Dean Baker Rips Apart Third Way's Anti-Social Security OpEd...Enjoy!

[jtown1123]

CEPR Beat the Press

By Dean Baker

Cheap Tricks on Social Security

Friday, 08 July 2011 04:08


The business-backed group Third Way has been making a big point of going after Social Security lately. Today it had a column telling us that Social Security is in crisis, even though the most recent projections from the Social Security trustees show that the program can pay full scheduled benefits with no changes whatsoever for a quarter century. Even after that point, the program would always be able to pay a higher benefit than what current retirees receive.

Third Way's crisis argument hinges on the fact that the program is paying out more in benefits than it collects in taxes. In other words, it is relying on interest from the $2.6 trillion trust fund that it has built up over the last quarter century. To term this a crisis would be like saying that Bill Gates had a crisis because he dipped into his $50 billion in assets to build some new play houses for his kids. The trust fund was built up for the explicit purpose of supporting the program. It makes no sense to say that using it is a crisis.

It is also worth noting that even if we waited until 2036 and the program actually faced a shortfall, the amount of additional revenue needed to sustain the program's full benefits past this shortfall would be trivial compared to costs like the increase in military spending associated with the wars in Afghanistan and Iraq.


http://www.cepr.net/index.php/blogs/beat-the-press/cheap-tricks-on-social-security

[The Magistrate]

1. The Point Being, Ma'am, The Bought-Out Shit-Heels In D.C. have No Intention Of Paying that Interest

No debt owed to a working person, no contractual obligation to a working person, ever has to be honored by a person of wealthy status....

[Ian David]

2. Doesn't "Third Way" translate into German as "Third Reich?" n/t

[jtown1123]

3. Good point.

[hfojvt]

11. no, because a reich is an empire

as in Frankreich (France) or Oesterreich (Austria). The German word for 'way' is 'weg' and pronounced like 'veg'.

But I am sure that was meant to be rhetorical.

[fascisthunter]

12. geez... that is Creepy

[Uncle Joe]

4. Kicked and recommended.

Thanks for the thread, jtown.

[chill_wind]

5. K & R for Dean Baker and telling it like it is.

eom

[slipslidingaway]

6. Thanks! knr n/t

[LiberalAndProud]

7. The third way isn't.

It's just a retread of the same old way the Republicans have been going all along. Wish they'd go form their own party and leave mine alone.

[hfojvt]

8. gotta love Dean Baker

but isn't there a problem with the Bill Gates analogy? I am not sure what is in Bill's portfolio, but I assume it is made up of shares of Microsoft and other stocks and maybe some bonds, t-bills, and even CDs. It is a diversified portfolio made up of assets outside of just debt to himself.

The SS trust fund is more like Bill Gates writing himself an IOU and then spending his money to feed the city of Portland. If his $50 billion trust fund consists of IOUs that he wrote to himself, then he cannot really cash part of it in. To spend any of it, he will need to sell more computers (or, in the case of the government, to get more tax revenues) or to borrow from other people. And are other people gonna want to lend to him if he is running huge personal deficits?

I think of this analogy because I became a personal banker. I was in graduate school and about to get a bank CD for $2,000. My sister was writing me about her car loan which was 12.5% interest on $3,500 or so in debt. So I thought, hey, instead of getting a CD, what if I lend you the money at 8% interest? That way, I make 2-3% more than the CD pays and you save 4.5%. It's a win-win.

You can trust your sister, at least I did, and you can perhaps trust your spouse. But if you "invest" your retirement fund with loans to your spouse who spends the money taking trips to Vegas and Europe, then the spouse really has no way to pay it back after they retire.

Government bonds should be a good investment, but not when the government just uses that money to give tax breaks to the rich and to drop bombs in the middle east. The Government has now spent ten years making bad investments and living large off of my/our retirement funds.

[EFerrari]

9. K&R

[Better Believe It]

10. K & R

[Bonhomme Richard]

13. Big business wants to get their hands on all that money.

It's as simple as that. If only all that money workers put into the SS fund went to investment companies, hedge funds, insurance companies, etc. That's lost revenue in their eyes.

[EFerrari]

14. Of course. And the idea that they'd go through all this poliical flak

to trim a few dollars from "costs" is ridiculous on its face.

[The Magistrate]

17. True, Ma'am: This Is Just A Take-Over Raid On A Company's Pension Fund, Albeit on A Very Large Scale

[democracy1st]

15. K & R

[jwirr]

16. I have been seeing that ad on tv with Obama talking about the default.

That we are not going to default on out obligations. I want to ask him which default/obligations he is talking about - the ones to China/others we owe or the ones to the people of the USA (money "borrowed" out of SSA).

[defendandprotect]

18. kr

[suffragette]

19. It's Simpson-Bowles redux

Wrong then and still wrong now.

[slipslidingaway]

20. nt

[Starry Messenger]

21. k&r