Looting Social Security

[Donnachaidh]

http://informationclearinghouse.info/article21991.htm

February 14, 2009 "The Nation" -- - "Governing elites in Washington and Wall Street have devised a fiendishly clever "grand bargain" they want President Obama to embrace in the name of "fiscal responsibility." The government, they argue, having spent billions on bailing out the banks, can recover its costs by looting the Social Security system. They are also targeting Medicare and Medicaid. The pitch sounds preposterous to millions of ordinary working people anxious about their economic security and worried about their retirement years. But an impressive armada is lined up to push the idea--Washington's leading think tanks, the prestige media, tax-exempt foundations, skillful propagandists posing as economic experts and a self-righteous billionaire spending his fortune to save the nation from the elderly.

These players are promoting a tricky way to whack Social Security benefits, but to do it behind closed doors so the public cannot see what's happening or figure out which politicians to blame. The essential transaction would amount to misappropriating the trillions in Social Security taxes that workers have paid to finance their retirement benefits. This swindle is portrayed as "fiscal reform." In fact, it's the political equivalent of bait-and-switch fraud.

Defending Social Security sounds like yesterday's issue--the fight people won when they defeated George W. Bush's attempt to privatize the system in 2005. But the financial establishment has pushed it back on the table, claiming that the current crisis requires "responsible" leaders to take action. Will Obama take the bait? Surely not. The new president has been clear and consistent about Social Security, as a candidate and since his election. The program's financing is basically sound, he has explained, and can be assured far into the future by making only modest adjustments.

But Obama is also playing footsie with the conservative advocates of "entitlement reform" (their euphemism for cutting benefits). The president wants the corporate establishment's support on many other important matters, and he recently promised to hold a "fiscal responsibility summit" to examine the long-term costs of entitlements. That forum could set the trap for a "bipartisan compromise" that may become difficult for Obama to resist, given the burgeoning deficit. If he resists, he will be denounced as an old-fashioned free-spending liberal. The advocates are urging both parties to hold hands and take the leap together, authorizing big benefits cuts in a circuitous way that allows them to dodge the public's blame. In my new book, Come Home, America, I make the point: "When official America talks of 'bipartisan compromise,' it usually means the people are about to get screwed."


MORE at the link above --

[BlooInBloo]

1. Man - EVERYBODY thinks Obama is as stupid as they are.

[Hannah Bell]

8. obama's not stupid - but he *is* going to fuck with SS. he says so on his website.

& it won't be a good thing.

and he's going to do it at the behest of his bosses.

oh, & ps: the people talking about it aren't stupid either.

[geckosfeet]

2. It's not yesterdays issue. Especially when it has been demonstrated

that having retirement savings in financial and investment institutions it fruitless and results in losses.

It is these very financial institutions who are pushing for this reform, so that can claim everything we own. They are salivating.

[madfloridian]

3. Be sure to read Peterson's reply to Greider...then Greider's reply back to him.

http://www.thenation.com/doc/20090302/peterson

And then read Greider's response.

http://www.thenation.com/doc/20090302/greider_response

"David Walker is offended but, if you read his letter closely, he more or less confirms what I wrote about the establishment's assault on Social Security and other entitlement programs.

I said they want to loot Social Security. He says it's already been looted. I said they are trying to evade the regular processes of representative democracy. He says Congress is "broken" and so cannot be trusted to make sound decisions in a timely manner.

Do they want to whack benefits for Social Security recipients, as I claimed, or don't they? Walker declines to answer the question. Readers may decide for themselves whom to believe."

Recommended your post.

[Lasher]

4. Obama won't go for anything like a commission.

Must capture new revenue; no new Social Security Comission

OBAMA: We’re going to have to capture some revenue in order to stabilize the Social Security system. You can’t get something for nothing. And if we care about Social Security, which I do, and if we are firm in our commitment to make sure that it’s going to be there for the next generation, and not just for our generation, then we have an obligation to figure out how to stabilize the system. I think we should be honest in presenting our ideas in terms of how we’re going to do that and not just say that we’re going to form a commission and try to solve the problem some other way.

CLINTON: With all due respect, the last time we had a crisis in Social Security was 1983. President Reagan and Speaker Tip O’Neill came up with a commission. That was the best and smartest way, because you’ve got to get Republicans and Democrats together. That’s what I will do.

OBAMA: That commission raised the retirement age, and also raised the payroll tax. So Sen. Clinton can’t have it both ways.

Source: 2008 Philadelphia primary debate, on eve of PA primary Apr 16, 2008

http://www.ontheissues.org/2008/Barack_Obama_Social_Security.htm

[snot]

5. I hope you're right. BUT that's not what I'm hearing is currently going on.

From http://tpmcafe.talkingpointsmemo.com/2009/02/13/the_economists_who_missed_the_housing_bubble_are_c/ ;

"Word has it that President Obama intends to appoint a task force the week after next which will be charged with "reforming" Social Security. According to inside gossip, the task force will be led entirely by economists who were not able to see the $8 trillion housing bubble, the collapse of which is giving the country its sharpest downturn since the Great Depression."

(snip, mentioning that the vast majority of baby boomers have seen their 401(k)'s melt during the last 6 mos.)

(Not to mention that, bec. of threats that the boomers would bust the system, etc., SS taxes were previously raised and CPI increases re-jiggered.)

"In short, the vast majority of baby boomers will be approaching retirement with little other than their Social Security and Medicare to support them. And now President Obama is apparently prepared to appoint a commission that will attack these only remaining pillars of support.

"It is especially infuriating that this task force is likely to headed up by economists who somehow could not see an $8 trillion housing bubble. The incompetence of such economists has inflicted enormous pain on billions of people around the world. However, unlike people who fail in other professions, economists who mess up on the job just get promoted so that they can do even more harm."

[Lasher]

10. I've seen the buzz.

But I don't see anything from a mainstream news organization which supports speculation that Obama will do anything to cut Social Security benefits. In fact, if you hit the link I supplied upthread and read his campaign statements, you might conclude as I did that he supports no other changes than perhaps raising the cap on earnings that are subject to payroll taxes.

More specifically, there is a fear that Obama will appoint something like Saint Ronnie's Greenspan Commission of 1982, which recommended the benefit reduction and middle class payroll tax increases that became law back then. This anxiety seems reasonable when we recall Junior appointed a reform commission in 2001, and organized sinister 2004 meetings to plot demise of Social Security:

"In the weeks since Mr. Bush's re-election, White House officials have been holding a steady stream of meetings with Social Security reform advocates from the Cato Institute, the Heritage Foundation, and leading business and industry associations as they develop a plan to let younger workers invest part of their payroll taxes in stocks and bonds that they would own and control.

"Participants in these closed-door policy-making briefings say that Vice President Dick Cheney's office has become a player in the meetings and that senior officials are considering plans that would allow investments of up to 4 percent of payroll taxes, one of the three options proposed by the president's Social Security reform commission in 2001."

http://www.washingtonpost.com/wp-dyn/articles/A28022-2004Dec2.html

Some of the speculation is no doubt fueled by wishful thinking of enemies of our social programs. But Obama is not George W. Bush or Ronald Reagan. With less than a month in office he has proved to be a defender of our social programs, with the increase in Medicaid funding that is included in the stimulus bill. This is in sharp contrast with what we have seen in the past 8 years, and it's just the beginning of a new era.

Social Security will be just fine while Obama is President.

[exboyfil]

6. Nothing to loot - the Trust Fund is a sham

2018 (it is probably 2017 now after the economic downturn and maybe approaching 2016) will be an interesting year. It will be the first year in which S.S. contributions will not be used to paper over any of the national deficit, but become an increaser of the deficit/debt. In theory we have $2.2T in this "Trust Fund" (this is part of the $11T plus national debt).

Now that we have spent over 25 years building up the "Trust Fund" we are now being told S.S. is a problem. It is not a problem. It is close to being actuarially sound (more sound than most pension plans currently out there). Being one of those taxpayers between $50-$100K/yr who carry the system on their backs, I refuse to be told that my promised benefits - in which my employer and I have paid nearly $200K are not available.

Actually you can keep the $200K if I don't have to pay another dime into the system for my next 15-20 year working career. Somehow I just don't think I am going to get that deal.

You want something to really make you choke on your cornflakes - take a look at the promised benefits in public defined pension retirement plans. These plans, in general, have used a 8% investment return formula to calculate benefits. Even before this latest crash a ridiculously high number. I looked at the promised benefits associated with IPERS on less than 9% income withholding, and it is obvious, even before you go throught the reports, that it cannot happen without tapping into general revenues or dramatically increasing current workers withholding percentages (maybe eventually to the point of driving those workers away - thus further increasing the pension deficit).

What is really going to be interesting is when inflation adjusted pensions such as Social Security/TIPS treasuries meet our deficit monetizing policies. Pity the poor individuals with fixed pensions/annuities and savings without inflation protection - they better hope S.S. can keep up with the inflation that will occur. At least they will have some real income.

[ThomWV]

11. Of course there is no fund - that's not where the looting takes place

It is the simple fact that the funds are collected and never make it into a fund that is the looting - it is ongoing, every friday afternoon when the paychecks are handed out. They aren't dipping into a pot, they are intercepting the input.

[bottomtheweaver]

12. There's a trust fund, it's got $2.4 trillion, and it's growing fast.

Please let's try not to catapult the progaganda any more okay? The looters are out of office for a few brief years so let's use the opportunity to set the record straight.

http://www.ssa.gov/OACT/STATS/table4a3.html

[ThomWV]

13. Actually you're wrong

You presume that those assets at the end of each year are cash in a fund - the cash that was taken out of your paycheck times everyone's paychecks. They are not. Those "assets" are the IOUs from the Agencies that have taken and used the money.

[bottomtheweaver]

14. The trust is held in interest-bearing Treasury obligations.

They are as real as money gets, as I've said before. The whole "IOU" bullshit is just right-wing propaganda. I'm guessing you saw that "I.O.U.S.A." claptrap on CNN? I didn't, but that's just the kind of deception they've been using to try to destroy Social Security since it was established 73 years ago.

[Lasher]

15. When you put money in the bank you get paper

And what's their problem with "paper"? A thousand dollar bill is paper, the check I write, my stock certificate, my government bond—all paper. Did they expect the trust would be made of diamonds?

What of the millions of Americans who own Treasury bonds, all paper? Seven trillion dollars of national debt has been spent on government programs, and there is "nothing left." Has the US defrauded the world of $7 trillion?

[deaniac21]

16. dumb as a box of rocks.

[Peace Patriot]

7. Looks like we might need a ten million-person march on Washington DC and

a nice long sit-down with our government ("We shall not be moved!") about Social Security.

[midnight]

9. fiscal responsibility

They have no idea what that phrase means.