It seems that the efforts of the austerians to cow the public into cutting Social Security and Medicare are not getting traction. And Tea Party adherents are breaking with the Republican party line on this issue.
From the Wall Street Journal:
Less than a quarter of Americans support trimming Social Security or Medicare to tackle the country’s budget deficit, according to a new Wall Street Journal/NBC News poll that illustrates the challenge facing lawmakers seeking voter support for altering entitlement programs.
The poll, conducted between Feb. 24 and 28, found strong opposition for cuts to these entitlement programs across all age groups and ideologies. Even tea party supporters, by a nearly 2-to-1 margin, declared cuts to Social Security “unacceptable.”….
The survey also found a sharp uptick in desire for the government to do more “to help meet the needs of people.” Just over half of people in the survey backed more government involvement, the highest percentage since February 2009, just after President Barack Obama’s inauguration.
Hhm….Obama is moving to the right as the country is moving to the left. But, as Tom Ferguson first described in his book Golden Rule and has since become blindingly obvious, powerful investors dominate party politics. Thus unless the trend towards a positive view of government promoting social aims progresses, it won’t affect the state of play in the Beltway.
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Jardinero, you’ve accidentally (?) illustrated why the extremists are losing ground: fewer and fewer people buy into the drama (like the “$75 trillion debt”, etc.).
so the deficit-conscious are now “extemists”?
and are losing ground?
really?
bon chance apres QE2!
Look at how well austerity is working in Latvia and Ireland. Can you give me any success stories?
Sometimes the choices are between “godawful” and “less bad”. I’ll agree that QE2 is a terrible idea, we should have fiscal stimulus focused on sound national priorities along with debt restructuing, but austerity is a piss poor idea right now. And it’s anti-stimulus thinking that has led the Fed to try to end run it with QE2.
Austerity will work, because all the malinvestment and leverage will be worked out of the system. Yes, it will lead into a painful deflationary spiral much like our great depression.
The other option is a stagflationary depression, where people recklessly speculate, food and fuel climb higher and higher, and the entire savings of the middle class gets wiped out.
I’m buying silver and gold. Think it’s a bubble? Well I guess we’re going to see. Aren’t we?
Yves,
Did the laws of mathematics get repealed while I wasn’t looking?
We can have awful austerity now or more awful austerity soon.
The national debt exceeded $1 trillion for the first time while I was in high school. We are now adding more than a trillion to the debt EVERY year. At this level every single percentage point increase in the interest rate will be a budget busting problem, and sooner or later rates will go up.
Social Security’s “assets” are debt owed by the government – promises to repay, just like all other politicians’ promises – only reliable to the extent you have leverage to pry them out.
Maybe by itself Social Security would be OK, but it’s not by itself. There’s also defense (even a dramatically reformed one), Medicare, Medicaid, and all the city and state budget issues, plus the FDIC is running a little short, oh, and so is Freddie and Fannie, and yeah, a few pension funds are a little light right now too.
Austerity isn’t the choice. We’ve wanted to have everything now so we’ve put it all on the national credit card. We either make hard choices now or harder choices will be made for us later.
And one of the harder choices we might face is bluntly, the end of the republic. Bankrupt nations fall. And if we can’t get our act together, I fear that is what will happen to us.
It’s the bloodbath that process will trigger that frightens me.
The relevant debt metric isn’t in nominal or real dollars, it’s in percentage-of-GDP. Which means there are three solutions to a debt problem – (1) cut spending and hope that the corresponding fall in the GDP doesn’t wash out your better debt behavior, or (2) stimulate the economy and hope production rises enough that it offsets the spending, or (3) inflation, inflation, inflation! Ruling out (3) as unacceptable, given that we have a large demand gap right now, (2) makes more sense than (1).
Right now, our $1T+ deficits are the result of 4 factors – (a) weakened economy results in lower tax revenues, (b) automatic stabilizers, (c) lowering taxes without cutting services, and (d) wars and other emergency expenditures. Because the wars were off-budget during the Bush years and the economy was fine, the official deficit figures from 2003-2006 are probably indicative of the deficits we’d run from (c) alone, so about $700 billion. With (d) at about $150 billion, nearly half of our debt is a result of the economic slowdown, which is on pace to continue for years to come.
The logic of someone like Yves (and correct if I’m wrong, Yves) is that if a $1.4T stimulus (double the size of ARRA) could close (or dramatically shrink) the demand gap, it would pay for itself (through increased revenue and reduced expenditure on automatic stabilizers) in 3-4 years, and it would grow the GDP (reducing the relative size of the debt)[1]. Oh, and it would also alleviate a lot of pain in the US.
[1] – The obvious downside is trying to place that many Treasuries.
Olddeadmeat,
Your argument has at least three fatal flaws:
1) Trying to fit human behavior into the iron box of the “laws of mathematics” is one of the principle causes of our current crisis.
2) The deficit and national debt should be expressed as a percentage of GNP, not in absolute numbers as you do.
3) Austerity in the current environment can only result in a deflationary spiral.
People like you remind me of an engineer I used to work with. He was a brilliant guy, having graduated at the top of his class at Colorado School of Mines. But behind the wheel of a car, he was a disaster. If the speed limit said 70 mph, then he believed that meant you should drive 70 mph. Snow and rain and sleet and fog counted for nothing. The idea that one should modify their speed accoring to road conditions was totally foreign to him.
Your analysis makes sense until you realize that money is an abstraction, and that we don’t need to sell debt to print money. We can totally avoid a deflationary spiral/austerity/starvation/human misery by printing the money we need to recreate our hollowed out manufacturing sector and infrastructure and giving people who are desperate a lifeline. In such an environment of under-utilization inflation will just not happen (except of course if all that printed money is given to banks to speculate with as we are doing now, and then we will see huge inflation in commodities causing more starvation and misery and economic destruction as well). Austerity never works, it just grinds the system to a halt, collapses it and then we have to rebuild everything from scratch. To some revelationist-types that may sound comforting, but believe me, when you are starving it won’t be.
Either we will (in the US) stimulate the economy with true directed fiscal stimulus (with no “offsetting” debt generation) to the tune of $8-10 trillion or we have a war (stimulus by other means). Which do you prefer?
Gentlemen all:
Thank you for the kindness of your replies – I shall endeavor to return the favor, if I may channel Heinlein: “I never learned from a man who agreed with me”
Zach:
In the metric of debt to GDP are you using the current GDP, which has pumped by 10 years of debt? All that “growth” was debt funded CONSUMPTION – houses with fancy tile, vacations, leased new cars every 2 years, and lots of dinners at Outback. It was a sugar high – no muscle at all.
I fear option 1 is inevitable. Option 2 is a nice hope as you phrase it, with of course the slight downside you mentioned at the end.
Didn’t we just try last year? With borrowed money? And what else needs borrowing? Bailouts for California, Illinois, Frannie and Freddie, the FDIC? Our regular bills? Will interest rates stay low long enough to roll over all our short duration T-bills?
Does covering any or all that count as stimulus? If not, which ones are you propose we let twist in the wind?
Or are you hopeful enough to cover it all?
DownSouth:
Not sure I understand your first point, clarify please?
Neither vendors nor employees let me excuse mathematics when I write checks, so I’m nervous when people don’t want to be boxed in by the math. Ken Lay didn’t want to be boxed, and Houston paid the price.
Re: debt v. GDP, see my reply to Zach above
Re: austerity v. deflation – I fear we have inflation already, but are just exporting it. Some say that we are taking advantage of our reserve currency and our monetary policy is increasing food prices and destabilizing other nations. Just to be clear, are we willing to beggar our neighbors?
Consider what is scarce v. plentiful.
Scarce resources: food and energy. Outside the U.S. add potable water to that list.
Plentiful: hungry people, available unskilled labor, paper dollars.
Is printing more paper dollars going to improve the situation or it is just for bread and circuses?
YankeeFrank:
See my comments to DownSouth above re: inflation. Shall we continue printing until we can no longer export inflation but have to swallow it ourselves? And how much?
It’s nice to tell me how austerity doesn’t work – tell me how we are going to avoid it. I don’t consider war stimulus, but rather just brutal austerity. It will reset demands and expectations – the dead don’t expect anything and don’t consume anything after all.
The last stimulus was what, $787 billion? And what did we get for it? Do we get a better return by doubling down, Will $1.5T get us back on track? If not, how much do we need? $10 T? We’re going to borrow $10T or so already over the next decade with zero stimulus anyway, so what’s another $10T between friends right?
Do y’all really feel good about a stimulus? That it’s going to make a real difference? Or is it using a new credit card to make the minimum payments on the old one?
Of course the tea baggers are against cuts to social security. Remember, a lot of tea bagger candidates ran on “protecting” Medicare. Rand Paul rallies were infamous for the Medicare scooter brigades. Of course, it was all part of the big con – republicans want to cut Medicare and social security even more than Obama. It shouldn’t be a surprise that a group of voters who are heavily made up of Medicare beneficiaries would want social security to remain untouched.
Your teabag hatred clouds your view, Jer. The article states: “Less than a quarter of Americans support trimming Social Security or Medicare”
Are 75% of Americans now teabaggers, or do you want to consider widening your scope of political party affiliations “who are heavily made up of Medicare beneficiaries”?
With all due respect, you appear to have a problem with reading comprehension. From the post:
Even tea party supporters, by a nearly 2-to-1 margin, declared cuts to Social Security “unacceptable.”
@sam says, March 2, 2011 at 11:09 pm
“Are 75% of Americans now teabaggers”
The article states:
“Even tea party supporters, by a nearly 2-to-1 margin, declared cuts to Social Security “unacceptable.”
That’s 66% of teabag supporters, not 66% of Americans.
I think you’ll find it’s your inability to read the article that’s clouding your view.
Dam, apologies Yves, you made that point before me. If only I weren’t so slow typing.
Paul Krugman’s econometric models have clearly proven that money printing is not inflationary in a recessionary environment (notwithstanding the 1970s or emerging markets in the 1990s since these were unique circumstances), so it makes sense to print the money to cover social security. Cutting SS would be deflationary, which would exacerbate future shortfalls without some other source of expansion of M2.
Using the equation PV = nRT, one sees that an increase in V (monetary velocity) must be met by an equivalent increase in n, R, or T (or a combination of all 3). So therefore increasing P (stock of money) in an environment where V is decreasing (due to an aging population) will result in nRT (the rate of inflation) being held constant. This is what the Republicans, Teabaggers and Libtards just don’t undertand. Well, they probably do understand this as it is basic econometrics, they just have alterior motives being pushed by the Koch brothers, namely the destruction of the middle class.
Isn’t that the equation for ideal gases?
Good eye EmilianoZ; I never knew that inflation could be described by the ideal gas law :)
The guys that say that are Keynesian. These are the same guys that cheered on the internet bubble and then said real estate was the best investment of the century. You guys have no idea what you’re talking about. An Argentinian monetary crisis is in the American futures. All this money printing will result in INFLATION.
“These are the same guys that cheered on the internet bubble and then said real estate was the best investment of the century.”
Evidence of this claim?
Oh, why do I even ask? You clearly know how the world works and what’s going to happen. I’m sure you’re never surprised by anything. The global economy? Simple! It’s all figured out now! We only have to look at one thing. I’m mean, look at all the inflation in Japan! You’re right! Case closed!
While Krugman is without a question a Keyneian, the analysis he was making is basically a monetrest one. The equation above is a bit confusing in its labeling money supply as P, rather than M. Freidmean’s basic monetary equation is M * V = P * Q. In other words money times velocity is equal to price times volume. Price times volume is othewise known as nominal GDP when it comes to the macro economy. If V falls, then M has to rise or you either get deflation or a reduction in Q, otherwise known as a recession, or a combination of the two (and they do tend to reinforce eachother). A falling V needs to be made up by an increase in M, the money supply to ward this off. If the economy is opperating well below potential (i.e. now) then an increase in M (holding V constant) will mostly show up as in increase in Q, or output. If it is operating close to potential, then it will mostly show up as an increase in P, or higher inflation.
Too much debt is bad for the economy.
How about some common since economic philosophy, considering economics is not a true science? There are far to many variables interacting in a system in constant flux.
Krugman’s stats rely on a belief in fraudulent goverment statistics. The equation doesn’t consider that increased money supply creates rampant speculation whih causes inflation that doesn’t show up in the bogus CPI numbers.
Dan G wins a cigar. The equation I posted above is, as the first commenter noted, the ideal gas law from chemistry. The rest of my post is meaningless econobabble where undefined variables are used to “prove” a position. This is typical of what Paul Krugman does. Krugman and his ilk also dismiss out of hand any information that is contrary to their view. For example, the virtually endless list of economies that have been destroyed by excessive money printing from Argentina to Germany to Zimbabwe to…you get the point. None of these are even considered as the Princeton Rasputin vomits the contents of his brain out the nib of a pen.
Thanks EM. You fooled me; but I’ll still take that shipment of Cubans. You might want to get Chavez to negotiate the deal. I understand that he has deep ties to Cuba, and is a hell of a peace negotiator
Time is ripe for the emergence of populists in both parties. The old guard beholden to Big Money better wake up and smell the coffee. 2012 is going to be an interesting dynamic.
I doubt anything is going to change. I’m not even going to bother voting anymore because there is so much corruption in our government that at this point it’s impossible to do anything about it. I still think this is great country and there are many worst places in the world so I try to be grateful for that. I just pretend the government doesn’t exist and try to remember there are good people in the world although sometimes it’s difficult.
all it takes for evil to succeed is for good people to do nothing.
Yes, and continuing to believe in sham “elections” certainly qualifies as doing nothing.
There is no reason to believe that Binky believes in elections. The only evidence to hand is that he beieves in shouting meaningless slogans.
Nor is there any reason to believe that Nicole believes in doing nothing … only that she no longer believes in doing what we have taught, at nausiam, to be the best and only proper thing to do.
On the plus side, she does express abundant optimism. I hope she comes back.
On the other side, she does not indicate what she will do instead of voting. It would be reasonable to assume that, having so recently had her epiphany of futility, she has not yet considered what to do. Whether we assume that or not, it would be logical to ask her.
Unfortunately, in current Anglo culture, asking that question is the certain prelude to demanding that she shut her [various random expletives deleted] mouth until she has a fully articulated policy with implementation flowcharts in triplicate … the certain prelude to beating her into submission or depression, and silence.
I assume that Nicole, and anyone else who participates, is like most of us quite reasonable most of the time. I intend neither to demand complete plans nor to ambush tentative proposals.
I challenge people to think about it: What do you do when you no longer vote? What do you do when the produce trucks from California become inceasingly scarce, then stop coming at all? How do you respond when your nearest and dearest try to silence you? What are the good questions?
Let us have many questions and answers.
Don’t respond here. Hardly anybody will read here after today.
Nicole; You must ‘believe’ in change. We all see daily evidence that “the more things change, the more they stay the same.”
But, what we need to change is ourselves. Your plan of ‘ignoring the bastards’, is only one step. We also need to shape our physical and emotional worlds so that the old ways do not influence our futures. There will be a large cost to that process. If sucessful, the benifits to Mankind will be enormous. If we fail,,,well, there is the personal satisfaction that we tried our best.
The people of Egypt are a continuing inspiration. In coming together with a common purpose they quietly upset the establishment apple cart. All the establishment’s vested interests (including the Moslem Brotherhood) tried to undermine their resolve. It didn’t work.
It’s all how the question is phrased and/or the ignorance of the respondent.
If you ask “In order to balance the federal budget would you favor trimming Social Security over other programs?” Most people will answer no if they know nothing about the nature of the federal budget. The Wall Street Journal article suggests that this was how the questions went.
But if the questions had been stated differently: “It is projected that by 2025, Social Security and Medicare will consume eighty five percent of all projected tax dollars and interest on the debt will consume the rest; would you be in favor of cutting Social Security?” Everyone would answer yes.
Yes indeed, it is very important how the poll is worded! So much so that I noticed how you cleverly lumped Social Security together with the insolvent Medicare. You just made your own point!
I must note the “85% of all tax dollars by 2025” is a complete fabrication. So if you are going to attack the study by posing completely inaccurate questions as your counterpoint, it underscores the point that the legitimate case against these programs is not as strong as the scaremongers would like the public to believe.
I would point you here:
http://www.kpcb.com/usainc/USA_Inc.pdf
Felix Salmon on the Meeker “analysis”:
Maybe it’s the Palo Alto drinking water? It’s got to be something like that, in any case — some kind of causal explanation of why so many people start fancying themselves experts on public policy the minute they become successful in Silicon Valley….
The main conclusion I draw from this report, then, is that once again Silicon Valley has managed to produce someone who thinks that their success in the tech industry qualifies them to talk with great certainty about issues they don’t really understand.
Gimme a break, Yves. Jardinero’s point is legit: In any poll, the framing of the question matters. You’ve stated as much several times.
If Jardinero’s question was restated to:
“It is projected that by 2025, Social Security and Medicare will consume more than half of all projected tax dollars and interest on the debt will consume a significant portion of the rest—would you be in favor of cutting Social Security?”
The results would be dramatically different. You know this, and you’re lying if you say otherwise.
And we haven’t even begun to address the fact that 84% of the respondents to this poll were older than 29…and 91% older than 24.
Are you kidding me??? Let’s take an issue which will obliterate a segment of our society…and exclude them from an opinion poll and draw conclusions accordingly.
It’s pathetic.
As for Felix Freaking Salmon…did you even read his post? Salmon doesn’t refute—in any way shape of form—the fiscal assumptions in 2025.
[All he says is that running the US is not the same as a corporation and that people in Silicon Valley should stick to their core competency. Gee, thanks Felix. Now, if only Economic Bloggers would do the same.]
Then…and this is the best part…Salmon goes on to say (with my emphasis) “FISCAL POLICY IS A POLITICAL ISSUE, rather than something that can be solved with consultants and power point.”
What an achingly stupid comment. In fact, it’s so stupid, it immediately calls into question Salmon’s core competency…which is what, exactly?
Hey Felix: ALL federal government POLICIES are inherently political….
“Environmental Policy? Oh, well that’s political, of course. These issues can’t be solved with consultants and Power Point!
“Health Policy? It’s Political! Duh…”
You can’t make this shit up.
[And while you’re at it, Felix: Lose the hackneyed “urban-intellectual” eye-glasses…It’s a tired look that needs to go the way of disco-polyester. And for the love of God that you know doesn’t exist: Go outside for a few minutes today and get some sun!]
Yves, this is not exclusive to Silicon Valley. People generally assume intelligence in one field is a lot more transferrable than it really is. We treat our Einsteins (extremely gifted in one field) as Da Vincis (talented in a broad range of fields).
A comedic representation of the issue is http://xkcd.com/793/
Dan Duncan said: “Gimme a break, Yves. Jardinero’s point is legit: In any poll, the framing of the question matters. You’ve stated as much several times.”
Straw man.
Yves never said the framing of the question doesn’t matter. What she said was that the only way to elicit the response that you and Jardinero1 desire is by interjecting your economic Armageddon fiction into the question.
DD just loves misdirection, doesn’t he?
That (and unintentional parody of conservative views laced with high-school-level mistakes in vocabulary, grammar, logic, and sense of what is comedic) are present in almost every comment he writes.
Back on topic — If anyone believes that the recipients of Medicare and SS (which compose a huge voting block in this country) are going to vote to trim their own benefits, you’re insane. They will take us down with them if that is what has to happen for them to keep their benefits. Anyone who disagrees with this doesn’t spend much time around human beings, apparently.
@Dan Duncan
Son,
I’m sorry to have to correct you in public like this, but I’m paying you good money to disrupt blog commentary and promote my right-wing agenda. I’m not paying you to sound like a teenager with expressions such as “Felix Freaking Salmon” or “achingly stupid comment” followed by “it’s so stupid” or “you can’t make this sh*t up”.
I wasn’t going to say anything but this has gone on too long, and if you can’t refrain from expressions such as “freaking this” or freaking that” or “you can’t make this sh*t up” *every single post*, then I’m afraid I”ll have no choice other than to let you go.
Best Regards,
Pete Peterson
[And while you’re at it, Felix: Lose the hackneyed “urban-intellectual” eye-glasses…It’s a tired look that needs to go the way of disco-polyester. And for the love of God that you know doesn’t exist: Go outside for a few minutes today and get some sun!]
Sorry Felix, that last comment “Lose the hackneyed urban-intellectual eye-glasses” was from Dan Duncan, not me. He may be on my payroll, but I did not instruct him to say this, nor do I disapprove of using ad hominem attacks to promote my agenda.
Ahem, er, let me make a couple of things perfectly clear: no one on this blog is working for me, and that includes Dan Duncan, Jardinero1, Bruce Kastings, Olddeadmeat, etc Repeat, none of these gentlemen are on my payroll, they are expressing their own opinions with regard to the necessity of cutting social security. And the second point, under no circumstances would I approve of ad hominem attacks to promote my agenda.
Pete, it’s not about pertinent or impertinent comments. Politic and religion are kinds of subjects which could generate conflicts.
The single-minded focus on destroying Social Security and the refusal to address the real issues with Medicare have been the most baffling aspect of the political debates in the past decade for me.
Social Security is essentially an enforced savings plan with a bit of income redistribution to it. It generally appears to have been quite successful at its primary purpose of minimizing elderly and disabled poverty. Possibly people don’t like it because it is successful and efficient since americans don’t appear to believe that either of those words belong in a sentence with the word “government”. There are some tweaks that can be done to make it more actuallrily sound, but I have seen no evidence that these tweaks should be on a top 10 list of budget priorities.
Medicare on the other hand is a massive time bomb that is beginning to explode. However, it is really no different than the overall US health insurance problem facing the private sector. Medicare is announcing with great fanfare that the entire US health care system is broken and needs a massive overhaul in the next decade. I have seen no evidence that Obamacare is the answer. There needs to be a complete rethinking of priorities on reimbursement models and allocation of healthcare resources involving both the public and private sectors. So far there has been no rational debate. It is just ideological posturing, fear-mongering, and more politicians lying about health care than about their mistresses.
I’m confused, if healthcare is broken why does it offer the best job prospects?
In at least one respect they are the flip side of the same coin — demand for health care services is rising rapidly, hence the good job prospects, and also hence the scarcity and inflationary dynamic. Problem is the inflation is out of control (not solely due to demand).
The other part of cost increases, and general high cost of health care in the US is due to having one part of our society that is getting “too much” healthcare, or too many tests, over-invasive procedures, etc. in a form of churning, and the other part has no health services at all. Single payer or some form of universal health insurance combined with payment for outcomes not “services” is the ONLY answer.
Therein lies the conundrum. Many health care workers ultimeately make much of their money off of Medicare.
“Deficit-conscious”?
David Stockman’s The Triumph of Politics was his memoir of watching Reagan’s handlers create a deficit by cutting the taxes of the rich and inflating military spending, then using the deficit as the excuse for cutting social programs. Aren’t we seeing the same game again? Or is that the “extremist” point of view?
The “deficit-conscious” are either the con artists or the marks.
+1
Then again, I *am* deficit conscious. But, I want to solve it by increasing taxes on the wealthy and by cutting the war budget.
If you cut the war budget, there would be no need to raise taxes. In fact, reducing our “national security” would enhance the argument for “cutting” social security.
Please see this link which identifies our $1.2 TRILLION
“national security budget” Ninety percent(90%) cut anyone.
http://original.antiwar.com/engelhardt/2011/03/01/the-real-us-national-security-budget/
War is the big investment a country can make. It is maybe 1000 return of investment. This is the reason, even if it’s a bad one.
The other obvious reason why a super majority of Americans do not want politicians or anyone else to touch Social Security, under pain of death, real and political, there is the practical matter of the pay stub. If undereducated and below average, average Americans pay attention to anything, it is the paycheck. On it, broken out as clear as can be, are all of the taxes you pay and the other item that is not a tax, but a contribution, FICA. There is almost no one who does not ask the question, what the hell happened to my paycheck? It is usually explained by the old heads who know that while you may beat down the federal income tax and get a refund, FICA, is your future Social Security check from the government when you retire. They also know a great deal about other benefits associated with it, including disability. So, while it may come as news to the econometric crowd, and all of the Ivy Leaguers, stock brokers and other wise masters of the universe that there is some political convergence around SSI that may seem anomalous, it is not. Many of the people may be fooled most of the time about a lot of issues, but this is not one of them. Just as the banking system has collapsed 3 times in the last 75 years, Social Security has never missed a payment in all of that time due to being a ticking time bomb, broke, insolvent, or demographically unsustainable. It has more credibility, more support and less need for calculus than NASA.
I am by no means fully informed, but I have done a little research. I have a pension from my employer that will pay me $500 a month starting in August, OR I could take a lump sum of $105,000.
This lump sum is in the ballpark of what it would cost me for an annuity with a payout similar to my pension. It just so happens that my total FICA contributions including my employer contributions total almost 300,000.
The SSA projects that my SS payment will be about $1500 a month which is what $300k in an annuity would get me or in the ballpark.
Sorry about that! On the other hand my wife has only paid $37,000 into SS including her employer contribution but somehow the total $37,000 gets her $500 a month. What I have also noticed is that you get a LOT more money if you can get a Disability Pension from the SSA which I know personally a LOT of people have done.
The end result it would appear is that Social Security is going broke not because of the people who paid in a lot and are taking out what they paid as an annuity but the people who paid in a little and are getting what they need!
Social Security isn’t going broke. It needs a few fixes, but even when it “collapses” it can still pay like 70% of its obligations. We may need means testing or to raise the FICA cap (but not the benefits cap) or something, but we don’t need dramatic changes.
take the lump sum NOW. Who knows if your pension will remain solvent with all these defaults going on.
The thing that always bothers me about Social Security reform discussions is that they always talk about raising the retirement age as the “only solution” to making Social Security solvent for the long haul.
Nobody ever suggests that we just treat Social Security like a welfare program for the elderly. That’s essentially what it is, we just need to admit it. I don’t understand why people who have ample retirement income and/or pensions get Social Security at all. If we treated Social Security like welfare and only gave it to people over 65 who actually needed it, there wouldn’t be a solvency problem.
The argument against this would obviously be… “I paid into the system, I want my money back when I get old”. The response is that there are hundreds (if not thousands) of other programs that our tax money funds that the average person never “gets back”. It’s just the cost of living in a society that provides assistance and safety nets for the less fortunate. I may not use any of these programs, but I’d like to know that they’ll be there if I ever do need them.
I am old enough to remember back in the 80s when the application of “means testing” was discussed, it was dismissed because it would be demeaning to social security recipients. To which I would say at this point – “you don’t need to cash that check…”
Medicare is the program that needs to be addressed. People did pay into the SS system. They don’t necessary need to get what they want or think they deserve, but such is life.
Well, some people may not “need” their Social Security payments, but one reason the program works is that it has low overhead. Adding a means test would cost more than it would save. It’s simply more cost-effective to continue the current system, which doesn’t require expensive people to make decisions which must then be appealed to more expensive people.
I’m quoting from memory, so my details may be a little bit off, but in “The Predator State”, Jamie Galbraith pointed out that Social Security is a “significant” part of their retirement income for 65% of elderly people, and the ONLY retirement income for 20%. It is a bad, bad mistake to mess with it.
I believe that you have fallen into the disinformation trap that the politicians set for you decades ago.
The individual only pays half the tax. The company pays the rest. That money has been set aside for you as well. Most people don’t realize that.
I make enough now that I am subject to a 6% maximum 401k contribution rate and the employer matches 2%. As a result, the total Social Security payments by myself and the employer are roughly equal to my 401k annual savings. Because I have been diligently saving my entire working life, your proposal would mean that HALF of my payments into various government promoted retirement savings vehicles would no longer provide income for me in retirement.
To be at all equitable on any sort of means testing, it would be necessary to have the means testing cutoff probably at $200k or more. Otherwise, it would become a highly imbalanced shift to the poor and lower middle class.
The means testing would likely eliminate a very small percentage of the population unless the upper limit of social security payments stopped somewhere in the $60k-$100k annual income range. I don’t believe that this is either politically doable or economically desireable. Also, at that point in time we would just create another very convuluted government program out of something where one of its primary hallmarks of success has been simplicity and efficiency.
I don’t see evidence of insolvency in the next 30 years unlike virtually every other aspect of federal and state government. People have to pull out 75-year projections to make the breathless case of insolvency. I have problems believing 30 year projections at the level of accuracy that people that ascribe to them. 75-year projections are virtually useless. Does anybody seriously think that a 75 year projection from 1935 would predict anything about the world today? They didn’t even know that WW II was coming.
Looking at the SS retirement benefit formula it has bend points where the income replacement declines: Taking the average indexed income for 35 years, the first 749 a month gets a 90% replacment amounts between 750 and 4517 get a 32% replacement, and amounts between 4518 and the limit for contributions (around 106k) get 15%. Any pay above the cutoff limit is already not counted, since it is not taxed. This limit is now to low at 85% of median income where it should be 90%. So there is already bias and a welfare element to the program.
This is no news, the Tea Party has been against cuts to Medicare from the beginning. They are also against cuts to defense, and as mentioned social security. This is the main reason they are in such an untenable position, because when you combine that with being against any tax increases yet demand big cuts in spending, where do you go?
I think we have to cut health care costs, and Obama’s plan does not do that, at least enough, if at all. If we cut health care costs Medicare will come down.
Neither party wants to talk about it, which is also the dilemma for the budget. I think it is a mistake to say to the Democrats that they can use Republican efforts to cut medicare or social security against them, this shouldn’t be turned into a political football. We need to deal with this.
Fixing rising medical costs is the only solution. If we just cut or scale back Medicare/Medicaid without solving the rising medical costs issues, we’re going to have an awful lot of angry people who are being bankrupted by medical care, aren’t getting medical treatment they need, or are watching loved ones die for lack of money. That’s not a stable long-term situation.
“This is the main reason they are in such an untenable position, because when you combine that with being against any tax increases yet demand big cuts in spending, where do you go?”
The obvious answer is Medicaid. Not only is it much more obviously “welfare”, but as currently structured, it will eventually crush the states. Where I live, the state recently had a group of academics produce a long-term high-level forecast for the state’s finances: revenues grow at 5%, education costs (biggest share of the state budget) grow at 6%, Medicaid (next biggest share) grows at 8%. I’m quite sure other states see similar situations. By 2025 or so, Medicaid is the largest single category in the state budget. By 2050, it IS the state budget.
I think it’s an even-money bet that by 2014, when the big expansion of Medicaid in the ACA kicks in, one or more of the conservative states will have chosen to withdraw from the program. No state is happy about losing that much federal money, but at some point they have to choose between Medicaid and everything else the voters expect in the way of services.
With 20% of the adult population now receiving monthly checks from SS it is not hard to imagine why there is opposition to cut benefit payments. That don’t call SS the “Third Rail” for nothing.
This is not a popularity contest. It is about economics. SS ran a cash deficit of $50b last year. That number will be 1/2 trillion over the next ten according to the CBO and in excess of 1 Trillion according to B Krasting.
This popularity that Yves points to is the worst reason not to consider changes. But that is what is going to happen. SS will be untouched until after 2012. It will be too late to “fix” things then. Across the board cuts will be the only option. The program will have to be socialized to meet benefits for those who are in need. The program will have been gutted. That will be the legacy of those who avoided the tough choices that are necessary today.
We are on the way to the worst possible outcome for SS. All because it is so popular. Only in America….
Bruce Krasting said: “SS will be untouched until after 2012. It will be too late to “fix” things then.”
You assert that by 2013 it will be too late to “fix” Social Security. So in 22 months we will have irreversible damage to Social Security.
Perhaps you would like to revise that just a little?
Social Security is projected to be able to pay out 100% of promised benefits until 2037 without any changes. That is 26 years from now.
I have no faith whatsoever in projections over 10 years. In our current environment projections over 5 years are bound to be filled with errors. But you want us to sign on to changes to a system which will be solvent for 26 years!
Relax, the sky is not falling.
“I have no faith whatsoever in projections over 10 years. In our current environment projections over 5 years are bound to be filled with errors. But you want us to sign on to changes to a system which will be solvent for 26 years!”
Uh, I agree with you – projections over 10 years are fantasy. This includes the projection that SocSec will be solvent in 26 years.
Tertium Squid said “Uh, I agree with you – projections over 10 years are fantasy. This includes the projection that SocSec will be solvent in 26 years.”
I hear you, but here is the question.
Since Social Security has $2.5 Trillion in it’s trust fund which will not be exhausted over the next 10 years, why should we make any changes to that system?
Bruce Krasting said: “This is not a popularity contest. It is about economics.”
You’re stuck in the early 19th century, reciting the same old hackneyed talking points that the kleptocrats have used for over 200 years. And they’re just as big a fiction now as they were then.
Maybe this from Robert L. Heilbroner’s book The Worldly Philosophers will help us to see through the kleptocrats’ propaganda:
They lived in a world that was not only harsh and cruel but that rationalized its cruelty under the guise of economic law. Necker, the French financier and statesman, said at the turn of the (19th) century, “Were it possible to discover a kind of food less agreeable than bread but having double its substance, people would be reduced to eating only once in two days.” Harsh as such a sentiment might have sounded, it did ring with a kind of logic. It was the world that was cruel, not the people in it. For the world was run by economic laws, and economic laws were nothing with which one could or should trifle; they were simply there, and to rail about whatever injustices might be tossed up as an unfortunate consequence of their working was as foolish as to lament the ebb and flow of the tides.
The laws were few but final. We have seen how Adam Smith, Malthus, and Ricardo elaborated the laws of economic distribution. These laws seemed to explain not only how the produce of society tended to be distributed but how it should be distributed. The laws showed that profits were evened out and controlled by competition, that wages were always under pressure from population, and that rent accrued to the landlord as society expanded. And that was that. One might not necessarily like the result, but it was apparent that this result was the natural outcome of society’s dynamics: there was no personal ill will involved nor any personal manipulation. Economic laws were like the laws of gravitation, and it seemed as nonsensical to challenge one as the other. Hence a primer of elementary economic principles said: “A hundred years ago only savants could fathom them [economic laws]. Today they are commonplaces of the nursery, and the only really difficulty is their too great simplicity.”
http://www.angrybearblog.com/2010/01/after-party.html
Now the message is economics is the basis for reform to SS? Not the likely hood it is a political possibility to address deficits and this is part answer, (unlike say military budgets and such), than can address the crisis in 2012 of governmental debt you espouse?
Is that because a 2 to 1 political disadvantage doesn’t bolster your argument BK?
Your arguments for SS reform are ferocious, but out of proportion to your ‘concern’ for bond default I believe. No matter the particulars, yor are predicating a much bigger deal in 2012 than SS reform will even begin to touch.
Let’s separate out concerns if that is your concern…good policy, and possible good policy in the immediate future.
One can get whiplash following the memes.
It’s just too damn convenient that the counterfeiting cartel, the fractional reserve bankers, wreck the economy and then everyone else must pay for it, including the old and helpless.
I work for my state’s Elderinfo office. I meet many of those people Procopius mentioned above, the people for whom Social Security means they can have a relatively independent old age. I have friends who work with people who receive Social Security disability income and Social Security supplemental income. These programs are vital to many Americans and I think if Social Security were changed significantly from its current form, we would discover that the number of people in poverty would increase rapidly.
My practical experience makes me think that Social Security is a program that achieves its goals. I don’t see any reason to tamper with this program other than to insure it can continue to function as it does now on into the future.
My experience with Medicare, however, has led me to conclude that there are serious problems that need to be clearly understood and dealt with, the quicker the better. Among those problems are the payment schedule which is in the hands of the RUC and Congress, a very bad cost-controlling situation; the absurd semi-privatized Medicare Advantage sector; the opaque and expensive “medigap” industry; the truly incomprehensible Medicare D semi-privatized prescription drug coverage. I would very much like to see these addressed.
I am sorry to see that tea party == republican these days in peoples minds.
It is just further proof that nothing will change until it all falls apart.
The tea party movement of individuals that pretend to know what they are talking about and are often 180 degrees out of whack under the guise of Prosperity, Many do not have a clue about liberty.
They know not of the real cause for their demise not are they interested in what the cause. They are really mad at running out of money. Do you really think you would here from them, without a bad economy?
Some say they have awoken to the fact that they have lost control of the government, but do try to regain it? Only as long as they are not affected.
Afterall, they too want other people to pay for their needs, hypocrites!
Many of them do not know history or the constitution but but the have truths they hear on the radio or tc. And they are quick to criticizes others for views that they are not “compatible” with their own view of the world.
I can only assume that things will change when they get their tax cuts and yet, nothing changes. Or when they can no longer use dollars to pay for things.
For all of this has happened before, although not on such a large scale.
It is just further proof that nothing will change until it all falls apart.
The tea party movement is a movement of individuals that pretend to know what they are talking about but are often 180 degrees out of whack with reality. Many have been living under the sense of false Prosperity brought about by loans and wish to return to that. Most do not have a clue about real liberty.
They know not of the real cause for their demise, nor are they interested in what the cause is for it is not liberty.
The real reason for their “discomfort” is that they have run out of money, for what ever reason. And it is easy to blame big government for their plight. Do you really think you would hear from them, without a bad economy? It is all artificial. Sometimes people really do get what they voted for.
Some tea party members say they have awoken to this “travesty”. They feel that they have lost control of the government. Really? Should the rallying cry be “gives me liberty or give me social security”? Even they like it when other people pay for their needs. Hypocrites!
Many of them do not know history nor of the constitution. And If they do study it and understand it, it makes many of them very uncomfortable. Instead, they cling to half truths that they hear on the radio or see on TV. At least is sounds good, right?
And they are quick to criticizes others for views that are not “compatible” with their own or ones that cause them the slightest discomfort.
However, in time they will get a smaller government, but it will not be because of them. For all of this has happened before, although not on such a large scale.
ya know it upset me when Matt taibbi called the teabaggers idiots. Yes they are and they are racists, but we need them. Social Security would be a perfect cause for all of us to come together to fight the oligarchs with. Right now, breaking the oligarch hold on our country should be priority number 1.
Using the lexicon of Nietzsche, I would say most Tea Partiers are active nihilists.
“Active nihilism…is not content to be extinguished passively but wants to extinguish everything that is aimless and meaningless in a blind rage,” is how Michael Allen Gillespie explains Nietzsche’s philosophy in Nihilism Before Nietzsche; “it is a lust for destruction that purifies humanity.” It is “driven by the spirit of revenge or by resentment.”
While Nietzsche didn’t believe active nihilism was something “affirmative and healthy,” he nevertheless held it in much higher regard than what he did passive nihilism. Passive nihilism is the “doctrine of resignation,” the “will to nothingness.” Passive nihilists don’t want to go out “with a bang” like the active nihilists, “but with a whimper.”
Great point. Over at ZH a while ago BK had a few posts on SS being paid to “illegal immigrants”. It was eye opening, and good reporting by BK. The comments that followed were priceless.
Active Nihilists. From Kurt Vonnegut in Siren’s of titan, not a direct quote, but close-
His father was an anarchist and left him an estate that consisted entirely of government bonds.
If the government can print money, why do we need to worry about funding social security? What do we have taxes?
The government can print and spend as much as it desires. However, the backing of that fiat is essentially the government’s taxing authority. No taxes = no value eventually. See http://en.wikipedia.org/wiki/Chartalism for more info.
Money, as a cultural artifact, as opposed to the theoretical construct of finance innovators, progressed with the material culture and social organization developments. It is a historical product, not subject to the mechanistic laws of physics, but to the learned expectations of the society where the money is used. The Chinese, due to the invention of paper and the printing press, had paper money before Europe even knew how to make paper, much less print. Culturally, the distribution of money is learned like language. Genghis Khan ordered, under the pain of death, for a common paper currency to be accepted all along the Silk Road. This was a beginning of an international cultural order that could be used by anyone on the route to the far East, under his aegis that allowed for predictability, a learned cultural norm, that advanced trade, travel and political prestige. Aside from fiance theory, the simple increase in the number of people, and the number of jobs, requires the printing of more money. The absolute amount of money coined and printed and fabricated digitally through electronic banking and other legally chartered banking practices serves the social order. The taxes, collected by the modern nation-state bureaucracy is a measure of the strength of a state. The scale of tax collection rivals the capital accumulation of the private banking system, hence producing a pronounced duel system of competing sovereign powers in the same social order: the republic and its treasury funded by taxes and the private capitalist system funded by profits. This is the political struggle that is regularly discussed here too many times in very oblique, sarcastic and world weary ways, with an undue emphasis in financial theories which are devoid of a commonly agreed upon empirical basis. But, as Yves and many of her compatriots have repeated try to emphasize, economics is by and large an academic shill at best, without much participation in the larger social sciences, which would be helpful for valid policy development and political deliberation with the purpose of informed decision making that is reasonable, transparent and not morally bankrupt.
But, as Yves and many of her compatriots have repeated try to emphasize, economics is by and large an academic shill at best, without much participation in the larger social sciences, which would be helpful for valid policy development and political deliberation with the purpose of informed decision making that is reasonable, transparent and not morally bankrupt. Paul Tioxon
That line will not go very far in certain circles. We should agree to disagree wrt money. Let the private sector have its own private money supplies and let government have its own. Otherwise, we have an irreconcilable conflict between force (government) and voluntary cooperation (the private sector). We are in danger of the worst of both worlds, a government enforced PM standard.
Tea Partiers tend to oppose “entitlements” AKA dollars that go to other people. Anything dollars coming their way are another story.
I believe this is somewhat positive. Just as what is happening in Wisconsin, this comes down to what government(i.e. a societal compact) should be for. Maybe we can start discussing what is of essence in regards to government. With ever changing health and employment dynamics, there is clearly some way to have stability in society for these concerns. The first way would be to cut the life-support for the banksters, even though that would most probably lead to severe austerity. It would be better for the real social “security” though.
First of all there is no such thing as socialsecurityandmedicare. They are two different programs, and have very different financial prospects. This is the same as the lead up to the Iraq war. There are no such thing as WMD’s. There are nukes, there are chemical wepons and there are biological wepons, but not WMD’s. A nuke, combined with a means of delivery is a very different thing than a WWI era mustard gas artillary shell with a rane of 5 miles. Yet in the lead up to the war, all the talk was about WMD’s. Personally I thought that Saddam had WMD’s as they were defined, but in the form of the artillery shells. While nasty weapons to be sure, and Sadam was a world class a$$hole to use them on his own people, they posed zero threat to the US, and thus were not a legit reason to go to war. The lumping the very solvent SS system, which has been subsidizing the rest of the governemnt for about 30 years, with medicare where costs have been exploding (mostly due to our broken overall HC system) is the same type of obscufation and deception. Oh, isnt it funny how the exact same people are doing it?
I believe this is somewhat positive. Just as what is happening in WI, this is about what government(i.e. a societal compact) should be for. Maybe we can start discussing the essence of government. With ever changing dynamics in health and employment, there is clearly a way to address those concerns. The first way would be to cut the life-support for the banksters, although this would probably lead to severe austerity. It would be better though for true social “security”.
Before targeting the poor and working class with cuts in social security, why not target the banksters, the Pentagon, Big Pharma and Big Agriculture first? You know, just in case they might have any spare change lying around.
Even if the apocalyptic projections of Jardinero1, Dan Duncan, Bruce Kasting, and Olddeadmeat, etc are accurate (which I doubt), one solution to fund social security would be force the banksters to give back the trillions used to bail them out. Including all money used for backdoor bailouts. Next eliminate corporate welfare to Big Pharma and Big AG. Force companies like Boeing Corp, Bank of America and hundreds of others to pay taxes in the USA. Then stop the wars, close military bases and reduce the Pentagon budget.
Bringing the troops home alone would save $390,000 a year per trooper overseas, according to a Congressional Research Service estimate. And this is just one example of potential savings from the list above.
“In October, the Congressional Research Service estimated that in 2006 (the latest available figures), it cost $390,000 a year to sustain each American trooper overseas.”
http://www.nytimes.com/2009/03/01/weekinreview/01glanz.html?pagewanted=2
Why do Jardinero1, Dan Duncan, Bruce Kasting, Olddeadmeat and so many others always take the side of corporations versus the people. Why target the working class and middle class first, yet never mention cutting Big Pharma, Big Ag, the Pentagon, and never mention stopping the wars or forcing the banksters to pay back their bailout money?
Can Pete Peterson have that many shills working for him?
yes, Peterson, et al, has that many shills and lots more working for him/them aka Republican party. so i am not at all surprised at the volume of stupidity and thievery.
i do think the system will have to crash. kind of like having to have the Republicans take over in Wisconsin and then America/White House and Senate along with their control of the Supreme Court and House of Reps.
the zombies have bought into the Big Lie: Government is the Problem for many years now. the Best selling PR man, St. Ronnie, did his job well.
the many problems with our Health Care/Medicare/Medicaid are the results of the Big Lie and Good PR. Goebbels was too timid in his observations. American Marketing is stellar in its’ ability to con America..
to think a forced savings program, like Social Security, works with just the middle class paying for it should be enough reason raise the cap from $106,000?, i think that is where the cap is today. after all this is my/our money we saved for that age where we were supposed to be able to retire. save for a rainy day/old age insurance concept.
the problem of letting Business run health care is our main bankrupting point.
but then again, America is not seen as a society made for “people.”
America is a business run and ruled collection of “I’ve got mine, you go eff yourself” of “so called” leaders. American doesn’t have a society so much as it has a culture of money worshippers. society is just the default “aggregation” of those living under the “Greed is Good” credo.
like detritus, American society is an after thought, if given any thought at all. that is why the competition of an efficient or even an inefficient Government is not tolerated by the Wealthy Corporate Elite/Wall St.
any competition for Wall st. is less money for them. we have finally seen the man behind the curtain exposed. will Tea baggers and the rest of the Zombies see the reality for what it is? i doubt it. at least until the pain gets bad enough to choose otherwise.
Bankruptcy is becoming very popular again. It will be the only way out for countries, corporations and individuals in the long run.
The USA budget consists of two sections:
Mandatory spending: $2.009 trillion (-20.1%)
$695 billion (+4.9%) – Social Security
$571 billion (−15.2%) – Other mandatory programs
$453 billion (+6.6%) – Medicare
$290 billion (+12.0%) – Medicaid
$164 billion (+18.0%) – Interest on National Debt
Discretionary spending: $1.368 trillion (+13.1%)
~ $804 billions (+12.7%) – Defence/Veteran affairs/homeland security/department of energy/NASA
The most suspect parts as for return on investment of collected taxes are military/defence spendings and Medicare. Both are badly managed and while I included budgets of department of energy and NASA in full into defence spending (which is not true), I think it is a reasonable approach as substantial parts of defence/security related spending are masked in other departments budgets.
As Aunt Deb noted Medicare spending are open to review too. Some parts of Medicare are borderline with criminal enrichment of cronies typical for financial sector:
The same is even more true for military spendings.
In both cases there are powerful groups that are recipients or this largeness.
Questions:
1. Who can match the political power and level of organization of opponents of military-industrial complex (which rivals in power and is interconnected with financial sector) and medical/pharmaceutical lobby?
2. Who can serve as realistic countervailing political force?
3. Can this be the USSR situation replayed when military-industrial complex (among other factors) was instrumental in dragging the country into its grave?
Taking into account plausible answers, outcomes are not certain.
In other words the problem of preserving Social Security is linked to other aspects of structural crisis that is under way. That means that the problem of SS solvency is connected with the answer on the other tricky questions such as “Can the debts aquired by state during saving banking system be at least parcially repaid to keep total debt below 100% of GDP?”.
Also the price of iol is an important factor and unpredictable factor too as raising oil price will definitly slow growth and as a result the ability to repay the debts.
So everything is interconnected here and Social Security solvency problem can’t be treated separately from other aspects of the crisis.
BTW the proposal to set retirement age to 70 for people with high (by some metric) income (without changing the size of the pension they get) can help and is not that difficult to implement.
It probably will not face much resistance as it in the best financial interest of both the people affected and the state. I think that is win-win solutioon.
Those people definitly can finance first 5 years of retirement out of savings in exchange for higher pension (5*8=40% higher). Many professionals in high positions might still work those years, anyway.
Well, too many posts to read so if I’m repetitive forgive me.
I’m with the MMTers on this one. The Treasury issues a bill. The Fed buys the bill and creates a dollar. The dollar goes to the Fed which buys a product from a private producer or gives it to a private citizen which buys the product from a private proucer. The private proucer puts the money in the bank and it is retired for as long as it sits there. The bank owns the federal reserve note, the Fed owns a T bill. Money from nothing.
All government reserve funds abide by the same logic. A dollar in the Social Security Reserve fund does not exist. The government cannot hold dollars because if it holds dollars it owes the fed a dollar it issued and the Fed holds a dollar the Treausury issued. It does not exist.
The lesson is, that government spending is nothing more than a transfer of current savers to current spenders. I’m paying for my dad, via government transfer, and if I support this program than I explicitly say I want my younger cohorts to pay a dollar for me.
Of course we want this system, but it’s survival is predicated on that transfer mechanism. The government does not buy corn with your social security payments and then hold it until you get old and give it back to you. All your entitlement gets you is an entitlment to take from younger generations when you are no longer able to work.
Personally, I’d rather save my earnings than give them to someone else in the hope that someone else will give them back to me. I’m not at Tea Partier, Deomocrat or Republican though so I’m f’d.
Articles supporting peoples’ tendencies to vote for money need to be discounted. Once you pay in, you are definitely going to vote to get paid out. We should really be asking where the money comes from. Of course, if we get constant economic growth then it will be cheaper for future generations to provide those payments but all you need is a little headwind to blow up the system.
“Pete Peterson Doesn’t Need His Social Security. He has said so himself many times…..
Like most of the granny bashers, Peterson routinely played fast and loose with the facts. For example, while warning about the poverty facing future generations, he suggested cutting the annual Social Security cost of living adjustment because the official consumer price index (CPI), to which retirees benefits are indexed, overstates the true rate of inflation. However, if the CPI really overstates inflation, then incomes are rising much more rapidly than the official data show; and future generations will be far richer than we could possibly imagine. (If income rises by 4 percent and the inflation rate is 3 percent, then real income has risen by 1 percent. But if our measure of inflation is wrong, and the rate of inflation is just 2 percent, then real income has risen by 2 percent.)
I recall hearing Mr. Peterson pontificate for an hour, completely unchallenged, on a major public radio talk show. At one point, he assured his audience, with reference to the solvency of Social Security, “trust me, there is no trust fund.” Mr. Peterson repeated this lie verbatim, just in case the meaning escaped his audience…..”
Dean Baker
http://www.truth-out.org/article/pete-peterson-doesnt-need-his-social-security
I am a tea party sympathyzer, and I would have polled the same as the majority did in the poll Yves cited. However if the poll question was changed to “would you support raising the retirement age for social security as part of an effort to balance the budget” – then I would have gone the other way.
Medical entitlements are the greatest risk to our budget. Tied for (distant) second place are military adventurism, bail-outs and other entitlements.
Wow. Lots of comments here.
Most Americans lack an understanding of NPV and unfunded or underfunded liabilities. Good luck.
This thread is so long few will probably see this post. If any wish to debate me, please bump me in coming days.
My position is simple. I view Social Security as a contract between the people and the nation. If a citizen surrenders his or her authority and possesion over the assets of the nation to a government in return for a promise of future considerations, then that person’s claim should have priority over all other claims on the nation’s assets.
Consider it in terms of a corporate bankruptcy (If indeed the nation is so broke it cannot pay it’s debts), There are always debt instruments which have prior claim on the assets and which get paid out first.
This analogy could be disected a lot more, in asking whether seniors be viewed as employees or shareholders of the nation, or ondering whether the nation actually had the authority to enter into debt obligations without consultation..But, I think most people will see my point.
Denying Social Security obligations amounts to national fraud, in addition to moral and financial bankruptcy.