It's unclear what effect Romney's decision to add Rep. Paul Ryan to his ticket will have on his candidacy, if any. But the choice certainly has had a salutary effect on the Obama re-election campaign.
Naturally, it sparked a full-throated debate on the infamous Ryan and House Republican plan to turn Medicare into a voucher, and force the most vulnerable -- the elderly, the disabled, and seriously ill -- to pay thousands more for health care out of pocket. (The nonpartisan CBO put the estimate at about $6500 per person.) Democrats generally can only be delighted as Romney and Ryan and House members struggle to explain why they have to destroy Medicare to save it. ("It's a great reform, but don't worry it only applies to folks under 55 who might not be watching.")
Equally important, the debate has led the president and vice president to become vocal defenders of Medicare, Medicaid and Social Security -- the centerpieces of the social compact we make with one another, and the glittering crown jewels of the Great Society and the New Deal.
First, the president made it clear that his Medicare reforms -- unlike those passed by the Republican House and advocated by Romney/Ryan -- don't cut guaranteed benefits. Instead they take on the entrenched hospital, insurance company and doctors lobbies to exact savings. This focus -- initiated in Obamacare -- is vital if we are to fix our broken health care system which now threatens to bankrupt everyone -- families, companies, government at all levels.
Then Joe Biden announced yesterday that the ticket would guarantee no changes in Social Security. "I guarantee you, flat guarantee you, there will be no changes in Social Security," Biden told patrons of the Coffee Break Café in Stuart, Virginia, "I flat guarantee you."
This is good policy. Social Security is not in deficit, and has not contributed to our debt and deficits. Addressing its currently projected long-term shortfall (unlike any other government program, CBO reports it is fully funded through 2038) should not be folded into the deficit hysteria triggered when Wall Street excesses blew up the economy, lifting our debt from 40 to 70 percent of GDP. Any necessary reforms -- like lifting the cap on payroll taxes so that millionaires like Romney pay the same rate as their secretaries -- should be the product of a bipartisan commission focused on preserving Social Security, not paying for Wall Street's mess.
It is also good politics. With companies abandoning pensions, home values -- the leading source of middle-class savings -- devastated, and fewer families able to save adequately for retirement, more and more Americans will rely on Social Security's guaranteed benefits to provide a lifeline in retirement. The program enjoys popularity across the spectrum -- from both Republican and Democratic voters, from conservatives to moderates to liberals. Democrats are well advised to treat Social Security as a sacred trust.
In contrast, both Romney and Ryan supported the Bush plan to privatize Social Security, which would have added trillions to our deficits and would devastate retirees when the stock market tanks. It was so unpopular that Bush later regretted making it the priority of his second term.
Biden's pledge, of course, offends the conventional wisdom among Washington's chattering classes that favors a "grand bargain to get our books in order" in which "everything is on the table." What that translates into is that Democrats agree to cuts in Medicare and Social Security, in return for which Republicans agree to "tax reform" that lowers tax rates but raises more revenue by closing loopholes.
This is the formulation of Deficit Commission co-chairs Alan Simpson and Erskine Bowles that was rejected by their commission, including Paul Ryan, who led House Republicans members in opposition. It also defined the deal discussed by President Obama and Republican House Speaker John Boehner around the debt-ceiling debacle, the terms of which would also have been rejected by Ryan and his Tea Party colleagues in the House for envisioning increased tax revenues.
Biden's "guarantee" to defend Social Security now effectively takes Social Security off the table. Democrats gathering in Charlotte at the national convention should ensure that this language is written into the party's platform. The president would do well to reaffirm it in his speech to the convention as he lays out the fundamental choice we face.
It's hard to imagine what Romney was thinking when he selected Ryan as his running mate. Ryan is the intellectual leader of the House Republican Congress that has racked up a well-deserved record low 9 percent approval rating from the American people. As former Virginia congressman Tom Perriello said, "Mitt Romney is the only person in America who looked at the way this Congress is behaving and said, I want the brains behind that operation."
But Romney's choice has had good effects. It elevated the debate over Medicare and Social Security, and as Joe Biden declared, moved Democrats to stand once more as the defenders of these vital foundation blocks of our social compact. And for that, Romney has our deepest gratitude.
Follow Robert L. Borosage on Twitter: www.twitter.com/borosage
If you want to extend retirement because we are living longer, I want to go back to the days of 2% on the first $3,000.
Don't waste your vote on either of them, instead vote straight third parties.
Not the Vice President, not the President, not the Congress, not the Supreme Court, not AARP, not Bernanke ... NOBODY ... has the power to make good on that guarantee. Saying that was just electioneering hot air (a Biden specialty), "buy your vote by giving you a false sense of security", blah, blah, blah.
Social Security and Medicare will continue as long as we can continue to borrow the money at low interest rates from China to finance our benefits. Then Social Security and Medicare will last a few years longer, as the Federal Reserve simply begins printing and dumping money (to pay benefits and the interest on the debt we owe to China). And by that time, Biden will no longer be in office, so (like Clinton) he'll be able to claim that everything was just fine when he left.
And once again, the joke will be on We The People. We got fooled by the DotCom bubble. We got fooled by the housing bubble. We're being fooled by the student loan bubble. And here we are, crowding our way to the front of the crowd for the opportunity to be fooled once again.
Shame on us.
Social Security is paid for with FICA taxes paid by workers from their wages with an equal amount contributed by their employers, NOT borrowed money. Look it up.
To continue payroll tax holidays by moving money into the trust fund from the general fund means Social Security will lose its status as a protected benefit owed to every working American and instead become politically vulnerable, just like any other government program.
Charles Blahouse, one of two public trustees for Social Security and a research fellow with the Hoover Institution said: “It’s a grave step for Social Security, and the program both financially and politically will be on a lot rockier footing.”
Robert Reischauer, the other public trustee and president of the Urban Institute, said "extending the payroll tax cut could, if it continues for a substantial period of time, undermine one of the foundational arguments that makes the Social Security program inviolate.”
Since Social Security began, it's been premised on a simple contract: Americans pay into the program’s trust fund over years of paychecks through the payroll tax. In return, when they retire, they receive monthly benefits.
The payroll tax cut changed that. Instead of being a protected program with its own stream of funding, Social Security, by taking money from general revenue, becomes more akin to other government initiatives such as Pentagon spending or clean-air regulation - programs that rely on income taxes and political jockeying for support.
Now, Social Security will have to compete with every other program, whereas before it had its own dedicated revenue. It broke the firewall that had always existed between the trust fund and the operating fund.
President Obama and the Republicans will say that the payroll tax holiday is all about stimulating the economy. But don’t be fooled. According to the Center for Budget and Policy Priorities,extending the Making Work Pay Tax Credit, is a much better, more targeted stimulus. See “Payroll Tax Holiday a Poor Stimulus Idea,” available at this link.
And the Making Work Pay Tax Credit poses no threat to Social Security. The innocent-sounding payroll tax holiday, on the other hand, will lead inexorably to killing Social Security. Let me explain:
Sixty members of the Senate are unwilling to raise taxes by 3 percent on the $250,000 and first dollar (and all those dollars earned above $250.001) of those making over $250,000 and by 1.6 percent more (for a total of 4.6 percent) on the $384,860 and first dollar {and all those dollars earned above $384,861) of those making over $384,860. They are even unwilling to spare everyone making less that one million dollars any increased taxes and simply raise taxes by 4.6 percent on the $1 million and first dollar (and all those dollars earned above $1,000,001 of the nation’s multimillionaires and billionaires. (I say multimillionaires because anyone with a net worth of a few million dollars is not making an annual income of over one million dollars.)
KEEP READING
Govt debts and deficits are good! They mean the same as private sector wealth and savings respectively.
Social security is owned by the people and not the govt. Here debts and deficits have the normal meaning. It is not actually required and the govt can deficit fund as it does all other govt agencies.
Borosage is mixing pluses and minuses. This is an example of nonsense economics.
[Banks create dollars by lending, and dollars are destroyed when these loans are paid down. The federal government does not create or destroy dollars by borrowing. It creates dollars by spending and it destroys dollars by taxing.]
In summary, the words “debt,” “owe,” “borrow,” and “lend,” when describing personal (monetarily non-sovereign) finances, involve the creation and destruction of money. Those identical words, when describing federal finances, involve nothing more than an equal exchange. No money is created or destroyed." from
http://rodgermmitchell.wordpress.com/2011/12/24/why-federal-debt-is-not-debt-and-federal-borrowing-is-not-borrowing/
This is the same reason for saying that national debts NEED NOT and CAN NOT be paid back. The concept is nonsensical.
Do you live in Greece by any chance?
http://rodgermmitchell.wordpress.com/2012/08/14/mathematical-proof-that-deficits-should-be-increased-send-it-to-your-favorite-debt-hawk/
and
To understand economics, you must understand Monetary Sovereignty. Most economists and politicians don’t. Monday, Sep 7 2009 at
http://rodgermmitchell.wordpress.com/2009/09/07/introduction/
Social Security benefits are calculated with a formula based on how much you pay in. That is why there is a cap on income that is subject to FICA taxes. And why the cap cannot be removed, only increased. Currently, the cap should be increased slightly to meet the requirements of the original guidelines.
Because if people who pay more, get more, then how does raising the cap help in any way?
Get more is problematic because Social Security is suppose to pay out benefits based on your contribution. It is not suppose to be welfare. The problem is that high-wage earners face a bias in the formula that makes their expected benefits per dollar contributed substantially lower.
The Trustees of the Social Security system disagree. AP just released an article that debunks the non-sense about SS not adding to the deficit. You may like what the man says, but when you trust an agenda-driven think-tank over the Trustees of the system you want a feel-good conclusion rather than an informed opinion.
The Trustees have said (page 15 of their report) the system has a shortfall of 20.5 trillion dollars. They project that IN A GOOD ECONOMY people as old as 63 EXPECT to be affected by the exhaustion of the Trust Fund. It is irresponsible to ignore those facts.
No it didn't. The AP article clearly states that this is referring to future debt and deficits, as discussed above. Perhaps we also shouldn't believe the opinion of the agenda driven "Joe Economist" about what articles are actually claiming versus what he is stating they claim.
The statement you quoted from the author above is entirely accurate. The author above never stated that there was no shortfall, nor that social security was something that shouldn't be address, did he?
The Trustees said that the system has a shortfall of 20.5 trillion. This includes the cost of the promises made to future retirees. Are you calling the Trustees agenda driven too?
The core problem is whether you think future benefits should be costed today. The Trustees say yes (they are responsible for the system's financial safety). The government as a whole says no - according to the Supreme Court future benefits in Social Security aren't guaranteed hence it isn't a present obligation.
But even if you agree with the government that Social Security benefits aren't guaranteed, the Social Security Trustees Report says that the system recieved a $103 billion dollar subsidy in dollar-for-dollar deficit spending in 2011. Beyond that, the system has enjoyed subsidies (again dollar-for-dollar deficit spending) since the mid-1970s in the form of the EITC, which literally pays people to pay their payroll taxes.
You want to play games with the numbers. My view is that millions of people depend upon the system and anything less than GAAP accounting is going to end in misery.
You are either independently wealthy, a member of the 1%, or a free-market ideologue-- or too young to know better!
Also, study SS ambit more-- how much you get out of it, does depend on how much you've put into it!
The "crisis" in Social Security is, in part, a right-wing fiction designed to spread fear and garner their support for an anti-government agenda.
http://www.miamiherald.com/2012/08/11/2946288/social-security-not-deal-it-once.html
We know that the best way to save this program is to have the money deposited into individual accounts instead of a general collective pool, where the money belongs to the individual, and invested in US Savings bonds.
By placing people's money in their own individual account we can insure that everyone who pays into the system will be able to collect their fair share, and the money left when they pass can be left to their heirs.
Putting money into your own account doesn't help you unless you also bail-out on the benefits of existing retirees. If you put your payroll taxes into a private account, how will you pay for existing benefits.
If you say we will finance benefits out of the general fund, you are no better off. You simply have changed the pocket from which the money is taken. If you don't pay benefits, you haven't made yourself better off, you simply have made retirees worse off. Privatization fixes nothing.
The vast majority of people like you don't want into a privatized system - you want out of Social Security. That makes sense. It is easier to fix Social Security than add a layer that does nothing beyond make you feel better about your payroll taxes by making you hate income taxes that much more.
Yes, I would like to opt out of ss. If I could, I would be able to retire 5 years earlier, let someone else have my job and retire with a real nice pension.
That kind of transition is always incredibly tricky. However, prolonging the unsustainable only increases the internal pressures on the system. "Guaranteed benefits" cannot be sustained unless we commit to a continually growing population.
"Social Security is a federal agency. If you go on line to federal agencies, you will see a list of about 650 agencies. Not one ever has gone bankrupt. Not one ever has bounced a check. Yet, only two of these agencies is “supported by” (actually, limited by) FICA or by any other tax collection: Social Security and Medicare.
Why was this limit placed on Social Security and Medicare? Both programs were created when the U.S. government was monetarily non-sovereign. So, Congress needed to be convinced these two programs wouldn’t cost anything, and that these two programs were like private insurance policies, in which people paid for the benefits they received. That was the only way to get Congress to create Social Security and later, Medicare.
Today, because the U.S. now is Monetarily Sovereign, FICA not only is useless, and financially harmful, but it creates the wrong impression about Social Security finances. Because of FICA, some people believe Social Security will run out of money. " from
http://rodgermmitchell.wordpress.com/2012/03/26/monetary-sovereignty-for-young-people-part-4-social-security/
The Special Treatment of capital gains needs to END. Lower income taxes ... exempt from FICA ... this is why the middle class bears a heavier tax burden than the investment class.
ALL investments with a positive ROI yield "income" ... but certain types are subject at most to a 15% capital gains rate while others are taxed at your marginal income tax rate.
WHY does the government offer an added incentive to trade stock than to invest in your community via an S&L? THAT sounds like socialistic economic planning for one form of income and investment to be tax incented versus another.
Social Security was an "insurance" program, not a "savings" plan ... and it is closer to a traditional company pension plan than a savings plan. In traditional company pension plans, a portion of today's earnings was used to pay retirees. There is a hitch, of course, if the number of retirees is great and the number of current workers is small ... so companies had to pre-fund pensions to some degree by putting money aside for that purpose.
Private industry being as "efficient" as it is, of course, many companies did not set enough resources aside to pay promised future pensions and then were unable to pay them from current funds.
Companies like AT&T and Exxon currently have significantly underfunded pension plans that will require them to put more aside in the future in order to catch up ... assuming their businesses don't go away and they stick the government PBGC with the expense.
The government faces the same issue with its supplemental pension plan and needs to do what AT&T and Exxon need to do ... increase funding so it can continue to meet its obligations.
You do not have an individual account with SSA with "your" savings in it.