Category Archives: Spending priorities

Does the Attack on Social Security by Conservatives Make Any Sense? Read What One of America’s Leading Experts on Social Security Has to Say.

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Max Skidmore

What About Social Security?

The Social Security Act became law in 1935 and created a system of “social insurance.” Workers pay into trust funds through deductions from wages, and employers match the workers’ contributions. Benefits are calculated on the thirty-five years of highest earnings. The maximum amount of wages subject to Social Security (FICA) tax for 2023 is $160,200. The system began to pay benefits in 1940.

Originally, the Act called only for retirement benefits, but through the years the system expanded to include payments to spouses, survivors, and the disabled. Thus, Social Security now provides life insurance, as well as retirement, and also protects against lost wages resulting from disability before one reaches retirement age.

Roughly a third of Social Security’s checks go to people younger than retirement age; that is, to survivors of deceased wage earners and to the disabled. The elderly are not the only ones who benefit from Social Security. Virtually the entire population does¾either through receipt of benefits, insurance coverage, or being freed from the necessity of caring for their elderly relatives.

Benefits are indexed to inflation, so that purchasing power remains constant through the years. Moreover, benefits continue through the lives of beneficiaries, however long they may live; one cannot outlive benefits.

As limited as the benefits are (and it would be an excellent idea and easily achievable to expand, not reduce, them), most retired Americans receive a substantial portion of their income from Social Security. For the average retiree, Social Security accounts for nearly a third of the total. More than a third of America’s retired elderly, in fact, count on Social Security for half or more of their total income. Substantial numbers of retired people have no income at all except for their Social Security. For millions of Americans, the benefits they receive from Social Security enable them to escape poverty and live in reasonable comfort.

Despite scare propaganda from groups who would profit from privatization, the system’s finances are sound. The highly publicized times for depletion of the trust funds vary from year to year, and are always based on “intermediate projections” from the annual reports from the system’s Board of Trustees. The trustees, themselves, caution in their reports that depletion years are to be considered only as estimates based on a huge number of assumptions. They are not to be taken literally.

Nevertheless, commentators  generally treat them as firm and unquestionable, and mistakenly refer to the trust funds’ impending “bankruptcy.”  This is nonsense. The projections are extremely cautious, and likely are quite pessimistic. “Bankruptcy” is not an appropriate term for a federal, tax-funded, program. FICA taxes in would continue to come in, regardless of trust fund balances. Moreover, the trustees always publish a “low-cost,” more optimistic, projection that tends to present the future of the trust funds as secure in the long run. The conditions that the low-cost options project are just as likely as the Intermediate projections to materialize. If conditions were to become less favorable to Social Security, however, it would be a simple matter to adjust tax rates, lift or remove the cap, etc. Dire warnings about “unsustainability,” are scare propaganda designed to frighten the public in hopes that they will accept unwarranted modifications to the system based on conservative ideology, not finances.

Social Security is remarkable, it keeps millions from poverty, provides them with independence, and all the while it operates at far lower expense (less than 1% for administration) than any other income-transfer system. Also, it is off budget. Lowering benefits would not affect the deficit or the national debt; it would merely build up bigger trust funds, while continuing to tax workers, but providing them with nothing for their taxes. It would not provide balance to the budget.

Why, then, is there any opposition to such an efficient and worthwhile system? Why are Republicans such as Senator Ron Johnson urging that the system should require re-authorization every year, or else vanish?

Johnson, of course, will never be considered as among the more able or thoughtful senators. Senator Rick Scott, though, until this November, was chair of the National Republican Senatorial Committee, an official Republican organization. He proposed that Social Security and Medicare be authorized only for five-year periods, ceasing to exist if Republicans gain control and fail to re-authorize them.

Most egregious of all, and openly revealing the obvious betrayal by Republicans of the decades-long consensus regarding the value of Social Security, are the bullying threats from Senator John Thune. Thune currently is number two among the hierarchy of Senate Republicans. It has just been announced that he intends to hold the debt ceiling hostage. That is, he intends to block any elevation of the debt ceiling unless there are cuts to Social Security. This reveals the reckless cruelty of current Republicans. Incidentally, it also reveals that the dangers of the “debt ceiling” that performs no useful function; it saves not one dollar, and creates opportunities to cause chaos. It only permits irresponsible politicians, such as Thune, to create mischief.

Some of the opposition arises from investment bankers and other wealthy groups who might benefit from privatization. Most, however, comes from extreme conservatives who simply do not like government programs, regardless of their many vital functions. Do they not recognize how cruel it would be to slash the incomes of those who count on it, including those of very limited income?

The cruelty is the point. Many conservatives do not ignore the cruelty that they would cause; rather, they welcome it. Ronald Reagan began to redistribute income upward, and his party has since continued to do so with a vengeance. Until recently, they generally kept their intentions hidden. Now, though, they are openly expressing their hostility to the less fortunate of their constituents. Republicans no longer find their motto embarrassing, no longer do they find it necessary to disguise it. It is, “Soak the poor, and reward the rich,” and clearly and overtly is a common theme of their proposals. They recognize few, if any, “deserving poor.” To be poor is to be fair game. Anyone who wants to avoid institutionalized cruelty should just go out and get rich.

As the Herblock cartoon in 1964  put it (portraying the message from Republican presidential candidate, Senator Barry Goldwater), the poor should simply go out and inherit department stores.

President Obama’s War Speech

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President Obama ended his war speech tonight by saying, “We as Americans can come together behind a common purpose.”  He also said our “cause is just” and “our resolve is unwavering.”  If these phrases are more than soaring rhetoric, I have a few questions:

When will this military venture become something more than a rich man’s war and a poor man’s fight?  

Working class men and women fighting these wars (Iraq and Afghanistan) are either killed or broken mentally and physically through repeated deployment to these god-foresaken battlefields.  I don’t see the upper classes and politicians who are making war decisions sending their children to this particular war.  If  Afghanistan is so important to our national security, then we need to begin the draft now.  I am increasingly disgusted by the sentimentalizing, romanticizing, and patronizing of our “brave men and women in uniform,”  many of whom are in uniform because they needed a job.  Does this self-indulgent society really care all that much about the mental and physical damage and stress experienced every day by the troops on the ground in Afghanistan?  Or is it “out of sight, out of mind?”

When will the upper classes begin paying their fair share of taxes so that our quality of life can stop its decline due to war spending?

If the middle classes and working classes continue to pay a disproportionate share of the taxes needed to fight this war, and the upper classes continue to profit while bearing a lower tax burden, that won’t seem to me to be “coming together behind a common cause.”

What happens if an Afghan Army and Government are not able to pick up the fight in 18 months?

There is an old labor movement refrain to promises from politcians:  “We will get pie in the sky when we die by-and- by.”  It is likely that we will attempt to buy off villagers (the Petraeus approach), sacrifice the lives of several hundred American troops and god knows how many of the villagers.  We will have hundreds of Americans with severe injuries that most of us will never see…and wouldn’t want to look at anyway.  At the end of 18 months, we will be coming out. Yea right.

Fight Privatization of Kansas Government!

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Beware of Privatization of Government Services

In response to today’s editorial, “Privatization caution,” I submitted the following letter to the Lawrence Journal World:

A move is under way to privatize government services and jobs in Kansas.  The so-called Reason Foundation (heavily funded by the Koch Billionaires of Wichita) is pushing this irrational idea.  In pushing their wacky form of right-wing libertarianism, the Koch oil magnates and other far-right billionaires will claim that their purpose is economy and efficiency in government.  Don’t fall for this.

Privatization has historically cost taxpayers more than services provided by government employees and has essentially lined the pockets of executives and investors.  If you don’t believe this, just consider the costs of outsourced defense/war functions.  Logistics and food services provided by KBR are far more expensive than when these services are provided by the military.  One small example:  The Army Times reported on their website on Nov. 1, 2009, that Pentagon auditors are attempting to deal with KBR’s “disjointed processes” and “weak accounting practices.” 

While troop levels are dropping off in Iraq, KBR’s level of employment has remained at the January 2008 level (17,000 employees).  During my service in the Marine Corps in the 1960s, I paid the same dues as every other Marine had paid up to that time.  I served on mess duty.  Cooking and other food services were provided by sergeants, corporals, and privates.  You can bet that this was done far cheaper than it would have been done by KBR.

Consider Medicare Part C (Medicare Advantage Plans).  According to the Center for Medicare Services, the federal government pays private insurance companies on average 14 percent more for providing coverage to Medicare Advantage beneficiaries than it pays for the same services to beneficiaries in the traditional Medicare program (20 percent more in some parts of the country).

Examples of these types of rip-offs of taxpayers abound.  The right-wing, anti-government libertarianism promoted by the Kochs has, as its primary objective, the destruction of government programs.  Furthermore, the main result of privatization is transfer of wealth from the bulk of U.S. taxpayers to the top 5 percent of wealth and income classes.

Legislators are being irresponsible when they hand your government, and in effect your taxes, over to the likes of Halliburton, Cigna Insurance, and the Correction Corporation of America.  One Republican legislator was quoted in the Journal World on Nov. 30 as telling the Reason Foundation representative, “You had me at hello.”  This is a mindless bending to the will of a powerful private interest with selfish motives that are contrary to the best interests of the people of Kansas.

Are We Setting the Elderly Up for Benefits Reductions, Lower Quality of Life?

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Beginning with the Reagan Administration, there has been a steady, incrementally-successful movement under way to rig the economic and political system against the interests of the bulk of the U.S. population.  People in perhaps the bottom four income quintiles are now paying a disproportionate share of taxes in comparison to the top 20 percent, which amounts to an income redistribution toward the wealthy classes.  At the same time, most Americans are receiving fewer benefits for the taxes they do pay, which is resulting in a lower quality of life as measured by health care availability, educational opportunity, employment income and housing affordability.

At this time, two targets of the plutocratic, ruling class are Medicare and Social Security.  Pay attention to the steady “drum beat” of dire warnings about the coming of the budget-busting, elderly hoard.  It is important for all citizens to inform themselves about the demographics of the U.S. population and the realities of Social Security and Medicare financing.

An Aug. 17, 2009, column by Ross Douthat–one of a bevy of conservative columnists for the New York Times (along with David Brooks and Tom Friedman)–is one good example of the propaganda perpetrated on an unsuspecting public by conservatives. In an ageist, “blaming-the-elderly,” ill-informed, insulting column, “Telling Grandma ‘No,”  Douthat put out the following false information:  “…by 2030, there will be more Americans over 65 than under 18….”

We have to be on watch for this type of propaganda. 

Here is the truth:

According to the Population Division of the U.S. Census Bureau, by 2030, the percentage of our population under age 18 will be 23.51%, while the percentage of those 65 and over will be 19.3%.  After 2030, these percentages will change very little. By 2050, those under age 18 will constitute 23.14%, while those 65+ will account for 20.17% of the U.S. population.  This leaves approximately 57% of the population as potential wage earners who will be funding their own future benefits of Social Security and Medicare.

This should hardly be viewed as a major, unabsorable shock to the U.S. budget. Indeed, it should be much much less of a problem for our country’s coffers than continuing to finance the folly of war, bank bailouts, give-aways to the pharmaceutical industry and the military-industrial complex welfare programs.

(I will write more about the Social Security and Medicare Trust Funds in later posts.)

Blaming Elderly and Poor Americans

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The Nov. 21-27, 2009,  issue of the Economist was devoted to the U.S. budget deficit–its causes and solutions.  I found it disconcerting that this conservative, business-oriented publication chose to focus on programs for the elderly as the main causal factor in our current 13 trillion dollar debt.  For instance, on page 13, an editorial writer had the following to say: 

“America’s deficit problem is in essence a spending problem, so spending must bear the brunt of adjustment.  An aging population and health care inflation are inexorably driving up the cost of the country’s three big entitlements: Social Security (pensions), Medicare, and Medicaid (health care for the elderly and the poor, respectively).”

This is reminds me of the blame for U.S. budget woes heaped on welfare recipients during the Reagan and Clinton Administrations.  And, indeed, a punitive so-called “welfare reform” act was passed during the Clinton Presidency.

Nothing was said in the Economist about spending on the military-industrial complex, the trillion or so that was gifted to Wall Street gamblers, tax cuts for the rich, handouts to the pharmaceutical industry, and on-going wars of choice–just to name a few other drains on the Federal budget.  In terms of adjustments, the Economist might have mentioned some of the current proposals to tax financial transactions, taxing hedge fund managers as employees rather than treating their income as capital gains, increasing the capital gains tax, and so on.  Why does the debt problem have to be solved, again, on the backs of the elderly and the poor?

Warfare or Health Care?

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35,000 More Troops in Afghanistan…
Is President Obama About to Make a Huge Mistake?  

Will we get warfare or health care in the Obama Administration?  If the media is correct in reporting that President Obama is planning to announce a major military escalation, perhaps a whole new war, in Afghanistan, then that is the question.  Will this Country pour another $50 billion per year into an unnecessary, misguided war that will in all likelihood end badly?    

How much militarism can the U.S. afford?  How many U.S., mostly working class, troops are we willing to sacrifice in worthless military ventures that have nothing to do with the safety and welfare of our population – or any other population for that matter?  Have we learned nothing from Viet Nam and Iraq?  It is mind boggling to see the seemingly intelligent, liberal Barack Obama bend to the will of a general that should have been fired for insubordination when he undermined the President in public.   

I sometimes wonder what could have become of Lyndon Johnson’s Great Society had he not made the mistake that President Obama is apparently ready to make.  Congress can stop this. 

Call Congressman Moore and/or Congresswoman Jenkins and tell them to vote against this misadventure.