If social security doesn't contribute to the debt, then why....

[garybeck]

Bernie Sanders, who I trust, said recently on the radio that because social security is funded by the payroll tax and not the US treasury, that it "has not contributed a nickel to the national debt." (hear the interview here: http://www.youtube.com/watch?v=zIp2LvGxLko)

If that is so, then why is social security being discussed as a way to deal with the debt ceiling crisis?

Is the whole thing just a sham and they're just looking for a reason to cut social security and they think the american people are too stupid to know that what Bernie says is true?

[Warpy]

1. After Reagan did six hikes in the OASDI premiums, Congress just got cozy

with the idea of robbing nearly 50% of those premiums every single year to mask the disaster Reagan's tax "reform" caused to the treasury. Now that they double charged a whole generation of workers, they want to pull the rug out from under them by dismantling the programs so they don't notice they've been robbed for over 30 years.

Remember, Republicans have also talked openly of defaulting on the T-bills that represent that debt to Boomers, especially, another stupid policy that would cause a panic and wreck what's left of this economy.

Republicans are dangerous. They need to be out of office.

Democrats are too weak to fight them, it seems.

[valerief]

3. +1

[MannyGoldstein]

2. Because Republicans and Democrats want to plunder everything at once

They're all agreeing that it doesn't effect the debt - but they want to "strengthen" it while they're doing all of this other debt stuff.

"Strengthen" = "gut"

http://www.handsoffss.org/uploads/7/2/2/6/7226267/the_common_sense_guide_to_social_security_0.5.pdf">The Common Sense Guide to Social Security

[Ozymanithrax]

4. Social Security comes from a separate pool and not the treasury...

Bernie is right. It is still running a surpluss, so not a dime ahs been borrowed to pay a Social Security check.

Republicans have hated Social Security from the beginning, because to thiem it is:
(1) a tax and they hate taxes as part of their ideology
(2) It violates their belief that private enterprise and individual action is the best solution for everythng.
(3) They consider it socialist, and in its origins it was.

It boils down to this. Repubicans are great at putting out simple messages that appeal to emotion. People who accept their message never think about what they say.

According to their philosophy government is bad and evil, Yet, there are lots of them working in it. Why?

[ProfessionalLeftist]

7. Exactly. And whatever problem the US has ever faced Repubublicans have two answers

1. cut taxes (always their answer no matter what)
2. gut social security & Medicare (ie: privatize/starve it, whatever)

Every chance they get these are the things they aim for. They see a BIG chance now. And Obama, sadly, dancing right with them.

[yurbud]

13. and if you can't refute it in a bumper sticker, most people won't get it.

[CaliforniaPeggy]

5. You have put your finger right on it. It IS a sham.

The Republicans have wanted to get rid of Social Security forever. They were against it before Roosevelt implemented it.

They hate entitlement programs.

[ProfessionalLeftist]

8. Yep. That's it. n/t

[gateley]

6. What Warpy said, plus they (R's) want to privatize it so they

can screw us some more.

And, WHY doesn't someone ask them that to their faces during their pressers? Why can't the reporters ask the right questions? :grr:

[ProfessionalLeftist]

9. The media is owned by corporations...

...corporations run the gov't. That's why.

[snot]

10. K&R'd.

[SammyWinstonJack]

11. The American people for the most part are stupid and will believe any thing corporate owned

media tells them.............bread and circuses......ya know


And THANK GOD IT PASSED! :silly:

We are so screwed! :grr:

And Obama is NOT a Socialist, he isn't even a Progressive, let alone a Liberal.

[sabrina 1]

12. I think you answered your own question. The right

wants to cut SS and always have. Actually they want to privatize it, and they want cuts because they want the surplus in the Fund to grow, so that they can borrow from it for wars and bailouts etc. None of which is right, those who paid into it should be be getting raises, not cuts since the fund has accumulated a surplus of over 2 trillion dollars and that will double by 2023 calculated on the current economic situation. This will most likely improve, so SS is in pretty good shape for the next 50 plus years without anything being done about it, and for longer if the economy and job situation improve during that time.

We should NOT be hearing the words 'social security' in this debate. And your question is a good one, why are we?

[girl gone mad]

14. It's a manufactured crisis.

I think others have hit on some of the goals of the parties involved. Privatization, a further shifting of the tax burden onto the working class, neo-liberal austerity and looting, etc.

[RaleighNCDUer]

15. In short, YES. nt

[roomfullofmirrors]

16. social security is forced by law to exchange it's cash for government IOUs which means

the government is using it to pay for shit. The government is having trouble redeeming the bonds however because they have a revenue/spending/debt problem right now so they want to use more of the social security "cash" for their own needs which means they need to limit their obligation to pay out benefits by raising the retirement age, adjusting the inflation calculations, and by whatever other means they find necessary to turn the social security/FICA tax into an extension of the federal income tax. If the government were forced to keep it's grubby fucking hands off the FICA revenue, social security would be just fine but the government would be bankrupt so what do you think they're gonna do?

[eomer]

22. That would be exactly right if it weren't completely wrong.

The federal government cannot go bankrupt. It can always spend dollars into the economy and it can do so without borrowing them. In fact, the only way that dollars get into the economy is by being spent into it by the federal government.

The rightwing's framing that we have a deficit "crisis" is completely bogus but unfortunately even here on DU most of the discussions accept this fallacious frame as a given. Deficit spending is not now a crisis and it's not even a minor problem at this time - it is exactly what we need the federal government to be doing at this juncture. During a recession, especially a deep and prolonged one like this, the federal government should deficit spend in order to put more dollars into the economy and stimulate demand. On the other hand, during prolonged periods of strong growth, the federal government should run a surplus in order to keep the economy from overheating.

[roomfullofmirrors]

26. you're wrong

because you wrongly assume that we can simply spend money and that will magically create jobs and; thereby, resolve the underlying tax revenue problem. You are also wrong because you assume we can create money without borrowing it without economic consequences. You are implying that we "print money" and inject it into the economy. This will simply make things cost more which will exacerbate the stagflation we're already experiencing. This would also amount to an indirect tax on social security recipients, other fixed income people, and US bondholders (like China and the social security administration). This would raise interest rates and undermine our credit worthiness which would make future borrowing more expensive. It would also make a loaf of bread, a gallon of gas, a bushel of corn, and tank full of gasoline/diesel cost more which is the last thing we need right now. In other words, it will have the opposite of the intended effect. It amounts to a last resort taken by an administration that is incapable of creating jobs. Before you scream right winger, I don't think any Republican will be creating jobs either. That ship has passed. Voting can't save you now. You are building a platform out of bullshit. You should know by now that this only works until it's time to actually stand on your platform and then you're stuck making excuses for your president. Furthermore, all of your post ignores the reality of what I originally posted, that the government is increasingly having to use FICA taxes to compensate for income tax revenue shortfalls arising because of the unemployment/underemployment problem. Social security, as many posters here have pointed out, should not be in any danger of insolvency because it is self financed except...it has to, by law, hand its money over to the government in exchange for IOUs.

[eomer]

28. No, I don't assume that.

I don't assume that we can print money without consequences. It is precisely the consequences that are of benefit in this economic situation.

During this prolonged recession, deficit spending will stimulate the economy and cause it to recover more quickly. This is true because we have a massive demand-side problem. Deficit spending will create more demand and more demand will create more jobs. (I refer you to http://krugman.blogs.nytimes.com/">Paul Krugman for further elaboration.)

Later on, when the economy is booming again, that is the time to balance the budget, create a surplus, cool the economy as necessary, and control inflation.

These principles of fiscal and monetary policy have previously been taken as accepted fact until a B-grade actor started the scam that you're currently fooled by. The rightwingers are pushing these supply-side ideas, including the ones that you're advocating, precisely because they don't, and won't ever, create better conditions for average workers. Better conditions for average workers are exactly what the Reagonomics crowd (the ones who understand what the effects will really be) have been trying to eliminate over recent decades because their class benefits from persistent unemployment and a desperate pool of workers.

[roomfullofmirrors]

31. if you are right, why is unemployment still at 9.2% despite historic levels of deficit spending?

it's difficult to argue about these things because few people are arguing honestly. The politics of it all corrupts the argument and leads to platforms made out of bullshit and exacerbation of the real problems. We are where we are because corporations have figured out how to produce their widgets with 4 workers instead of 10 and 2 of those workers are employed in a foreign country where they do not contribute to US tax revenues. Until they come back, our economy will remain locked in these doldrums. Increasing the money supply will not fill our sails with wind. It will just make the waters we find ourselves in more dangerous.

[eomer]

32. Krugman explains:

http://www.nytimes.com/2010/02/05/opinion/05krugman.html

[roomfullofmirrors]

33. no he didn't. that article is a year and half old. Curent realities prove him wrong.

This is what he says about unemployment:

"Instead, well more than half of the deficit was caused by the ongoing economic crisis, which has led to a plunge in tax receipts, required federal bailouts of financial institutions, and been met — appropriately — with temporary measures to stimulate growth and support employment."

This article was written in February, 2010. The June unemployment numbers seem to suggest that Krugman was wrong about the benefits of deficit spending. IOW, he agrees that there is a revenue problem and then he asserts that deficit spending has supported employment which is obviously false as evidenced by the June 2011 unemployment numbers. He also thinks the plunge in tax receipts is a result of the revenue problem when, in reality, it is the other way around-the plunge of tax receipts has led to the ongoing economic crisis. so again, tell me, if deficit spending will promote employment, why is unemployment increasing, not decreasing. and after you have answered that, we'll talk about the misery index.

[eomer]

34. The prescription was to deficit spend dollars into the economy, and enough of them.

That has not yet been tried.

Much of our current deficit consists of tax cuts to the wealthy, which isn't spending dollars into the economy. Rather, those dollars are being hoarded for the most part.

Deficit spending that directly provides jobs (government jobs) to the unemployed or else indirectly creates jobs (government projects in areas that cannot be offshored, like infrastructure construction) will indisputably boost demand and trigger the multiplier effect that is needed to get the economy moving again.

The dollars have to get into the hands of average citizens in order to produce the effect. And there has to be enough dollars to do more than just backfill some fractional part of the losses -- it has to be enough to make some headway.

Krugman predicted all this in his earlier writings when the stimulus was being debated. Here is an excerpt from a recent piece (July 10, 2011) where he reminds us:

Excuse No. 4: We tried to stimulate the economy, and it didn’t work.

Everybody knows that President Obama tried to stimulate the economy with a huge increase in government spending, and that it didn’t work. But what everyone knows is wrong.

Think about it: Where are the big public works projects? Where are the armies of government workers? There are actually half a million fewer government employees now than there were when Mr. Obama took office.

So what happened to the stimulus? Much of it consisted of tax cuts, not spending. Most of the rest consisted either of aid to distressed families or aid to hard-pressed state and local governments. This aid may have mitigated the slump, but it wasn’t the kind of job-creation program we could and should have had. This isn’t 20-20 hindsight: some of us warned from the beginning that tax cuts would be ineffective and that the proposed spending was woefully inadequate. And so it proved.

http://www.nytimes.com/2011/07/11/opinion/11krugman.html?_r=1&ref=paulkrugman

There are also numerous other rightwing afflictions that are hindering our economy, and it seems like perhaps you agree with me on this. For example, the free trade agreements and taxation that favors offshoring. These things need to be fixed too, but they don't change the fact that Keynesian stimulus will work to fix a demand-side problem.

Edit to add: and a simultaneous campaign to convince average Americans to "buy American" and also to buy from small, local, employee-owned businesses as much as they can would help multiply the effect of the dollars spent into the economy. Of course, we're not going to hear that kind of a campaign from our government or our media since they've both been captured, for the most part, by the large transnational corporations who created this crisis in the first place.

[roomfullofmirrors]

35. you're proposing the mother of all gambles.

You and I actually see eye to eye on most of what you just posted however. most. back in 2005, I was at a graduation party (my own college graduation party). I was talking to the husband of a fellow grad. He was a realtor and he was loving life as you can imagine. I warned him that the good times were going to end. He looked at me like I had a penis growing out of my forehead. they came up with every excuse in the book to refute me. They were wrong. I was right. I warned my entire battalion that invading Iraq would be a disaster. They didn't believe me. They were wrong. I was right. I wrote a term paper back in 2005 regarding the fiscal mess approaching America due to the series of poor economic decisions that had been made. I saw it coming. I was right. Back around...2002, I warned the Republicans at freeperville that we were heading into a debt crisis. They stated that "debt is only 60% of GDP so we have nothing to worry about" "and Reagan proved that deficits don't matter". Debt is now 90% of GDP and they have all changed their tune suddenly (now it's the democrats who are agreeing with Dick Cheney's famous quote). My own aunt, a retired social security administrator believes there is a social security trust fund flush with the cash to finance the retirement of all the baby boomers. I told her there's nothing but IOUs and the money has been spent on BS. She was wrong. I was right. I'm not bragging mind you. I'm just saying, I spend a lot of time fighting to get to the truth of these things by arguing with intelligent, and not always like minded people such as yourself and, as such, I usually have a pretty good unbiased sense of reality.

So, here I am again, arguing with an intelligent and somewhat like minded individual about some dire economic situation. You're saying that we need more stimulus. You're saying that we need to do it bigger and better than the last time. I said back in 2008 that the best way to resolve this crisis was to put the money in the hands of the people, not the banksters. I even wrote a letter to my representative saying as much. what did they do though? They gave the money to a cabal of unaccountable banksters who have done God only knows what with it and here we are 3 years later with a 9.2% official unemployment rate, a debt crisis, a housing crisis, record high stagflation, and general misery.

so, I will agree with you that if the government printed up a trillion dollars and actually distributed it to the right people and then maybe even provided them a tax incentive to pay off their mortgages early with it (in order to climb out from under the housing mess which underlies much of our problems), we would get out of this mess. they will not do that however. they will print up the trillion dollars and give it to the cabal of unaccountable banksters who will do god only knows what with it again and the result will be continued unemployment, continued stagflation, continued trade deficits, and continued misery (index) for the majority of Americans.

what you are proposing will, therefore, not work as it will not even begin to fix the underlying problems with our economic foundation. Having said all of this, I'm invested in commodities so you can safely assume that I believe they will follow your logic, not mine because I also know that America solves (attempts to solve) all of her problems the same way, by creating more debt. that's our other trick.

[eomer]

36. It seems we agree.

So I was explaining what I thought really ought to be done to solve the real crisis. In other words, if we had politicians who actually wanted to fix the economy, to make it work again for average Americans, then Krugman's prescription is the right answer.

You raise the other very important question, more important perhaps, of what kinds of things are likely to get enacted if our corrupt Congress and, sorry to say it, corrupt President get started enacting things. And on that question I'm just as cynical as you. My first reaction after the 2010 election was that the best we can hope for during this Congress is that absolutely nothing can get done because anything that can get passed in the Republican-majority House will be worse than nothing. And that was without even considering that Obama was going to continue his premature capitulation strategy.

Unfortunately I had forgotten, back then, about the couple of things that do absolutely have to get done by Congress just to keep the lights on. Raising the debt ceiling is one of them. So I need to amend my 2010 reaction slightly and say that the best we can hope for is that they will fail to agree on anything substantive and will be forced to do only the bare minimum possible. In other words, that they will just raise the debt ceiling like it's been done in the past, without other changes being tacked on.

If they do essentially nothing (just the base minimum) then we have no deficit crisis. The tax cuts will expire and the deficit will disappear within about the next five years, I think it is. So that's what I hope occurs from a practical point of view.

Another thing that has to be done, unfortunately, is to raise Medicare reimbursement rates. They've been doing this periodically because of the way the formulas work and they'll have to do it again. So on this one, too, we have to hope they will fail to agree on anything else and will end up doing just the bare minimum of raising it again like in the past. However, if they don't make some offsetting revenue or spending change then what I said above about the deficit going away on its own is no longer true (as I understand it). So this may be the sticking point. What will we end up with when they are forced to raise the rates and then offset the cost somewhere else?

But, back to the original point, I think it is important that people know what the real solutions would have been were we not so screwed. What would be the right thing to do if we didn't have all three branches of government owned by the wealthy, powerful, corporate interests? So I will continue pointing these things out for that reason, but you are right that it is different than a discussion of what can actually get enacted, which, essentially, is nothing good. Thanks for the thoughtful reply and the chance to clarify what I really meant.

[girl gone mad]

29. No, he's right.

We can simply spend money and create jobs, and it isn't magic.

There is no deficit crisis. Under a sovereign currency, the government deficit merely represents a private sector surplus (savings). In periods of private sector debt deleveraging, as exists now, this deficit is non-discretionary. As the private sector rushes to repair its balance sheet, the automatic stabilizers kick in and the deficit naturally expands. This is the way it should work and it's a good thing.

The only time we need to be concerned about the deficit is when inflation starts to negatively impact growth and economic stability. That's a sign that the money supply has grown too quickly and excess currency must be removed from the economy through reasonable (preferably progressive) taxation.

[roxiejules]

17. Something smells fishy...

and including Social Security with the 'crisis' just makes it stink further.



"Is the goal to force the US into the same kinds of IMF austerity programs that have caused riots "in so many other nations?" Some predicted years ago that the "international bankers" would bring down the American economy."

- Washington's Blog




http://www.washingtonsblog.com/2011/06/america-is-being-raped-just-like-greece.html

[sabrina 1]

18. That's what it's beginning to look like, as many others have

said.

[roxiejules]

19. A criminal leveraged buyout of America

"The American Tapeworm model is to simply finance the federal deficit through warfare, currency exports, Treasury and federal credit borrowing and cutbacks in domestic "discretionary" spending .... This will then place local municipalities and local leadership in a highly vulnerable position - one that will allow them to be persuaded with bogus but high-minded sounding arguments to further cut resources. Then, to "preserve bond ratings and the rights of creditors," our leaders can he persuaded to sell our water, natural resources and infrastructure assets at significant discounts of their true value to global investors .... This will be described as a plan to "save America" by recapitalizing it on a sound financial footing. In fact, this process will simply shift more capital continuously from America to other continents and from the lower and middle classes to elites."


- Catherine Austin Fitts - former managing director of a Wall Street investment bank and Assistant Secretary of the Department of Housing and Urban Development (HUD)





http://www.washingtonsblog.com/2011/06/america-is-being-raped-just-like-greece.html

[roomfullofmirrors]

20. defaulting sounds preferable.

[Lugnut]

21. It's a huge scam.

Republickers have hated Social Security from Day One. A lot of the American people really are that dumb. The very simple solution to whatever problem is seen as a threat to SS is to eliminate the cap on taxable wages. Nobody wants to talk about that on either side of the aisle.

It rankles me to no end that a Democratic president seems to be using the income and health care insurance I paid for as a bargaining chip in debt reduction negotiations. I expect that sort of thing from the GOP but not from a guy who's supposed to be on my side.

[Enthusiast]

23. "the whole thing just a sham"

Yes

[tekisui]

24. It is similar to the reasoning used to tie unemployment benefits to the bush-Obama tax

cuts for the wealthy.

[CrossChris]

25. Because it's something to say. And 80% of the public will buy it.

Who cares if the knowledgeable news consumers are screaming bloody murder over it. We don't make up enough of the population to matter.

[Uncle Joe]

27. Because it was never put in a "lockbox" clearly marking it off limits to be used as such.

Thanks for the thread, garybeck.

[fascisthunter]

30. Because it is a SCAM!