increasing – you're going to have to pay more and more for FICA withholding for Social Security, more and more for healthcare, for the pharmaceutical monopoly and the health insurance monopoly. You'll also have to pay more and more to use public services for transportation to get to work, because the state is not funding that anymore. We're cutting taxes on the rich, so we don't have the money to do what social democracies are supposed to do. You're going to privatize the roads, so that now you're going to have to pay to use the road to drive to work, if you don't have public transportation.
You're turning the economy into what used to be called feudalism. Except that we don't have outright serfdom, because people can live wherever they want. But they all have to pay to this new hereditary "financial/real estate/public enterprise" class that is transforming the economy.
SHARMINI PERIES All right, Michael. Many, many, many things to learn from your great book, J Is For Junk Economics: A Guide to Reality in the Age of Deception. Michael is actually on the road promoting the book. So if you have an opportunity to see him at one of the places he's going to be speaking, you should check out his website, michael-hudson.com
So I thank you so much for joining us today, Michael. And as most of you know, Michael Hudson is a regular guest on The Real News Network. We'll be unpacking his book and some of the concepts in it on an ongoing basis. So please stay tuned for those interviews.
Thank you so much for joining us today, Michael.
craazyman , March 9, 2017 at 10:10 amj84ustin , March 9, 2017 at 10:21 am
It's 10 bagger time for sure. A house in the tropics with servants at your beck and call. Breakfast on the veranda. Lunch at the club. An afternoon sail. Dinner at the house of a famous author. Or some native woman who cooks spicy food and is hotter than the sun. No shuffleboard and pills! You need to stay buff if you wanna live like this. You can't be flabby and short of breath.flora , March 9, 2017 at 11:47 am
Thanks for this.PhilM , March 9, 2017 at 10:32 am
+1. Yes. Great post. Very clear explanation of Greenspan's SocSec bait-and-switch.a different chris , March 9, 2017 at 12:56 pm
Yves's remark on retirement by sector is apt. I laugh bitter tears when I see that a financial CEO contract always includes a "pension," as if the tens of millions of dollars in salary and bonuses weren't enough.
A "pension" is for those who, broken by a life of hard physical labor, finally can't work any more for their crust of bread. It's not another revenue line-item that's barely enough to refuel the yacht.
There was a time when people "saved for retirement." With real rates of return being negative, and all assets priced arbitrarily at the whim of the central bank's policy du jour, I am perfectly frank when people ask "what should they invest in": nothing. Pay down your debt, and spend whatever you have beyond an emergency cushion right now, while you can enjoy it. Savings will inevitably be wasted, by inflation, the "health-care system," or financial-sector scammers. Do not ask for whom the bell tolls; if you have to ask, you can't afford it.
This is all in the context of the Federal Government already spending 20% of GDP, a number that was never designed to happen. It is the States that were supposed to be in charge of the people's welfare, not the national authority. So the argument that we should increase Federal taxes to somehow redistribute wealth is also wrong, because that wealth will simply be wasted, spent by people who are responsible to no one.
At moments like this there are no good choices. Most Europeans have long learned to live with governments that were hostile to them, and that is where we stand now.
Tocqueville's Democracy In America is tough going in spots, but my gosh, what a beautiful world he depicts, when the average Pennsylvanian's tax liability beyond his township was $4 a year.Sound of the Suburbs , March 9, 2017 at 10:38 am
I won't argue too hard about your "Federal vs State" argument, but note that if the state is in charge of most taxation then Richy Rich can live in a low tax state next door and employ the well-educated, healthy (single-payer) people in your state.Sound of the Suburbs , March 9, 2017 at 10:46 am
Just got my copy of "J is for Junk Economics"
Other people are on the same wavelength.
Professor Werner moving from reality to fantasy:
"Classical and neo-classical economics, as dominant today, has used the deductive methodology: Untested axioms and unrealistic assumptions are the basis for the formulation of theoretical dream worlds that are used to present particular 'results'. As discussed in Werner (2005), this methodology is particularly suited to deriving and justifying preconceived ideas and conclusions, through a process of working backwards from the desired 'conclusions', to establish the kind of model that can deliver them, and then formulating the kind of framework that could justify this model by choosing suitable assumptions and 'axioms'. In other words, the deductive methodology is uniquely suited for manipulation by being based on axioms and assumptions that can be picked at will in order to obtain pre-determined desired outcomes and justify favoured policy recommendations. It can be said that the deductive methodology is useful for producing arguments that may give a scientific appearance, but are merely presenting a pre-determined opinion."
"Progress in economics and finance research would require researchers to build on the correct insights derived by economists at least since the 19th century (such as Macleod, 1856). The overview of the literature on how banks function, in this paper and in Werner (2014b), has revealed that economics and finance as research disciplines have on this topic failed to progress in the 20th century. The movement from the accurate credit creation theory to the misleading, inconsistent and incorrect fractional reserve theory to today's dominant, yet wholly implausible and blatantly wrong financial intermediation theory indicates that economists and finance researchers have not progressed, but instead regressed throughout the past century. That was already Schumpeter's (1954) assessment, and things have since further moved away from the credit creation theory."
"A lost century in economics: Three theories of banking and the conclusive evidence" Richard A. Werner
Even the BoE has quietly come clean about money.
Leaving Paul Krugman looking rather foolish
" banks make their profits by taking in deposits and lending the funds out at a higher rate of interest" Paul Krugman, 2015.
No, it doesn't work like that Paul.Sound of the Suburbs , March 9, 2017 at 11:20 am
The facts tell all.
Francis Fukuyama talked of the "end of history" and "liberal democracy" in 1989.
Capitalism had conquered all and was the one remaining system left that had stood the test of time.
With such a successful track record, everything was being changed to a new neo-liberal ideology and globalization was used to test this new ideology everywhere.
The Great Moderation seemed to indicate that the new ideology was a great success.
"Seemed" is the operative word here.
A "black swan" arrives in 2008 and nothing is the same again, the Central Bankers pump in trillions to maintain the new normal of secular stagnation.
Sovereign debt crises erupt, the Euro-zone starts to disintegrate, austerity becomes the norm., no one knows how to restore growth and the populists rise.
A new ideology comes in that is rolled out globally and seems to work before 2008.
What happened in 2008?
This is the build up to 2008 that can be seen in the money supply (money = debt):
Everything is reflected in the money supply.
The money supply is flat in the recession of the early 1990s.
Then it really starts to take off as the dot.com boom gets going which rapidly morphs into the US housing boom, courtesy of Alan Greenspan's loose monetary policy.
When M3 gets closer to the vertical, the black swan is coming and you have an out of control credit bubble on your hands (money = debt).
Irving Fisher produced the theory of debt deflation in the 1930s.
Hyman Minsky carried on with his work and came up with the "Financial instability Hypothesis" in 1974.
Steve Keen carried on with their work and spotted 2008 coming in 2005.
You can see what Steve Keen saw in the graph above, it's impossible to miss when you know what you are looking for but no one in the mainstream did.
The hidden secret of money.
Money = Debt
From the BoE:
If you paid off all the debt there would be no money.
Money and debt are opposite side of the same coin, matter and anti-matter.
The money supply reflects debt/credit bubbles.
Monetary theory has been regressing for over 100 years to today's abysmal theory where banks act as intermediaries and don't create and destroy money.
The success of earlier years was mainly due to money creation from new debt (mainly in housing booms) globally feeding into economies leaving a terrible debt over-hang.
Jam today, penury tomorrow.
This is how debt works.
Twelve people were officially recognised by Bezemer in 2009 as having seen 2008 coming, announcing it publicly beforehand and having good reasoning behind their predictions (Michael Hudson and Steve Keen are on the list of 12).
They all saw the problem being excessive debt with debt being used to inflate asset prices (US housing).
The Euro's periphery nations had unbelievably low interest rates with the Euro, the risks were now based on common debt service. Mass borrowing and spending occurs at the periphery with the associated money creation causing positive feedback.
Years later, it was found the common debt service didn't actually exist and interest rates correct for the new reality.
Jam today, penury tomorrow.
Why doesn't austerity work? (although it has been used nearly everywhere)
You need to understand money, debt, money creation and destruction on bank balance sheets and its effect on the money supply. Almost no one does.
Richard Koo does:
Ben Bernanke read Richard Koo's book and stopped the US going over the fiscal cliff by cutting government spending.Sound of the Suburbs , March 9, 2017 at 11:55 am
Alternative and I would say much more accurate realities:
1) Michael Hudson "Killing the Host", "J is for Junk Economics"
The knowledge of economic history and the classical economists that has been lost and the problems this is causing. Ancient Sumer had more enlightened views on debt than we have today.
2) Steve Keen "De-bunking Economics"
His work is based on that of Hyman Minsky and looks into the effects of private debt on the economy and the inflation of asset bubbles with debt.
3) Richard Werner "Where does money come from?"
The only book generally available that tells the truth about money, I don't think there are any other modern books that do and certainly not in economics textbooks
4) Richard Koo's study on the Great Depression and Japan after 1989 showing the only way out of debt deflation/balance sheet recessions.
https://www.youtube.com/watch?v=8YTyJzmiHGkDead Dog , March 9, 2017 at 1:02 pm
The BoE have made a mistake.
"Although commercial banks create money through lending, they cannot do so freely without limit. Banks are limited in how much they can lend if they are to remain profitable in a competitive banking system."
The limit for money creation holds true when banks keep the debt they issue on their own books.
The BoE's statement was true, but is not true now as banks can securitize bad loans and get them off their books.
Before 2008, banks were securitising all the garbage sub-prime mortgages, e.g. NINJA mortgages, and getting them off their books.
Money is being created freely and without limit, M3 is going exponential before 2008.diogenes , March 9, 2017 at 10:41 am
Thanks SOS, agree. We're at that 08 point now, in fact it's worse.
Pensions should just be a click of the computer, no borrowings, savings or taxes needed and they need to be sufficient to live on.
No, we aren't 'winning'
In Australia, we used to give people the 'aged' at 60 for women and 65 for men. Now its 67 for both, the woman's aged cut in was raised for 'equality' reasons, and it going up to 70 for my kids.
Politicians, judges, CEOs and the c-class, all those 'shiny bums', they can often work well into their 60s. The rest of us experience age discrimination in a tight job market and are forced into menial jobs just when society should be funding their well earned retirement.inhibi , March 9, 2017 at 11:48 am
The whole "there aren't enough workers to support retirees" meme is risible.
Example: Jane funds an IRA for 30 years. For those 30 years, there is one person paying in, and zero taking out. When Jane retires, the IRA flips to one person taking out, and zero paying in.
Disaster, or working as advertised?
That Serious Thinkers, elected officials and the SSA themselves advance this trope to explain why SS is hopeless is proof of willful mendacity.
Now if these folks admit, well yuh, you paid in over all of these years, but the money ain't there no more, then first, that's an admission of mismanagement (unsurprising), and second, bail us the fuck out like you did Wall Street.Art Eclectic , March 9, 2017 at 12:12 pm
Most every purported "help" by the government is the exact opposite: your paying into a black hole.
Look around you. What around you was paid for by the government? The answer is none of it was. Taxes are a way to keep the bureaucratic structure afloat. What is very clear is that once government reaches a certain size it begins to massively leach off of those that work and gives it to those that "manage".
Look at any industry today and you will find, in the private sector, declining or stagnant wages for the "drones". Then look at the public sector: expanding, better benefits, better wages, less work etc. Thinking about it makes my blood boil. I see truckers making less now then 10 years ago, yet, the industry keeps crying that they "don't have enough workers". Yeah, sorry no one wants to work 25/8 driving around in the day time, sleeping in a truck at night, getting tracked through GPS & get penalized for going above speed limits when they can work for the DMV, make the same amount, and sit at a desk for 7 hours a day with plenty of benefits and vacation time.
Its about time for this system to implode. I see globalization and government expansion as a huge force that will eventually cause a revolution in the States.a different chris , March 9, 2017 at 1:09 pm
Globalization and the government are simply red herrings meant to distract Trump voters while shareholder value driven corporate overlords continue looting.jrs , March 9, 2017 at 7:01 pm
Look around you . The government employs less people than pretty much for my whole life. Please get informed before you go off on a multi-paragraph rant.
If you want a job join the military. Do you think that's a good option?Arizona Slim , March 9, 2017 at 12:37 pm
maybe noone should work in trucking, freight trains are much more energy efficient as far as a means of transporting goods over long distances. Nah I'm not faulting truckers, just saying it makes no societal sense is all except maybe for the last few miles, but then neither do a lot of things. I doubt many people want to work at the DMV, but then maybe the benefits are enough to make a distasteful job seem worth it.PhilM , March 9, 2017 at 11:05 am
ISTR reading that the creators of the 401k saying that they never intended it to be a replacement for a pension.Arizona Slim , March 9, 2017 at 12:39 pm
As usual, the abuse of history is the outstanding credibility-buster in this piece. When an author says this,
Nobody anticipated in the 19th century that people would have to pay for their own retirement. That was viewed as an obligation of society.
why should I believe anything else that he has to say?
The sole instance given is of Bismarck's Germany, actually ground-breaking in its social welfare policies, which came only in the last part of the 19th century.
For most of the 19th century, just about everywhere, nobody who worked for a living expected to live long enough to retire.
Indeed, retirement in past centuries had a different denotation. Its common use was among the aristocracy, when one of that number determined to remove himself from active (urban) social or political life and withdraw (hence the etymology, "re-tirer"), usually to the country.
Haygood had to resuscitate "rusticate" for the other day, to achieve a modern equivalent of that.
All of this is common knowledge. In case you don't think so, spend five minutes with any book of demographics or social history; and that's just for Europe. Don't let's even ask what "nobody expected to pay for their retirement" meant in early nineteenth-century Alabama.
By the way, Hudson does this all the time. When I can fact-check offhand, from my fund of common knowledge, he is often casually abusing the truth. I can be pretty sure that the rest of what he says is just as unreliable.MBC , March 9, 2017 at 12:52 pm
Didn't Bismarck create those social welfare programs in order to prevent unrest in a recently unified Germany?Rick Zhang , March 9, 2017 at 7:21 pm
You may be correct about the 19th century, but it is 2017. And his points about the US tax system, the banks, the wealthiest 1% and our gov't deceiving the middle and lower class are solid. A very basic retirement and healthcare should be provided to all in any decent marginally successful society. Not to mention a supposedly "great" one.Hans Suter , March 9, 2017 at 12:57 pm
I think this is where some progressive get tripped up and don't understand why their policies aren't more popular to the wide swaths of America outside of their bubble.
Often times, these people (I use this term loosely to include working class whites in Appalachia as well as Silicon Valley libertarians) like to provide a fair and wide safety net. However, most policies that are advanced are strictly means tested. This causes significant resentment among those just outside of the cutoff lines. Think: Social Security has essentially blanket coverage. Yes, there's some redistribution going on behind the scenes, but if I pay in for 30 years I will get most of my money back. It's wildly popular, while welfare programs are not.
The same applies for health care – Medicare is popular and Medicaid is not. If I pay in for a government program, I want to be able to take advantage of it. Save me the crap about not wanting to subsidize the lifestyles of the 1%; they pay in far more than they would take out of the program. It's a small price to pay to have universal coverage and buy in from all segments of society. So extending Medicare down to everyone is a better political strategy than extending Medicaid upwards to encompass higher income levels.
More reading: https://www.nytimes.com/2017/03/07/business/economy/trump-budget-entitlements-working-class.html
Rick Zhang @ Millennial Lifehackera different chris , March 9, 2017 at 1:12 pm
why don't try to educate yourself, you may start here https://eh.net/encyclopedia/economic-history-of-retirement-in-the-united-states/Dead Dog , March 9, 2017 at 1:13 pm
You read a great deal into a statement that you didn't at all prove was untrue. Not impressive.
The question is, did society believe that it had a responsibility of care for people that got too old to work? You didn't even address that. Yes we know life was "nasty, brutish and (most often) short. That doesn't invalidate what he said.PhilM , March 9, 2017 at 1:41 pm
PhilM 'I can be pretty sure that the rest of what he says is just as unreliable.'
No mate, he speaks truth and may have exaggerated, but the point remains that here, the UK, most of Europe – then the state funds your pension if you need one. It is now a social obligation. Only in the US, do you have this class of people (the working class) who don't deserve retirement and must fund their own meagre pensions, and if the 'pool which funds the pensions' becomes insufficient, well you know the rest.
Taxes see, they fund things, or more often don't, because it's a widely accepted lie to keep the private bank money creation bullshit going forever.Dead Dog , March 9, 2017 at 2:37 pm
That's the problem, Dog, I generally agree with his point, and with the responders to my comment, on policy grounds. My point is that leading with something that is provably false, and even probably false to common knowledge, is not a winning tactic; some would say it insults the intelligence of the audience, even.
To me this site, if it's about anything, is about filtering out the BS that is used by people with an agenda to "enhance" their arguments. Lambert does this with a Lancelot-sized skewer. And part of the beauty is the crowd-sourced fact-checking from an extraordinarily informed, and sceptical, community.
I may not have much to add to their expertise, but one thing I do know is some European history, and it drives me berzerk to see people just misuse history as if it strengthens their argument. If they don't know that what they are saying is true, they should not say it. And by "know it is true," I mean, know the source, and the source of the source, and be able to judge its reliability. That is what scholarship is all about: seeing how far down the turtles go.
So when someone just tosses out an assertion about "what the past thought was right," as if that created a moral obligation or not in 2017 (which as MBC quite rightly observed it does not, at least not without a clearer argument), they should be critiqued. When their assertion is based on sloppy cherry-picked facts and wrongly generalized, they should be called out as either uninformed or malicious, in hopes they will be less so in the future.
That's all I was saying; I did not have a point to make about pensions, because I agree with Hudson's viewpoints almost all the time, which is why it is so sad to see him turn out to be so cheesy, so often.
My personal experience of pensions is this: they are a total scam to lock people into exploitive, nearly intolerable working conditions on the flimsiest of promises in the private sector; and in the public sector, they are a way of adding to the debt burden of generations yet to come without the assent of the people: taxation without representation, in effect.
I have seen professionals crumble morally thanks to the force of the pension. It is despicable corporate oppression at the subtle level, because it looks as if they are doing a good thing, which of course they are not. It's more subtle than their obvious screaming cruelties to people and animals and the land, which, it must also be said, nobody does anything about either.Rick Zhang , March 9, 2017 at 7:25 pm
Thanks for replying Phil. Good points.
Yes pension systems aren't perfect, but some people don't have family or money to fall back on when they get old. I am seeing more and more of my own friends in their 60s struggling to earn money through work. They want to stop, but can't afford to.
And, I am dismayed and disheartened of seeing people on the sidewalks that could be my parents. Or, shit, meMoneta , March 9, 2017 at 7:52 pm
I have no sympathy for these people. Read Hillbilly Elegy and see the perspective from the white working class. More often than not, people who are "struggling" in mid life are those who made bad choices. They abused drugs, had kids out of wedlock, or didn't make a career for themselves. Often, they spend poorly – on luxury items and consuming excessively.
I live now just like how I did when I was a poor student – with a carefully limited budget and spending within my means (more on experiences than products). I save 80% of my income and plan to retire early. More people can do the same.
My mentor/hero bought a fixer upper house that she repaired by herself. She bikes to work every day in the snow, and buys her clothes from thrift stores. She makes a six figure salary.
Save for an uncertain future, folks, and you won't find yourself in dire straits later on in life.
– Rick Zhang @ Millennial LifehackerRick Zhang , March 9, 2017 at 8:26 pm
If everyone saved like you did, the economy would be smaller so there would be even more unemployment and no money for savingsJagger , March 9, 2017 at 1:18 pm
Tragedy of the commons, eh?
If everyone saved more, we'd reach a happier and more balanced equilibrium. Plus, money that's saved is recycled into the economy through lending.
Or maybe you're arguing that the poor should save more and the wealthy should consume more and keep the economy humming.
– Rick Zhang @ Millennial LifehackerPhilM , March 9, 2017 at 3:38 pm
For most of the 19th century, just about everywhere, nobody who worked for a living expected to live long enough to retire.
I suspect your children or your extended family, were your retirement if you lived long enough pre-20th century times. Also I cannot imagine there was any sort of defined retirement prior to 20th century for the masses. People simply did whatever they could within their families until they couldn't. Work loads probably just decreased with the fragility of old age.
Also many people did live long lives. IIRC, heavy mortality was primarily concentrated in children and childbirth and maybe the occasional mass epidemic or bloody war. Dodge those and you could probably live a fairly long life.watermelonpunch , March 9, 2017 at 5:39 pm
Quite right; there was a bimodal or multimodal curve, which is why mean averages of life expectancy are not all that enlightening. But the fact is that most people who worked or fought, worked or fought their whole lives, until they were incapacitated; then there was their family, or the Church, or the poorhouse, or starvation, usually leading to mortal illness, if it had not done so before then.
The other side of that story is that the old folk were there as part of the social and economic unit: helping to pick the harvest with the very youngest; sharing skills and knowledge across four or five generations, century after century-rather than being shuffled off to die in some wretched cubby, doing "retirement" things. There's a terrific little book, Peter Laslett's The World We Have Lost, that gives a well-sourced and interesting picture of pre-industrial family life that pushes people to overcome some of their self-satisfaction about this kind of thing.Moneta , March 9, 2017 at 1:19 pm
I remember reading where they found a Neanderthal remains that showed that this guy was definitely disabled to the point where he couldn't have survived alone. Which means someone else helped him live longer.
That's what humans have always done pretty much, before money. People paid in by being part of society, and then their community helped them later. Social insurance is just the money big civilization version of it isn't it?
I'm just thinking of the people with aging parents and children with parent cosigned student loans And what if they were responsible for paying the $90,000+ / year nursing home payment and all the medical bills, instead of Social Security, Medicare, Medicaid On top of trying to help their kids get through college.
The whole scenario is a bad joke and getting worse.jrs , March 9, 2017 at 2:48 pm
There wasn't 15-20% of the population expecting to live 30 years in retirement and the next generations to pay for their still mortgaged McMansions and trips to the tropics.
I have no issues paying for retirees. I have issues with asking the younger generations to pay for lifestyles that are bigger than theirs. The Western retirement lifestyle is too energy and resource intensive.polecat , March 9, 2017 at 2:58 pm
I don't think most people collecting a social security check actually have a big lifestyle, much less trips to the tropics, that's a Charles Schwab commercial, not a reality for most people. What Social Security has done is mostly reduce the number of old people living in poverty. Ok so young and middle age people are still living in poverty, making everyone live in poverty including people that are old and frail and sick is not an improvement. Are retired people's lifestyles actually shown to be more energy intensive, I think in many ways they would be less so, ie not making that long commute to the office everyday anymore etc..Anonymouse , March 9, 2017 at 4:04 pm
This -- Without adequate resources and, most importantly, energy, there are no pensions -- indeed, there is no middle class as well !!jrs , March 9, 2017 at 6:51 pm
Sorry, but your comment is delusional. It is impossible for someone retired on only Social Security to "pay for their still mortgaged McMansions and trips to the tropics". In what universe is that possible on a MAXIMUM annual income of less than $32,000? Googling "maximum social security benefits" generates the following info:
"The maximum monthly Social Security benefit payment for a person retiring in 2016 at full retirement age is $2,639. However, the maximum allowable benefit amount is only payable to those who had the maximum taxable earnings for at least 35 working years. Depending on when you retire and how much you made while working, your benefits may be considerably less. The estimated average monthly benefit for "all retired workers" in 2016 is $1,341."Moneta , March 9, 2017 at 9:01 pm
I suspect a lot of people (younger than boomers) might be still mortgaged to a small degree when they retire as housing costs have gone up so that people can't afford a mortgage when they are young, so if they buy real estate at all it's at middle age, buy the first home in their 30s or 40s or 50, for a 30 year mortgage. But McMansions have nothing to do with that.PlutoniumKun , March 9, 2017 at 1:59 pm
First of all I did specify that a 15-20% group is doing quite well.
– Debt in retirement is increasing
-Average/median square footage house 1973 vs. 2010. https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf
-Social Security represents half of retirement income for half of retirees. https://www.fool.com/investing/general/2016/02/28/how-much-of-my-income-will-social-security-replace.aspx
-Income distribution (see page 9)
The income distribution table shows that the younger retirees 65-75 are not suffering when compared to the working population they seem to have a good thing going for them
Merging all these data points, it becomes quite apparent that there is a large percentage of retirees who still carry debt while collecting social security.
Increasing social security to some group means making another group payPhilM , March 9, 2017 at 5:40 pm
As usual, the abuse of history is the outstanding credibility-buster in this piece. When an author says this,
Nobody anticipated in the 19th century that people would have to pay for their own retirement. That was viewed as an obligation of society.
why should I believe anything else that he has to say?
The sole instance given is of Bismarck's Germany, actually ground-breaking in its social welfare policies, which came only in the last part of the 19th century.
For most of the 19th century, just about everywhere, nobody who worked for a living expected to live long enough to retire.
Indeed, retirement in past centuries had a different denotation. Its common use was among the aristocracy, when one of that number determined to remove himself from active (urban) social or political life and withdraw (hence the etymology, "re-tirer"), usually to the country.
Historically, he is right and you are entirely wrong, which is not surprising as Michael Hudson is originally a philologist and historian and has specialised in economic history.
The modern conception of retirement is mostly a 20th Century invention, but throughout history, there are many versions of 'retirement', and they were almost always paid out of current expenditures. Roman soldiers were paid lump sums and frequently given land on reaching retirement age through the Aerarium Militare. Militaries throughout ancient and medieval history had similar schemes, and not just for officers, but again, these were rarely if ever paid out of a contribution scheme – it was considered an obligation of the State.
In many, if not most societies, it was accepted that aristocratic employers and governments had obligations to elderly staff – for example, fuedal workers would keep their homes when they were no longer capable of working, and this extended well into the 19th Century. Organised religions would almost always have systems for looking after retired religious members, again, always paid out of current revenues, not some sort of investment fund. The concept of a fixed retirement age (outside of the military) is a relatively modern one, but the concept of 'retirement' is not modern at all.fresno dan , March 9, 2017 at 11:05 am
This is the worst strawmanning bull**** I have seen in a while; it is simply infuriating. I don't have the time to put all of what follows into perfect order, but here's what I can tap out in a minute or two.
If, PK, you are trying to prove that some people in the past have stopped work and still gotten paid, as part of their lifetime compensation for the work they have done, and that this is, de facto, compensation during what we would now call "retirement," you win. Straw man knocked over.
So let me again quote what Hudson says, just so your argument can be demonstrated as the pointless distraction that it is:
"Nobody anticipated in the 19th century that people would have to pay for their own retirement. That was viewed as an obligation of society."
That couldn't be clearer. "Nobody anticipated," as in "nobody." Meaning it was a generally accepted social value that . what follows. What follows is "people," as in "people"; not just soldiers, or priests, or servants; "people," ie, Gesellschaft; and then, "their own retirement," (which can only imply a period when they were old enough still to do something productive that earned money, but chose not to, instead; because otherwise it would be called "disability," right?). "That was viewed as an obligation of society," meaning, it was a right, not a privilege or gift or compensation, and it was universal, because it applied to "people," and "nobody" thought otherwise.
There is just nothing there that is justifiable in any way based on the history of the nineteenth century. The only exception is Bismarck's Germany, which is adduced as proof of the statement, which is totally insupportable on its face.
If you stand by that, and are trying to suggest that "retirees," meaning as a group everyone in society beyond a pre-defined age, as opposed to the disabled, were ever perceived as having a societally based right to welfare support before the very late nineteenth or early twentieth century, and that only in a very few, very advanced places, you fail three times over.
You do this in classically ahistorical ways: you conflate Gesellschaft with Gemeinschaft; you adduce the military of the ancient world, which is just hilariously anachronistic, but even those prove you wrong when examined closely; you completely misconstrue the rules of the corporately organized ancien regime, which by the way was ancient history as far as the post-Dickensian industrializing Europe that Hudson speaks of; you adduce the military and the priesthood as if they were representatives of "society" as a whole, which they were not–they were adherents of the body that made the rules, and liked to keeps its friends close, and could reward them. The same, while you are at it, was true of some different varieties of public servants–but not many, and again, not before the late nineteenth century, and certainly not in the US:
"Like military pensions, pensions for loyal civil servants date back centuries. Prior to the nineteenth century, however, these pensions were typically handed out on a case-by-case basis; except for the military, there were few if any retirement plans or systems with well-defined rules for qualification, contributions, funding, and so forth. Most European countries maintained some type of formal pension system for their public sector workers by the late nineteenth century. Although a few U.S. municipalities offered plans prior to 1900, most public sector workers were not offered pensions until the first decades of the twentieth century. Teachers, firefighters, and police officers were typically the first non-military workers to receive a retirement plan as part of their compensation."
Your ad hominem appeal to Hudson's authority as a historian is amusing: it is actually not surprising that Hudson is wrong, and I am right; because he is an economic historian, with a special faculty, apparently, for conducting contemporary policy polemics; and I would be happy to give you my professional authority, except that this is the internet, so appeals to professional authority don't mean anything at all, but I'll just put it to you that it is more than sufficient; but leaving that aside, I am without a polemical agenda, except just this one: that the past needs to be respected in its totality, and that even when being used to score points in contemporary policy arguments. I know which of us has more credibility here just by reading Hudson's sentences, which are devoid of historical meaning or sensitivity; and I know that I, as a historian, would never knowingly misuse the past to make a point about the present, because that is being a bad, bad doctor.
You bring up three cases: military, clergy, and servants. Those are exactly not what Hudson is talking about when he mentions Bismarck, or the nineteenth century, or retirement and its old age provisions as a whole, so you basically proved my point just by failing to address the actual argument. What Hudson is referring to-because he says so with his one example-is the Bismarckian "Gesellschaft" obligation to what had in previous centuries been called the the third estate in generic terms. Not, mind you, the first and second estates and their servants and adherents. If Hudson were talking about pensions for the military, he would have said so, and his argument would have ended there, in a paragraph, because they are fully protected in that regard and have been, at least more than the average citizen, since the GI Bill. Pensions for the military is not part of some kind of "social obligation" for retirees; it is a reward for long service, and therefore not some kind of "right of social welfare," but a kind of compensation, and it was not much, at that, in the 19th century.
The regular clergy, which made up most of the clergy until the dissolutions, did not retire: their jobs were for life, because they lived a life of prayer, and that was not something that ever ended. The Church supported all clergy as a corporate, spiritually mandated obligation, not as a generalized "social obligation" like social security, or what Bismarck instituted. If your point is that certain corporate groups took care of their privileged members when they no longer worked, that is one thing; if your point is that "retirement" as a condition that merited social welfare, in general, the clergy don't make that for you. They were exceptions to the general rule that people had to fend for themselves, a rule that applied to the entire third estate by definition from time immemorial.
Lastly, servants: those who "retired" in the nineteenth century very often did not have the same treatments as servants in the ancien regime, many of whom died in harness in any case. But, if their employing families did continue to provide for them, they did so not out of a sense they were meeting the "obligation of society to the retired," but as a matter of family or community duty, noblesse oblige. It was completely at the mercy and discretion of the family involved. It was a matter of personal honor, and still is, when servants have been your friends and companions and have prepared and eaten the same food you have, and cleaned your mess and watched your back and brushed your horses and trained you to ride, and seen your youthful foolishness, sometimes for generations. Those are not "obligations of society"; they are personal and family and moral obligations. So Cato the Elder took some heat for his recommendations on discarding old and broken down slaves, but nobody suggested it was up to the Republic to pay for them instead. Since you're going to the ancient world, you might better have used that example than that of the soldiers.
And so all that is what Hudson is not talking about. He's talking about Bismarck's social security as a moral precedent, reflecting a widely held belief in the popular right to a social safety net after a certain age.
So of course some people were "pensioned." They were called "pensioners," and many of them were not at all "retired," but had gone on to work at other things, like soldiers who opened up fish-and-chips shops (q.v.). That does not mean that there was ever a Gesellschaft-like concept of "retirement" as a condition that brought the right to support by the commonwealth; not before Bismarck. That's what Hudson's reference tries to imply, that such a concept was common in the 19th century, at a widespread societal level in Western Civilization, and it is provably, demonstrably, obviously wrong. If it weren't, why would the Old-Age Pensions Act 1908 have ever been passed?
"Nobody anticipated in the 19th century that people would have to pay for their own retirement. That was viewed as an obligation of society."
You simply cannot construe that to have any truth, given the facts of the century. You can straw-man me about the concept of "retirement" all you like, although you are still wrong there, because the groups you name aren't people who "work for a living," which is the third estate; they are the first and second estates, and their adherents: those who fight for a living, and pray for a living, and those who obey them.
So the fact remains that Hudson's statement was just polemical fluff, and no historian worth the name should have uttered it. I guess I'll sit here and wait for his response, because yours, well .Dead Dog , March 9, 2017 at 1:22 pm
"He didn't call FICA wage withholding a tax, but of course it is."
This just drives me to apoplexy. 1, that it is not called a tax, and 2, that wage taxes are never ever reduced.
Incessant yammering about "incentives" – but doesn't a wage tax disincentivise both employers and employees with regard to wage work? – – Endless talk about how CEO's can't do ANYTHING unless their taxes are REDUCED!!!!!!! But somehow .that just goes out the window when it comes to wages – TAXES MUST GO UP.
Cheney – deficits don't matter .except apparently with regard to social security ..
The other scam about FICA and its "separate" funding is that social security being in balance is OH SO IMPORTANT – deficits will be the death of it. Yet the general fund is in deficit (see Mish today for a bunch of stuff on the hypocrisy of repubs on the deficit) and ever more deficit and nobody seriously cares about it or worries about it. MONEY can always be found for invading for Iraq, and paying for invading anybody is NEVER a problem. Feeding old folks, on the other hand, sure strains the resources
Its like it is as important to keep a reserve army of the impoverished as it is to keep the empire.Hemang , March 9, 2017 at 11:17 am
FD -'This just drives me to apoplexy' Breathe, buddy.
Yes, mate, feeding old folks – looking after the oldies so they have health care, decent food and a home.
How well each country does it reflects their views on whether it's a social obligation. For many countries, there is no safety net and families provide the care, if they can.
It's becoming that way in the west too. I don't see many governments increasing welfare for our poorest people, benefits are being gutted and those that did save for retirement are seeing their funds looted and zero interest paidDisturbed Voter , March 9, 2017 at 12:51 pm
Life in Indian joint family is great- no retirement work- food for life for a member- great lack of boredoms and lonely depressions- life, life ,- exquisite vegetarian food fit for Gods- low tech human scale towns- GREAT TO BE ALIVE ON 3 dollars a day! This talk of retirement and working and senior junior savings is so pathetic that my sex drive just evaporated into thin air reading it! Get a life.Sluggeaux , March 9, 2017 at 11:25 am
Destruction of the family by public and private corporations, with the assistance of disruption by multiple industrial revolutions is key.Arizona Slim , March 9, 2017 at 12:41 pm
It's good to read Michael Hudson's call-out of FICA as a mechanism to crush workers and transfer wealth to the already rich.
FICA is indeed the worse sort of deductive reasoning. It is based on the premise that the rich are entitled to be rich, and that the masses want to take their money from them. In America in particular, wealth has historically been based on grants from the sovereign to loot the commons (timber, agriculture, mineral extraction, railroads, military procurement, data mining, etc.). These grants to loot the commons have nearly always been based on corrupt practices of cronyism and bribery. Alchemists like Greenspan simply provide theo-classical mumbo-jumbo after-the-fact justification for their piracy.
Ironically, I was just reading about impending failure of the Oroville Dam, a prime example of America as the seat of greed. It was well-known that the spillways were inadequate and crumbling due to 50 years of use. However, the Reagan-ites of Southern California refused to tax themselves in order to save Oroville and Yuba City, 450 miles away.
It's sad that everyone, especially the rich, think that they can blow-up the United States and then fly to their bolt-hole in New Zealand or Australia - or if you're not so rich to a shack in Panama or Thailand. I suspect that we will soon find ourselves to be unwelcome pariahs in those places.Dead Dog , March 9, 2017 at 1:24 pm
And, if you're a freelancer like I am, you get to pay both sides of the FICA tax, employee and employer. Fun, fun!mk , March 9, 2017 at 1:25 pm
They may be unwelcome by the masses, but money still talks and, if you haven't got any, well you just stay right where you are.Rick Zhang , March 9, 2017 at 8:30 pm
200,000 people (even if they all voted) is not a political threat to the state and feds.MMT is the Key , March 9, 2017 at 12:30 pm
How is FICA a redistribution to the wealthy? If anything, what you pay in buys you a share of the distributions when you retire. That means the output is roughly proportional to the input you contribute. The wealthy stop contributing after roughly the $120,000 limit, but that doesn't mean they take an outsized distribution. They take home exactly the same (pre-tax) as someone who only made $120,000 per year.
If anything there's a bit of redistribution behind the scenes that favours the poor. See my earlier post. If you make too many changes to Social Security such that it becomes another welfare program, it will lose its popular backing and eventually get axed.
– Rick Zhang @ Millennial LifehackerPhilM , March 9, 2017 at 2:08 pm
Neoliberalism is OUT-DATED. Rather, for the past four decades, it's been fiat currency for the .01% and gold standard straitjacket ideology for everyone else.
"The mainstream view is no longer valid for countries issuing their own non-convertible currencies and only has meaning for those operating under fixed exchange rate regimes,
'The two monetary systems are very different. You cannot apply the economics of the gold standard (or USD convertibility) to the modern monetary system. Unfortunately, most commentators and professors and politicians continue to use the old logic when discussing the current policy options. It is a basic fallacy and prevents us from having a sensible discussion about what the government should be doing. All the fear-mongering about the size of the deficit and the size of the borrowings (and the logic of borrowing in the first place) are all based on the old paradigm. They are totally inapplicable to the fiat monetary system' (Mitchell, 2009).
We might now consider the opportunity afforded by the new monetary reality, effectively modelled by MMT. A new socio-political reality is possible which throws off the shackles of the old. The government can now act as a currency issuer and pursue public purpose. Functional finance is now the order of the day. For most nations, issuing their own fiat currency under floating exchange rates the situation is different to the days of fixed exchange rates. Since the gold window closed a different core reality exists – one which, potentially at least, provides governments with significantly more scope to enact policies which benefit society.
However, the political layer, in the way it interacts with monetary reality, has a detrimental effect on the power of democratic governments to pursue public purpose. In the new monetary reality political arrangements that sprang up under the old regimes are no longer necessary or beneficial. They can largely be considered as self-imposed constraints on the system; in short the political layer contains elements which are out-of-date, ideologically biased and unnecessary. However, mainstream economists have not grasped this situation – or perhaps they cannot allow themselves to- because of the vice-like grip that their ethics and 'traditional' training has on them.
MMT provides the best monetary models out there and highlights the existence of additional policy space acquired by sovereign states since Nixon closed the gold window and most nations adopted floating exchange rates. We just need to encourage the use of the space to enhance the living standards of ordinary people."
Heterodox Views of Money and Modern Monetary Theory (MMT) by Phil Armstrong (York College) 2015
https://www.youtube.com/watch?v=d57M6ATPZIEJim , March 9, 2017 at 4:25 pm
A new socio-political reality is possible which throws off the shackles of the old. The government can now act as a currency issuer and pursue public purpose. Functional finance is now the order of the day. For most nations, issuing their own fiat currency under floating exchange rates the situation is different to the days of fixed exchange rates. Since the gold window closed a different core reality exists – one which, potentially at least, provides governments with significantly more scope to enact policies which benefit society.
What I especially like about your post is that it finally takes the mask off and openly admits what everyone who tries to learn about MMT has realized at once: that for all of its utility in understanding money systems, it is designed and propounded with an agenda: to undermine the mores underlying centuries of private-property-based liberal capitalism. Those mores, which remain more than illusions despite the encroachments of central banks, are the last barrier to prevent state capitalism from becoming completely authoritarian, because as long as "taxation" is, at least theoretically, the limit on state spending and therefore power, then "representation" actually means something, and so representative democracy and property rights, which are the keys to a functioning productive civil society and underlie all human progress for eight hundred years, can survive a bit longer.
The very real and useful core of MMT, which describes what we see happening since the gold standard fell, and is therefore unimpeachable from a certain objective turn of mind, is Janus-faced. On the one hand, it acknowledges what the Framers knew intuitively when they gave the Federal government the power of issuing money: the sovereign makes the money. On the other, as often used here, and especially in your comment, it is a rationale for a government unrestrained by property rights and representative constraints on its power of expenditure. That will not end well, simply because it will not last long, and it will end in a military despotism or landed aristocracy (if you're lucky). Because it always has, and you are not going to change that, are you?PhilM , March 9, 2017 at 5:48 pm
In one of the recently discovered lectures (1940) by Karl Polanyi, in referring to post-war Europe (post 1918) he argued:
"The alternative was between an integration of society through political power on a democratic basis, or if democracy proved too weak, integration on an authoritarian basis in a totalitarian society, at the price of the sacrifice of democracy."
It is still the same issue today which PhilM nicely illuminates when he states: "..What I especially like about your post is that it finally takes the mask off and openly admits what everyone who tries to learn about MMT has realized at once: that for all of its utility in understanding money systems, it is designed and propounded with an agenda to undermine the mores underlying centuries of private-property-based liberal capitalism. These mores, which remain more than illusions despite the encroachments of central banks, are the last barrier to prevent state capitalism from becoming completely authoritarian, because as long as "taxation" is, at least theoretically, the limit on state spending and therefore power, then "representation" actually means something "
The national security state already has a potentially totalitarian hold on us and in the future the MMT scenario "as a rationale for a government unrestrained by property rights and representative constraints on its powers of expenditure" might nicely finish us off.
It would no longer be the neo-liberal present where the whole of society must be subordinated to the needs of the market system, but the other extreme, where the whole of society must be subordinated to the needs of the state supposedly working in the "public interest."Grebo , March 9, 2017 at 7:27 pm
Thank you for your reply. You said it better than I did, especially with the citation of Polanyi, one of my personal heroes.Allegorio , March 9, 2017 at 2:20 pm
it is designed and propounded with an agenda: to undermine the mores underlying centuries of private-property-based liberal capitalism.
You say that like it's a bad thing :-)
the last barrier to prevent state capitalism from becoming completely authoritarian
State capitalism? If this is supposed to be a topical reference I don't get it.
as long as "taxation" is, at least theoretically, the limit on state spending and therefore power, then "representation" actually means something
How so? Did "taxation" restrain Bush from spending trillions on invasions? Can't you have representation without taxation?
representative democracy and property rights, which are the keys to a functioning productive civil society and underlie all human progress for eight hundred years
I thought that was the Catholic Church
"Property rights"-the private monopolisation of the gifts of nature-at least in their traditional form, seem to me to be the third fundamental flaw in our political economy, along with Capitalism (narrowly defined) and our bogus monetary ludibrium. We need a new Church.Katy , March 9, 2017 at 12:31 pm
MMT: great stuff. With you 100%. The issue is corruption and this culture of privilege and corruption we live in. You better believe the government will be issuing currency for other than the public interest. The fact is we live in an MMT economy now, it's just that the currency created by the government is being passed out to the ethnically privileged .001%. The talk of deficits and national debt is all a smoke screen to cover up this fact. It is way past time to educate the masses on this theme, kudos to Michael Hudson & Steve Keen.Sluggeaux , March 9, 2017 at 1:02 pm
J is for Junk Economics: Amazon's "#1 New Release in Business & Professional Humor." Facepalm.Disturbed Voter , March 9, 2017 at 12:54 pm
OMFG, you're not making this up!
Bezos really is a contraction of Beelzebubdjrichard , March 9, 2017 at 1:13 pm
One part of society parasitical on the productive part .. starts small. $1 per $1000, then $10 per $1000 until it gets to $1000 per $1000. Neither bought politicians, nor bought citizens, stays bought.
Of course we shouldn't expect women and children to work that is destructive of reproduction and child raising. Some women should work some children should work but only a few. Otherwise obvious system dynamics will reduce the net population in quality and quantity.susan the other , March 9, 2017 at 1:28 pm
You're going to privatize the roads, so that now you're going to have to pay to use the road to drive to work, if you don't have public transportation.
This is a zero-sum game for the elite. They're already soaking us. If they soak us on tolls, they'll have to take less money soaking us another way.
In contrast, Fed Gov reducing spending is not a zero-sum game for the elite. That means less money to be soaked up from the public. Unless of course, the public compensates by taking out more private debt. In which case, ka ching for the elite again.
That said, I don't think the mind-set really is to reduce Fed Gov spending. Rather, the mind-set is to reduce entitlements so that other Fed Gov spending can be increased, namely on defense, intelligence communities, etc. And I really don't think the elite have much of a dog in that fight. After all, the elite suck up all the money regardless of how it's spent by the Fed Gov. So my guess is that this campaign to reduce entitlement spending is being waged by the other agencies in the Fed Gov and the eco-system that feeds off them.Jim Haygood , March 9, 2017 at 1:34 pm
In the 1980s Greenspan pushed for massive increases in FICA. And Reagan spent it on Star Wars. Recently I've read that that wasn't really a missile shield project but a cyber technology project. Today we read that the CIA has disseminated all this accumulated and obsolete technology; leased it out to private contractors; or variously bribed the Europeans with it. Etc. Fast-back to the 1930s and FDR took the same SS money for WW2. In the 60s, JFK agonized about the budget and the value of the dollar and could see no reason to go into Vietnam, but oops. LBJ bulldozed through Congress our Medicare plan, which upped SS contributions, and he went promptly into Vietnam, spending it all and stuffing the retirement funds with treasuries. Shouldn't we all be looking at how transitory these achievements (or disasters) have been. Maybe nothing more than boosting the economy for a few years every other decade or so. Money could achieve much more than this if we accepted as fact the fleeting benefits of misspending it and instead concentrated on a steady economy benefiting all. Hubris rules, but it doesn't ever make things better.a different chris , March 9, 2017 at 4:18 pm
'it's a myth that Social Security should be pre-funded by its beneficiaries' - Sharmini Peries
If it's a myth, it's one that's incorporated in the Social Security Act of 1935, as well as (for private pensions) the ERISA Act of 1974.
After about a century of experimentation, we know how to fund pensions securely: estimate the present value of the future liability using an appropriate discount rate, and then keep it funded on a current basis.
Social Security grossly violates this model in three respects. First, it is only about 20 percent funded, headed for zero in 2034 according to its own trustees.
Second, because Social Security does not avail itself of the Capital Asset Pricing Model developed in the 1960s, it invests in low-return Treasuries, which causes required contributions to be cruelly high. Had Soc Sec been invested in a 60/40 mix of stocks and bonds, FICA taxes could have been half their current level and funded higher benefits.
Third and finally, Social Security is treated as an off balance sheet obligation in the Financial Report of the United States. Unlike the legally enforceable obligation of private pension sponsors to make good on their promises, the government refuses to take responsibility and put itself on the hook. The Supreme Court has ruled that Social Security essentially is a welfare program, which Congress can cut back or cancel at will. So much for "security" - there isn't any.
Social Security is part of a general pattern of government taking a sleazy, second-rate approach to its social promises, by exempting itself from well-established prudential rules mandating best practices. Frank Roosevelt wanted his constituents to be forever dependent on the kindness of perfidious politicians. He got his wish.ajea , March 9, 2017 at 8:15 pm
>we know how to fund pensions securely: estimate the
C'mon Jim you can do better than that. Here is dictionary.com, do you see the problem with your statement?
verb (used with object), knew, known, knowing.
1. to perceive or understand as fact or truth; to apprehend clearly and with certainty:
verb (used with object), estimated, estimating.
1.to form an approximate judgment or opinion regarding the worth, amount, size, weight, etc., of; calculate approximately:Jim A , March 9, 2017 at 2:10 pm
If it's a myth, it's one that's incorporated in the Social Security Act of 1935, as well as (for private pensions) the ERISA Act of 1974.
Read Luther Gulick's memo to FDR. Read to the end:
https://www.ssa.gov/history/Gulick.htmlTim , March 9, 2017 at 2:40 pm
When you lend money to the profligate, they are happy. When you ask to be repaid, they are furious. It turns out that is just as true when workers who payroll taxes on their whole income "lend money" to the wealthy by paying excess amounts to the SS trust fund which in turn, enabled tax cuts for the wealthy. The wealthy are incensed that the SS trust fund, which has "lent" trillions to the treasury is now demanding to be "repaid" with interest.Tim , March 9, 2017 at 2:33 pm
That's the trick about S.S. that gets me. You cannot pay in 15% of your income with some amount of reasonable compounding interest for your entire career and not have a massive nest egg at the end. But the math is done straight up such that there never was interest on the payments, so we are entitled to very little, despite every other form of investing on the planet returning some kind of interest.
It's one of the reasons I argue for a Sovereign Wealth Fund to retain and manage all SS recepts, so at least the contributions and return on investment are accounted for in plain sight, so nobody can bait and switch.
And heaven forbid the Sovereign wealth fund could also be used as government bank that loans (our) money direct to citizens, without private banks getting a cut.
It ain't utopia, but it is a way of playing their game and still winning results and the pr war even in the face of the most anti-sociailst conservative.a different chris , March 9, 2017 at 4:23 pm
We need to keep up with the Feudalism 2.0 Moniker.
We continue to refine society towards only 4 classes of people:
Over the last 35 years the productivity owners have been making a run, vacuuming up all the productivity improvements leaving everybody else stagnant, before considering inflation, but with the robotic age coming, they are just getting warmed up.ChrisAtRU , March 9, 2017 at 4:07 pm
>but with the robotic age coming, they are just getting warmed up.
Henry Ford II: Walter, how are you going to get those robots to pay your union dues?
Walter Reuther: Henry, how are you going to get them to buy your cars?
Apparently not an actual quote, but one Reuther certainly endorsed.
You know "they" are just planning to kill 2/3 of us off, don't you? The elite are evil and sure many of them are stupid, but far from all of them.
"You're turning the economy into what used to be called feudalism. Except that we don't have outright serfdom, because people can live wherever they want. But they all have to pay to this new hereditary 'financial/real estate/public enterprise' class that is transforming the economy."
From Marx's "Capital", Chapter 26 (The Secret of Primitive Accumulation):
"The industrial capitalists, these new potentates, had on their part not only to displace the guild masters of handicrafts, but also the feudal lords, the possessors of the sources of wealth. In this respect, their conquest of social power appears as the fruit of a victorious struggle both against feudal lordship and its revolting prerogatives, and against the guilds and the fetters they laid on the free development of production and the free exploitation of man by man. The chevaliers d'industrie, however, only succeeded in supplanting the chevaliers of the sword by making use of events of which they themselves were wholly innocent. They have risen by means as vile as those by which the Roman freedman once on a time made himself the master of his patronus.
The starting point of the development that gave rise to the wage labourer as well as to the capitalist, was the servitude of the labourer. The advance consisted in a change of form of this servitude, in the transformation of feudal exploitation into capitalist exploitation. "
Jan 24, 2017 | economistsview.typepad.compgl : , January 24, 2017 at 09:03 AMTrump's nominee to head OMB is Mick Mulvaney - someone who sees as a high priority slashing Social Security and Medicare:libezkova -> pgl... , -1
One would think progressives would make it a high priority that this appointment does not go through.One of the simplest ways to commit a political suicide for Trump is to touch Medicare or Social Security.
Jan 21, 2017 | economistsview.typepad.comPeter K. : , January 20, 2017 at 04:26 AM"As I explained in my May 14, 2015 column "How Increasing Retirement Saving Could Give America More Balanced Trade":Peter K. -> Peter K.... , January 20, 2017 at 04:26 AM
I talked to Madrian and David Laibson, the incoming chair of Harvard's Economics Department (who has worked with her on studying the effects of automatic enrollment) on the sidelines of a Consumer Financial Protection Bureau research conference last week. Using back-of-the-envelope calculations based on the effects estimated in this research, they agreed that requiring all firms to automatically enroll all employees in a 401(k) with a default contribution rate of 8% could increase the national saving rate on the order of 2 or 3 percent of GDP."
Wasn't there a recent discussion about how 401(k)s are a sham?
Hillary should have campaigned on this policy of diverting savings to Wall Street in order to help exports. This would have gotten more voters to the polls.... Call it a private Wall St. tax on savers.
from Miles Kimball the supply-siderPeter K. -> Peter K.... , January 20, 2017 at 04:41 AMhow would Brad Setser think about an 8 percent tax on Chinese consumers that the Communist sovereign wealth fund could invest abroad for their retirement? That would boost Wall Street some more.Peter K. -> Peter K.... , -1The other benefit of Kimball's plan - from a prog neolib viewpoint - is that it would weaken Social Security.
Dec 26, 2016 | www.nytimes.com--> The Quiet War on Medicaid
By GENE B. SPERLING DEC. 25, 2016Continue reading the main story Share This Page Continue reading the main story
Progressives have already homed in on Republican efforts to privatize Medicare as one of the major domestic political battles of 2017. If Donald J. Trump decides to gut the basic guarantee of Medicare and revamp its structure so that it hurts older and sicker people, Democrats must and will push back hard . But if Democrats focus too much of their attention on Medicare, they may inadvertently assist the quieter war on Medicaid - one that could deny health benefits to millions of children, seniors, working families and people with disabilities.
Of the two battles, the Republican effort to dismantle Medicaid is more certain. Neither Mr. Trump nor Senate Republicans may have the stomach to fully own the political risks of Medicare privatization. But not only have Speaker Paul D. Ryan and Tom Price, Mr. Trump's choice for secretary of health and human services, made proposals to deeply cut Medicaid through arbitrary block grants or "per capita caps," during the campaign, Mr. Trump has also proposed block grants.
If Mr. Trump chooses to oppose his party's Medicare proposals while pushing unprecedented cuts to older people and working families in other vital safety-net programs, it would play into what seems to be an emerging strategy of his: to publicly fight a few select or symbolic populist battles in order to mask an overall economic and fiscal strategy that showers benefits on the most well-off at the expense of tens of millions of Americans.
Without an intense focus by progressives on the widespread benefits of Medicaid and its efficiency, it will be too easy for Mr. Trump to market the false notion that Medicaid is a bloated, wasteful program and that such financing caps are means simply to give states more flexibility while "slowing growth." Medicaid's actual spending per beneficiary has, on average, grown about 3 percentage points less each year than it has for those with private health insurance, according to the Center on Budget and Policy Priorities - a long-term trend that is projected to continue. The arbitrary spending caps proposed by Mr. Price and Mr. Ryan would cut Medicaid to the bone, leaving no alternative for states but to impose harsh cuts in benefits and coverage.Continue reading the main story Advertisement Continue reading the main story
Mr. Price's own proposal, which he presented as the chairman of the House budget committee, would cut Medicaid by about $1 trillion over the next decade. This is on top of the reduction that would result from the repeal of the Affordable Care Act, which both Mr. Trump and Republican leaders have championed. Together, full repeal and block granting would cut Medicaid and the Children's Health Insurance Program funding by about $2.1 trillion over the next 10 years - a 40 percent cut.
Even without counting the repeal of the A.C.A. coverage expansion, the Price plan would cut remaining federal Medicaid spending by $169 billion - or one-third - by the 10th year of his proposal, with the reductions growing more severe thereafter. The Henry J. Kaiser Family Foundation estimated that a similar Medicaid block grant proposed by Mr. Ryan in 2012 would lead to 14 million to 21 million Americans' losing their Medicaid coverage by the 10th year, and that is on top of the 13 million who would lose Medicaid or children's insurance program coverage under an A.C.A. repeal.
The emerging Republican plan to "repeal, delay and replace" the A.C.A. seeks to further camouflage these harmful cuts. Current Republican plans to eliminate the marketplace subsidies and A.C.A. Medicaid expansion in 2019 would create a health care cliff where all of the Medicaid funds and subsidies for the A.C.A. expansion would simply disappear and 30 million people would lose their health care.Advertisement Continue reading the main story
In the face of such a manufactured crisis, the Trump administration could cynically claim to be increasing Medicaid funding by offering governors a small fraction of the existing A.C.A. expansion back as part of a block grant. No one should be deceived. Maintaining a small fraction of the current Medicaid expansion within a tightly constrained block grant is not an increase.
Some might whisper that these cuts would be harder to beat back because their impact would fall on those with the least political power. Sweeping cuts to Medicaid would hurt tens of millions of low-income and middle-income families who had a family member with a disability or were in need of nursing home care. About 60 percent of the costs of traditional Medicaid come from providing nursing home care and other types of care for the elderly and those with disabilities.
While Republicans resist characterizations of their block grant or cap proposals as tearing away health benefits from children, older people in nursing homes or middle-class families heroically coping with children with serious disabilities, the tyranny of the math does not allow for any other conclusion. If one tried to cut off all 30 million poor kids now enrolled in Medicaid, it would save 19 percent of the program's spending. Among the Medicaid programs at greatest risk would be those optional state programs that seek to help middle-income families who become "medically needy" because of the costs of having a child with a serious disability like autism or Down syndrome.
Democrats at all levels of government must aggressively communicate the degree to which these anodyne-sounding proposals would lead to an assault on health care for those in nursing homes and for working families straining to deal with a serious disability, as well as for the poorest Americans. With many Republican governors and local hospitals also likely to be victimized by the proposals of Mr. Ryan and Mr. Price, this fight can be both morally right and politically powerful . Republicans hold only a slight majority in the Senate. It would take only three Republican senators thinking twice about the wisdom of block grants and per capita caps to put a halt to the coming war on Medicaid.Gene B. Sperling was director of the National Economic Council from 1996 to 2001 and from 2011 until 2014.
Dec 23, 2016 | economistsview.typepad.comlikbez : December 23, 2016 at 04:07 PM
"One neat trick to stop Social Security 'Reform'"
=== quote ===
Republicans constantly try to bring Social Security into ongoing debates about 'Balanced Budgets'. But they face a fundamental problem with their math. For a variety of reasons, some quite reasonable and others nakedly political (seniors vote) nearly every 'Reform' proposal out there promises to hold 55 and older harmless. Meaning you can't have any more than miniscule effects on Cost projections until today's 54′s and younger start retiring. Except for a handful of early retirees that event happens 11+ years in the future, which is to say outside the 10 year Budget Scoring window.
You can't have a fix to a problem scored over 10 years with a solution starting Year 11. Sure the 'Reformers' will blather about "Infinite Future Horizons". But any proposal that spares current seniors from cuts will score close to zero by CBO and JCT. You just have to count years on your fingers.
... ... ...
GOP plans to "reform" Social Security often take this form
1. Américas $20 trillion public debt is unsustainable
2. Current Budget Deficits add to that debt
So far so good
3. Social Security must be part of that discussion
4. 55 and orders must be shielded from changes that allow them no time to adjust
5. (The Bush/Krasting argument) Payrolll tax increases across the board are neither politically possible nor econimically wise
All three of these are doubtful. This post points out that 2 and 3 +4 (2nd edit) are incompatible within a structure that assumes 10 year budget scoring. Argue or acknowledge that specific point and we can move on.
... ... ..
GOP point one is interesting on several fronts. One it is debatable on its own terms. It it is not clear that current Public Debt is unsustainable on a percentage of GDP basis, especially when you take that in the form of Debt Service at current and projected 10 year rates. A $10 trillion debt at 8% (roughly Bush era) is twice as expensive as a $20 trillion debt at 2% in debt service terms and assuming principal rollover. Simply put Obama years have seen a massive refi of Public Debt. Much credit for which belongs to the Feds QE1 and QE 2.
... ... ..
Jim A, December 15, 2016 11:31 am
Of course that 22% benefit cut is an illusion created by thinking that the SS trust fund is something more substantial than your left pocket borrowing from your right pocket and giving it IOUs.
Assuming that we were to simply run out the clock and make no changes to SS until the trust fund ran out. On the day before the trust fund ran out we would have combined general revenues and government borrowing sufficient to redeem the special, non-negotiable bonds held in the trust fund. On the day afterwards, the general revenue and the ability to the US treasury to borrow money wouldn't have changed. Under current law we would at that point be forced to cut benefits to all retirees by 22%.
Presumably that 22% of revenue that was NOT being spent to repay the trust fund would be applied as deficit reduction. Or used for tax cuts or new discretionary spending. Of course those are all political impossibilities, and would never happen.
It is important to the Republicans that want to reform SS that people never realize that we can afford to pay the shortfall in SS revenues from the treasury. Because once people realize that, they will be more comfortable with that than they will be with the alternatives.
Donald Trump campaigned on a promise not to cut Social Security, which puts him at odds with the Republican Party's historical antipathy to the program and the aims of today's Republican leadership. So it should come as no surprise that congressional Republicans are already testing Mr. Trump's hands-off pledge.
... ... ...
As Congress drew to a close this month, Sam Johnson, the chairman of the House Social Security subcommittee, introduced a bill that would slash Social Security benefits for all but the very poorest beneficiaries. To name just two of the bill's benefit cuts, it would raise the retirement age to 69 and reduce the annual cost-of-living adjustment, while asking nothing in the way of higher taxes to bolster the program; on the contrary, it would cut taxes that high earners now pay on a portion of their benefits. Last week, Mark Meadows, the Republican chairman of the conservative House Freedom Caucus, said the group would push for an overhaul of Social Security and Medicare in the early days of the next Congress.
... ... ...
Another sensible reform would be to bring more tax revenue into the system by raising the level of wages subject to Social Security taxes, currently $118,500. In recent decades, the wage cap has not kept pace with the income gains of high earners; if it had, it would be about $250,000 today.
The next move on Social Security is Mr. Trump's. He can remind Republicans in Congress that his pledge would lead him to veto benefit cuts to Social Security if such legislation ever reached his desk. When he nominates the next commissioner of Social Security, he can choose a competent manager, rather than someone who has taken sides in political and ideological debates over the program.What Mr. Trump actually will do is unknown, but his actions so far don't inspire confidence. By law, the secretaries of labor, the Treasury and health and human services are trustees of Social Security. Mr. Trump's nominees to head two of these departments, Labor and Treasury - Andrew Puzder, a fast-food executive, and Steve Mnuchin, a Wall Street trader and hedge fund manager turned Hollywood producer - have no government experience and no known expertise on Social Security.
His nominee to run the Department of Health and Human Services, Tom Price, a Republican congressman from Georgia, has been a champion of cuts to all three of the nation's large social programs - Medicare, Medicaid and Social Security. When discussing reforms to Social Security, he has ignored ways to bring new revenue into the system while emphasizing possible benefit cuts through means-testing, private accounts and raising the retirement age.
There is no way to mesh those ideas with Mr. Trump's pledge. But Mr. Price, who currently heads the House Budget Committee, has found a way to cut Social Security deeply without Congress and the president ever having to enact specific benefit cuts, like raising the retirement age. Recently, he put forth a proposal to reform the budget process by imposing automatic spending cuts on most federal programs if the national debt exceeds specified levels in a given year. If Congress passed Mr. Trump's proposed tax cut, for example, the ensuing rise in debt would trigger automatic spending cuts that would slash Social Security by $1.7 trillion over 10 years, according to an analysis by the Center for American Progress, a liberal think tank. This works out to a cut of $168 a month on the average monthly benefit of $1,240. If other Trump priorities were enacted, including tax credits for private real estate development and increases in military spending, the program cuts would be even deeper.
Mr. Trump's hands-off approach to Social Security during the campaign was partly a strategic gesture to separate him from other Republican contenders who stuck to the party line on cutting Social Security. But he also noted the basic fairness of a system in which people who dutifully contribute while they are working receive promised benefits when they retire. Unfortunately, he has not surrounded himself with people who will help him follow those instincts.Susan Anderson is a trusted commenter Boston 1 hour agoThere is a simple solution to Social Security.Thomas Zaslavsky is a trusted commenter Binghamton, N.Y. 1 hour ago
Remove the cap, so it is not a regressive tax. After all, Republicans appear to be all for a "flat" tax. Then lower the rate for everyone.
There is no reason why it should only be charged on the part of income that is needed to pay for necessary expenses should as housing, food, medical care, transportation, school, communications, and such. Anyone making more than the current "cap" is actually able to afford all this.
There is no reason the costs should be born only by those at the bottom of the income pyramid.
As for Republican looting, that's just despicable, and we'll hope they are wise enough to realize that they shouldn't let government mess with people's Social Security!The idea hinted in the editorial that Trump has any principle or instinct that would lead him to protect benefits for people who are not himself or his ultra-wealthy class is not worthy of consideration. No, Trump has none such and he will act accordingly. (Test my prediction at the end of 2017 or even sooner; it seems the Republicans are champing at the bit to loot the government and the country fro their backers.)Christine McM is a trusted commenter Massachusetts 2 hours agoI wouldn't hold Trump to any of his campaign promises, given how often he changes positions, backtracks, changes subjects, or whatever. His biggest promise of all was to "drain the swamp" and we know how that turned out.Rita is a trusted commenter California 2 hours ago
He might have a cabinet of outsiders, but they are still creatures from outside swamps. That said, if there is even the barest of hints that this is on the agenda, I can pretty much bet that in two years, Congress will completely change parties.
Imagine: cutting benefits for people who worked all their lives and depend on that money in older age, all in order to give the wealthiest Americans another huge tax cut. For a fake populist like Trump, that might sound like a great idea (he has no fixed beliefs or principles) but to his most ardent supporters, that might be the moment they finally get it: they fell for one of the biggest cons in the universe.Given the Republican desire to shut down Medicare and Social Security, it is not hard to predict that they will do so a little at a time so that people will not notice until its too late.Mary Ann Donahue is a trusted commenter NYS 2 hours ago
But since the Republicans have been very upfront with hostility towards the social safety net, one can conclude that their supporters want to eliminate social safety net.Mary Scott is a trusted commenter NY 4 hours ago
RE: "To name just two of the bill's benefit cuts, it would raise the retirement age to 69 and reduce the annual cost-of-living adjustment..."The COLA for 2017 is .03% a paltry average increase of $5 per month. There was no increase in 2016.
The formula for how the COLA is calculated needs to be changed to allow for fair increases not reductions.Republicans have been promising to "fix" Social Security for years and now we are seeing exactly what they mean. We can see how low they're willing to stoop by their plan to cut the taxes that high earners now pay on a portion of their benefits and decimate the program for everybody else. I wouldn't be surprised if they raised SS taxes on low and middle income earners.serban is a trusted commenter Miller Place 4 hours ago
There has been an easy fix for Social Security for years. Simply raise the tax on income to $250,000 thousand and retirees both present and future would be on much firmer footing. Many future retirees will be moving on to Social Security without the benefit of defined pension plans and will need a more robust SS benefit in the future, not a weaker one.
Don't count on Donald Trump to come to the rescue. He seems to hate any tax more than even the most fervent anti-tax freak like Paul Ryan. Mr. Trump admitted throughout the campaign that he avoids paying any tax at all.
The Times seems to want to give Mr. Trump limitless chances to do the right thing. "Will Donald Trump Cave on Social Security" it asks. Of course he will. One has only to look at his cabinet choices and his embrace of the Ryan budget to know the answer to that question. Better to ask, "How Long Will It Take Trump To Destroy Social Security?"
At least it would be an honest question and one that would put Mr. Trump in the center of a question that will affect the economic security of millions of Americans.Cutting benefits for upper income solves nothing since by definition upper incomes are a small percentage of the population. The obvious way to solve any problem with SS is to raise taxes on upper incomes, the present cap is preposterous. People so wealthy that SS is a pittance can show their concern by simply donating the money they get from SS to charities.david is a trusted commenter ny 4 hours ago
We can get some perspective on what Social Security privatization schemes would mean to the average SSS recipient from Roger Lowenstein' analysis of Bush's privatization scheme.
Roger Lowenstein's Times article discusses the CBO's analysis of how the Bush privatization scheme for Social Security would reduce benefits.
"The C.B.O. assumes that the typical worker would invest half of his allocation in stocks and the rest in bonds. The C.B.O. projects the average return, after inflation and expenses, at 4.9 percent. This compares with the 6 percent rate (about 3.5 percent after inflation) that the trust fund is earning now.
The second feature of the plan would link future benefit increases to inflation rather than to wages. Because wages typically grow faster, this would mean a rather substantial benefit cut. In other words, absent a sustained roaring bull market, the private accounts would not fully make up for the benefit cuts. According to the C.B.O.'s analysis, which, like all projections of this sort should be regarded as a best guess, a low-income retiree in 2035 would receive annual benefits (including the annuity from his private account) of $9,100, down from the $9,500 forecast under the present program. A median retiree would be cut severely, from $17,700 to $13,600. "
Dec 14, 2016 | www.nakedcapitalism.com
Originally published at Angry Bear
The Republicans have opened a new assault on Social Security. At present all I know about it is what I read in a Talking Points Memo by Tierney Sneed Key House GOPer Introduces Bill With Major Cuts To Social Security .
The trouble with Sneed's article is that she does not appear to know what she is talking about. She just wrote down what some "experts" told her with no idea what the words mean.
For example, she says,
"A 65 year-old at the top of the scale, a $118,500 average earner, would see his benefits cut by 25% when he retired, compared to the current law, and that reduction would grow to 55 percent compared to current law by the time the retiree was 85 years old."
Well, which is he, "at the top of the scale" or an "average earner"?
The point is probably trivial but I point it out so you will be on your guard if you read her article.
Additionally she quotes Paul Van de Water, who is someone who actually knows that Social Security can be fixed entirely and forever by simply raising the payrolll tax one tenth of one percent per year until the balance between wage growth and growth in the cost of retirement is restored. But somehow she doesn't bother to mention this, or maybe Van De Water forgot to mention it because he favors a "tax the rich" solution without understanding that that will turn Social Security into welfare as we knew it, and lead to its ultimate destruction by those rich who would then be paying for it.
Social Security has succeeded because Roosevelt insisted it be paid for by the workers who would get the benefits, "so no damn politician can take it away from them."
But the damn politicians keep lying and journalists keep repeating the lies without spending ten minutes thinking about them. The basic "facts" about the Republican proposal, introduced by Texas Congressman Sam Johnson appear to be :
- gradually raise the retirement age from 67 to 69.
- This amounts to a benefit cut of about 10%, but that's not the worst of it. Raising the retirement age is simply a death sentence for people whose health is not up to working another two years, or won't live to collect benefits for more than a few years after they retire.
- change the cost of living adjustment to reduce real benefits as the retiree gets older .
- This is called a "technical adjustment." They can pretend that the CPI is too generous and know that most people won't understand the scam.
- the size of initial benefits will be cut for most workers by catastrophic amounts .
This turns Social Security into a straight welfare plan. Most people will be paying for benefits they will never get. The very poorest are promised a larger benefit for awhile until the bogus cost of living adjustment, and increased retirement age do their work. Moreover it is not clear what happens to "the rich" who lose their "side income" as they get older. And of course there is always the fun of going to the welfare office every month to prove that you don't have any hidden assets.
Meanwhile, the CRFB (Committee for a Responsible Federal Budget). an organization dedicated to the destruction of Social Security by misrepresenting the facts, is playing cute games like "use our calculator to find out how old you will be when SS runs out of funds."
But SS will never run out of funds as long as the workers are allowed to pay in advance for their own benefits. With no change at all in SS, SS will pay 80% of "scheduled benefits," but this is 80% of scheduled benefits which meanwhile have grown 25% in real value. So the GOP "plan to save SS" is out and out theft.
CRFB has another cute game: "use our calculator to design your own plan to save social security." But when I used their calculator it did not allow "increase the payroll contribution by one tenth percent (for each the worker and the employer) per year for twenty years.
There are other ways to accomplish the same end, but this seemed to be the simplest way to fit the CRFB "calculator." Someone with more time and a newer browser might want to try seeing what they get. But look at small per year increases in payroll contribution. For example, I think a 0.4% increase (combined), about two dollars per week for each the worker and the employer, should solve the problem in ten years, but I haven't done the numbers on that myself.
Meanwhile, something that calls itself "the Bipartisan Policy Center, says "Ultimately, we are going to need something that's a little more balanced between benefits saving and revenue changes in order to get a proposal that could pass Congress and get approved by the president," said Shai Akabas, director fiscal policy at the Bipartisan Policy Center."
It's hard to see how much cuts ("benefit savings") make sense to balance a dollar a week increase in the payroll tax (revenue changes), but that's the kind of thinking that "Bipartisan" gets you. "Hey folks, we can save you a dollar a week just by gutting Social Security so it becomes meaningless as insurance so workers can retire at a reasonable age."
I am getting too discouraged. As long as no one is working to tell the people how this will work for them, we are just going to stand around like sheep and watch them cut our throats.ambrit , December 14, 2016 at 4:28 amPlutoniumKun , December 14, 2016 at 6:06 am
As someone who grew up with the promise of Social Security as a minimal income support system for my old age I can attest to the fact that when the "average" retiree, who has almost no individual savings accrued, steps in the pile of Social Security "reforms," there will be not just a wailing and gnashing of teeth.
Modern age old people no longer can rely on extended families for support. Those extended families have been fragmented by the pressures of "modern" socio-economics. This is prime territory for a demagogue.
The Twentieth Century had World War 1.0 and a subsequent "Lost Generation." It's increasingly looking like the Twentyfirst Century will have the GFC, Social Support 'Reforms' and a subsequent "Euthanized Generation."
Remember, this process will not affect just oldsters. It will suck in those closest to said oldsters as emergency support resources. It won't be only oldesters who will be watching elites "over iron sights."Cry Shop , December 14, 2016 at 6:39 am
Perhaps someone will enlighten me, but this is one thing that really puzzles me about the Republican determination over many years to gut social security. I can understand their ideological fixation with it – what I can't understand is why they are so willing to play electoral fire with it. Surely this directly attacks millions of core Republican voters?
They may be able to fool many of them with deceptive slogans, but surely when the prospect of finding their pensions slashed faces them, even the most supine and gullible middle American Republican voter in their middle to late years is going to realise they've been had. The backlash could be enormous. I find it hard to see how any rational politician would want to go near it.Leigh , December 14, 2016 at 7:29 am
They will find a way to blame it on the Democrats, and more importantly, on Blacks, Hispanics and other minorities. They will sell the cuts and privatizations as the only way to save the system that has been so badly damage by the fore mentioned, and as long as their base gets their beliefs from Faux News, Bretbart, etc; it's quite probably the Republicans will succeed in getting what they want while screwing down the ever hapless Democratic party.
I've met more than a few who'd almost be pleased to suffer as long as they thought blacks were being made to suffer even more. There's no logic when hate gets this strong.Scott , December 14, 2016 at 7:49 pm
Exactly, the same way they have mortally wounded our once stellar public education system, (a system once good enough to educate our "Greatest Generation) – is now a shell, death by a thousand cuts
Also, if you think income disparity is bad now? – hang on to your wallet, because after 4 years of Trump and his prospective cabinet picks, it will hit the stratosphere.
"There's no logic when hate gets this strong" – so true.Steve C , December 14, 2016 at 7:50 am
Smart to point at the educational system.
I have not found many youths who can tell me what they want to do. I find this really weird.
It is true that if you know what you want to do the library will do.
Thanks to Ben Franklin, inventors, engineers had a place to hang out and collect information they could use.
Maybe you had to live in NYC to have a NYCity library card, but it is a big city.
Meantime Charter schools, which sounded great to us when at Kenwood on the Southside, are gaining ground and collecting tax money regardless of results.
They are said now in Not Conscious to be handing out diplomas same as Public Schools did to get some bodies out the door.
I was a graduate, but denied attendance at the diploma hand out thing, cause I refused to pay, for my public school diploma. Public education, supposed to be free to citizens.
People think I didn't graduate.
The Union believed in Trump. I get sick about lots of things. It will be worse than they think.
Education & Defense are what the government is for.Pat , December 14, 2016 at 8:10 am
Twelve years ago the Republicans needed the Democrats to actually plunge the knife on the back. Democrats like Joe Lieberman dearly wanted to lend a bipartisan hand but Pelosi and Reid actually rallied to prevent it. Talking Points Memo was all over it then. Now they're on top of Paul Ryan's machinations to privatize Medicare and this Social Security scam. Kind of raised some old feelings for TPM, but they're also heavily flogging the CIA Russian hacking dembot campaign.
About the only thing I knew about Hillary's agenda is that she wanted to means test Social Security and Medicare and start new wars. Obama wanted to do many of the cuts in Sam Johnson's bill but was foiled by Tea Partiers who couldn't take yes for an answer or were smarter than they seemed.
Both Schumer and Pelosi said the Democrats would oppose any of these current plans. We'll see.Steve C , December 14, 2016 at 8:34 am
I would hope they would realize that Social Security and Medicare are issues where the only winning move is to expand them. IOW, they need to realize this is an area where the campaign donors need to be told to pound sand, shut up and expect to pony up – as in you ARE going to be paying more into the system.
But these are people who thought there was no way that Clinton could lose, that this Russia nonsense is a winning strategy and that ACA was going to be good for Democrats once people got to know it. IOW, their grasp of reality outside their bubble might as well not exist it is so broken.
So while my fingers are crossed they still want their jobs AND aren't completely delusional, I also know we better put the fear of the voters into every member of Congress about grannies and wannabe grannies with canes beating them to a pulp any time they leave their house.
And by grannies I mean anyone on SS, and wanna be grannies everyone who someday might be able to retire or at least only work part time after retirement age because of SS.Pat , December 14, 2016 at 9:22 am
For Democrats it's not about winning. It's about pleasing the donors.Steve C , December 14, 2016 at 1:42 pm
IF they cannot win an election they will not have any donors, and they are rapidly getting to the point where a Democrat getting elected to a national office is the exception. Not to mention there are a large number of states where that is pretty much the case. There is no reason to try to bribe people so you can have them in your pocket if they are powerless.
They are terrible at strategy, but eventually they may figure out they need voters. You do NOT alienate seniors as seniors are the most reliable voters around. Oh, and most of those seniors have grandchildren they think deserve Social Security and Medicare as well. The only winning strategy is to protect and expand.Larry Motuz , December 14, 2016 at 8:16 pm
I forgot to mention the consultant class. Absent a hostile takeover the Democrats may not be fixable. Their disdain for and disconnect from the voters will do them in.Spring Texan , December 14, 2016 at 9:54 am
Gerry-mandering: When politicians pick the voters, instead of the voters picking the politicians.
Fixing that could fix politics.dontknowitall , December 14, 2016 at 8:31 am
Would love to see this repeated and repeated, because although it's hard, we need to grasp this fact:
their grasp of reality outside their bubble might as well not exist it is so broken.
their grasp of reality outside their bubble might as well not exist it is so broken.
their grasp of reality outside their bubble might as well not exist it is so broken.
their grasp of reality outside their bubble might as well not exist it is so broken.
their grasp of reality outside their bubble might as well not exist it is so broken.Praedor , December 14, 2016 at 12:47 pm
Sam Johnson the same Sam Johnson who wrote "I spent seven years in the Hanoy Hilton. The Hanoy Hilton is no Trump hotel." back in July ? Who milks his Vietnam tour of duty like a rabid milkmaid Who says "I do not feel like a hero, and I do not call myself one" in the tones of one who thinks the exact opposite? Who is constant cahoots with McCain (who is currently trying to sink a Trump presidency) why am I not surprised that a neoliberal faction of the senatorial republican party in seeking to weaken a populist president-elect is reaching for the third rail with both hands and smearing all republicans with the same brush. I doubt very much Trump will weaken social security since he knows it is the only thing his rebellious base of Deplorables can depend on call me simple but Trump won this election against practically everyone and he knows his base is the only sure recourse he has.oh , December 14, 2016 at 1:51 pm
I don't count on that (Trump knowing not to touch Social Security). I wouldn't be surprised if he went for privatization. HE will never ever need Social Security so why concern himself over it? He's already throwing his electoral base under the bus with his cabinet picks. Every single one of them is a direct violation of his pre-election promises.susan the other , December 14, 2016 at 12:28 pm
I heard that there special rooms available for Johnson and McCain at the Hanoi Hilton! I urge them to take advantage of this excellent offer.oh , December 14, 2016 at 1:53 pm
I think Hillary also wanted to increase the payroll tax by 3% (an enormous amount of money) and use it to privatize 3% of the SS funds to make up for shortfalls, ostensibly. They better have a good insurance policy so that'll be another 3%. All this nonsense because we refuse to admit we need social policies and social funding of the basic things. We are committing suicide 24/7 these days. Why don't we just call it all insurance?Praedor , December 14, 2016 at 12:43 pm
The financial (rentier) crowd want to get their claws on the SS funds. They'll achieve their goal unless we kick their puppets out of Congress.
They already have their teeth into your IRA funds, student loans, home mortgages and your bank funds, It won't be too long before a Trojan Horse Prez signs away your SS. Beware!Steve C , December 14, 2016 at 1:44 pm
We'll see if the Dems stand firm and fight back OR go for the old "bipartisanship!" bullcrap and instead agree to a lessor CUT. They would then promote it as the two sides working together.
Typical neoliberal Dem establishment move.
Or are the progressive forces ascendant and ready to fight absolutely?
We'll see. In any case, the House will pass it, no question. The test is in the senate where the Dems still have some teeth available (whether they USE those teeth is another thing altogether).jrs , December 14, 2016 at 9:34 pm
If so, the Democrats are finished.Paul P , December 14, 2016 at 2:29 pm
Yea Senate that consists of a bunch of millionaires (on both sides).jawbone , December 14, 2016 at 4:34 pm
The Democratic Party must be made to defend Social Security as they rallied
against Bush's privatization plan. They will do so for political advantage, but they
too have attacked Social Security. Obama attacked it on three occasions–the Deficit Commission, the chained CPI added to a budget proposal, and the timing of married couples claiming benefits–and, were it not for Monica Lewinsky distracting
Bill Clinton, Bill Clinton would have been attempting to privatize Social Security, not Bush.
Now it the time to contact your senators and representatives: NO CUTS.Cry Shop , December 14, 2016 at 7:17 pm
As things stand, what you recommend is the best action to take as of right now. It is not enough, but when letters come in to Dems and Repubs stating the senders will NEVER vote for anyone who votes to mess with Social Security, Medicare, Medicaid, there might be some reactions.
BUT it needs to be many, many, many people writing, calling, and meaning it when stating "Representative/Senator XXX, you mess with this and you will never, ever get a vote from me."
How do we get enough people to take action???
Is Bernie on the ball about this?Paul Art , December 14, 2016 at 7:24 am
Humm, if you are depending on Bernie or any one politician to save you, then you've lost the point of Democracy. It's all of you forcing them to do the right thing.
Bernie Sanders has said it himself, even FDR said to Black Activist asking for an anti-discrimination executive order to the defense industry: "I agree with you, I want to do it, now make me do it." They did do it, by threatening a strike during WWII, for which some were sent to jail. That's what it's going to take, because voting once every 2 or 4 years isn't going to cut it.Cry Shop , December 14, 2016 at 8:31 am
They will never attack current beneficiaries. This is a lesson they have learnt over the years. This is why they changed tack in the 1980s and keep raising the eligibility age which is a very soft target. One thing the GOPers understand really well is, GOPer Seniors ALWAYS vote and some Dem Seniors vote sometimes. So they will leave current beneficiaries alone. GOPer Seniors – almost all of them are driven by the conviction (Tea Party types) that Social Security and Medicare are under jeopardy because of illegal immigration and because Social Security funds are being raided and handed over to other beneficiaries like those on Disability etc. They have plenty of traction on this because if you go ask the average 25 year old or even a 40 year old today whether they can count on Social Security, most of them being morons and having swallowed the MSM propaganda will tell you, 'I don't think it will be around when I get to 65'. I am fairly certain there are polls to back this up. This is what the Greenspan Blue Ribbon Commission cleverly did under Reagan. The people who are in their 50s today were in their late 20s in the 1980s and clueless about what exactly Greenspan did to the eligibility age. So telling current beneficiaries that its good to cut benefits for future beneficiaries makes a lot of sense to current beneficiaries. In any case SS is toast. I think we will have to wait for the entire cycle of Old Age poverty to take root again in another 50-60 years and for the tide to turn. It was wide spread old age poverty that prompted FDR and also Trueman into action for SS and Medicare respectively.
Sewer species like Pete Peterson and the Hedge Funders target SS because it is a very productive way to create mass unemployment and lower wages. They don't want people removed from the labor market by SS when they become 65. Their secret longing is to drive down wages to the point where the per hour rate will equal the human mules you see pulling overloaded hand carts in Mumbai, India or Shangai, China. This is really the agenda. This is basically the psychology of monopoly thinking. When you have captured markets up to a 95% level then you start looking like an idiot because you have closed off growth altogether. Monopolies do not grow because there are no more markets left. So the next thing to do is increase profits via driving labor costs down – standard Michael Porter Harvard Business School trick. This is what they have been doing in the last 40 years.RUKidding , December 14, 2016 at 10:21 am
It's how they are selling every sort of deregulation. it destroys the future, but who gives a damn about their children and grand-kids, the ungrateful snots. Shipping the old folks off to the retirement home has divorced them from both the care and of caring about their descendants.BeliTsari , December 14, 2016 at 9:11 am
Your comment about the old folks home is right on target. The better class of senior housing establishments are often the most fortified of bubble worlds, and the Seniors there spend hours ranting to each other about how the younger generation has screwed them over somehow. I've witnessed it first hand. They've been carefully taught not to give a crap about future generations, including their own kids and grandkids. It's all about MEEEEEEEEEEE .RUKidding , December 14, 2016 at 10:22 am
Thank you, I think a lot of us have noticed the veracity of this, especially over the last four decades. Show of hands who else out there is sufficiently paranoid, to consider signing-up a year early & simply absorbing the hit, with some silly fantasy of being grandfathered-in?BeliTsari , December 14, 2016 at 11:45 am
Hand is raised in the air.
My siblings have done that for just this reason.Steve H. , December 14, 2016 at 12:01 pm
Thanks! I was dizzy from a bad head cold, working in very bagger-ridden environs (a quite literally Dikensian hell-hole in Pennsyltucky), applying for Medicare and fishing through obfuscatory pleonasm, picking Plan D & N insurers the 2nd or 3rd page in, they ask you if you're applying for "benefits" at this time! Jesus Anybody ANYBODY??? I have some meager equity (at least, last time I looked?) sufficient for a decade or so. But with Republicans dying young?BeliTsari , December 14, 2016 at 12:05 pm
New word, thank you.
You can never have too many wordsUserFriendly , December 14, 2016 at 10:49 am
I doubtless stole it from Izzy Stone or Frank Zappa, while high?jawbone , December 14, 2016 at 4:37 pm
Increasing the retirement age while the average life expectancy is decreasing seams especially crewel. Combine that with that piece from the times that showed people like me, born in the 80's only have a 50% chance of earning more than our parents and that we are already drowning in student debt and that is a full on assault on the youth of this country. Screw the national debt burdening future generations, this will actually burden us. This really is the worst country in the world. Fuck Patriotism.JTMcPhee , December 14, 2016 at 11:23 am
Phrases to remember: "Hurry Up and Die" and "Soylent Green is People."Susan Nelson , December 14, 2016 at 7:03 pm
Anyone who has a chance of affecting the behavior of AARP when it comes to SS and Medicare needs to step up and apply whatever pressure they can to get that thing to return to its origins and "work the issue" for their members, present and future. I know, it's mostly just another front for insurance and other sales pitches and scams and "cruise packages" and other lifestyle crap, but at least there has to be some skeletal remains of the original bones of the organization in there somewhere.
Or failing that, is there another entity that might be worth supporting and joining with, to go on the offensive and fight back? I would hate to think it's all futility and "47%" from here on out.JTMcPhee , December 14, 2016 at 9:17 pm
Alliance for Retired Americans https://retiredamericans.org/
Social Security Works http://www.socialsecurityworks.org/Cry Shop , December 14, 2016 at 8:42 pm
Thanks. Will examine for signs of actual utility versus collection of data and $$.JL , December 14, 2016 at 11:54 am
AARP's origins? It was founded by an insurance salesman as a slick way to sell, yep you guessed it, the industry's interests to a powerful bank of less than bright voters.jrs , December 14, 2016 at 9:43 pm
Just want to point out that you both degrade avg 40yo for thinking they can't count on SS and in the same post claim SS is toast.
Some of us don't think we'll be able to count on SS because the elite are determined to raid that cash flow, not because we've swallowed the B's line.Marco , December 14, 2016 at 7:34 am
Some of us question if there won't be mass human extinction before then. Maybe there will be no old age for many people alive today including yours truly. But nonetheless, if by some miracle the worst doesn't happen then Social Security is important.Steve C , December 14, 2016 at 1:51 pm
Prez Hope and Change's support for chained-CPI will certainly complicate the fight against this. If Obama and his Rubinite stable of bean-counting butt-boys were for it then it must be okay?voteforno6 , December 14, 2016 at 7:36 am
See Paul Art's comment above. Obama worked to keep wages low to please the Pete Petersons of the world.RUKidding , December 14, 2016 at 10:37 am
They're banking on getting some Democratic support, to make it bipartisan. With weasels like Mark Warner in the Senate, they might get some Democrats to sign on to this.Carolinian , December 14, 2016 at 8:20 am
Eh? Democrats will line up with their Republican BFFs to screw over the proles. Given how Democrats are now a very Rump party in this nation, what have they got to lose? Why take of their alleged "constituents" in the 99% What a laugh. The constituents of the Dem pols are, have always been, and will continue to be the .01%. So the Dems will happily oblige their real constituents by screwing over the proles. Anyone who expects a different outcome is not living in reality.NotTimothyGeithner , December 14, 2016 at 9:32 am
Perhaps it's because "the banks own this place." Also the Republicans, like the Dems, are running on the fumes of past ideological obsessions and Social Security was always seen as a prime Dem vote getter and flagship of the hated New Deal. Remember Karl Rove wanted to take the country back to the McKinley administration. But mostly it's probably because people like Paul Ryan are creatures of their funders.oh , December 14, 2016 at 2:33 pm
Plenty are stupid, but the Democrats are in complete disarray. The GOP will face push back from their voters, but the Democrats as they are now are not a threat to win any time soon. AARP recognizing the interests of its members can shake Washington, but right now, the GOP sees no threat to its rule.John Wright , December 14, 2016 at 10:17 am
Many of the not so weathy Repubs are 'rich wannabes'. So they'll gladly toe the line on cut social security cuts and free market memes. They think that they have noting to worry about because they'll be wealthy before they retire and they won't need SS. Boy, do I have a few bridges and lots of swamp land to sell them!sharonsj , December 14, 2016 at 12:38 pm
One can note the Social Security "reform" is usually pushed by wealthy individuals who feign concern about saving a system for the future of less well off Americans.
Also, Social Security is a system that is of little import to the wealthy as they will not be depending on it for basic living expenses.
The wealthy's real fears are of a raising of the income cap that will hit them directly or of an effort to support higher wages for the citizens currently paying into Social Security, hitting their business profits.
While it may seem unexpected they can get help from Democrats in this effort (Obama, Bill Clinton ) but I suspect this is so because wealthy donors support the effort and the Democrats can pitch the "saving" aspect while collecting campaign cash.
If a politician is not re-elected as a result, they might have a more lucrative career at a think tank or as a lobbyist.
Of course, if the wealthy are so concerned about the alleged Social Security problem that is looming in the future, where were far sighted wealthy Americans when it came to questioning the Iraq War, the drug war, the lack of financial reform, and all the USA military/covert actions that have done great harm to public finances?
Strangely, Social Security "reform" is a big concern of theirs, and the other USA efforts that have caused much harm, are not.
Then there is climate change, again, wealthy individuals are more concerned about "saving social security" than saving the planet.
Also the "reform minded" politicians do not appear to allow that current social security benefits probably are used by many entire low income families. So cutting grandma's benefits also could immediately hit her kids/grandkids financially.
A secondary effect is that lowering SS benefits means the wages of current workers can be lowered in concert as their SS payments, which flow to current recipients, can be lowered, perhaps even allowing another Social Security reform effort to be promoted.
The ability of TPTB to sell this to the American public should not be underestimated as the advertising/public relations/MSM has been successful in promoting/maintaining many bad ideas.Michael C , December 14, 2016 at 10:25 am
The wealthy are not concerned about saving anything unless they can make money off it. They are already getting richer from the endless wars on terror and drugs, and taking planetary resources for themselves. The only reason they talk about "reforming" Social Security and Medicare is to get their hands on that money as well. And please do not expect the corporate media to explain any of this to the dumbed-down masses.Deloss Brown , December 14, 2016 at 11:41 am
The Republicans can afford to play with potential policial backlash for two reasons: First, they relentlessly beat out false narratives about the demise of SS and its inadequacies so that their flase story becomes a part of the consciousness of citizens. (This is the same thing done to attack teachers, unions, the post office, government, etc. You put out the lie long enough, it becomes the truth.) Second, they have been engaged in not one knife to the heart of the program but an attempt to promote its demise by a thousand cuts, little by little, until the program is no longer viable. I know for a fact that young people have bought into the lies put forth by them and do not think the program will be there for them because they too have bought the lie. Those pushing to kill the most effective program in US history, one that has kept the elderly from complete poverty, are nothing more than evil. They want no public programs, and all revenue funnelled into corporate models that enrich the 1%.diogenes , December 14, 2016 at 4:12 pm
Sure, I can explain it.
Conservatives love destruction for its own sake. Smashing the Alaska Wildlife Refuge, smashing the ancient city of Baghdad, spilling oil all over North Dakota, wrecking Social Security, all these things have a political component, but it is the destruction itself that makes them absolutely adorable to Conservatives. Bear in mind this pervasive love of destruction, and many Conservative initiatives will become more clear.
And the "base" goes along with it, because many of them have been inculcated with the theory that it is more pleasurable to do someone else harm than to do one's self good. Given a choice to make, they will always pick the former. Hope this helps.
Me, I find NC's alarm and amazement at the Republican plans to wreck Social Security ingenuous. What did you think would happen? God knows you were warned.juliania , December 14, 2016 at 7:03 pm
https://www.youtube.com/watch?v=FNt0anp7WK8jrs , December 14, 2016 at 9:48 pm
Who warned us? Not the media. Not Obama. Who? I'm thinking naked capitalism.com, best Paul Revere substitute I can come up with at the moment.
Nobody here needed warning. Nobody is alarmed or amazed. And nobody stuck their heads in the sand and figured everything is going to be peachy. What we did need was a well written reminder.
And we got it. Thanks, Yves.Glen , December 14, 2016 at 12:29 pm
People drunk a whole lot of Koolaid like "it takes a Democrat to cut social security". Koolaid was spilled all over in drunken Koolaid orgies at one point toward the end of election silly season. But the party is over and all that is left is the wreckage. Of course Hillary may have done the same thing as we weren't exactly getting any encouragement from her that she wouldn't and rather in fact got hints that she might (support for Peterson committee, her retirement plans for private investment etc. – to supplement Social Security of course). None of which were absolute certainty that she would cut it of course, but they aren't always honest about that are they, so not encouraging either.Waldenpond , December 14, 2016 at 1:09 pm
It's best seen as an all out effort to wreck any good that the government does for common people so that they can beat the war drum of government failure. This then serves as the smoke screen to hide just how much ultra rich directly benefit from government support through bailouts, privatization, tax cuts, subsidies, and out right theft and fraud. And just how much more they will get when Social Security and Medicare are privatized and benefits are shrunk. Those are large streams of government controlled funds, and they want it.
Social Security and Medicare work extremely well, and should be expanded. But don't delude yourself into thinking this is obvious to most people. Both political parties are dedicated to killing Social Security and Medicare and are extremely adept at spouting the " we must kill it to save it" BS.Harris , December 14, 2016 at 5:11 pm
Ds movement to the right and their continuation of R policies, no matter how vile, actually redeems the R party for the next election. If they take turns governing only on behalf of the .9, .09 and .01% they take turns redeeming the other branch of the money party. The colluding media will propagandize every bit of corruption and sleazebaggery as 'no other option' trot out imaginary deficits.
The voted out politicians will enthusiastically do it because they enter office looking for the big sellout as they will receive the only objective they ever had in achieving elected office . lucrative appointments and sinecures at parasitizing corporations, think tanks, scam foundations and presidential libraries.Praedor , December 14, 2016 at 12:08 pm
He will limit the changes to those under 50 ( ie those with much much lower voting percentages than 60+'ers ).
Johnson is 85, so I doubt any of this was his idea.JTMcPhee , December 14, 2016 at 12:40 pm
Screw your "iron sights". I'll use my reflex sight and hit center every time.ambrit , December 14, 2016 at 4:37 pm
Exactly. But not everyone has a reflex sight or scope. And a lot of people who do have such a very wrong notion of who the targets ought to be, the ones that actually pose the greater=st immediate threat
Though 4,000 veterans appearing at Cannon Ball with the #NoDAPL presence probably have or are developing a correct "sight picture" and target designationScott Frasier , December 14, 2016 at 2:05 pm
Oh H-! Where is my 3-9X40 when I need it?
The late lamented science fiction writer Mack Reynolds penned a screed along these line a ways back about a pissed off ageing Lord Greystoke and the fate of the old in America called "Relic."Jeremy Grimm , December 14, 2016 at 2:14 pm
The plan will be structured to only hurt future retirees. The solution to this political problem is to have anyone who will be affected demand that they be allowed to opt out from now on and to receive a refund, with interest, of all of their previous contributions to the system because the "earned benefits" have been taken away. Ownership in America is a sure winner politically.
I don't expect Democrats to have the balls to actually propose this, but it would leave the plans in tatters because without the tax stream and the already contributed taxes it won't be able to pay current retirees. Now that would get the current retirees attention!juliania , December 14, 2016 at 7:08 pm
Not only can old people no longer depend on their extended families for support I'm afraid many young people in that extended family have had to rely on the older people for support. My young adult children are not doing terribly well in the new economy and I don't see things improving for them any time soon - if at all. I've had to step in and help a little here and little there more and more as the costs for those unplanned surprise expenses keep blindsiding my children.Battaile Fauber , December 14, 2016 at 4:55 am
Very true!Mike , December 14, 2016 at 6:35 am
Well, which is he, "at the top of the scale" or an "average earner"?
I interpreted that as he earns an average of 118k, putting him at the top of the scale.Naomi , December 14, 2016 at 9:15 am
And maybe that is what the author thought, but it doesn't work. Wages above the SS max don't get taxed and don't add to the final benefit, so people who have an average salary equal to the max have a benefit that is below the max. The difference would depend on how much the salary fluctuates, year by year.BecauseTradition , December 14, 2016 at 4:55 am
Exactly correct. This author misinterpreted. But Sneed's original grammar was sloppy as well. Should've read, "earning an average of $118,000".ambrit , December 14, 2016 at 5:13 am
Perhaps a serious attack on welfare for the rich would persuade the enemies of Social Security that those who live in glass houses should not throw stones?BecauseTradition , December 14, 2016 at 8:22 am
To make such an attack, one needs must take over the "reins of power." In short, your suggestion is revolutionary. (I'm not averse to such, just observing.)not a rich person , December 14, 2016 at 10:06 am
I mean an ideological attack since much welfare for the rich is not yet recognized as such (e.g. government provided deposit insurance instead of a Postal Checking Service or equivalent, e.g. interest on reserves, e.g. other positive yeilding sovereign debt).BecauseTradition , December 14, 2016 at 10:52 am
government provided deposit insurance is for the rich?
who knew?JTMcPhee , December 14, 2016 at 11:27 am
Yes it is. It is part of the means by which the poor, the least so-called creditworthy, are forced to loan to depository institutions to lower the borrowing costs of the rich, the most so-called credit worthy.
The ethical alternative is an inherently risk-free Postal Checking Service or equivalent for all citizens, their businesses, etc. Then the poor need no longer lend (a deposit is legally a loan) to banks, credit unions, etc or else be limited to unsafe, inconvenient physical fiat, aka "cash."Higgs Boson , December 14, 2016 at 5:50 am
And of course the Few are planning to do away with "cash." Already happening several placesJTMcPhee , December 14, 2016 at 12:13 pm
And yet our crumbling empire has ample treasure to play game of thrones all over the world.lyman alpha blob , December 14, 2016 at 2:25 pm
It's slightly old news, but "Congress" is also hurting the Troops (another easily cut-able bunch) that are doing that "war" thing all over the world. http://www.stripes.com/news/us/congress-passes-defense-budget-with-troop-benefit-cuts-1.319021 , and with more detail on the "sausage making" process, there's this (note the remarks about "furious lobbying" by beneficiaries and entitled persons): http://thehill.com/policy/defense/overnights/225785-overnight-defense-budget-would-cut-military-benefits The efforts to cut VA disability and health care benefits, and of course pensions and stuff, are constant. Just like SS and Medicare. Maybe there are some congruencies of interests and constituencies here? A "base," of sorts?
Interesting that maybe 4,000 veterans showed up and formed up at Cannonball/DAPL, to stand against the thugs and "government" and with the Native Americans who seem to have found a set of honest and attractive memes to present to the rest of us. The Bonus Marchers got the MacArthur Fist way back when, but I'm wondering how all those troops trained in maneuver-and-fire would take to further (planned) assaults on their livelihoods and families, while they are ever more being "deployed" to protect the as-s-ets and post-national "interests" of the FewMarie Parham , December 14, 2016 at 6:41 am
+1Larry , December 14, 2016 at 7:08 am
Not to worry. Organization is taking place. In New York State the Bernie delegates have kept in touch since the convention. They have organized into 25 affiliates state wide. We have had a conference already. The Lower Hudson Valley affiliate may be able to defeat the Trump agenda all by itself. We tuned into the Our Revolution call and decided to do our own thing. https://twitter.com/NYPANetworkPaul Art , December 14, 2016 at 7:26 am
Any similar initiative in Massachusetts? The last time the Republicans tried to gut SS under Bush, the Democrats came out in force and held meetings on weekends around Rhode Island (where I was living at the time) to fire up opposition to the plan. I'm anticipating Elizabeth Warren and other MA democrats will oppose this, but want to be ahead of that by looking for other avenues of opposition like Bernie's coalition, such that it is.UserFriendly , December 14, 2016 at 10:55 am
I seriously doubt anyone would be enthused by a Democrat party still headed by that Super Frisco Water Carrier Pelosi. I know I would not for one. The bell tolls for Bernie but the man has been struck dumb.dao , December 14, 2016 at 7:03 am
If you already have an OR local or state group and you want to be affiliated with national, or at least talk to national DM me on twitter and I can get you in touch, I have a friend who works for them.
https://twitter.com/UserFrIENDlyyyRUKidding , December 14, 2016 at 10:26 am
Social security has already been cut over the last several years without a peep out of anyone. No cost of living adjustments in 3 of the last 8 years. Actual inflation is at least 2 points higher than the reported figures. Social security has been cut 15-20% since the financial crisis.Gcw919 , December 14, 2016 at 11:27 am
Yep. And I have elderly friends who are suffering bc of it. But everyone is very passive having bought into the propaganda that this is "just the way it is," and "there's just not enough money" to provide anymore via SS. So we have a very passive population, who've mostly all bought the propaganda about how "broke" Soc Sec is we proles, yet again, have to suck it up bc the wealthy certainly cannot be expected to have the income cap raised heave forfend.Fran , December 14, 2016 at 12:47 pm
Just got my Soc Security statement. My net gain, for 2017, after an increased deduction for MediCare, is .nothing. See, there's no inflation (except my car insurance, home insurance, health insurance, food, etc have all gone up). And to add insult to injury, our benefits (derived from involuntary deductions from our paychecks) are called "entitlements."
As our elected "representatives" are so adamantly opposed to these programs, and would like to reduce them to table scraps, I am eagerly awaiting the announcement that Congressional pensions and healthcare benefits are going to be discontinued.GregL , December 14, 2016 at 12:28 pm
Same here. Any small gain was offset by increase in deduction for Medicare. In addition to the rising costs you cite, I find I am paying increased local taxes, among other things. So, like most people, we must contend with stagnant income to pay rising cost of living (and I mean the necessities).
I started paying into the system in 1965. Medicare used to be no cost and cover all medical expenses, so that is a cut in itself. I knew that I could not rely on SS in my old age, and I live modestly.
I agree with your last comment. I have never seen why our representatives in Congress should receive any different coverage than the citizens they are elected to represent. As individuals, they can supplement it, just as we have to.ambrit , December 14, 2016 at 4:40 pm
I was notified yesterday via letter that my SS benefits will increase 4.00 / mo next year. This will be a great help because my rent went up 7.00 / mo to 1600.00 for my studio apt.bkrasting , December 14, 2016 at 7:24 am
Woah there. You were paying only 1593.00 a month before? You related to the landlord perhaps?not a rich person , December 14, 2016 at 10:10 am
What is the status of SS today?
Current law says that in approximately 13 years all benefits will be cut – across the board – by 20-25%.
That is an unacceptable outcome.
What to do with this reality? The answer is "Something" must get done. The wrong answer is, "Don't do anything, wait 13 years, and then fall off a cliff".
The proposal that in the author's words "Guts" SS actually increases benefits by 9% for the bottom 20% of beneficiaries. The cost of the proposal falls on those who have high incomes before AND after reaching age 65. The proposal stabilizes SS for the next 75 years, and there are no new taxes required. Exactly what is wrong with that?craazyboy , December 14, 2016 at 12:03 pm
what is wrong with that is that far more than the "bottom 20 percent of beneficiaries" rely on Social Security income.
apparently you are not aware of that.Pat , December 14, 2016 at 11:13 am
In the post pension plan age, I think the 20%-90% bracket needs it. Maybe up to the 99% bracket once our current 401K bubble bursts and Housing Bubble II bursts.Waldenpond , December 14, 2016 at 2:21 pm
So the only option are things that actually punish today's working class and weaken the system by eliminating the all in/all the same position? No, it isn't. The problem is that the answer is to slowly raise the payroll tax AND eliminate the cap – something that should have been done decades ago once it became clear that the people who lived the longest on SS were largely those who stopped paying payroll taxes at some point throughout the year. But we cannot consider those.
Nope we have to talk about raising the retirement age when life expectancy for most is dropping and we have to go with things that mean that you need to start living like you have to choose between drugs and eating cat food from day one because your benefit will never increase regardless of how much more your food, housing or medicare premium increase, or there even if they allow cost of living they write off things because you can give up steak for chicken over and over.roadrider , December 14, 2016 at 7:56 am
Instead of a expanding to a more universal program, you support turning SS farther into a program that categorizes individuals, assigns a hierarchy and then ranks them according to some random definition of human and who is most deserving.
There's nothing wrong at all with having nothing but contempt for others and hiding behind some made up term of 'cost'. It's perfectly reasonable to deny the means to the dignity of housing and food to others.
or .mikimurphy , December 14, 2016 at 8:59 am
The fact the last two Dim-o-crat presidents (Clinton and Obama) and not a few Dim-o-crat Senators and Congressmen are in agreement about "saving" Social Security doesn't help either. Clinton's plan was derailed by the Lewinski thing and Obama's because the Republicans wouldn't take yes for an answer (didn't want him to get credit for it but don't mind doing it themselves)RUKidding , December 14, 2016 at 10:30 am
In case anyone has not noticed, they are already cutting SS benefits by stealth means. There have been no cost of living increases in 3 of the last 5 years, and for my personal SS benefits, the measly .3% increase next year goes away entirely with the increase in medicare payments. I suspect many folks, like my sister who is 78 and still working full time, do not realize that the increases they are receiving are due entirely to their still being in the work force. In addition, with the cutbacks that have been forced on the administrative side of SS, more mistakes are being made. A friend of mine was declared "dead" by SS (something that also happened to me with my tiny pension plan). When she attempted to correct the error, the SS employee discovered that "thousands" of people had been similarly affected. This happened last summer and my friend is finally receiving her benefits, but a month late and for some reason the agency cannot issue that catch-up check. She is still working and so not completely bereft, but what in the world are the folks doing who have no other income??? I suppose our overlords will be most pleased that the constant annoyances they are causing us will result in our passing away from sheer anger and frustration.Susan C , December 14, 2016 at 9:00 am
That's interesting. I have a friend, who is still in her 50s, who was working on her will, etc, and discovered that she was no longer "alive" as far as Soc Sec was concerned. She got it rectified, and it didn't have a negative impact on her (she's still comparatively young and working). But it's decidedly odd about how all these citizens are suddenly dead as far as Soc Sec is concerned. And yes, it takes some effort to get back on the database of the living. For those who are really elderly, this could be a very difficult thing to do.
Wonder why this is happening .BecauseTradition , December 14, 2016 at 9:22 am
It boggles my mind why any one would ever want to gut social security. Companies already push people out at 55 and then you have a good 8 to 12 years of somehow managing until social security comes to your rescue. Younger people do think social security will not be in place when they are in their 60s which makes them angry. And who can ultimately rely on the stock market etc. to give them the money they will need when older – shivers. Is the economy that sound? Plus many people cannot manage to work so long due to health reasons which do start creeping up on people in their late 50s or the work they do is too labor intensive for them to imagine keeping at it until 69 or even 67. Bodies give out at some point. That is reality. Everyone wants to work until 70 but the companies don't want older workers – they want young, fresh, vital. If anything, social security should start at 60.ChiGal in Carolina , December 14, 2016 at 10:17 am
"These who pant after the very dust of the earth on the head of the helpless
also turn aside the way of the humble; " Amos 2:7Pat , December 14, 2016 at 9:27 am
Love me some of those Old T prophets. Widows and orphans, man, widows and orphansSteve H. , December 14, 2016 at 9:39 am
Two reasons come to my mind, a desire to reduce or eliminate the employer half of payroll taxes AND the pool of money that the financial industry thinks should be theirs to rape and pillage. But I'm sure there are others.craazyboy , December 14, 2016 at 12:08 pm
Recent posts and comments have noted both more billionaires and a rapid concentration of wealth amongst them. But it's mo' po', too, what Turchin calls 'popular immiseration'. To decrease the effects of 'interelite competition' the wealthiest cannot just bestow unto their favorites, they must tend to the rich on the downslope. Those are the ones with resources to engage in attrition. So there is a long history of shoving the costs onto those who can't fight back, and the unlanded are easier to slap down.
A personal case: Pearl was a delightful very elderly lady a few doors down. Her house was in trust until she died, and she had a daughter and a grandaughter living with her. When she died, one of her (all over-55) children had medical debt needing paid and so he vetoed keeping the house. It sold, the land was lost to the family, and daughter and grandaughter were homeless.
That interelite competition was apparent in the election. Our choice of two New York billionaires was a choice over which aspect of the FIRE sector would dominate, Finance or Real Estate. But those differences seem to get averaged out below a scale of 10^8 or so dollars.neo-realist , December 14, 2016 at 3:50 pm
"Everyone wants to work until 70"
Not me. I decided I hate work at the young age of 49.Punxsutawney , December 14, 2016 at 9:30 am
Re Companies that push people out at 55 and don't want older workers and prefer younger ones, this leaves a lot of people in that 55-70 age bracket in a difficult (and in some cases, a terrible) situation if they're not in the minority of those who have a secure gig until they retire (usually people that I know that have government gigs w/ pensions.) The Presidency nor the Congress have no solution for older workers who get pushed out and face discrimination due to their age when they seek employment. They would prefer to not hear about it and if they're sleeping in cars or in tents under bridges, that's their problem.tegnost , December 14, 2016 at 11:10 am
What the GOP is doing is planning "Theft", pure and simple.
The next 4 years will likely see the greatest wealth transfer of all times. To the top of course.Punxsutawney , December 14, 2016 at 2:55 pm
continuing what's been going on for the past 8 years, ever heard of quantitative easing, the ACA, or chained CPI? Foam the runway with HAMP, maybe, or endless war as the only jobs guarantee available. Sorry, but trump is just more of the same, only a little more forthright. You should be used to it by now.Adam Eran , December 14, 2016 at 9:55 am
No argument here. Put the Dems in control and they will find all kinds of excuses for doing the same thing, all bight more subtlety. Clinton was going to privatize Social Security and Obama proposed chained CPI. Not to mention the effects of TPP.Jerry , December 14, 2016 at 1:31 pm
Another columnist whose "answers" are predicated on the assumption that taxes provision government programs. Just one question: Where do tax payers get the dollars to pay taxes with if government doesn't spend them out into the economy first?
If that's too much thinking: Where was all this "we're out of money" talk when the Fed, according to its own audit, pushed $16 – $29 trillion out the door to save the financial sector from its own frauds? Yet government routinely denies it makes the money when the orders-of-magnitude demands of safety net programs appear. Taxes make the money valuable; they do not, and obviously cannot, provision government.
As long as this isn't common knowledge, we're all condemned to austerity. Even public policy makers sympathetic to workers (e.g. Dilma Rousseff) are in peril if they adopt the "inevitable austerity" routine.John Hemington , December 14, 2016 at 4:38 pm
Unfortunate that I had to scroll this far down to find the first person with a correct understanding of government finance. I've explained MMT point blank to people multiple times and they still cannot grasp it. Until people start caring and get a general understanding of how this thing works we are in a lot of trouble. I am hoping that Trump will be godawful enough to bring about such a conviction for revolution to the average American
As the Henry Ford saying goes (oft-quoted by Ellen Brown):
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."Denis Drew , December 14, 2016 at 10:13 am
Exactly right and if the powers that be were really concerned about funding SS from those who will receive it all they have to do is raise the income cap to cover total income for everyone - not just middle income workers. Problem solved and no need to worry about the fact that the government can't run out of dollars.Jim Haygood , December 14, 2016 at 12:34 pm
I have my own weird tack on SS retirement.
I see the Trust Fund as having been accumulated over the decades by my generation - by paying higher FICA tax to purchase fed bonds with. TF running out now supposed to be the big to do? Wasn't it supposed to run out? Aren't we supposed to use what we saved?
I like to say: have an SS retirement shortfall today? Do it all over again: hike FICA, lower income tax and accumulate bonds. Mmm.
But, just yesterday I had a brainstorm. If Repubs want to cut benefits so FICA shortfall doesn't have to made up by income tax cashing bonds (covering about 25% of outgo just before our bonds run out, then, Repubs want to steal our savings that we forgave immediate gratification to accumulate all those long years.
Always suspected income tax payers who are hit for as much as 39% would balk at cashing the bonds when the time came - but on the basis of the usual world run for the haves idea. Never thought of it in terms of outright theft - before yesterday.
PS. Really shouldn't use up all bonds. Right now there are about four years of full replacement in the TF. Legal solvency is defined as one year - needed to cover temporary shortfall while Congress moves to fill in - happened couple of times.thoughtful person , December 14, 2016 at 10:37 am
" Wasn't it supposed to run out? "
No. Defined benefit plans are supposed to be funded so that the assets earn enough to pay promised benefits. If the assets run out, the plan is not only mismanaged, it's bankrupt.
Seriously, if your checking account were emptied by a hacker, would you ask "Wasn't it supposed to run out?" You are a crime victim.RUKidding , December 14, 2016 at 10:42 am
Educate, Agitate, Organize, yup, expanding on cry shop's comment above, it's more than breitbart and Fox these days. The mainstream media may be (usually) more polite and more subtle, but they will not report the basic info accurately like Yves and Lambert do here. Our Revolution is a good start. There need to be alternative sources of information such that education can happen. That is why the "fake news" attacks on alternative media are such a big deal. The founders of the US understood the importance of information too, one reason the postal service was established with low rates for all periodicals. "Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives", wrote Madison. We really are sheep without knowledge. Some like it that way .Gaylord , December 14, 2016 at 11:21 am
Donald Trump, at his rallies, consistently lied to his fervent fans that he was going to save Soc Sec & Medicare. What a laugh.
I've been blogging and telling people throughout the election process that Trump made a very public DEAL with Paul Ryan that he, Trump, was totally behind cutting and gutting SS & Medicare. That is the main (possibly only) reason why Ryan gave Trump his very tepid "endorsement." But this was very public knowledge and not hidden.
But of course, Trump lies constantly, so his fans were mainly enthralled with what a bully he is and believed what they wanted to believe. Made up fantasies. Some of his fans are waking up to the fact that they've been screwed over royally. Of course the M$M will happily oblige by somehow finding a way to blame it all on Obama, Clinton, the Democrats, whatever (not that the Dems aren't equally happy to cut and gut SS & Medicare, as well) and the proles will buy it.
Home and hosed. Case closed. We're screwed.RUKidding , December 14, 2016 at 12:02 pm
Republicans should offer Kevorkian "escape kits" free for the asking.Katharine , December 14, 2016 at 11:35 am
Although various states have now passed laws to legalize what's called "assisted suicide," there's still a lot of resistance to it, esp from those of various religious persuasions. Also assisted death in these cases is only available for those already in the latter stages of terminal illnesses, and generally extreme poverty doesn't fall under that definition. So sucks to be you.
I guess dying from hunger and exposure, due to extreme poverty, is our just deserts. No rest for the wicked. When you die, you have to die as painfully and slowly as possible just to impress upon you how worthless and awful you truly are. The punishments will continue until morale improves.Jim Haygood , December 14, 2016 at 12:30 pm
This was posted hours ago. How many readers have taken the time to email their congressmen? Please do! You don't have to be lengthy or learned. You can simply state a couple of talking points you all know and intimate that tampering with benefits is not going to be accepted. This is definitely one of those "if you're not with us you're against us" issues, and the sooner your elected representatives understand you mean that the better.Benedict@Large , December 14, 2016 at 12:36 pm
"I think a 0.4% increase (combined), about two dollars per week for each the worker and the employer, should solve the problem in ten years, but I haven't done the numbers on that myself. "
WHUT? Why are space cadets like this even allowed on the internet?
Trying to patch Soc Sec's $10 trillion hole with an 0.4% FICA tax hike is like trying to empty the Atlantic Ocean with a teaspoon.
Net present value, Dale - I'm afraid you cut class that day. Now it's too late.oh , December 14, 2016 at 4:55 pm
Mark my words.
The attempt by the right to "fix" Social Security is nothing more than an attempt to make the trust fund disappear, and to mark all the obligations that fund was supposed to have met null and void.
If this sounds like they are trying to steal the trust fund, that is not the case. They have already stolen it. Now they just have to fix the accounting to say they didn't, which they will do by setting the system to never need to cash a bond from the trust fund.
Tin foil hat, you say? Fine, but do me a favor. Whenever a bill is introduced to "fix" Social Security, do the accounting for how it will play out. The trust fund will no longer be needed?Ranger Rick , December 14, 2016 at 1:00 pm
Yup, that's the R's plan and people will be sleeping when they play this con.Waldenpond , December 14, 2016 at 1:54 pm
Something about this strikes me as a hilarious farce of unintended consequences. People worried about "government debt" and demanding its reduction are getting exactly what they wished for.Nate , December 14, 2016 at 3:38 pm
I'm not quite sure of your meaning here. It sounds like you are mocking people for not being able to get out from under a propagandist educational/media system and a corrupt government. Then again, it also seems to be gloating and that people deserve to be immiserated.herkie1 , December 14, 2016 at 1:49 pm
Exactly!PrairieRose , December 14, 2016 at 9:43 pm
This is called a "technical adjustment." They can pretend that the CPI is too generous and know that most people won't understand the scam.
I am a 100% disabled veteran and several years back they tied our COLA to the SS COLA.
The result is that since mid 2013 in this region we have lost about 40% of our purchasing power. Our standards of living have dropped by that much.
Of course there is NO INFLATION, the letters I have been getting actually claimed that because of this DISINFALTIONARY economic environment . That is no inflation so no raise this year.
Now, I am going to be 59 this spring, I worked at a lot of things between 1973 and 2005 when a judge ruled in my favor regarding my disability and awarded me SSD. But, because I spent so many years fighting SS and did not have the quarters of income recent enough my SSD amounts to $1,013 per month.
Now for all the republicans out there who think SS is too generous, I would ask you to stick your filthy little brains, or rather pull them out of your exhaust holes. You can claim it is too generous when you have spent a lifetime paying in and then someone tells you that 12 grand a year is too generous.
MY RENT IS MORE THAN THAT and this place s a hovel in the sticks. The only way I can have a roof over my head for less is to live in my vehicle.
Fortunately I also have a bit in VA disability and between the two I thought of myself as middle class if just barely only 36 months ago, now I would consider myself in dire poverty at 20k a year, anything less and we are talking eating at the mission and sleeping in shelters. Vehicle? Right. The fact that they refuse to acknowledge inflation and use quite literally half a dozen tricks to disappear it from the headlines does NOT mean it does not exist. If you can eat gasoline and flat screen TV's you are certainly doing great, otherwise you are experiencing something never known in the USA, structural downward mobility for 90% of us.
And it is these facts that drove the angry and the stupid to vote for Trump, they were not the majority of voters, but between them and antiquated laws giving voters in small states far more power than in urban areas (where people actually live) that Orange Hitler dude got in, and so did the GOP majority of fascists who have as a holy mission class warfare and getting rid of diversity of any kind, racial, sexual, or gender.
They are going to gut every bit of progress since Teddy Roosevelt. They are going to bring back segregation, this time though via school vouchers. They are not going to FORCE non white non middle class kids into slum condition schools, so they will plausibly claim HEY it is NOT segregation and those parents have an equal right to move their kids to private schools also. No, instead these kids will be abandoned in schools that the government will slash funding to as white upper and middle class people are partially paid the tuition to send their kids to private schools which are exempt from federal discrimination laws. I am NOT holding my breath for this, I have a one way ticket to Australia for the first week of January.
THAT is going to be the story of all government for a while, social security is just one of MANY functions of government they are going to kill off. If you think people were angry in 2016 just you wait till 2020.
It is already so bad that unless the GOP grows a conscience and a heart in the next 2-4 years the USA will break up the way the Soviet Union did. The nation now has what so many married couples cite in divorce proceedings, IRRECONCILABLE differences.
And the worst of it is that no matter if you like it or hate it the USA is the rock of stability that has keep civilization working since the end of WWII. You break up the USA and bingo there is no uni in the unipolar geopolitical world. What we will have is chaos and war and humanity will fail. USA FAIL=Humanity FAIL.Nate , December 14, 2016 at 3:27 pm
Thank you. Thank you. Thank you. For your plainspoken honesty. This should be copied and posted everywhere, starting with senators and representatives.Brooklinite , December 14, 2016 at 4:59 pm
Don't you love when your vote gets what you desired? No empathy. Big shoutout to U.S. congress.no to opting out , December 14, 2016 at 6:44 pm
They should have an option for an opt out of social security, medicare/Medicaid, Affordable Health Care. Not having that kind of freedom to me is not worth it. I am not buying any other excuses such as I am not shrewd to invest my money. Taking money is the easy part. Getting back is always laborious if you are lucky to get.marblex , December 14, 2016 at 5:27 pm
right. many people opt out of "mandantory" auto insurance by just not
getting it. it's been estimated that in FL at different times as many as
one third of the drivers on the road are not insured. and really, if they
get injured, they get treated in an emergency room until they are stabilized
(the law) and if they were sued for damages, what could be recovered?
but, let's remember, while they are on their "ride" they are "free." Yep.
a lot of people think like that.Quill , December 14, 2016 at 5:51 pm
Social Security, let's lay it to rest once and for all Social security has nothing to do with the deficit. Social Security is totally funded by the payroll tax leviedon employer and employee. If you reduce the outgo of Social Security, that money would not go into the general fund or reduce the deficit. It would go into to the Social Security Trust Fund. So Social Security has nothing to do with balancing a budget or lowering the deficit.
Ronald Reagan (first Reagan-Mondale debate 1984)walter jahnke , December 14, 2016 at 6:14 pm
You misunderstand the article from the beginning. When she says:
"A 65 year-old at the top of the scale, a $118,500 average earner, "
She means someone who has earned $118,500 on average over his/her career , placing him/her at the top of the scale.
I'm not sure why you are criticizing the writer of this article.Oregoncharles , December 14, 2016 at 6:45 pm
would someone explain why the greenspan changes , which were supposed to keep social security solvent, did not, I've googled the history and the only answers seem to be that the trust had trillions in surplus that were used to pay off other obligations, , which I do know that the funds were used to lower the deficits in previous years, but wouldn't the surplus still be there? Explanation please by someone knowledgeable about the history and why the problems nowAltandmain , December 14, 2016 at 8:28 pm
"Well, which is he, "at the top of the scale" or an "average earner"?"
Oops. Even I understand that one. It means he earned an AVERAGE of $118,500, the maximum that SS taxes.
Next question: what kind of idiot actually introduces a bill to cut Social Security? One who plans on a lucrative retirement from politics, that's what kind.aab , December 14, 2016 at 8:39 pm
Sadly the Democrats will just go along with it.
Maybe the left wing (represented by Sanders) might put up a fight, but they don't have the power to stop this.
The US is rapidly becoming a feudal society.David , December 14, 2016 at 9:44 pm
Protesting the proposed policies of President who owns real properties of value in media-drenched major cities that require the labor of lower income workers on a daily basis might be more effective than protesting a President whose wealth is almost entirely stored in secret, offshore bank accounts.
Let's hope, anyway.
"The trouble with Sneed's article is that she does not appear to know what she is talking about. She just wrote down what some "experts" told her with no idea what the words mean."
You missed the question, is it the writer or the policy of the site?
Oct 24, 2016 | cepr.netAt the debate last night, moderator Chris Wallace challenged both candidates on the question of cutting Social Security and Medicare. The implication is that the country is threatened by the prospect of out of control government deficits. The question was misguided on several grounds.
First, as a matter of law the Social Security program can only spend money that is in the trust fund. This means that, unless Congress changes the law, the program can never be a cause of runaway deficits.
Second, it is important to note that the size of the projected shortfall in the Medicare Part A program (the portion funded by its own tax) has fallen sharply in the Obama years. The shortfall for the 75-year planning horizon was projected at 3.53 percentage points of payroll in 2009, the first year of the Obama presidency. It has now fallen by 80 percent to just 0.73 percent of payroll. This reduction is due to a sharp slowdown in the projected growth of health care costs. Some of this predates the Affordable Care Act (ACA), but some of the slowdown is undoubtedly attributable to the impact of the ACA.
Anyhow, the implication of Wallace's question, that these programs are somehow out of control and require some near term fix, is not supported by the data. We will have to make changes to maintain full funding for Social Security, but there is no urgency to this issue.
On the more general point of deficits, the country's problem since the crash in 2008 has been deficits that are too small, not too large. The main factor holding back the economy has been a lack of demand, not a lack of supply. Deficits create more demand, either directly through government spending or indirectly through increased consumption. If we had larger deficits in recent years we would have seen more GDP, more jobs, and, due to a tighter labor market, higher wages.
The problem of too small deficits is not just a short-term issue. A smaller economy means less investment in new plant and equipment and research. This reduces the economy's capacity in the future. In the same vein, high rates of unemployment cause people to permanently drop out of the labor force, reducing our future labor supply if these people become unemployable. (Having unemployed parents is also very bad news for the kids who will have worse life prospects.)
The Congressional Budget Office now puts potential GDP at about 10 percent lower for 2016 than its projection from 2008, before the recession. Much of this drop is due the decision to run smaller deficits and prevent the economy from reaching its potential level of output. We can think of this loss of potential output as a "austerity tax." It currently is at close to $2 trillion a year or more than $6,000 for every person in the country.
It is unfortunate that Wallace chose to devote valuable debate time to a non-problem while ignoring the huge problem of needless unemployment and lost output due to government deficits that are too small.WDG • 4 days agoOn Chris Wallace's question, we know now from Hillary Clinton's Wall Street speeches that her plan on debt and entitlements is to support the elitist Bowles-Simpson project, the centerpiece of which was raising the age for Medicare and Social Security. Who do you think Hillary is lying to about benefits - everyday Americans like you (who she deplores) or her Wall Street backers?
pieceofcake • 4 days agoand the nerve of this Wallace dude and the nerve of all these other... so called journalist on this show?NN • 4 days ago
Wallace even didn't notice - the whole time!! - that it was Alec Baldwin -(and not Trump) - who answered his silly questions - and then the nerve of the so called 'media' to praise Wallace - that he didn't notice that Alec Baldwin answered his questions.
... ... ...I am perfectly fine with running deficits to get out of a recession and compensate for temporary shortfall in private demand. Isn't this the original idea behind deficit spending? But we are 7 years out of a recession.Paul NN • 4 days ago
Japan has been doing this deficit spending thing for 20+ years and borrowed an enormous amount of money. It has not solved anything. Growth continues to be elusive. Progressive economists keep whistling by the graveyard. And the conservatives just want to cut taxes. Both groups look like medieval doctors who prescribe bloodletting no matter what the illness is. Oh, the dismal science!The Japanese yen is severely overvalued and therefore Japan's exports no longer can sustain GDP growth as they did in the past. Combined with Japan's anemic consumer demand, there is nothing but government spending to spur growth. If Japan now cut its deficit spending, its economy would collapse.michael garneau carolindenver • 2 days agoMy point is that American health care is profit driven. The private health insurer companies drive up the costs in all sectors of health care - whether that be for a simple phlebotomy test or a urinary catheter or...., or for a visit to a cardiologist after initial treatment for angina in an emergency dep't.carolindenver michael garneau • a day ago
Health care should be considered a basic human right in any country and not one that is affected by the amount a person can pay - or the quality of private insurance a person can afford. I worked in the field for 33 years before retiring and what I saw was, in many cases, very sad and unfortunate. Those who had money went on with their lives and those who did not often simply died. That is no way to manage any society.Dear Michael,I am in TOTALl agreement with you but, as a very satisfied Kaiser Permanente member, I am a little defensive about maligning the term "HMO" which, I believe, is a beacon of hope for "Best Practices" in our current profit driven health delivery mess. I am a retired RN who watched first hand as the system became ruled by consolidation and greed. I remember in the 1980s being told that consolidation would bring cost down. What a joke that was. So I am working for single payer, Medicare for all. Carolstewarjt • 4 days ago"It is unfortunate that Wallace chose to devote valuable debate time to aJaaaaaCeeeee stewarjt • 4 days ago
non-problem while ignoring the huge problem of needless unemployment
and lost output due to government deficits that are too small." -D. Baker
That's Wallace's job and he does it expertly.Well, not so much expertly as doggedly, with enthusiasm, and without letting anything like arithmetic or reality interfere.Francisco Flores • 4 days agoWe should have a Full Employment Fiscal Policy coupled with a Federal Job Guaranty would put an end to this discussion. Funding the entitlements are not an issue - although the law may need to be revised - as the government can issue its currency without a problem - inflation being the constraint. (The increase in demand for apartments, cable subscriptions, and shuffleboards are unlikely to trigger uncontrolled inflation.)AlanInAZ • 4 days agoDean thinks the debt is not a problem but the majority of voters Clinton was trying to reach probably do think it is a problem. She proudly proclaimed that her programs would not add to the national debt implying no increase in deficit spending. She ridiculed Trump because his tax plan would add significantly to the deficit and national debt. Clearly she wants to portray an image of fiscal responsibility and Wallace's question allowed her to go down that path.AlanInAZ NP • 4 days agoI did not say that she did not propose to increase spending - just that she would not increase the debt because everything is "paid for". If everything is paid for by tax increases then there is no near term stimulus to the overall economy. There may be long term benefits if the projects are worthwhile but that will take years to surface. She also declined to defend the benefits of fiscal stimulus after the financial crisis. People hear what they want to hear from these debates.NP AlanInAZ • 4 days agoI think you are wrong about the near term benefits of taxing wealthy people and then using that money for public spending. The propensity of the wealthy for spending is low and therefore if you take some of their money and spend it it will be stimulative.AlanInAZ NP • 3 days agoI am aware of this ptc argument but find it weak. I know plenty of "wealthy" couples who save very little. Anyhow, even if there is some merit to the argument why not borrow now at almost zero cost and ensure the maximum stimulus.Francisco Flores AlanInAZ • 3 days ago
Another factor - public spending may not find its way into the lowest income levels of our society. Infrastructure projects, for example, will enrich contractors and materials industries as much or more than the individual workers. Also, they take a long time to get started as there really is no such thing as shovel ready. Couple the protracted startup with higher taxes and you get very little near term benefit.This whole discussion is of course mute since running deficits does not crowd out investing. And increasing the debt has no negative implication other then the political effects. The government can print money and spend money. If it runs deficits it can keep interest rates low by buying securities.jumpinjezebel • 4 days agoWe need to stimulate DEMAND Now to get the economy revved up and the money flowing. Best way is the change Social Security such that it doesn't kick in until the earner has made $10,000 (i.e.) and account for that by lifting the cap accordingly such that 90% of all earned income is taxed: just as it used to be when Reagan/?? fixed it. Just think what all that money would do in the economy. It would not be used to by back stock or inflate golden parachutes. It would be immediately spent. It would be DEMAND.
Oct 24, 2016 | economistsview.typepad.com
anne : October 23, 2016 at 02:04 PM , 2016 at 02:04 PMhttp://cepr.net/blogs/beat-the-press/the-173-trillion-austerity-tax-in-the-infinite-horizon
October 23, 2016
The $173 Trillion Austerity Tax in the Infinite Horizon
By Lara Merling and Dean Baker
The Peter Peterson-Washington Post deficit hawk gang keep trying * to scare us into cutting Social Security and Medicare. If we don't cut these programs now, then at some point in the future we might have to cut these program or RAISE TAXES.
There are many good reasons not to take the advice of the deficit hawks, but the most immediate one is that our economy is suffering from a deficit that is too small, not too large. The point is straightforward, the economy needs more demand, which we could get from larger budget deficits. More demand would lead to more output and employment. It would also cause firms to invest more, which would make us richer in the future.
The flip side in this story is that because we have not been investing as much as we would in a fully employed economy, our potential level of output is lower today than if we had remained near full employment since the downturn in 2008. The Congressional Budget Office estimates that potential GDP in 2016 is down by 10.5 percent (almost $2.0 trillion) from the level it had projected for 2016 back in 2008, before the downturn.
This is real money, over $6,200 per person. But if we want to have a little fun, we can use a tactic developed by the deficit hawks. We can calculate the cost of austerity over the infinite horizon. This is a simple story. We just assume that we will never get back the potential GDP lost as a result of the weak growth of the last eight years. Carrying this the lost 10.5 percent of GDP out to the infinite future and using a 2.9 percent real discount rate gives us $172.94 trillion in lost output. This is the size of the austerity tax for all future time. It comes to more than $500,000 for every person in the country.
By comparison, we can look at the projected Social Security shortfall for the infinite horizon. According to the most recent Social Security Trustees Report, ** this comes to $32.1 trillion. (Almost two thirds of this occurs after the 75-year projection period.) Undoubtedly many deficit hawks hope that people would be scared by this number. But compared to the austerity tax imposed by the deficit hawks, it doesn't look like a big deal.
So: Hillary Clinton has already said that she will raise Social Security taxes on people who make less than $118,500 per year, but Donald Trump has not indicated whether he will impose Social Security taxes on income above $118,500 per year.
Other proposals that have been pushed in order to "replenish the Social Security Trust Fund" - or to achieve the long-term stability of the Social Security system - mainly focus on three approaches:
One is privatizing Social Security, as Wall Street wants, and which proposal is based on private gambles that the assets that are purchased by the Wall Street firm for the individual investor will continually increase in value, never plunge, and never be reduced by annual charges to pay Wall Street's fees for management and for transactions, throughout the worker's career until retirement.
Another approach is gradually reducing the inflation-adjuster for benefits, the inflation-adjusted value of the benefits that Social Security recipients will be receiving. President Obama had been trying to get congressional Republicans to agree with him to do that (which some call "the boiling-frog approach" because it's applied so gradually), but they continued to hold out for privatizing Social Security, and thus nothing was done.
And the third option is to increase the retirement-age, as Obama also wanted to do (and which is really just another form of "boiling-frog approach"), but also couldn't get congressional Republicans to accept that. (Trump's comment to "Not increase the age and to leave it as it is" is a clear repudiation by him of this approach. And his promise to not increase taxes would, if taken seriously, also prohibit him from endorsing Hillary Clinton's approach.)
Investigative historian Eric Zuesse is the author, most recently, of They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST'S VENTRILOQUISTS: The Event that Created Christianity.
Cheapie -> css1971 Oct 19, 2016 9:20 AM
Blackstone Group's Tony James, likely to be Clinton's Sec of Treasury, advocates a hedgfund enriching scheme involving MANDATORY government savings plan on all Amercans.
Tony James head of the crooked Blackstone Group, a giant hedge fund connected to many state pension funds, is likely to be Clinton's Treasury Sec. Hedge funds have donated 125 million to Crooked Hillary, 20k to Trump. This is thievery on the grand, epic biblical scale with the usual bs about "helping" people.
"We absolutely have to start now," Mr. James said at a Center for American Progress conference in Washington on Wednesday. " It has to be mandated . Nothing short of a mandate will provide future generations a secure retirement."
Mr. James recommended a proposal by Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at The New School in New York, to create a retirement savings plan for everyone based on 3% annual salary contributions shared equally among employees and employers. The federal government would guarantee a 2% return, through a modest insurance premium on such accounts . "With corporate profits at an all-time high, this should be a manageable burden," he said, adding that the approach "is going to require us to look beyond the next election cycle."
Mr. James also called for redirecting $120 billion in annual retirement tax deductions to give every worker a $600 annual tax credit to save for retirement.
small search brings up deluge of corruption, payoffs etc.
http://www.reuters.com/article/us-blackstone-lawsuit-idUSBRE97S0NA20130829 http://blogs.wsj.com/corruption-currents/tag/blackstone-group/ http://www.businessinsider.com/sec-probes-banks-buyout-shops-over-dealings-with-sovereign-funds-2011-1 http://www.ibtimes.com/political-capital/hillary-clinton-denounces-corporate-crime-while-accepting-cash-blackstone-firm http://www.economicpopulist.org/content/one-thousand-names-fraud https://www.ft.com/content/0cee0c66-1e3e-11e4-bb68-00144feabdc0 http://nypost.com/2014/08/14/seaworld-shares-dive-but-blackstone-on-a-perfect-wave/ https://libertyblitzkrieg.com/2014/05/05/leaked-documents-show-how-blackstone-fleeces-taxpayers-via-public-pension-funds/ https://pando.com/2014/05/05/leaked-docs-obtained-by-pando-show-how-a-wall-street-giant-is-guaranteed-huge-fees-from-taxpayers-on-risky-pension-investments/
Sep 27, 2016 | economistsview.typepad.com
anne : Tuesday, September 27, 2016 at 05:05 AMhttp://cepr.net/blogs/beat-the-press/contrary-to-what-ap-tells-you-social-security-is-not-a-main-driver-of-the-country-s-long-term-budget-problem
September 27, 2016
Contrary to What AP Tells You, Social Security Is NOT a Main Driver of the Country's Long-term Budget Problem
The New York Times ran a short Associated Press piece * on Social Security and "why it matters." The piece wrongly told readers that Social Security is "a main driver of the government's long-term budget problems." This is not true. Under the law, Social Security can only spend money that is in its trust fund. If the trust fund is depleted then full benefits cannot be paid. The law would have to be changed to allow Social Security to spend money other than the funds designated for the program and in that way contribute to the deficit.
The piece also plays the "really big number" game, telling readers:
"the program faces huge shortfalls that get bigger and bigger each year.In 2034, the program faces a $500 billion shortfall, according to the Social Security Administration. In just five years, the shortfalls add up to more than $3 trillion.
"Over the next 75 years, the shortfalls add up to a staggering $139 trillion. But why worry? When that number is adjusted for inflation, it comes to only $40 trillion in 2016 dollars - a little more than twice the national debt."
Since this is talking about shortfalls projected to be incurred over a long period of time, it would be helpful to express the shortfall relative to the economy over this period of time, not debt at a point in time. This is not hard to do, since there is a table ** right in the Social Security trustees report that reports the projected shortfall as being equal to 0.95 percent of GDP over the 75-year forecasting horizon. By comparison, the costs of the war in Iraq and Afghanistan came to around 1.6 percent of GDP at their peaks in the last decade.
The piece also gets the reason for the projected shortfall wrong. It tells readers:
"In short, because Americans aren't having as many babies as they used to. That leaves relatively fewer workers to pay into the system. Immigration has helped Social Security's finances, but not enough to fix the long-term problems.
"In 1960, there were 5.1 workers for each person getting benefits. Today, there are about 2.8 workers for each beneficiary. That ratio will drop to 2.1 workers by 2040."
Actually the drop in the birth rate and the declining ratio of workers to beneficiaries had long been predicted. The reason that the program's finances look worse than when the Greenspan commission put in place the last major changes in 1983 is the slowdown in wage growth and the upward redistribution of wage income so that a larger share of wage income now goes untaxed.
In 1983, only 10 percent of wage income was above the payroll tax cap. Today it is close to 18 percent. This upward redistribution explains more than 40 percent *** of projected shortfall over the next 75 years.
It is also worth noting that the loss in wage income for most workers to upward redistribution swamps the size of any tax increases that could be needed to maintain full funding for the program. While AP wants to get people very worried over possible tax increases in future years, it would rather they ignore the policies (e.g. trade, Federal Reserve policy, Wall Street policy, patent policy) that have taken money out of the pockets of ordinary workers and put it in the hands of the rich.
-- Dean BakerReply Tuesday, September 27, 2016 at 05:05 AM Foreign Kidnappers said in reply to anne... , Tuesday, September 27, 2016 at 05:21 AMPaine -> anne... , Tuesday, September 27, 2016 at 07:23 AM
fewer workers to pay into the system. Immigration has helped Social Security's finances, but not enough to fix the long-term
Fewer workers who on balance draw smaller pay-check-s within a World of rising prices. Can you see the long trend of inflation? Do you see how the price of a t-bond has risen steady on during the past 35 years? As the bond price rises the yield falls. Do you see how much?
This is a long term unstoppable inflation that raises the price of all ships. All nursing homes and all ships!
Dean in high gearJulio -> anne... , Tuesday, September 27, 2016 at 01:39 PM
Remove the taxable compensation exclusions and capsThat's 139 Trillion with a capital "T", and that rhymes with "P", and that stands for pool!anne : , Tuesday, September 27, 2016 at 05:08 AM
And don't look at guys like me to save Social Security. My unfunded liability for kids shoes alone is over $20,000, and that's assuming they leave home at 18.http://cepr.net/publications/op-eds-columns/time-to-treat-bank-ceos-like-adultsanne -> anne... , Tuesday, September 27, 2016 at 06:09 AM
September 26, 2016
Time to Treat Bank CEOs Like Adults
By Dean Baker
The country's major banks are like trouble-making adolescents. They constantly get involved in some new and unimagined form of mischief. Back in the housing bubble years it was the pushing, packaging and selling of fraudulent mortgages. Just a few years later we had JP Morgan, the country's largest bank, incurring billions in losses from the gambling debts of its "London Whale" subsidiary. And now we have the story of Wells Fargo, which fired 5,300 workers for selling phony accounts to the bank's customers.
It is important to understand what is involved in this latest incident at Wells Fargo. The bank didn't just discover last month that these employees had been ripping off its customers. These firings date back to 2011. The company has known for years that low-level employees were ripping off customers by assigning them accounts -- and charging for them -- which they did not ask for. And this was not an isolated incident, 5,300 workers is a lot of people even for a huge bank like Wells Fargo.
When so many workers break the rules, this suggests a problem with the system, not bad behavior by a rogue employee. And, it is not hard to find the problem with the system. The bank gave these low level employees stringent quotas for account sales. In order to make these quotas, bank employees routinely made up phony accounts. This practice went on for five years.
As it became aware of widespread abuses, it's hard to understand why the bank would not change its quota system for employees. One possibility is that they actually encouraged this behavior, since the new accounts (even phony accounts) would be seen as good news on Wall Street and drive up the bank's stock price.
Certainly Wells Fargo CEO John Stumpf, as a major share and options holder, stood to gain from propping up the stock price, as pointed out by reporter David Dayan. In keeping with this explanation, Carrie Tolsted, the executive most immediately responsible for overseeing account sales, announced her resignation and took away $125 million in compensation. This is equal to the annual pay of roughly 5,000 starting bank tellers at Wells Fargo. That is not ordinarily the way employees are treated when they seriously mess up on the job.
Regardless of the exact motives, the real question is what will be the consequences for Stumpf and other top executives. Thus far, he has been forced to stand before a Senate committee and look contrite for four hours. Stumpf stands to make $19 million this year in compensation. That's almost $5 million for each hour of contrition. Millions of trouble-making high school students must be very jealous.
There is little reason for most of us to worry about Stumpf contrition, or lack thereof. His bank broke the law repeatedly on a large scale. And, he was aware of these violations, yet he nonetheless left in place the incentive structure that caused them. In the adult world this should mean being held accountable.
This is not a question of being vindictive towards Stumpf, it's a matter of getting the incentives right. If the only price for large-scale law breaking by the top executives of the big banks is a few hours of public shaming, but the rewards are tens of millions or even hundreds of millions in compensation, then we will continue to see bankers disregard the law, as they did at Wells Fargo and they did on a larger scale during the run-up of housing bubble.
There is another aspect to the Wells Fargo scandal that is worth considering. Insofar as the bank was booking revenue on accounts that didn't exist, it was also ripping off the banks' shareholders. The shareholders' interests are supposed to be protected by the bank's board of directors.
It doesn't seem the shareholders got much help there....http://www.nytimes.com/2016/09/27/business/dealbook/wells-fargo-workers-claim-retaliation-for-playing-by-the-rules.htmlPaine -> anne... , Tuesday, September 27, 2016 at 07:31 AM
September 26, 2016
Wells Fargo Workers Claim Retaliation for Playing by the Rules
By STACY COWLEY
In two lawsuits seeking class-action status, workers say they were fired or demoted for acting ethically and falling short of unrealistic sales goals.Really importantpgl -> anne... , Tuesday, September 27, 2016 at 08:19 AMRehire the staff. Fire the CEO.EMichael -> anne... , Tuesday, September 27, 2016 at 09:06 AMThis isn't going to be popular in here, and I do not even like saying it, but the timing of these lawsuits suggest to me ambulance chasing.pgl -> EMichael... , Tuesday, September 27, 2016 at 09:18 AM
Unless someone can tell me how it is possible for these employees to accept this treatment for years and years until the CFPB fines Wells Fargo.Cellino & Barnes? I hope these plaintiffs have been attorneys than that. But yea - having a government agency make your case is a good idea as I'm sure top Wells Fargo management has hired some nasty defense attorneys.EMichael -> pgl... , Tuesday, September 27, 2016 at 09:26 AMNot my point.pgl -> EMichael... , Tuesday, September 27, 2016 at 09:46 AM
California has some of the strongest whistle blower protections in the country.
I find it remarkable that(and I have tried but failed to find any evidence) not one of these mistreated employees filed a lawsuit years ago. The firings started in 2011. Are you telling me these employees sat around for 5 years without a single one of them taking action?
The other part that bothers me is this bonus level goal. Wells Fargo is not the only company in the world that sets their bonus levels at points that are almost impossible to obtain.
I do not see why that is an issue at all.
Not talking whistle blower protections. Firms like Cellino and Barnes only take cases where they know they can win. Then again - I am talking about a dirt bag law firm. Why bring a case when the odds are stacked against you? But I think what you are pointing out is they is a new sheriff in town with respect to gathering the facts - which of course is always key in winning any law suit.pgl -> EMichael... , Tuesday, September 27, 2016 at 09:47 AM"not one of these mistreated employees filed a lawsuit years ago".EMichael -> pgl... , Tuesday, September 27, 2016 at 10:04 AM
A lot of women who have been raped don't bother to prosecute the creep thinking they can't win anyway. This may have been the thinking of these employees until now.0 for 5300 is mind boggling.Julio -> EMichael... , Tuesday, September 27, 2016 at 11:19 AM
I am not saying the law firm is incompetent, I am saying it seems to me they are taking a case where WF might not want to deal with more bad pr and settle.
The only people, from what I have seen of this case, that have a chance to win on the merits are those who claimed they called the ethics department at Wells and were fired for that action.Yes, the lawyers are circling like vultures.cm -> anne... , Tuesday, September 27, 2016 at 09:35 AM
But it just shows that lawyers evaluate cases before taking them on, and that the cases' prospects depend on public opinion.
In addition, it is much easier for people to feel empowered, talk to lawyers, and fight back if they don't feel isolated and vulnerable to retaliation."the executive most immediately responsible for overseeing account sales, announced her resignation and took away $125 million in compensation. ... That is not ordinarily the way employees are treated when they seriously mess up on the job."EMichael -> anne... , Tuesday, September 27, 2016 at 10:52 AM
Based on (public) evidence available to me, I have to inform you that this *is* ordinarily the way how the higher executive ranks are treated when the have to leave because of a serious blunder. In many cases, the termination package is written into their contract, with exceptions mostly for criminal malfeasance, breach of contract, and that type of thing, or if the management/board deems it is better for everybody else to "convince" the undesired executive to leave without a big splash, then they will sweeten the deal.
As I have seen in tech, in many companies the rank-and-file are treated to similar arrangements, only the amounts are several orders of magnitude lower. But it is not very common for somebody to be outright fired without severance. There are commonly provisions like a few weeks of salary continuation per year of service, or offering a small sum to get a quick exit instead of a drawn out and arduous process of managing somebody out and "documenting" everything.
Here's the part that bothers me about this.(and once again I will mention that I feel almost dirty defending bank execs).Paine -> EMichael... , Tuesday, September 27, 2016 at 11:38 AM
" large-scale law breaking by the top executives of the big banks".
I don't get this at all. It seems that setting huge bonus numbers is somehow large scale law breaking.
But let's look at the real numbers is some perspective here(which is usually Baker's thing).
The idea seems to be that Stumpf came up with this idea to open accounts that people did not know they had. Those accounts would both generate revenue and allow him to talk about the growth of accounts in the bank.
I have seen nothing that shows how many accounts were opened illegally(I would like to see that) and nothing to show how many legal accounts were opened during this time frame. With that info you could put this into perspective how Stumpf and other high level execs gained from this action.
That being said I know one thing. People who had accounts opened illegally were returned the fees that they paid. That total is $5 million. Not a lot of revenue but it kind of makes sense. You cannot charge people a lot of fees with products they do not even know they have. there is no way in the world that anyone can think there was going to be a lot of money made on accounts that were, to all intents and purposes, dead.
Meanwhile, in the time period that this case covers, Wells Fargo had profits of almost $100 billion. To think the CEO is going to worry about such an insignificant amount of revenue by "planning" an illegal action is absurd.
I am all in in the bank CEOs committing fraud during the bubble, there was a huge amount of profit to be made. But to think this thing came from the top, or even five or six levels down, is silly. There is no reason.
This was the case of front line people committing fraud to make money. It was also the case of their managers to encourage and/or allow that fraud to make money.
Wells certainly deserves the punishment for allowing this fraud to happen, but thinking it originated in the executive offices makes no sense from an standpoint.
It takes courage to defend top managementPeter K. -> Paine ... , Tuesday, September 27, 2016 at 01:01 PM
Of a oligop bank
EMichael hates lefites. He gets off on baiting them (us).paine -> Peter K.... , -1Let us enjoy the attention
econbrowser.comJeffrey J. Brown
In reading the following NYT article about the Greek Crisis, with an emphasis on pensions and pensioners, I recalled Professor Hamilton's post on the US Social Security system. To borrow Warren Buffet's phrase about finding out who is skinny dipping when the tide goes out, I wonder if the tide has just receded faster for Greece than for the US, in terms of over promised and under-funded Social Security and pension plans, especially in regard to vastly underfunded state and local government pension plans. And of course, federal government owns both the asset and the liability for the Social Security Trust Fund
Greece's social security system was troubled even before the crisis, already divided into more than 130 funds and offering a crazy quilt of early-retirement options that were a monument to past political patronage.
In 2012, the pension funds, which were obliged under Greek law to own government bonds*, were hit by a huge debt write-down as those bonds plummeted in value. As a result they lost about 10 billion euros, or $11.1 billion - roughly 60 percent of their reserves.
Greece's creditors, seeking to make the Greek labor market more competitive, insisted that the government reduce the amount companies and workers must contribute toward pensions. And they insisted that Greece reduce its minimum wage so that those who do contribute have smaller outlays.
At the same time, the pension system was becoming an even bigger component of the social safety net, absorbing thousands. People like Ms. Meliou retired early, either because of the sale of state-owned companies, because they feared their salaries would be cut and thus their pensions would be smaller, or simply because their businesses failed. Few are living comfortably, and many support unemployed children.
*Remind you of another system?
Dean Baker:An Aging Society Is No Problem When Wages Rise: Eduardo Porter discusses the question of whether retirees will have sufficient income in twenty or thirty years. He points out that if no additional revenue is raised, Social Security will not be able to pay full scheduled benefits after 2034.While this is true, it is important to note that this would have also been true in the 1940, 1950s, 1960s, and 1970s. If projections were made for Social Security that assumed no increase in the payroll tax in the future, there would have been a severe shortfall in the trust fund making it unable to pay full scheduled benefits.We have now gone 25 years with no increase in the payroll tax, by far the longest such period since the program was created. With life expectancy continually increasing, it is inevitable that a fixed tax rate will eventually prove inadequate if the retirement age is not raised. (The age for full benefits has already been raised from 65 to 66 and will rise further to 67 by 2022, but no further increases are scheduled.)The past increases in the Social Security tax have generally not imposed a large burden on workers because real wages rose. The Social Security trustees project average wages to rise by more than 50 percent over the next three decades. If most workers share in this wage growth, then the two or three percentage point tax increase that might be needed to keep the program fully funded would be a small fraction of the wage growth workers see over this period. Of course, if income gains continue to be redistributed upward, then any increase in the Social Security tax will be a large burden.For this reason, Social Security should be seen first and foremost as part of the story of wage inequality. If workers get their share of the benefits of productivity growth then supporting a larger population of retirees will not be a problem. On the other hand, if the wealthy manage to prevent workers from benefiting from growth during their working lives, they will also likely prevent them from having a secure retirement.
RC AKA Darryl, Ron said...
Hey, if the plutocrats won't raise wages then they will need to raise the payroll tax cap on Social Security. They should have thought of that before starting so many wars. The Bonus Army will not be denied.
DrDick -> Darryl, Ron...
"they will need to raise the payroll tax cap on Social Security"
Raise it my foot, they need to eliminate it. The cap has always been more welfare for the rich.
Bud Meyers -> DrDick...
Why not eliminate the income cap ($118k) entirely and start taxing capital gains and dividends for Social Security too? Members of Congress pay this tax on 65% of the salaries ($174k), while 95% of all wage earners pay this tax on 100% of their earnings.
"We have now gone 25 years with no increase in the payroll tax, by far the longest such period since the program was created. With life expectancy continually increasing, it is inevitable that a fixed tax rate will eventually prove inadequate if the retirement age is not raised."
If wages of younger workers were maintaining the same gains over their previous generation peers, and in fact, gained even more due to reduced supply of workers relative to steady demand for labor as the large boomer cohort leaves the labor force to the smaller subsequent generation.
Instead, conservative free lunch economicntheory, itself grossly illogical, has led to cuts in wages as a matter of policy based on the idea that workers are not consumers, so gdp can grow faster if workers are paid less, leading to a larger supply of consumers with pockets of money being created by the tinker bell of wealth.
While changing demographics might require higher payroll taxes, say younger generations having more kids than the boomer generation and being stay at home parents than boomers were, in reality, the younger generations are moving further along the trend line of working more, just like the boomers.
Incomes are falling leading to reduced gdp growth because that is driven by labor incomes which are labor costs, and lower gdp means lower wage income means lower tax revenue with a fixed tax rate.
Social Security has structural problems simply because conservatives have sold Americans a bill of goods, promising something for nothing.
As a leading edge boomer, I've had the best of both good and bad policy. Great big government benefits when young to give me a great start in life, followed by bad policy tax hikes for me paid for by screwing the generation of children I did not have, and now 68, getting the great big government Social Security benefits Reagan signed into law in 1983, doubly great because, my big government start in life lasted to 2001 and made me very rich from simply working and living like my parents who were shaped by the depression. And Republicans can not cut my benefits because I'm hidden in the biggest block of the Republican base who almost all depend on Social Security.
3. There's no bonus for deferring spousal benefits past full retirement age.
Many Social Security strategies for workers hinge on the ability to get delayed retirement credits for claiming benefits after full retirement age. For those retiring now, waiting until age 70 to start taking Social Security can result in monthly checks that are 32% larger than you'd get at age 66.
For spousal benefits, though, there are no delayed retirement credits available. Therefore, it doesn't pay to wait until age 70 before taking spousal benefits. Once you reach full retirement age, which is currently age 66, there's no reason to keep waiting -- go ahead and claim your spousal benefits rather than simply losing them.
I have a new column:
It's a defense of social insurance against Republican attempts to dismantle it.
yes the rich are against social insurance because as the article says, they believe that the poor are not entitled to what the rich "have earned"
that of course is the big lie, they have not earned all of what they have, that assertion is absurd
they have manipulated the system and stolen whatever they could by whatever means possible so that the inequality is extreme
social programs, and all sort of fiscal programs are an attempt to reverse this extreme inequality and what it does to cause the poverty it causes
we are not at full employment (and what is full employment needs to be renegotiated) because of this inequality, and the forces driving it
if the investment of preexisting wealth gets low enough, the economy itself will not even be viable and will collapse
(keynes Y = I plus C, where I is the addition of preexising wealth ie investment minus the using up of preexisting wealth, ie disinvestment)
so, with their economics concepts built on a pile of lies, the republicans are basically only working to destroy the economy.
I think perhaps though it might have benefited by addressing the growing libertarian wing of the Republican Party, to whom social insurance, regardless of its benefits, is seen as immoral.
It seems like individuals like Rand Paul pay lip service to wanting to stop transfers to the "undeserving poor" when in reality, they don't care how deserving the poor are, they want to end the transfers altogether.
Logic, such as that in the article, would not affect them in the slightest.
It didn't take Republicans long to begin their assault on Social Security:Getting It Wrong on Disability Insurance, by Kathy Ruffing, CBPP: I've explained that a new House rule will make it harder to reapportion payroll taxes between Social Security's retirement and Disability Insurance (DI) trust funds to avert a one-fifth cut in benefits to severely impaired DI recipients in late 2016. In a revealing statement, co-sponsor Representative Tom Reed (R-NY) says the change is designed to prevent Congress from "raiding Social Security to bail out a failing federal program." He's doubly wrong.First, far from "failing," DI has grown mostly in response to well-understood demographic and program factors like the aging of the baby boom, and the program's trustees have long anticipated the need to replenish the trust fund next year... Second, DI isn't distinct from Social Security; it's an essential part of Social Security.Social Security is much more than a retirement program. It pays modest but guaranteed benefits when someone with a steady work history dies, retires, or becomes severely disabled. ...Statements like Representative Reed's implicitly attempt to pit Social Security retirement and disability beneficiaries against each other. ...
To hear critics tell it, President Obama's plan to cut Social Security by adopting a new inflation measure is a major attack on the elderly.
Rep. Greg Walden (R-Ore.), the head of the National Republican Congressional Committee, called it a "a shocking attack on seniors," while Sen. Elizabeth Warren (D-Mass.) sent an e-mail to supporters declaring, "'chained CPI' is just a fancy way to say 'cut benefits for seniors, the permanently disabled, and orphans.'"
Here are the facts. Chained-CPI does mean that Social Security beneficiaries will see their benefits cut. Imagine a person born in 1936 who retired in 2001, at age 65. For simplicity, let's assume they're eligible for the maximum benefit. Given that the cap was below $30,000 a year as recently as 1980, it's not inconceivable that a middle or upper-middle class person with steadily increasing earnings since 1958 would be in this situation.
Their initial benefit would have been $1,538 a month, or $18,456 a year. Under existing law, they would have gotten a series of cost-of-living adjustments (COLAs). By 2013, COLAs would have increased this person's annual benefit to $24,689.49. However, under chained CPI, it would be $23,820.19, a decrease of $869.30. That's a 3.5 percent cut in benefits. And, of course, a 3.5 percent cut in income matters a lot more when you're barely clearing $20,000 a year than it does when you're making a regular middle-class salary.
There would be other complications as well. Kenneth Stewart, an economist in the Division of Consumer Prices and Price Indexes at the Bureau of Labor Statistics (BLS), is one of the guys who computes the various CPIs every month. He notes that one benefit of CPI-W and other unchained CPIs is that they are final upon issuance. That is, the numbers are never revised. Two weeks after this month ends, BLS will release the April 2013 CPI, and that will always and forever be the April 2013 CPI.
Not so for chained CPI. "The chained CPI-U is subject to revision because we don't get the actual expenditure data until 1 or 2 years later," he notes. For example, in 2005 we had access to final chained CPI data for 2003, and only interim data for 2004. If we were to adopt chained CPI, we'd either have to use incomplete data, or else wait until we had final data to implement COLAs, which would further compound the cuts. The former, of course, would reduce the accuracy of the measure, a feature that proponents often tout.
For that reason, critics of chained CPI have sometimes promoted the CPI-E, an experimental index meant to measure price changes within products bought by the elderly. Because it's experimental and simply a result of reweighing the existing CPI measures to more heavily account for goods like housing and health care, the BLS doesn't publish the data on its website, but it's available upon request. Stewart, who helped develop CPI-E, explains that it's an unchained measure, and because of that its numbers don't need to be revised.
In the mid-2000s, the housing bubble and boom in health-care prices meant that CPI-E, which weights both more heavily, rose faster than conventional inflation measures. In 2008, for instance, adopting CPI-E as Social Security's inflation measure would have given our hypothetical retiree $327.88 more a year. However, since the housing bubble burst and health-care prices started slowing in growth, that effect has diminished. "Medical care inflation has been relatively subdued," Stewart says. "Shelter prices have also been very tame in, really, the last seven or eight years." As a result, in 2013 CPI-E would have resulted in only $56 in additional annual benefits for our test retiree.
The measure is not without its disadvantages. The biggest, noted by the Committee for a Responsible Federal Budget's Adam Rosenberg and Marc Goldwein here, is that a third of Social Security beneficiaries are not elderly. If the goal is to accurately represent inflation for beneficiaries, you'd also have to look at spending patterns among survivors and the disabled, which would be a considerable new project. Also, CPI-E uses a small sample size as it relies on the same sample that normal CPI does. To bring it from the experimental phase to become ready for prime time, that'd need to change. "We'd have to do a lot of research as to where those folks are shopping, what exactly they're buying, and what prices they're paying," Stewart says. "It's very difficult and costly to measure."
But ultimately, the question of which you prefer likely has more to do with whether you think Social Security benefits need to be pared back to ensure the program's long-run solvency, or whether you think the elderly need, if anything, a benefit bump. Those are policy questions, not technical ones, and all the debate in the world about chained CPIs and CPI-Es relative methodological merits won't resolve them.
Gregory John Bennett wrote:
12:59 PM EDT
It's easy. Take the cap off! Right now it's around 115,000.00 If you earn $ 70.00 or $ 70 million you pay in. Poof, away goes trying to fund it. Also, the crooks that we pay to perform the will of the people, are FOBIDDEN to use any of the money except for S.S. I say that because they have done that in the past and have not paid it back. I think that is called Grand Larceny?
When you look at the effects of chained CPI from the perspective of someone who retired in 2001 and see what that person would have lost since then, you get a OMG number. But when you look at that $869 number over 12 years, that's only about $73 dollars each year. The cumulative effect looks terrible, but, in fact, the retiree would hardly notice the difference.
The increasing costs of Social Security are attributable almost entirely to demographics. The baby boomers are retiring. That bubble will eventually subside. Further, the weak economy will eventually strengthen. When that happens Social Security will once again regain sound footing. When the crisis passes, congress can pass laws to return to unchained CPI or the new CPI - E.
If Republicans will agree to increased revenue and pass the President's budget with new money to create jobs, the temporary fix of chained CPI could very well be worth it. And remember, the most vulnerable seniors are protected in the President's budget from the effects of chained CPI.
4/11/2013 5:27 PM EDT
The chained CPI is an inferior estimate of inflation. Period, no further discussion really is needed. The BLS's measures of CPI-U and CPI-W currently reflect considered (professional and apolitical) judgments that seek to neither overestimate nor underestimate inflation as we have long understood the concept.
4/11/2013 2:37 PM EDT
First, SoSec was not intended to be a 100% replacement of income for retirement, so that person making almost $24k in SoSec likely has, or should have, meaningful income outside SoSec.
Second, the question to be asked is "what is the most appropriate measure to use?". If by law it was stated that SoSec would rise 10% per year, there would be a huge difference in benefits between that and chained CPI, but chained CPI is more appropriate, and thus, proper. People simply got more than they should have previously.
Third, a 65 year old retiree likely owns free and clear, or almost, his home, so has no mortgage. No more saving for their children's education. No more saving for retirement. And with a lower income, a lot lower taxes. Thus, even $24k goes a lot further for a retiree than someone in their 30s doing all those things mentioned above.
4/11/2013 3:06 PM EDT
"so that person making almost $24k in SoSec likely has, or should have, meaningful income outside SoSec"
You should take a look at some of the stats coming out of the baby boomer generation, something like 50% of them only have savings in their houses, not exactly a liquid asset.
"65 year old retiree likely owns free and clear, or almost, his home, so has no mortgage"
Is this an assumption?
You do not create policy based on "what should be", you create it based on "what is".
4/11/2013 11:44 AM EDT
I'm tired of hearing the whitewashing of President Obama's betrayal of the elderly and disabled and vets as 'calling the GOPs bluff.' That is just spin doctoring. You don't use Grandma's survival as 'bait' for a trap for the GOP. That is one of the most cynical, heartless whitewashings of a dastardly deed that I have ever seen. No, the fact is, President Obama has been 'jonesing' to go after Social Security since he came into office. As with so many of his broken promises, he had no intention of keeping his promises that he made in order to deceive his supporters into following him. This country has become so morally rotten that it now puts evil for good and good for evil. The President has shown that he loves the GOP more than his own base who elected him. He is a closet Republican.
4/11/2013 11:44 AM EDT
I'm tired of hearing the whitewashing of President Obama's betrayal of the elderly and disabled and vets as 'calling the GOPs bluff.' That is just spin doctoring. You don't use Grandma's survival as 'bait' for a trap for the GOP. That is one of the most cynical, heartless whitewashings of a dastardly deed that I have ever seen. No, the fact is, President Obama has been 'jonesing' to go after Social Security since he came into office. As with so many of his broken promises, he had no intention of keeping his promises that he made in order to deceive his supporters into following him. This country has become so morally rotten that it now puts evil for good and good for evil. The President has shown that he loves the GOP more than his own base who elected him. He is a closet Republican.
April 13, 2013
This Real News Network segment does a very nice, compact job of explaining why chained CPI is such a disastrously bad policy for older Americans. I'm featuring it with the hope that it might prove useful in educating friends and family members who might not be up to speed on this issue.
Topics: Banana republic, Dubious statistics, Politics, Social policy, Social values
Email This Post Posted by Yves Smith at 4:20 am
110 Comments " Links to this postJGordon says:JB says:
April 13, 2013 at 4:54 am
So, when/if chained CPI goes through, I'll be able to stop paying into Social Security, right? I mean, it's only fair considering that it wouldn't (and won't) actually be around when I'm old.
I have read that it is actually possible to opt out of Social Security. I'll have to look into that.
April 13, 2013 at 11:44 am
Besides the fact that you've been sold a bill of goods – since Social Security currently has a $2.5 trillion surplus and if payroll taxes remain current that surplus will not go away – are you a part of the 1% or on a military pension that you can afford NOT TO HAVE AN INCOME when you reach the age that no one will actually hire you?
mojo.rhythm says:William C says:
April 13, 2013 at 5:17 am
Not so. One of Ron Paul's pillar campaign promises was to give people the option to leave the Social Security program. There isn't really any point promising a policy if that policy already exists.JGordon says:
April 13, 2013 at 5:37 am
It is much easier to deliver on a policy promise when that policy is already in place.This is something that here in the UK the politicians quite often use to their advantage in more obscure policy areas.It works as long as the media are compliant.McMike says:
April 13, 2013 at 6:24 am
Oh no, I definitely did look into it: all I have to do is become a priest of some sort and I'm exempt. Definitely worth considering.mac says:
April 13, 2013 at 11:35 am
Actually, you can opt out by entering government service. Many governments, teachers, and state cops participate in alternative retirement plans instead of SS.
Then again, those funds will be underfunded, destroyed and raided eventually.
April 13, 2013 at 5:21 pm
Ron Paul like many others who dream of being President can yap as he/they want but cannot do many things they yap about as the House and Senate must do them.
Jim Nichols says:Garrett Pace says:
April 13, 2013 at 5:51 am
We don't need to cut Social Security–we need 11 Dimensional Chess Masters for the 99%
April 13, 2013 at 9:21 am
Obama really is playing 11 dimension chess, he's just playing against his supporters and not Republicans.
April 13, 2013 at 1:43 pm
Lol Garret that made my day. I cant believe I never thought about saying that before. Good one man.
from Mexico says:harry says:
April 13, 2013 at 7:09 am
This study might help to flesh out some of what Teresa is talking about:
"Poor experience higher inflation than rich"
• Poorer households have experienced higher inflation on average than richer households over the past decade. This difference has been especially marked since 2008 (during the recession).
• The poorest fifth of households faced an average annual inflation rate of 4.3% between 2008 and 2010, whilst the richest fifth experienced a rate of just 2.7% a year over the same period.
• Pensioners, and in particular those dependant on state benefits, experienced higher rates of inflation than non-pensioners.
April 13, 2013 at 5:33 pm
Of course the poor experience higher inflation than the rich. The terms of trade has moved in favour of the rich – the value of the poors labour has been falling. Thus the cost of gardeners cooks, masseurs etc has been falling.
Bruce Krasting says:washunate says:
April 13, 2013 at 7:53 am
Okay – the chained CPI is a bad idea. For the 60% of seniors who are dependent on benefit checks, this plan will hurt, that's an unfair outcome.
But what is plan B? I see only three:
1) Increase payroll taxes for all workers about 2%.
2) Raise the cap and change the benefit formula so that higher incomes do not get ever larger benefit checks.
3) A means test that is based on both income and assets. This would substantially reduce or eliminate SS benefits for anyone with income of $200k and or assets in excess of $2m.
#1 will not happen.
So a combo of #2 and 3 seem to be the only options.
A note to Progressives who love SS: If it is to be #2 and 3, then you can say goodbye to America's love affair with SS. Socializing the program may be necessary, but it will also kill the popular support. SS will become a welfare check for those who did not save in their lives.
I advocate a stiff means test. It would be cruel (and crazy) to starve seniors who do not have the financial resources. If you have $2m in the bank, no SS checks – period.ReplyJim Haygood says:
April 13, 2013 at 8:21 am
Bruce, what are you talking about? Can you show any data that Americans even understand that OASI and DI taxes are regressive, let alone that people like that?
Quite the contrary, I would suggest that taxing all wage income at the same flat rate would be more popular than the current arrangement.Bruce Krasting says:
April 13, 2013 at 8:39 am
'So a combo of #2 and 3 seem to be the only options.'
The old 'false alternatives' sales close …
SocSec either can increase its investment earnings, or reduce its expenses with lower payouts (such as chained CPI).
SocSec has considerable scope for increasing investment returns, since it is currently stuck in low-yielding Treasury notes (a subject Bruce Krasting has written about).
ALL pension funds, including those for government employees, invest in a mix of equities and bonds. SocSec, with its antique, pre-CAPM 1935 design, does not. This is one of the great ironies of the US: it's world's leading financial innovator, yet hasn't got round to incorporating Nobel Prize winning portfolio management insights from 50 years ago that form the basis of all modern pension investing.
Unfortunately, politicians have zero interest in modernizing SocSec's investment options for higher returns and more generous benefits. The reason is simple: SocSec's trust fund contains no marketable assets whatsoever. Its non-marketable Treasuries only can be redeemed via fresh federal borrowing.
To put it in plain words, the SocSec Trust Fund has been looted by a gross, simplistic accounting fraud carried out over decades. In comparison to that enormity, chained CPI is a mere penny-ante fiddle. It's like remaining silent about losing your fortune to Bernie Madoff, then calling the cops because he stole your lawn ornament.
Honor among thieves, comrades. When we're dealing with proven fraudsters, the only question is what fresh abuse they have in mind for us. As beaten spouses are advised, don't negotiate or plead. JUST LEAVE.
April 13, 2013 at 10:44 am
Jim – If you think that SS should divert some of its holdings of Special Issue Treasury bonds to higher yielding private sector bonds or stocks, you are out on a limb.
There is no way in hell that Wall Street will get a dime of the SS Trust Fund. There is next to zero support for this approach.
jrs says:Don Levit says:
April 13, 2013 at 12:24 pm
false alternatives but that 3rd alternative would be even worse. What can't be considered I guess:
1) raise income taxes, SS was borrowed from to fund the general government all these years, why not have the general government pay it back, it gets it revenue well from money printing and borrowing yes, but also from income taxes.
2) reduce other government spending in order to better fund SS
3) could some of that money banksters are getting (QE3) be used for SS instead?
4) do something to get medical costs which are otherwise bankrupting the government under control – this is probably realistically socialized medicine. Even if we didn't get that I would happily repeal Obamacare to fund a government program that unlike Obamacare actually works – that would be social security.
5) I would choose a payroll tax increase over putting the money into Wall Street and means testing. I think raising the cap may backfire but in the exact same way means testing will. They are both the exact same thing, turning it into a welfare program. Interesting that what the original poster preferred is that which would hurt the middle class rather than that which would hurt rich wage/salary earners (of course the real wealth isn't in working, we all know that).
April 13, 2013 at 3:21 pm
None of those choices would have been necessary if the excess FICA taxes had remained in the trust fund. Treasury borrowed the money to pay for expenses to lower the deficits.
Now, deficits have to be increased to redeem the bonds. It's that simple.
Government can be relied on to pay for current, annual expenses. It is not capable and/or willing to secure a fund for future purposes.
DWD says:banger says:
April 13, 2013 at 9:31 am
There really is a much simpler solution.
Raise the cap on the taxing of earnings and impose a benefit cap as well.
If you think about it this is just about the same thing as is happening now. The rich stop paying SS Taxes after 110K or whatever and the rest of their money is untaxed (at least for SS)
So, remove the cap and impose a benefits cap at a comfortable level and use the excess to shore up the system.jrs says:
April 13, 2013 at 9:37 am
This is the obvious solution. And like all obvious solutions to any of the major problems we face it is completely out of the question.
Everything has become political – by political I don't mean the BS that the mainstream media covers but the muscular contests between various power groups that have real power which is, for the most part, various factions of the oligarchy. In other words, the real political struggles going on in Washington are not reported on at all by anyone not even the left-wing because most segments of the population believe that Machiavelli's insights only applied to the ancients.banger says:
April 13, 2013 at 12:30 pm
Yea I'm not sure to what extent rich wage/salary earners are really the oligarchy though. Remember only such income is ever subject to SS taxes (not interest, not capital gains, not dividends, not stock options etc.) Sure a lot of rich wage/salary earners have their cartels and government protections (written right into the law, it's what has replaced unions, and that's not a good thing) but still are those peole really "the oligarchy"? I'm not sure.
April 13, 2013 at 12:55 pm
I can best describe the oligarchy as a emergent network of, increasingly, international billionaires, their servants, assistants and agents. It consists, at the top of the senior executives of major banks, international organizations and so on along with senior members of the security establishment (no guns no power). There is a caste of people addicted to power and what it brings. Or to put it another way, there is no such thing as American Exceptionalism which means that history continues and history has always had oligarchs act and the rest of the people get ordered about or stand looking. We are far more powerless than we imagine because we imagine that "democracy" cannot be gamed. It's taken awhile but it most assuredly has been gamed, in part, this is due to communication systems that no one imagined a couple of centuries ago.
Valissa says:banger says:
April 13, 2013 at 12:52 pm
Yeah, but even if someone or some group got the brilliant idea of publishing something like "The Power Report" or "Modern Machiavellian Times" to explain the real power games going on behind the scenes, how long do you think it would be before they were closed down?Valissa says:
April 13, 2013 at 1:02 pm
Depends on whether or not it was threat. As things stand there is no threat so I think such pubs would be just fine. The sad part is that the authorities know that the public does not want to know the truth, in fact, practically begs to be told lies to avoid pain and cognitive dissonance.
You probably know the old Emma Goldman quote "if voting changed anything, they'd make it illegal."
We just need to start with simple awareness and all else will flow–it's like realizing and fully accepting that abuse went on in your family–only until you do that and work through it can you stop having your life run by the past.Valissa says:
April 13, 2013 at 1:07 pm
Anyone who wants to try and understand the deeper power games at work have to work at it. I think this has always been true. People have to do things like read books, and search out thoughtful bloggers who write the occasional good article explaining some particular power game. All of this takes time and energy and it also requires remodeling one's worldview a bit. Realistically speaking, how many people are likely to do this?Don Levit says:
April 13, 2013 at 1:13 pm
@banger, my own experience is that people do not want to know those kind of truths. When I decided to learn more about power and money, then got excited about this new level of awareness I had developed, guess what happened when I tried to tell my friends about it? I become very unpopular until I shut up about it, and even lost some friends (over time). It didn't matter how carefully, politely, or nicely I tried to express it, it was a NO GO. And these are all very intelligent, well educated people.
OTOH, the are organizations like STRATFOR that, for a hefty fee, will let you read their power oriented news articles. I learned a lot form them! I'm sure there are other subscription services that offer this material as well.Nathanael says:
April 13, 2013 at 3:25 pm
No, that solution solves nothing on a cash flow basis.
As long as the Treasury borrows the trust funds to pay expenses and lower the deficits, the trust fund monies can be redeemed only with new general revenues, borrowing, extra taxes, or lower spending.
That would be the case even if the trust fund was invested in stocks and bonds. Numbers are simply, numbers. They do not fund anything.
Don LevitBruce Krasting says:
April 13, 2013 at 5:01 pm
Printing money is what funds government operations. They have big fat printing presses, in DC and elsewhere, which print the money. You can visit them.jrs says:
April 13, 2013 at 10:22 am
A viable solution. But ask Progressives if they would vote for this. They would not. It would convert the program they love into welfare. SS would lose the shield of "What you pay in – you get out".
This "solution" is exactly the opposite of the "Roosevelt dream" for SS.TedWa says:
April 13, 2013 at 12:33 pm
So Progressives would not vote for it because for once in their life they're not suicidal. Good. For once in their life they won't trade a narrow gain for a systematic loss and think systematically. Good.
April 13, 2013 at 1:48 pm
Isn't it amazing that this NEVER comes up in discussions of "saving" SS? It would be the most fair cut.
p fitzimon says:lambert stretherTedWa says:
April 13, 2013 at 10:20 am
Another option is to figure out how to employ the 25 million unemployed so they can contribute to S.S. and Medicare. Return to a saner and fairer income distribution so that 2 trillion in income doesn't escape the SS tax.
The bonus that comes with this option is that we save at least $500 Billion in welfare per year and people have enough income so that they are not totally dependent on S.S.Nathanael says:
April 13, 2013 at 1:49 pm
You sound naive : The rich don't pay income taxes, they pay capital gains taxes at 15% and lower.
April 13, 2013 at 5:00 pm
THANK YOU! I've been trying to get this fact across to people - most people simply don't realize this. Even though it's right there in your IRS Form 1040 instructions. (Most people don't read them.)
It's nice to see someone else pointing this out.
For reference, the extremely low rates on capital gains and dividends have not always existed. There were actually two years (1986-88 IIRC) when capital gains and dividends were taxed just like everything else. Before that, they were taxed less than anything else, but still at rates up to 45%.
April 13, 2013 at 9:32 pm
Oooh, an annotated Form 1040. How I would like to see one, and how a propos it would be. I don't have the skill to do it, myself….
Yves Smith says:
April 13, 2013 at 5:24 pm
Yes, the part that is always conveniently omitted is that the SS "problem" is the result of the lack of labor bargaining power. If we'd had companies sharing the benefits of productivity gains with workers as they had in the past, and hadn' thad a GFC that in large measure resulted from that (policymakers using easy access to debt rather than wages to preserve the illusion of rising living standards), we wouldn't have a problem worth discussing.Reply
April 13, 2013 at 5:24 pm
A fine idea would be to get rid of all the talk that is maybe a bit true, drop all the politics and see what/if there is a problem outside those used to position for votes.Reply
April 13, 2013 at 8:08 am
I got news for you, Social Security is already a socialized program with popular support.
Raise the cap, problem solved. Except it should be from 500K+, not 100-500K (on top of what it is already up to 100K).
Let's see it lose popular support because it only forces the super-rich to pay a bit more :)
There's already extensive support not just for the SS retirement but also the SS disability.
People used to say the same thing when Nixon introduced SSI - "people will stop liking Social Security because you're lumping in unpaid disability stuff!" - never happened, SS has still always retained 80+% support against any cuts or other reforms (the life expectancy catch-up excluded).
The Social Security brand will never be broken, it will never be unpopular. We just need to turn it into a responsible, good program that supports tens of millions of Americans in varying forms and nobody will ever hate it except jerkoff plutocrats.
Plus you throw in the fact that so many of the new disabled are the veterans our oligarchs sent off to war? It's political suicide to go after anything in the Social Security brand, that's why even Obama is getting heat from the mainstream.
In the end, we need an expanded Social Security, a fund we just all chip into to help support those who lost the game of capitalism or have been screwed in general in the game of life. That's how proper societies operate. You work and do well if you're able, and if not, you get help. Of course there's safeguards to prevent abuse, but in general in the countries that have the policy, people don't choose to be jobless and get a guaranteed minimum income that's just enough to cover the basics. So it's what we should want and need anyway. And such a thing always has popular support because every American knows someone who's touched by Social Security, so putting the word "cut" in the same sentence as that is automatically bad even if we expand it more.ReplyCarla says:
April 13, 2013 at 8:39 am
"In the end, we need an expanded Social Security, a fund we just all chip into to help support those who lost the game of capitalism or have been screwed in general in the game of life. That's how proper societies operate. You work and do well if you're able, and if not, you get help."
This sounds so humane as to be Utopian, but I agree entirely. Why not just remove the cap on wages that pay the Social Security tax (because let's face it, it is a tax) but cap the benefits at some suitable level for wealthy recipients so the well-off could continue to "buy-in" to the program and it would not be regarded as "welfare."
I'll bet 70 percent of Americans would agree, and since they vote for their Representatives in Congress and that's what really counts - Oh, wait.ReplyBruce Krasting says:
April 13, 2013 at 10:40 am
Chris – I agree with you when you say:
"a fund we just all chip into to help support those who lost the game of capitalism or have been screwed in general in the game of life."
But please accept that when you say this, you are destroying the basic tenets of SS. You want to turn it into a program that supports those who did not get rich in the American Dream. Those that did benefit, have to pay (or not get any benefits).
This is a plan that will end SS as we now know it. Try to sell your idea to Progressives like Dean Baker. He would not support you at all. I do support you – but I admit – I want to end SS as it is now configured. You can't have it both ways.ReplyChris-Engel says:
April 13, 2013 at 12:06 pm
We already fund SSI that carries the Social Security brand where the wealthy (who pay most taxes) are funding the disabled and invalid. The bottom 60-65% of SS recipients receive more in benefits than they have paid in. So, as I said, the taboo is already broken!
SS is socialized, SSI has incorporated the Social Security brand, and people are still happy even though it's a progressive social safety net program where we're funding a disabled and other people who don't pay into it.
Dean Baker agrees with me 100%, as evidenced here:Reply
The shortfall that remains is equivalent to only about 0.6 percent of our GDP, which could be easily made up with common-sense solutions, such as applying the Social Security payroll tax to income above $113,700.
I hope you weren't being purposely dishonest by claiming that Dean Baker would not suggest making SS more progressive by taxing the wealthier more…
tl;dr "The basic tenets of SS" have not been violated, it has been progressive for a looong time, and it still has retained massive support.jrs says:
April 13, 2013 at 12:41 pm
Eh no, the wealthy don't fund SS. That's partly why they've left it mostly alone until now. Wage/salary earners closer to the higher end of the SS tax fund SS while the wealthy go about not working for a living as always.Replyjrs says:
April 13, 2013 at 12:45 pm
You probably could have it both ways. Keep SS as is, funded out of income taxes and start floating the idea of a guaranteed minimum income for anyone who falls between the cracks. The oligarchs play both sides afterall.Reply
April 13, 2013 at 8:17 am
That does seem to be the common theme. Evidence about how the world works simply isn't relevant, because the Administration isn't making policy in the best interest of the public.
It has also been interesting hearing discussions about this, because as an age group, seniors are the wealthiest Americans. Younger age groups are in even more trouble.Replyjohn says:
April 13, 2013 at 8:24 am
Many, many Seniors don't have much money and even the ones who get a small pension often struggle to pay the bills.
So the fact that seniors as a group have the most wealth in this country just shows how far our wages have gone down in the past 30 years and how much the rent extraction from us has gone up.ReplyCarla says:
April 13, 2013 at 8:52 am
I know boomers who lost their jobs in the last 5 years and slipped from the middle class, and it is terrifying. They have spent down their savings, lost their homes, their cars are wearing out, they are hanging on by their finger-nails until they reach 62 and can get sharply reduced early Social Security BECAUSE THERE IS NOTHING ELSE FOR THEM.
The luckier ones were in their 60s when the ax fell and have been able to wait until almost the full retirement age of 66 to get a Social Security check that a poor person could almost live on.
The people making these policy decisions in Washington have absolutely no clue about what regular American citizens face in this economy. They are cruel, heartless, and their actions are indefensible.
But our fearless leaders do know who they're working for, and it AIN'T US.Replywashunate says:
April 13, 2013 at 8:59 am
yep, no argument here. What I think is taking time to sink in is that there are a lot of younger people who have never had a good job, never had savings, never had a pension, never had a house, don't have a car, don't have healthcare…ReplyLambert Strether says:
April 13, 2013 at 9:53 am
i'm fully aware of it.
How to make an alliance between young and old, that is the question….ReplySusan the other says:
April 13, 2013 at 1:04 pm
That's a really good place to start. Just think if the pension funds had not been conned by their fund managers and the banksters all that money would be available to invest not just in their retirement but in the future. Pension funds could have invested directly in the future by funding scholarships, research, affordable housing projects, permaculture projects and various other green, long-term investments. Obama is simply up to his old tricks here. It definitely is not a question of "unintended consequences" with Obama suggesting it. He knows exactly what he is doing and he's playing for an angle for the banksters to move in and middleman us all to death. Time will reveal the scheme I betcha.different clue says:
April 13, 2013 at 3:28 pm
Start by making visibly clear how many old are not very rich, and how many of them worked until they couldn't work anymore. Try demonstrating the difference between "boomer" and "yuppie" and show how the MSM work to confuse that difference on purpose so that yuppie-envy can be re-engineered into boomer-hatred.Jessica says:
April 13, 2013 at 4:26 pm
Link pensions and education, two phases of life most of us go through and that most of us need help during.jrs says:
April 13, 2013 at 12:51 pm
It's worse than that. I mean unless there are 10 year olds posting here, we'll all never be kids again, and if we can support whatever kids we might have, we don't think about it the way we think about our risky future old age. But as for the "Actual Living Standards of Seniors" it's nothing compared to the living standard of children. Which makes me so sad I want to donate to a save the U.S. children fund. I don't think children are any more valuable than seniors or vice versa, human life is valuable all throughout the lifespan or not at all. But it's just so sad that children are going to bed hungry and having their entire lives ruined.ReplyKokuanani says:
April 13, 2013 at 12:38 pm
Another nasty feature that no one seems to talk about is the "if you take SS early, you'll get less, so wait until you're 66 or 70 and get MORE."
The main people who can "wait until 70″ and thus will get significantly more in benefits are those who a) don't NEED social security; they can get by just fine from their other investments, working spouse, part time work themselves, and are just waiting for that jackpot @ 70; or b) have relatively easy jobs, so can continue to work until 70, again waiting for the "jackpot." How easy is it for a mine worker, loading dock worker, waitress or other person involved in physical labor to hold out until 70 for that "bigger benefit"?
This is just another FEATURE to assure that more money goes to the rich and undeserving.ReplyOtter says:
April 13, 2013 at 8:54 pm
Carla says: (April 13, 2013 at 8:52 am)
"The people making these policy decisions in Washington have absolutely no clue about what regular American citizens face in this economy. They are cruel, heartless, and their actions are indefensible."
Which is it? They cannot be cruel and heartless unless they have a clue.
Why does it matter whether they are ignorant, or heartless, or believe adversity is good for our souls? Their actions are not indefensible. They are hostile toward us.
Lambert Strether says: (April 13, 2013 at 9:53 am)
"How to make an alliance between young and old, that is the question…."
Not the question… only one of many… for example, what else to do, as alternative, or supplement, while contemplating or pursuing an alliance?ReplyTK421 says:
April 13, 2013 at 9:37 am
"Evidence about how the world works simply isn't relevant, because the Administration isn't making policy in the best interest of the public."
That's the bottom line, to me. Obama sucks.Reply
April 13, 2013 at 8:42 am
The most important thing to understand is that Social Security as it stands is a hugely unfair, highly regressive and in fact opressive tax on our lowest income citizens. Admittedly, it is better than nothing and I certainly would never advocate its elimination. But it's badly in need of major reform. As I see it, chained CPI is, or ought to be, a relatively minor side issue.
For one thing, if you are what is euphemistically referred to as an "independent contractor," or a professional consultant, or author, or the owner-operator of a small business, or in many cases a temp worker, you wind up paying the full payroll tax, NOT just half - that's 12.4 % of your earned income! And that is NOT subject to the sort of deductions that can be applied to income tax, you wind up paying the entire 12.4% regardless.
Moreoever, it's naive to assume employers don't take their SS obligations into account when determining wages, so even when the employer is ostensibly contributing his 6.2% share, that too is in effect being taken out of the employees paycheck.
On top of this, SS is a payroll tax, meaning income from anything other than wages and salaries, e.g., investment income, isn't subject to the tax. And finally, there is a cap, protecting ALL income over and above roughly $110,000 from being taxed at all. In other words SS is in effect a poor tax, literally a tax on low income workers. And a hefty one.
What we SHOULD be debating at this juncture, when the damaging effects of inequality are becoming increasingly obvious, are proposals to make this tax more progressive and more equable by: 1. raising or eliminating the cap; 2. including all forms of income, not just wages; 3. making the tax progressive, so the higher your income the higher the percentage you pay; 4. significantly increasing the monthy stipend.
Reforms of this sort would have the effect of drastically lowering SS taxes for those with lower to moderate incomes, and placing the bulk of the burden on those who can afford it. It would also enable much higher monthly payments for all retirees, something badly needed in this age of what could be called "hidden inflation," the skyrocketing cost of food, fuel, medications, health care, etc.
When I read all the brouhaha over minor issues such as "chained CPI," I cringe, because this tells us the meanest of the mean spirited conservatives have won, not because their reasoning is superior, but because they have succeeded in altering and in fact trivializing the terms of the debate itself. Classic misdirection - and as we can see from the above interview, it's working.Replybanger says:
April 13, 2013 at 9:50 am
Indeed, any issue discussed in the mainstream media is either a lie of a matter of misdirection all to keep people from understanding the real nature of American politics. Issues are not "discussed" realistically in this country. The case and point was the health-care "debate" which featured a radical avoidance of facts, logic, science so it was easy to invent a square wheel when, in fact, various types of round wheels existed and have existed in other places for generations.
I've noticed, in my country, that is someone comes up with a reasonable and elegant solution to a problem it is automatically ignored or savagely attacked as if actually bringing reason into the discussion is an act of treason.
The culprits are the mainstream news outlets who are, at best, courtiers and at worst criminally negligent because they act as our information censors and set the discussion paramaters–even many in the "alternative" press accept the fundamental assumption promulgated by the mainstream and viciously exclude truly alternative narratives.Replypetridish says:
April 13, 2013 at 10:15 am
I was with you pretty much until your last paragraph. Chained CPI, the "grand bargain" and the push for "entitlement" reform is every bit as mean-spirited as you claim, but it is a PROGRESSIVE idea.
Reread your "brouhaha." Obama is trying to ram this down everyone's throat and Obama is (ostensibly) on the "progressive" side.
As James Carville said the other day, Obama is the guy who goes car shopping, and when told that the car costs $25,000 says I'll give you $26,000.
I never thought I'd say this, but I'm with the conservatives on this one. I fervently hope they hate Obama enough to block this "grand betrayal" but make no mistake, it is a PROGRESSIVE betrayal.Replyscraping_by says:
April 13, 2013 at 10:42 am
Obama and the rest of the Congressional Progressive Caucus are lifestyle liberals, taking 'advanced' positions on a handfull of private life wedge issues. They're the Flaming Youth branch of the Washington Consensus.
Not to be confused with social democrat, New Deal, humanitarian, economic progressives. Economics as if people mattered, money was made for man, not man for money. Government used to defend people from the money class. Some overlap, no causation.ReplyNathanael says:
April 13, 2013 at 4:53 pm
Obama was never in the Congressional Progressive Caucus. He has never claimed to be a progressive. Well, that's honest of him, because he's not progressive.
Some progressives were foolish enough to support Obama. The scales are falling off their eyes.Replyrob says:
April 13, 2013 at 11:13 am
Obama is not a progressive, and doesn't play one on tv.He could in no way be confused as a progressive, as he has never done anything progressive.Reply
James carville is an establishment democratic voice who literally sleeps with the establishment republican voice.The faux two party trap is no better exemplified than by the carville/matlin household…Two schmucks who always seem to say something different ,yet go home to each other,share a bottle of wine,and who may or may not file taxes jointly.rob says:
April 13, 2013 at 11:01 am
I agree that you have touched on the most important aspect of all .The shifting of perspective;away from what is important to that which is tangential.
The points you make, would fix this problem.PERIOD.The fourth point of increased payouts would act as a stimulus.And would help the 'quality of life factor'.Even if the third point were not to be included;the higher rates paid by higher income earners.The progressive taxation aspect.If your points that ALL income were subject to SS/medicare tax.Which really means all the higher incomes over 113,000@,and certainly on the really "high" incomes that aren't called "earned" income.To cut through the crap and stop pretending people who make their livings doing different things should be subject to different taxes,would be a huge improvement.The soc.sec. problem would be solved.ANd as a society,america will be better off it it had a sense of security added to the population.
For what is true, is that if there is a time for all this disinformation,which is now.Then there is a time to put everything on the table, and make things right.Which is now!Replydifferent clue says:
April 13, 2013 at 6:29 pm
Well, perhaps successful prevention of CCPI would force discussion back to these other things.ReplyCarla says:
April 13, 2013 at 5:11 pm
"the meanest of the mean spirited conservatives have won, not because their reasoning is superior, but because they have succeeded in altering and in fact trivializing the terms of the debate itself"
Thanks for a perfect description of the Obama presidency.Reply
Jim A says:
April 13, 2013 at 9:01 am
Some state and local government employees are exempt fromReply
SS. But really, "SS won't be around when I'm older" is a self fulfilling prophecy, NOT an actuarial inevitability. ISTR that the worst thing projected to happen to social security is that it might only be taking in enough money to pay out ~80% of currently promised benefits.
clarence swinney says:
April 13, 2013 at 9:14 am
I do not comprehend Gay Marriage.
I am 88 and have met only on Gay person.
Fowl and Fish do not have Gays.
They mate Female/Male.
I cannot comprehend me kissing another male no matter my love for him.
I just do not understand 53% approving Gay Marriage.
How can church pastors promote it?Chris-Engel says:
April 13, 2013 at 9:29 am
We should model after Adam & Evil as the Bible says.
Marriage is between man, woman, and talking snake with evil apple.ReplyHotFlash says:
April 13, 2013 at 1:49 pm
Woohoo! As long as we (I mean *you*) are changing the subject, here is an excellent analysis of 'bible-based marriage' for your consideration http://www.youtube.com/user/MrsBettyBowers?feature=watchReplyTK421 says:
April 13, 2013 at 9:36 am
Fowl and fish do not write on the internet, either. So what?
"I am 88 and have met only on Gay person."
Irrelevant, and extremely unlikely.ReplyLambert Strether says:
April 13, 2013 at 9:59 am
if you're not a troll, you need to get out more. And what's this got to do with the thread?
Adding… There are people who believe there is too much love in the world. I am not one of them.ReplyHotFlash says:
April 13, 2013 at 10:32 am
Clarence, DOMA is not actually the topic at hand, but since you bring it up I have to tell you you are at most half right. Wiki article here https://en.wikipedia.org/wiki/Homosexuality_in_animals does not specifically refer to any documented homosexual behaviour in fish, but quoting
Petter Bøckman, the scientific advisor of the exhibition Against Nature? in 2007
"No species has been found in which homosexual behaviour has not been shown to exist, with the exception of species that never have sex at all, such as sea urchins and aphis. Moreover, a part of the animal kingdom is hermaphroditic, truly bisexual. For them, homosexuality is not an issue."
And gay giraffes - OMG!
I doubt that another male would want to kiss you, either.Replypdooley says:
April 13, 2013 at 10:57 am
Many fish change genders. Does that count?ReplyHotFlash says:
April 13, 2013 at 12:35 pm
Ooh, like Jurasic Park? Not the frog DNA! Heh.
Life is bigger than we are.Replyrob says:
April 13, 2013 at 11:16 am
Having a "senior moment"?Replyscraping_by says:
April 13, 2013 at 11:35 am
If you're 88, you remember the young men wandering the country on the highways and especially on the trains during the Great Depression. They were looking for work in an economy that had little cash money, and everyone had to scramble for what their was.
Social Security, like much of FDR's New Deal, was about getting money into the hands of people who needed it and who'd spend it. Creating work for all these young men closer to home, so they didn't have to go on the bum.
By the way, we railroaders coined the term 'bumfuck' observing these young guys. There was a lot of sodomy in the hobo camps, not so much in the Hoovervilles. Long as they keep it among adults, I suggest live and let live. And keep Social Security keeping people alive.Replyjrs says:
April 13, 2013 at 1:00 pm
That's ok, we'll defend to the death SS even for those seniors who hate teh gays, we're nice like that.ReplyMassinissa says:
April 13, 2013 at 1:52 pm
Lol jrs this made my day!ReplyMassinissa says:
April 13, 2013 at 1:51 pm
"Fowl and Fish do not have gays"
Untrue. There are gay flamingo's. Gay Flamingo's will do mating dances and form mating pairs with eachother, even though they cant reproduce.
And why in gods name are you talking about homosexuality on an article about Social Security?ReplyNotTimothyGeithner says:
April 13, 2013 at 3:39 pm
"I cannot comprehend me kissing another male no matter my love for him."
Love between men is on his mind. Sooner or later these culture warriors reveal themselves.Reply
April 13, 2013 at 10:08 am
This is a very clear exposition of the problem. I believe though there was some cost of living chicanery in the past, perhaps more than once (forget the administration), which I wish she had gone into as well, as it of course was a way to decrease benefits and did. The whole way COLA is measured is not an accurate reflection for any age group, much less the elderly. It has become just another way to keep wages down. As to her belief that this policy was not devised deliberately to hurt people (mostly women in this case), I disagree. Why must we forever give our "leaders" the benefit of the doubt. Whether due to narcissism, ideology, self-interest, lack of empathy or even full fledged psychopathy, they mean to do the things they do, and they do not care. It's mentioned on digby's site this morning that Obama loves to upset liberals. Why not? He is just another nasty conservative. That's how they roll. If we know nothing else about this man, we know his incredible stubbornness and identification with the rich. I cringe now when I see photos of him with his chin held high as if daring us to knock it down and those where he is smiling broadly in the presence of Brennan and other psychopaths of the national security state (revelling in the power he now has over life and death? It is truly sick and a reflection of a sick country.
Underpinning this latest Social Security chicanery, is the idea that citizens do not have the right to design collective solutions to collective needs with respect to global warming, education, health, retirement security, the environment, utilities, voting rights, women's rights (including therapeutic abortionworkers' rights, and the rights of so-called minorities and every other human need, free of rent seeking by corporations, is outrageous and turns common sense on its head. Yet our combined political class has been and is continuing to destroy the public sector and turn it lock, stock, and barrel over to corporations who are accountable to no one, not even their shareholders.
This is off topic, but what Obama is doing re the environment and food and other biodiversity issues is criminal. Don't we have enough proof to call him a psychopath? A high-functioning one that amends his behavior briefly to garner votes but then reverses himself. There isn't a reason in the world for someone like that to look after the common good now or in the future. This was also true of his recent predecessors of both parties.Reply
Ché Pasa says:
April 13, 2013 at 10:20 am
If I understand the Grand Scheme correctly - not saying I do, as it's couched in all kinds of obfuscations - the idea is to link Chained CPI cuts at the higher end of SS benefits to significant increases in the lower-end benefits received by millions. Ie: bringing the lowest SS benefit level up to at least the poverty line for an individual - which means doubling or even tripling benefits (or more) in some cases.
This will undoubtedly be marketed as "strengthening Social Security."
Of course it may never happen given the way these things work in Washington, and at this point, it's not even being mentioned as a possibility in the mainstream, but it's apparently part of the overall package of reforms being entertained among the ruling class as a way to make the benefit cuts and working and middle class tax increases that are fundamental to the agenda (as it were) more palatable to the restive masses.
After everybody exhausts themselves on fighting the superlative CPI issue, I guess the plan is to introduce Strengthening and Improving SS by substantially increasing lower-end benefits - who could be opposed to that, right? - while cutting the higher end benefits "just a little" to make it possible… see?
When Mark Shields opined on the NewsHour last night that poverty among the old had been reduced by 20% during the past decade while child poverty had increased 30% in the same time, and suggested that this is an untenable situation the answer to which was Chained CPI (among other things), it was obvious where this is going among the elites.
Balance, don't you know.Reply
clarence swinney says:
April 13, 2013 at 10:23 am
The "Grand Bargain" is about hurting regular people ("shared sacrifice") who have been sacrificing since Reagan. The rich have gotten tax cut after tax cut. Their corporations get breaks and subsidies. Wages have been stagnant since Reagan broke the unions, but prices have gone up. People used up their savings, then went into debt. Meanwhile government services for We the People have been cut, cut, cut. Our infrastructure is crumbling. Our transportation and electrical and other systems are just a mess. The safety net has collapsed. College has become unaffordable. Poverty is soaring and the middle class is disappearing.Reply
So now regular people have to "sacrifice" to pay off the money the government borrowed to give the rich their tax cuts and subsidies. That's the "Grand Bargain" in a nutshell.
The top 10% now own 73% Net Wealth-83% Financial Wealth-Get 43% Individual Income and pay 15% or less Tax Rate. We rank 4th on Inequality in OECD nations-We rank #1 in percent of workers earning a low wage-44 million earn minimum wage-46 million need Food Stamps..
Capo Regime says:
April 13, 2013 at 10:34 am
Spot on. As a retrieee and recovering economist I hear and take some interest in CPI estimates–all obfuscatory nonsense. For 20 years have been a board member in an organization which develops housing for seniors. Anecdotally, I like to talk with the residents (this is low and mod income) and they are more stressed and they simply cannot keep up–as it is the understated CPI has made it that they are poorer and poorer as their SS check grows 1.8% and inflation is really 7%, after 4 or 5 years the difference is palpable. They are already sicker, more stressed, eating more low nutrient staples and gettig out less. Lack of plazas or other public spaces keeps em isilated so that works well for the powers that be. The u.s. has become such an awful place for the vulnerable.Reply
April 13, 2013 at 10:37 am
I suppose it's too simplistic to suggest that we actually control inflation instead of expending so much energy deliberately and consistently finding creative ways to understate it.
While we're at it, we might also try making it possible again to actually save our own money toward retirement. But, of course, that would involve banks giving up their free money to earn their profits by paying interest to savers. I think that used to be called "the magic of compound interest." (And it would require a job that provided enough income to support savings.)
Never mind. Too simplistic.Replyscraping_by says:
April 13, 2013 at 11:25 am
Ah, Mythology. Greek, Roman, and Right Wing.
Inflation can't be entirely controlled. Ignoring the Milty Myth of being only demand-driven, even if we controlled the artificial causes (monopoly, speculation, sabotage, etc.) there would still be natural, uncontrollable causes. During a drought, the price of food's going up even if we keep speculators from grabbing the whole harvest.
The hope of creating a supply of capital that can generate interest to live on is a good story. But it's not possible for anyone who lives paycheck to paycheck, and the neoliberal success of the last thirty years has put most wage earners in that category. Even those who get some put back never get to the magic number that keeps them for life. Most analyses for the automatic millionaire type have people saving and spending the same dollar, or having people only work and save.
Throughout history, anyone who made it to an age past working have been supported by their children, their village, and/or their chieftan. Though those last two are pretty much the same. Not being villagers, we've gone with large bureaucratic substitutes for family and friends. Best we figure out how to do it right.Replyjrs says:
April 13, 2013 at 1:16 pm
Maybe but give petredish a little more credit they did say "And it would require a job that provided enough income to support savings.". Ie not your current job market and employment relations or one we have had for a few decades.
The current system wants to screw people both ways. Constant yet again threats to cut the safety net and yet this will be followed with "well you should have saved more" and it will be followed in some people by an increased determination to save more, as they will reason it's one thing they have control over (if they feel powerless over the current government, unless we get mass non-violent resistence, they are basically right), and yet the system is rigged to make that task near impossible as well. Not just "we're not getting rich passively, like we should be! divine right of capitalist …" but more "it's hard to even preserve the value of principle put away today for the future".ReplyNathanael says:
April 13, 2013 at 4:56 pm
Inflation is actually a good idea.
Why? Hoarding money is bad. Using money in order to get people to actually build things, grow things, make things, and provide services, is good.
This is putting it in the simplest possible way.
You don't want inflation to get so high that people give up on using money. But you want it to be high enough that people with money don't just sit on the money and hoard it. You want it to be high enough that people's debts slowly get easier to pay off.
By the way? Right now, rich people are just sitting on their money and hoarding it.Reply
April 13, 2013 at 10:45 am
So an old boys network goes after elderly women? Kinda another version of IBGYBG?Reply
clarence swinney says:
April 13, 2013 at 12:18 pm
1945-1980, we taxed Wealth to pay down wwii debt.
It will be necessary to pay down Conservative 16,000B Debt most incurred since 1980 by Conservatives.
Reagan not Congress submitted 8 budgets
Total-over 7000 Billion for 8 years.
Prior 50 years we spent 6066 Billion
Congress cut his total dollars requested by small amount.
Reagan whined his budgets were dead on arrival
All presidents budgets are adjusted in Congress.
Carter last budget spent 575B and ended with a debt of 917B
Reagan cut revenue by 750B across the board income tax cut.
Larry Speakes his OMB director wrote in his book "Speaking out"
the tax cut was a trojan horse to coverup Reagan 60% cut for the richest
The 750B individual "income" tax cut increased "income" tax revenues by 140 Billion.
That tax cut certainly did not pay for itself.
Increased spending by 80%-deficits by 110% and debt by 189%
He cut Carter 218,000 per month job growth by 24%
Increased spending by 90% –debt by 112% (doubled)–deficit from surplus to 1400B
Worst job creation since Hoover-31,000 per month-2 dumb wars–
Since 1980 three Conservative presidents increased spending from 575B to 3500B(less wjc itsy bitsy)
Deficit from surplus to 1400B-Debt from 1000B to 10,000B-Jobs from Carter 218,000 per month to 99,000. Initiated our involvement in 10 foreign conflicts.
April 13, 2013 at 12:53 pm
"Chained CPI", SS "reform", SS "going broke", all of this is in aid of rebranding SS as an ENTITLEMENT, in the pejorative sense of the word – i.e., something for nothing, the "free lunch" connotation. Obama has signed onto this notion, and in fact making common cause with the Republican Right, who always have loathed the entire concept of an old-age state-sponsored pension. Hendrik Hertzberg had an excellent essay in the 8 April issue of the New Yorker on this very subject: the evolution of SS as "earned" into something akin to a "handout". These are Reagan-Thatcher 80′s arguments about who is "deserving" and who is not, and The Mittster updated it with his "47%" bon mot; it's a pernicious meme that even Tea Party seniors cashing their monthly check/automatic deposit have bought into, and is yet another Big Lie ploy to denigrate a social benefit and cause yet more divisiveness in an ever-fragmenting social order.Reply
April 13, 2013 at 1:30 pm
The Social Security surpluses only ever existed on paper. The Chained CPI is the opening salvo to make sure in so far as is possible they stay that way. The surpluses represent a surtax on what was (because of the income caps and because so much of the income of the wealthy can be hidden, deferred, or converted into capital gains) already a highly regressive tax. They are money that was taken dumped into general revenues and spent.
If the surpluses had never existed, we would still be facing the same funding gap in the next few years between Social Security outflows which was built into the system in the 1983 Social Security Reform Act. The trillions that American workers overpaid into Social Security over the last 30 years were in exchange for a promise to make good shortfalls in the system until around 2040.
The government could have made the same promise even if there had not been a penny of surpluses, but then it would have not had all those free trillions to spend all those years and might have had to justify raising taxes overtly on workers and the middle class. Now that that promise is coming due, our political classes as a whole, Democrats and Republicans, are trying to welch on it. As I have written in the past, they are doing this for three reasons. First, money coming out of general revenues to cover shortfalls in Social Security receipts is money that the rich and our elites can't loot or use to fund their imperial projects. Second, even with low tax rates and numerous dodges to reduce the income subject to them, because of the extreme wealth inequality in the country, the rich end up paying most of the taxes that end up as general revenue. This would result in the intolerable situation where money would flow from the rich to the 99% to cover the Social Security shortfalls. Third, equally intolerable and for the same reason, would be removing the income caps on the payroll tax and treating all income as the same for Social Security taxing purposes.ReplyBlurtman says:
April 13, 2013 at 2:42 pm
I agree with the welching part, but US Treasury bondholders may find it surprising to realize that the money is "not there" and therefore, will not be repaid. Corporate bondholders, as well, will be troubled to realize that the money "is not there" and therefore, they should have no expectation of repayment with interest.
This whole argument of the Social Security surpus having been spent, and not being there, is aburd, and worthy of derision.ReplyDon Levit says:
April 13, 2013 at 6:24 pm
The money is not there. As explained previously, the excess FICA taxes were loaned to the Treasury to pay for current expenses, and lowered the deficits. To make the trust fund whole, the opposite will have to occur, raising the deficits.Reply
Please explain how the excess FICA taves can be 2 places at the same time.
From a Fiscal Year 2008 Financial Report of the U.S. Government:
P.33 "Each of the social insuramnce programs has an associated trust fund. The collection of earmarked taxes is CREDITED to the corresponding trust fund.
If the collection from taxes and other sources exceed the payments to the beneficiaries, the excess is invested in Treasury securites or "loaned" to the Treasury's generalfund. "THEREFORE, THE TRUST FUND BALANCES DO NOT REPRESENT CASH."
P. 96 "The government does not set aside assets to pay future benefits associated with earmarked funds. The cash receipts collected for an earmarked fund are deposited in the U.S. Treasury, which uses the cash for general purposes."
Don LevitBlurtman says:
April 13, 2013 at 8:54 pm
It is really a silly argument that I will not engage in, except to say that it is as much "there" as is the money owed to US Treasury holders, and as much as is the money owed to corporate bondholders.Replylambert strether says:
April 13, 2013 at 9:50 pm
Not "there"? "Where" is money? Think before you answer…
April 13, 2013 at 1:52 pm
Social Security needs to be institutionalized again???
Oh yea, TBTF is now institutionalized and there's not enough room for both -says the Blankfein 1%Reply
PAUL TIOXON says:
April 13, 2013 at 3:16 pm
A VOTE FOR CHAINED CPI IS A VOTE AGAINST THE NO TAX PLEDGE
Confirming my previous extended rant on Social Security and Chained CPI, that it is a deliberate policy in and of itself, and not even remotely anything any republican would touch with or without a 10ft pole: Grover Norquist has come out against Chained CPI as a tax increase, which means it is DOA for any beginning point of negotiations, much less a signal of anything other than a decision of the Executive Branch.
"Americans for Tax Reform, the advocacy group that asks lawmakers to sign a formal "Taxpayer Protection Pledge," said Tuesday that chained CPI violates the pledge.
"Chained CPI as a stand-alone measure (that is, not paired with tax relief of equal or greater size) is a tax increase and a Taxpayer Protection Pledge violation," the group said in a blog post.
Anti-tax crusader Grover Norquist, leader of the organization, criticized the policy via Twitter on Wednesday. "Chained CPI is a very large tax hike over time," Norquist wrote. "Hence Democrat interest in same."
The Congressional Budget Office estimates that chained CPI would reduce Social Security spending by $127 billion and increase tax revenue by $123 billion over 10 years.
When asked Friday if chained CPI represents a tax hike on the middle class, White House spokesman Jay Carney said, "I'm not disputing that."
Eureka Springs says:
April 13, 2013 at 4:21 pm
Assuming for the moment we could end use of SS by the treasury for other purposes… Raising the minimum wage (thus increasing contributions to the fund and better/living returns later) to a living wage (18 an hour with single payer for all or 21.5 per hour with PPACA ha!) needs more consideration than just raising caps.
Triple the minimum wage!Reply
April 13, 2013 at 4:48 pm
SS is already bankrupt, but keep pretending otherwise:
Don't Get Me Wrong
I see… Of all the places I have been and all the people I have been around, it is the population of black homeless MEN in San Francisco that have afforded me the greatest respect and leeway to do what I have to do. And those little old ladies all dressed up with perfect make-up to match, I know they spent a lifetime going uphill against the current to put themselves together, stringing together one day at a time. And I see the guys who have no idea where they will be sleeping one night to the next, getting up at 5am to seek work everyday. And I see real homosexuals minding their own business, seeking companionship with which to share their lives. I see everyone who gets up everyday and makes the world just a little bit better than it was yesterday, because that is all that may be reasonably expected. Most of all, I see those who, by no fault of their own, are dealt the worst hand in the deck and make something out of what little God has given them in the form of common sense. The Warren Buffets, Gavin Newsoms, and Jean Quans are actors, on a treadmill to nowhere, to be replaced by the next vacant souls, on the same treadmill.
My job is not to topple the empire, which will simply be replaced by the next mob and the next mayor that wants to get out in front of the parade. And it is not to pull back the curtain, so everyone can admonish everyone else for participating. My job is push back on the darkness that is the shadow of the empire, to make it just a little bit easier for everyday folks to get on with their day, so that the economy can regenerate, so kids can be kids. The majority does not raise family. The minority does. And it is from the bottom that they must climb to do so. Yes, many choose to forget where they came from, along with all of those who made their climb possible. I am not one of them.
If you want to do something useful, keep pushing on the new currencies. Of course the JPMs of the world will lie, cheat, steal and kill to maintain their positions. Unless you want to do so better than they, let it go. I told you that the bear market in gold was coming. It didn't take rocket science to look at the data objectively. Until legacy family banking law is dismantled, the global economy will continue to implode. When it is dismantled, labor will inject the necessary technology. The new currencies prevailing at the time will be the beneficiaries. Always have a three currency set, with associated bond to stock distribution, one legacy currency, PM, and one new currency to trade through, with your own unique algorithm so that the robot algorithms can't see it, and don't spend any more than 10% of your much more valuable time on this empire market stupidity. Get on with your life. That is the point, and it is that which the empire does not want you to see. The Chinese Railroad Company is not going anywhere, except to vacant cities filled with vacant souls.
Until you change that first diaper, and realize that you are responsible to God for the life of another, you have no f-ing idea what life is about, and neither does the majority surrounding you. Until that time you just have to have faith in yourself. I don't know what else to tell you. There is something your community requires that only you can deliver. Figure it out. I am a laborer and I know my function. What is yours?
If you are a kid, don't come to my elevator and tell me you want a job. Tell me what your function is and I will take you to your floor. I don't need a female that can f-. They are everywhere. I need a grown woman who can carry her share of the load with grace and dignity. And if you "think" you can build better economic kernels than I can, come out here in the real world and show me, with something more than a mouthful of best business practice marbles placed there by empire propagandists. I'm old, I'm tired, I have scarce patience for b-lsh-, and you will find that my kind are all alike, which is why we serve you a double at 5am, to see if you can stand on your own two feet, before we load you up for the journey. If you want a known destination before you begin, a plan for your life, go work for corporate – public, private or non-profit, it doesn't matter, and neither will you.
It's how you spend your time, not how you make your money. It's your priorities that determine your outcomes. Only an empire fool thinks it takes money to make money, in pointless enterprise. Love is distilled forward; everything else is a sunk cost. Don't waste your time on make-work in a make-believe empire world and expect anything other than to get recycled yourself. Kids don't need Mr Buffet's financial advice. They need parents. And, sooner or later, you are going to need them. Pension promises are pension promises, nothing more, to be inflated away at the discretion of capital. The majority always learns the hard way, when it's too late. This time will be no different than any other time, and the majority will cry, like every other time, that they never saw it coming.
The train to the future waits for no one, but it is always at your station if you build it. Get off the ground, or expect to part of the short.ReplyNathanael says:
April 13, 2013 at 4:54 pm
Social Security has as much money as it will ever need.
It will only be bankrupt if the politicians loot the trust fund.ReplyDon Levit says:
April 13, 2013 at 6:34 pm
So you would define loaning the entire trust fund to pay for other expenses, lowering the deficits, not looting the fund?Reply
What is your definition of the politicians looting the fund?
Do you think because the money was borrowed that the promise to repay means the money was what, not spent for expenses other than Social Security beneficiaries?
Don Levitkevinearick says:
April 13, 2013 at 6:42 pm
SS is already bankrupt. That money is coming from people currently earning it, who are rapidly learning how to escape the system with acceleration;
The kid in NK has figured out, although not entirely, that if he installs a random algorithm, the anti-missile guidance systems will do his work for him to deliver the warhead;
and, not only, but also,
just after the security guy escalates the electronic warfare game by demonstrating an app to take over flights through the autopilot program, a brand spanking new Boeing 737 goes in the drink.
It's looking more and more like an asymmetric WWIII everyday, where you too can participate, on your own side. Crack me the f- up.ReplyLucyLulu says:
April 13, 2013 at 9:49 pm
I borrowed money from my bank to buy my home. I only wish I could have looted my bank instead.
borrow != loot, as borrow implies the need to repay
I believe this has been explained before. SS law has always required that any surplus FICA revenues be loaned to the US Treasury to be used for general revenues and replaced with interest bearing bonds backed by the full faith and credit of the US government. It also requires that SS be independent and self-sustaining. Funds can not used for purposes other than paying benefits (and administrative costs), nor can general revenues be used to pay benefits. Until and unless Congress passes new legislation, this is the law. Got it?ReplyLucyLulu says:
April 13, 2013 at 10:00 pm
I spoze we could declare that we are defaulting on the bonds in the trust fund. I suspect the markets would not respond kindly, causing our 1% corporate elite to become agitated.
………Alternatively we could default on the T-bills owned by private citizens, equally backed by the full faith and credit of the US govt. We could thus eliminate the majority (80% IIRC) of our national debt instead of $2.5 trillion.
Just imagine, we could shave $10 trillion off our debt immediately! Makes $4 trillion over 10 years sound like raiding a child's piggybank. Wouldn't that make deficit hawks happy?Eric377 says:
April 13, 2013 at 10:10 pm
Don, for goodness sakes man, the assets of the Trust Fund are bonds and notes. What leads you to imagine that the redemption of these debt assets is an insecure prospect. Think about it for even 10 seconds: the only reason to suggest something like chained CPI cost of living adjustments is precisely because their is unanimity that the Trust Fund assets will be redeemed fully. The obvious intention with this is to stretch the time over which the Trust Fund assets will be redeemed. even those with a strong financial interest in avoiding the general taxes needed to redeem these debts fish around for these ploys precisely since there is no chance that simply reneging on the bonds and notes would ever be acceptable to the nation.Reply
financial matters says:
April 13, 2013 at 7:30 pm
To add what I would consider an MMT approach to this problem..
excerpts from 'Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems" by L. Randall Wray
""President Obama frequently asserted throughout 2010 that the US government was 'running out of money', like a household that had spent all the money it had saved in a cookie jar"
"Chairman Benanke was actually grilled about where he obtained all the 'money' to buy all those QE bonds from the banks. He (correctly) stated that the Fed simply created it by crediting bank reserves – through keystrokes."
"Monetary and fiscal policy can operate with combined force: deficits and net money creation when unemployment exists; surpluses and net money destruction when at full employment"
"Government should use its budget to achieve what it perceives to be in the public purpose"
Its hard to see problems with a good social security program as this would help alleviate financial inequalities and most of this money would be spent back into the real economy. I think the worst thing would be to let the financial system get it hands on this money in any way.
The medical system is a different kettle of fish with many of the problems being caused by the insurance part of the FIRE sector. Here I think a transparent single payer would go a long way to cutting the many abuses and inefficiencies.ReplyDon Levit says:Bart Fargo says:
April 13, 2013 at 7:58 pm
I assume you are tying in tie federal government's ability to create infinite amounts of money to the solvency of the Social Security trust fund.Reply
There really is no logical response to that other than IF what you say is true, you are correct.
Traditionally, the full faith and credit of the dollar was based on our history of excellence and our goodwill.
Now, if you are saying the full faith and credit is based on the abiity to emit keystrokes, I would say that is a shallow, and very shaky foundation for full faith and credit.
Don Levitfinancial matters says:
April 13, 2013 at 8:11 pm
Yes, agree completely. That's why I mentioned inefficiencies in the medical system. The money has to be spent wisely.
There are real limits to money creation such as inflation and currency exchange problems. But there seems to be a lot of policy space especially under conditions of less than full employment to put the money to better use than asset appreciation.Replylambert strether says:
April 13, 2013 at 9:53 pm
Based on the ability of the government to collect taxes, which gives value to fiat money. Of course, if the government is completely dysfunctional, and cannot collect taxes, fiat money has no value. As indeed it should not. Ergo, drowning government in a bathtub would destroy the dollar. Stupid conservatives (among whom I include Obama, who is drowning government in a bathtub, except with rhetoric like a "balanced approach").Reply
April 13, 2013 at 9:58 pm
If Republican obstructionism steps in to do some rare good by blocking Obomber's plans, then it seems the best we can hope for is that Obama will get electrocuted by the court of public opinion for pissing on the third rail of American politics. Actually, scratch that, I hope he gets his junk blown clear off by a bolt of white-hot high-voltage electricity. The 1% keep that part of Obama in their back pocket anyway, and so if he loses his current pair maybe he'll be forced to grow back a real set. Or else he'll just be rendered less violent and greedy, like a neutered animal.
Read more at http://www.nakedcapitalism.com/2013/04/obama-social-security-reform-ignores-data-on-actual-living-standards-of-seniors.html#YvC0lF9WpXViyLQF.99
Here's what chained-CPI really means Up to $849 less for someone who retired in 2001
Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers : Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism : The Iron Law of Oligarchy : Libertarian Philosophy
War and Peace : Skeptical Finance : John Kenneth Galbraith :Talleyrand : Oscar Wilde : Otto Von Bismarck : Keynes : George Carlin : Skeptics : Propaganda : SE quotes : Language Design and Programming Quotes : Random IT-related quotes : Somerset Maugham : Marcus Aurelius : Kurt Vonnegut : Eric Hoffer : Winston Churchill : Napoleon Bonaparte : Ambrose Bierce : Bernard Shaw : Mark Twain Quotes
Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 : Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law
Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds : Larry Wall : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOS : Programming Languages History : PL/1 : Simula 67 : C : History of GCC development : Scripting Languages : Perl history : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history
The Peter Principle : Parkinson Law : 1984 : The Mythical Man-Month : How to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite
Most popular humor pages:
Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor
The Last but not Least Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt. Ph.D
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Last modified: December, 05, 2018