Will President Obama defend Social Security from the folks who want to plunder it? That's the question Bill Grieder poses in a critically important article in the Nation Magazine.
We'll get an early indication this Monday when the president convenes a "Fiscal Responsibility Summit," designed as he put it, "to send a signal that we are serious" about America's long-term deficits." The focus will be on "entitlement programs" like Social Security and Medicare. "Everything will be on the table," the budget hawks will get a platform, and rumors now suggest the president may announce a commission designed to "fix" Social Security.
The president is surely right about the need to address America's long term finances. Doing so now is dicey, for the president has to convince Americans -- and the Congress -- on the need for more deficit spending: to pay for the bank bailout, finance mortgage relief and eventually a second stimulus to get the economy going. The danger -- as Roosevelt discovered in the Great Depression -- is to do too little and stop too soon, seeking to balance the budget before the economy regains its feet. But a long term discussion of America's finances now could help Americans look beyond the crisis, defining where we need to go and how, in the long term, we'll pay for it.
Progressives, of course, are worried about Obama falling for a trap set by the budget hawks, conservatives in both parties, the beltway establishment and financial elites, personified by Pete Peterson, a billionaire Wall Street baron. Peterson is spending a fortune trying to terrorize Americans about long-term deficits to justify hacking at Social Security and Medicare. Peterson, who made his fortune on Wall Street, never raised a word about the dangers of hyper leveraged finance houses gambling other people's money. He never expressed qualms about the leveraged buyout artists who were using debt finance to rip apart companies. He didn't fund an all out effort to stop Bush from raiding the Social Security surplus to pay for tax cuts for the rich. But now he wants folks headed into retirement who have already prepaid a surplus of $2.5 trillion to cover their Social Security retirements to take a cut tor work a few years longer to cover the money squandered on bailing out banks, wars of choice abroad, and tax cuts for the few.
Will Obama fall for this ploy? Not likely. In fact, his position on entitlements has been spot on. Social Security, he has argued, is basically sound, funded far into the future. If it needs more funds decades from now, lifting the cap that now cuts off payroll taxes at $102,000 would take care of the problem.
The real deficit problem, as Obama has argued, is caused by soaring medical costs. This isn't a problem of "entitlements" like Medicare and Medicaid alone. It's the result of our broken health care system that wastes over a third of its costs on administration, puts no limits on the costs of drugs, and does a terrible job limiting costs. Other advanced industrial countries spend far less of the GDP on health care while insuring all their people and producing better health results. Solve the problem of soaring health care costs and you solve America's long term federal budget deficits. Fail to solve it and you bankrupt everything - families, companies that provide health care, state and national governments.
Obama gets this. That's why he's insisted on universal health care reform, and why he demanded a downpayment be made in the stimulus on accelerating the transition to computerized medical records and comparative treatment research.
So if the president sticks to his campaign pledges, the summit may provide a platform for the distortions of the budget hawks, but it won't do much damage.
What we really need however is a true fiscal summit: a long-term assessment of our needs and our finances to begin framing a real "Grand Bargain" to pay for the investments we need.
That would start with what we consider to be the basics. I'd take the measure of a government that works that Obama defined in his inaugural address: a government that "helps families find jobs at a decent wage, care they can afford, a retirement that is dignified."
Meeting those basic goals will require developing an expanded public social compact to replace the promises that the corporations have shredded - particularly affordable health care and a secure pension above Social Security. It requires expanded public investment in areas vital to a vibrant economy and democracy: notably world-class education, 21st century infrastructure, and investments to fuel the transition to new energy.
Despite our current travails, this is still a rich country. We can afford to pay for this.
Indeed, successful health care reform would save money. The gold standard Lewin Group estimates that Obama's plan would save some $1.04 trillion over ten years.
New priorities could provide hundreds of billions more. For example, what if we decided to sustain the world's strongest military by spending as much on our military as the next 10 biggest militaries combined? As Bill Greider reports in his forthcoming book, Come Home America, that would save an estimated $180 a year to invest in areas vital to our future.
Given America's gilded age inequality, which has been worsened because of wholesale tax cuts and loopholes for the wealthy, progressive tax reform is a moral imperative. Reform of the estate tax - with a complete exemption for fortunes up to $2 million per person ($4 million for a couple) would provide $60 billion a year. Repealing the Bush top end tax cuts for households earning over $250,000, as Obama promised in the campaign, provides another $43 billion a year. A small financial transaction tax on the buying and selling of stocks and other financial products -- a vital reform to reduce excessive short term speculation -- could generate $100 billion a year. Ending overseas tax havens could generate $100 billion a year from the unpatriotic corporations and wealthy (all figures from Chuck Collins of Responsible Wealth and the Institute for Policy Studies).
This doesn't claim to be the last word. We can and should argue about the elements of any grand bargain. But everything should be on the table, not just "entitlements." What are the promises we will make to one another to create a decent society? What are the investments we need coming out of this crisis to sustain the American dream in a global economy? And then, how do we pay for them in the most equitable and efficient way? Now that would be the Fiscal Responsibility Summit we need.
Instead we see a hodgepodge of spending which will certainly have value but will also entail the usual corporate corruption, political favoritism, waste and fraud. There was a chance to slay both of the monster domestic issues, the economy and health care, with the same stone. I'm still waiting for our breakthrough president to show some breakthrough leadership.
People decided to vote for the cool guy though. They liked the way he speaks, so that trumped Health Care.
They must be protected because of their contributions to a solvent Plan. The fact that Social Security has been plundered (or attempts to plunder) by some does not change the equations but does mean more protection and solvency must be rebuilt!
It has given us supply-side trickle down economics and the dismantling of the American dream not to mention the dismantling of the American infrastructure. It has also given us free-trade sending our good jobs to the Asian dragons. As a result, we have become a beggar nation in which our number one employer is Walmart, when it used to be GM.
Voodoo economics has, in addition, given us balance sheet tricks and tax loopholes for the rich and let Wall Street leverage 40 to 1. It also made Bernie Madoff. In light of this dismal picture, Pete Peterson is a vulture who now wants to devour what is left of the American middle class, viz., its Social Security Insurance policy.
On the "wealth redistribution side" I can name dozens of programs that effectively robber Peter to pay Paul. Some broad examples are the Great Society programs that created our modern welfare state, farm subsidies, corp subsidies, pork projects (bridges to nowhere and the like) and the list goes on.
So you maybe you can tell me what has had more influence on the economy: ever expanding government and wealth redistribution or some mythical singlular policy action that alledgedly happened on Regan's watch. All he did was reduce the tax rate. And in the ensuing years the government not only collected more tax dollars, it rose to windfall levels. Unfortunately, the government still managed outspend the largess.
it is not voodoo...it is very simple....you cannot spend more than you have and hope to sustain an economy over a long period of time.
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“Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts,” Krugman writes. Krugman notes that Reagan “followed his huge 1981 tax cut with two large tax increases.” Here’s the skinny on Reagan Tax Increase number 1:
The whole story:
http://www.dailyhowler.com/dh060804.shtml
Maybe you should read your history rather than revisionist history....the Reagan tax cut of 1981 was followed, under Reagan, by the biggest tax increase in American history, in terms of taxes raised as a proportion of GDP, and then followed by additional tax increases every year that Reagan was in office until the last, mostly on the backs of the middle class.
Was government made smaller under Bush...and what did ever happen to the budget surplus left by Clinton?
Next you'll be repeating the idea that FDR prolonged the Depression when, in fact, FDR slowing down spending to try to balance the budget at the behest of the Conservatives in 1937 is responsible for that.
As soon as I started paying taxes. I have the "right" to demand that if I paid social security under certain terms that those terms will be honored. I have the "right" to demand that if my dollars go to bail an investment firm that terms be attached. I have the "right" to demand if my taxes go toward health care that I get at least my fair share. Just because it's government does not exempt it from fair play. If you invest in a private company you have the "right" to demand P&L and Balance Sheets, the "right" to demand they're fairly audited, and the "right" to vote your shares.
This is another of the increasingly common tweedlee-tweedledum arguments. That it's "generational theft" to invest in America but it's not if spent on wars and tax cuts. We are a social animal, people, and have been since before we emerged from our caves. We need each other, we need societies.
If you want pure capitalism, don't look to republican ideals. Look to Burma, or Liberia, or the Congo - where people have no "right" to demand anything and those with money or power simply take it, and the citizens have no "right" to demand otherwise.
On a purely fiscal level, souldn't our focus be on moving people from being tax USERS to tax PAYERS? Makes sense to me, but, then, that's just me...
Forget about what rights you think we may have, we have a moral obligation to stop consuming government services and to start paying down the national debt - we certainly don't have the right to rack up still greater burdens.
Bill Gates probably carries more absolute debt than I do, but as a percentage of income, the burden is miniscule compared to mine.
As a country, we had a debt that was over 100% of GDP coming out of WWII. Now it's about 40% of GDP, probably headed to 60% with the stimulus etc. What we want is a situation, when the economy is moving again, where the debt is coming down as a percentage of GDP -- even if it is going up in absolute terms. What gets dangerous is when it is rising as a burden on the economy even when economy is growing. (In a downturn like this one, we need deficit spending and a rising debt burden to put people back to work and get the economy moving.
While these Investment/Banking CEO'S were making millions in income each year for years they were also gambling with trillions of dollars of other peoples money because the profits were so high.
It was obvious during these hearings that these Investment/Banking CEO"S didn't have a clue as to how, why or when they were ripping off millions of honest citizens simply because they didn't give a damn or had an ignorance is bliss attitude as long as the profits kept rolling in.
These very expensive CEO'S had all the sound judgement, logic, reason, common sense, honesty and understanding of basic math and how the markets actually work as a turnip would.
Considering the fact that it was America's Investment/Banking CEO'S that caused this world wide financial meltdown I am surprised that these other countries haven't demanded that these trillion dollar swindlers be prosecuted and jailed for life. Apparently America's own legal system has no interest in bringing these trillion dollar thieves to justice.
It is a mystery to me why other countries did not have regulations in place to prevent such financial meltdowns.
Of course our country has a totally corrupt, criminally incompetent SEC and the 4 stooges of high finance: Greenspan, Cox, Paulsen and Bernanke who still believe that unregulated greed is a great idea!!! . Can you believe that people still listen to these turnip brains advice.
I say the blame is with the SEC, the Fed and Congress for bending the rules every which way they could and the poeple who signed up for loans they knew they could not afford.
You toss out "ideas" like raising the cap on payroll taxes like it's no big deal.
I find this kind of insane thinking horrifying. It's not an answer it's BS!
I also find horrifying your idea that we can "afford" paying more taxes because we are a rich country.
I'm sure we could "solve" ALL our problems by taxing the hell out of everyone.
Are you kidding?
Forget Social Security. No one under the age of 45 is even going to get it. By the time those of us in that age group reach retirement they will have raised the age to retire to about 80.
This would solve a lot of money problems too because most of us will be taking a dirt nap before we can collect any of the money we payed in!
Problem solved!
I've asked this simple question a lot on HuffPo lately, and I never get a response... why? It's simple enough, if we lower taxes and that's good, zero must be better, right? If not, what's the bottom line that would make the cut-all-taxes-all-the-time crowd happy? Just askin'....
:: sound of crickets chirping ::
I'll tell you where, there is none.
You have been duped into this whole tax idea. You should ALWAYS hate paying taxes.
The government is spending your hard earned money any way THEY see fit...
You can think it's OK if you like but not me.
Taxes are nothing more than a penalty for making money
Is it a crime to make money?
Why should I work my butt off just to hand it over to Uncle Sam?
The way I see it, the more I pay in taxes the LONGER I have to work just to get back to square one.
As it is already I'm working up to about April EACH YEAR just to pay my income tax!
You think I should pay more?
I suppose, like the old saying goes, we should be happy we're not getting all the government we're paying for.
What gives you so much confidence in the government?
Those of us who have no confidence in SS will be far better off either way because we will see to it that we are taken care of ourselves...
This is good advice under any circumstances.
Then, if we actually get any SS, we can be pleasantly surprised.
But you go ahead thinking government programs are so amazing, the rest of us prefer not living in a world of make believe.
The early recipients got many times their contributions (although many died before they collected anything - the contributions were and are not allowed to be part of ones estate) back the later ones will get a progressively poorer return. That is the classic pattern of a ponzi scheme. I am 47 and so I will get something but the reuturn will be substandard. There is a good chance that I will have to be older than today's recipients and will have to pay an increased share of my income.
In the end we either have to increase our economic production to cover the distribution or we have or lower our standard of living. There is no free lunch here. Read the CBO reports on this.
I had a conversation last year with the owner of a large truck repair business, some farmers and truckers that were in his shop as customers, and a supplier rep or two. We were sitting around and politics reared its ugly head. I asked the group this:
Without consideration of how anything might be paid for or implemented, would you agree with the following:
Every citizen has the right to basic no-frills health care
Every citizen has the right to basic education, free of charge, up to maybe an Associates Degree or tech school
Every citizen has the right to basic housing
Every citizen has the right to make enough money to support themselves and their family
Each and every one agreed those would be good things. The location? The Oklahoma Panhandle, probably the most conservative area of the country.
No one can tell me we can't do this...
I think I have the "right" to make a million bucks jumping center in the NBA.
Now... Having said that, I want YOU to make it happen.
The only "right" you or me have is the right to remain silent.
Look what happened to the "projects" as one small (disasterous) example.
http://eye-on-washington.blogspot.com
I wish I could blame the Republicans for the mess we are in. Democrats have to wake up, too.
The GOP has taken the position that not only must there be no increase in tax rates for the upper brackets, but that they should also be the primary recipients of 'stimulus' dollars. They seem to have convinced Obama that a downturn is no time to raise taxes on the wealthy. This despite the fact that they lowered taxes on the top brackets during boom times. The question, "When then is a time to raise taxes on the upper brackets?" remains unasked.
The enormous tilting of wealth to the top 5% during the Bush years argues strongly for this being a time for that class to 'give back'. But a multi-millionaire Congress and corporate-giant controlled mainstream media are united in opposition.
So, expect no increase on the the upper brackets and large scale cuts on necessary social programs.
It was worse with Bush who spent OPM (other people’s money) like a drunken over the hill cowboy in a Dallas strip club. Thank god, he was so drunk on power that he fell down on the way to the Social Security cabinet.
The issues is that tit for tat, this tax cut for that revenue and for that spending, etc is impossible to account for directly since it seems that once money is in Washington it goes into a huge bath tub of revenues with little knowledge of were it came from and what it was to be used for. This fungible notion is why the banks cannot really tell us were the tax dollars started and ended for example. Other spending programs like the Iraq war have been off the books for example.
What ever happened to lock box? At least for Social Security so we can partition at least some of our retirement from these thieves. This is one line in the sand that is worthwhile and essential.