Here’s how Hillary Clinton feels about Social Security:
“I do not believe it is in a crisis.”
That’s true and that’s all such a non-issue is worth, but Barack Obama wants to be President so bad he’ll take Social Security and Hillary Clinton down to get the job done. So that’s why he’s pimping a fake Social Security crisis:
Barack Obama in Des Moines on Saturday accused Hillary Clinton of blatantly avoiding the nation’s looming Social Security crisis . . .
Barack and all you right-wing Democrats, I’ve got news for you: there is no Social Security crisis. The projections say the system may run a little short of money about 45 years from now. So why are you pimping a crisis where there is none? Looking to pick up donations from Richard Mellon Scaife or the Cato Institute, which have been lying about a Social Security crisis for decades (cuz they hate Social Security and are willing to say anything to get rid of it)?
The idiot reporter goes on:
The government collects money from people’s paychecks on earnings up to $97,500 a year for Social Security retirement benefits.
As the nation’s baby boomer generation retires at increasing rates, some projections have showed Social Security paying out more than it will collect in about 10 years. Those projections are what have driven the conversation about government retirement benefit reform.
Yeah moron, and those projections are why we’ve been paying WAY MORE than the system has been paying out for the last 4-5 decades! There are huge Social Security reserves that retirees can collect for the next four decades even if the economy grows at an anemic 1.5% a year.
The reporter continues (emphasis added):
Some, as Obama did today, suggest that raising or eliminating that cap could bring in more money to prevent benefit cuts for future retirees. Other candidates such as former North Carolina senator John Edwards have suggested similar fixes to Social Security by suggesting higher taxes on wealthy Americans. …
Obama, himself, did not specifically outline a plan although he did say he was opposed to cutting benefits, privatizing Social Security or increasing the age to begin drawing retirement payments. He did not say if the cap should be completely lifted so that all income is taxed or if it should be raised.
Obama previously this year said everything was on the table when it came to Social Security, including raising retirement age.
Here is the truth about Social Security, from expert Dean Baker:
The program is … fundamentally sound, with the most recent projections from the Congressional Budget Office showing that it can pay all scheduled benefits for the next 40 years with no changes whatsoever.
… While we may have to make changes to the program in the distant future, there is no need to undertake such changes now, especially at a time when the public has been badly misled about the financial health of the program.
If that’s not enough, here’s the common sense detail about Social Security (emphasis added and the quoted passages at start from the Congressional Budget Office):
“[Social Security] is financed largely by a tax on workers’ wages (a payroll tax). The revenues from that tax are credited to two accounts (“trust funds”) in the federal budget, one for each of the program’s two parts: Old-Age and Survivors Insurance, and Disability Insurance.
Those trust funds, which are maintained in the U.S. Treasury, function mainly as accounting mechanisms to track Social Security’s revenues and spending and to monitor whether the program’s designated sources of revenue are producing enough money to cover expected benefits.
The program’s benefits, administrative costs, and other authorized expenditures are paid from those funds. Balances in the funds are held in the form of special interest-bearing Treasury securities.
Nothing about this procedure changed between the Clinton and Bush administrations. All Social Security revenue has continued to be credited to the trust funds. And as shown in this chart from the Social Security Administration trust fund assets have risen from around $1 trillion when Bush took office to better than $2 trillion now.
This brisk accumulation is occuring because, for now, Social Security is running big surpluses, taking in a lot more money than it pays out. That will change in the years ahead, as large numbers of baby boomers retire. In a decade or so, the program will start spending more than it brings in, which it will accomplish by redeeming those “special interest-bearing Treasury securities” in which trust fund assets are, and have always been, invested.
Some decades down the road, the trust funds will be empty. After that, if nothing is changed, the program will only be able to pay about three-quarters of promised benefits out of its then-current revenue stream.
The estimate of when this event – “trust fund exhaustion” – will occur is recalculated annually and is based on assumptions about a host of factors such as life expectancies, birth rates, economic growth, interest rates and inflation, disability patterns and more.
But today’s year-to-year budget policies – deficits or surpluses – have no effect on the estimated exhaustion dates. They change neither the resources flowing into the Trust Funds nor, in any direct way, the obligations and revenues of the program in the future.
Also at http://politicalfleshfeast.com/showDiary.do?diaryId=1003
based on current economic growth projections.
Right, and no one in the Democratic debate besides the questioners said it was a crisis. Obama said that it needs shoring up and that it is better to do it sooner rather than later. He also said that he wants to raise taxes on the rich rather than cut benefits to shore up the program.
Where is that an attack on the right? That seems like progressive foresight and a progressive solution. Most of the other candidates appear to agree with Obama on that one. Hilary is the one who seems to think it would be best to close our eyes to any problems in the most successful program of the New Deal.
If you are opposed to making sure that Social Security is protected say so. If you are opposed to raising taxes on the rich say so. If you are opposed to discussing you plans if elected say so. If you think that any of those are on the right wing agenda then say so. I would disagree with you, but at least we could have a meaningful debate.
I swear I read that a 2% Social Security tax hike will finance the program indefinitely. It may have been more than 2% but not much. If we were not so scared to say “tax” the problem could be solved by everyone with ease……but the Republicans have openly acknowledged their plan to starve our government. They will borrow that money too. Fiscal sanity for the rest of the budget is key. So nothing can be done until Bush is gone. They live this tax lie and borrow from the trust fund to make ends meet. The dishonesty is criminal.
He’s scare talking Social Security in exactly the way the right wing spins the ‘crisis’. Here’s his latest ad:
http://blog.washingtonpost.com/the-trail/2007/10/29/ad_watch_obama_on_social_secur.html
Assuming the latest conservative projections as true and that Social Security will not have any problems until 2052, and assuming the baby boom years are from 1946 to 1964: In 2052 the oldest baby boomer will be 106 and the youngest one 88. So, Obama’s “78 million baby boomers” fear talk is rank, ridiculous and exactly on script right-wing scare talk.
And it wasn’t just the ad. He made numerous appearances drumming up a fake social security crisis (emphasis added):
http://www.usnews.com/usnews/politics/bulletin/bulletin_071030.htm
By the way, Obama’s ad goes on:
The above is exactly on script right-wing media characterization of Senator Clinton. Don’t doubt it, we’ll surely hear such Obama bull about Clinton’s poll-driven two-facedness thrown in Clinton’s face during the general campaign next summer. And this guy is the ‘liberal’?
I see the Clinton’s point. They Republicans steal the trust fund to pay for their tax cuts and their war. So the fund is solvent on paper. Bush’s debt is 470 billion a year and 300 billion is “borrowed” from Social Security. Stop the theft. Make the Whitehouse submit an honest budget to congress. The Bush tax cuts must be repealed.
That’s right. The surplus cash flow is promptly converted to IOUs (with no backing but the good word of the government) to finance tax relief and wars. Once demographics kick in (the entire baby boom will retire over the next 10-12 years) – there will be no more annual cash flow surplus. The crisis is that the government is in no position to pay back what it has already borrowed, thus stiffing all future retirees.
They’re not IOUs, they’re U.S. government bonds, the safe investment you can make. But yes, if the U.S. government declares bankruptcy instead of simply printing money to pay off its debts (yeah, they can do that!), we might have a problem.
Government bonds are not IOUs? Really? And what does the government use that money for? And when the government has to pay off those bonds, where does the money come from? Does the government have a savings account that it draws upon to do that (and we have not heard of any such existing accounts) or does it come from general tax revenues?
Saying that Social Security will not run out of money for the next forty years tells you immediately that the system, which should be solvent in perpetuum, is flawed.
Any amount necessary to pay off the bond. That’s why it’s not an “IOU.” National governments with the power to print money are special, with special capabilities, and so we generally don’t call their debts ‘IOUs’ unless we’re selling or have accidentally bought into right-wing anti-Social-Security spin.
This is not an issue of right-wing spin. Freely printing money to cover deficits (other than very short-term) is a disastrous policy – even more so for those not privileged.
The dollar has been the base currency for global trade for decades (go read that diary, if you all haven’t already). Under that system, printing money may have been an option – but those days are dwindling fast. I think what is required is stricter fiscal policies, raise progressive taxes – at least to pre-2001 levels and then start paying back the SS IOUs. Once the fund is back in solvency, it could start to operate like a Sovereign Fund. An added advantage is that such a fund could promote socially responsible investments.
But such progressive policies would surely make the US a ‘socialist welfare state’ (check ‘Ethical Council’ reference).
At least you admit that it can be done. Now, backtrack and see how what that means: the ‘trust fund’ is in fact secure, it is not being ‘stolen from’ by the Bushies. The bonds in all reasonable likelihood will be redeemed (i.e., the US govt will not declare bankruptcy and will instead print money) and we may suffer from mild/moderate/severe inflation and/or ‘suffer’ from deflated dollar as a consequence, 45 freaking YEARS from now, if economic growth is less than expected and if Bush’s deficit-ridden fiscal policy is continued for most of those 4-5 decades.
So, NOT a crisis.
And no, mild inflation and a deflated dollar are NOT automatically a negative for most Americans — i.e., they are probably good overall for anyone in the bottom two-thirds in need of a raise or a job (dollar deflation makes US goods more competitive overseas, and so increases demand for US goods and workers) or owing a big chunk of money to the bank (on a mortgage, perhaps) — though they definitely are for the investing class.
“deflated dollar are NOT automatically a negative for most Americans –”
Tell that to retired Americans on fixed incomes which are being eaten away by inflation. Fortunately, social security benefits are increased yearly to account for inflation. But would that happen if deflated dollars beging to be circulated, dollars say worth 20 cents on the previous dollar? You are kidding yourself that the US can just print whatever dollars it needs and not have to worry about its effect on their valuation.
You didn’t respond to the second question. Look what happened to old age pensions in Russia during the transition from communism. Deflated currency led to everyone getting a reduced pension.
Yes, the govt can print more money if it needs to, and our problems are projected to be infinitesimally minor compared to Russia’s, so the scale of money printing would be small. So, whatever we’re talking about here concerning Russia, Social Security has cost-of-living adjustments which printing money could handle without (Bushian deficit spending coming back down to common sense levels for most of the future) a hyper-inflation risk. And the cost-of-living adjustment, I think, is the huge difference between social security and the ‘worthless ruble’ (?) problem experienced by Russian pensioners.
Our financial problems could grow massive if we foolishly continue our massively deficit-funded warmongering for another couple decades (though I don’t see how they would effect the govt bonds held by the Social Security program). Get back to me then if we keep up that idiocy, cuz then we might be threatened by a hyperinflation crisis. BUT such deficit spending — after another couple decades or so — would be a problem for ALL govt spending, including especially (I HOPE) our ridiculously pointlessly massive military spending.
??
By printing even more money?
Please take the time to read link above. If/when the dollar is no longer the base currency for international trade, the printing of money is no longer a sustainable option for a US deficit budget. If you want to import something of value, you will have to provide something of value – not simply paper with green ink and a promise for the future.
It’s fairly simple.
The US central bank has following a tight money policy more or less since the days of President Ford. What are you talking about?
And discouraging imports is a good thing for most Americans, as I’ve stated it creates jobs for home-grown manufacturers, which we still have a few of. And if a weak dollar discourages oil imports, by the way, more the better! Surely oil overpriced in dollars will inspire great conservation efforts here, which are essential in the anti-global-warming effort.
It’s fairly simple.
You provide no evidence for your claims. Did you have the time to read the diary linked to in my comment above (first link)?
Your faith in printing money as a solution to deficits is unsupported – and as shergald notes, it’s unclear why you believe that deflated dollars benefit the regular SS recipient.
Printing money is a longstanding response to demands on the treasury that cannot be met by current tax revenues. This ‘deficit spending’ in fact has been a very successful Keynesian policy tool, and for example helped get the U.S. out of the Great Depression.
Yes, I read the diary and couldn’t understand what you and your friends were getting at. I’m a Keynesian, that’s the way I understand economic policy, and I think based on Keynesianism’s historical record it’s a wise place to be.
The ‘trust fund’ is government bonds held by the Social Security Administration. No Bushie is going over to SSA offices and stealing those, I assure you.
So the government bonds issued to SSA will be there. And when they are cashed in the government will be able to pay them off, unless it declares bankruptcy. But it doesn’t need to do so, since the US govt can readily print money to pay its debts.
“Barack and all you right-wing Democrats, I’ve got news for you: there is no Social Security crisis.”
Bullshit. People on Social Security are now getting hit with larger payments for Medicare and drug co-pays, taking larger and larger hunks out of their benefits.
Social security is not a locked box as Gore liked to say. It is commingled with general federal budget expenditures. Every year we are being hit with another deficit, that has now taken the National Debt to upwards of 9 trillion, the interest on which is around 400 billion a year. That yearly interest is the second largest federal budget item, dwarfed only by national defense. If those funds were available for the common good we could actually send every child in the country through college or vocational school free. Instead we opt to give the wealthy enormous benefits in low tax rates and a low cutoff for income taxable for Social Security purposes.
Not taxing all income for Social Security is another Republican measure to help out the wealthy. It is another form of welfare for the rich.
‘trust fund’ is government bonds . . . well, just see my similar answers to the misstatements by others.
See above.