Loving Their Grandkids To Death
Howie has a great post up today about the social security con game which you should in full. I just wanted to riff on one little piece of it because it struck me that we haven't been clear about what's going on. In the post he quotes a great letter from Bernie Sanders which contains this passage:
The truth is that the Social Security Trust Fund has run surpluses for the last quarter century. Today’s $2.5 trillion cushion is projected to grow to $4 trillion in 2023. The nonpartisan Congressional Budget Office, experts in this area, say Social Security will be able to pay every nickel owed to every eligible beneficiary until 2039.
Got that? In case you don’t, let me repeat it. The people who have studied this issue most thoroughly and have no political bias report that Social Security will be able to pay out all benefits to every eligible beneficiary for the next 29 years.
It is true that by 2039, if nothing is changed, Social Security will be able to pay out only about 80 percent of benefits. That is why it is important that Congress act soon to make sure Social Security is as strong in the future as it is today.
That sounds pretty straightforward to me. We have created surpluses (with which we bought US treasury bonds like other smart investors such as the Chinese) and they are projected to cover 100% of benefits for the next 29 years after which it would only be able to pay out 80% of current benefits. So as soon as the immediate crisis is over, we should do the prudent thing and figure out how to ensure that we will be able to continue paying out 100% of benefits beyond the next 30 years.
Now Alan Simpson and Pete Peterson both make a fetish out of saying that the reason they want to "reform" social security is so it will be there for their grandkids. It's the emotional thrust of their whole argument. They also offer constant reassurance that the "greedy geezers" will not suffer any loss. So why then, knowing that their grandkids are already going to see a benefit shortfall of 20%, are they trying to make the situation even worse and cause a shortfall of another 15 to 20%? It doesn't make sense. Doesn't logic call for them to find more revenue so their precious grandkids could have the same amount seniors get today? Or at the very least, if they can't bear to raise taxes even for their own noble cause, why won't they leave it at only a 20% shortfall rather than cut benefits even more?
Back when they were pushing privatization, they could say that they wanted to offer their grandkids the opportunity for a better "return" by allowing them to invest what's left after the cuts in a roaring stock market. But privatization isn't on the table this time, for obvious reasons. Now they are just nonsensically saying that their grandkids are being cheated and because they love them so much they need to cheat them even more. I've heard of tough love, but this is just cruel.
Maybe it's too complicated, but in debates this fall I'd really love to see Democrats pose the question to their GOP rivals: if social security is going broke why are you trying to cut it more? I'd at least be interested in hearing how they explain why they are trying to destroy the safety net in order to save it. (Sadly, I suspect we're going to see a lot of "consensus" talk from Democrats on this issue.)
Be sure to read Howie's whole post which contains a lot of interesting info including the entire Sanders piece that concludes with this:
In the midst of all of the destructive rhetoric and ideas out there, there is one proposal that is simple, sensible and would keep Social Security strong and solvent in a fair and just way.
Under the law today, the Social Security payroll tax is levied only on earnings up to $106,800 a year. That means millionaires and billionaires get off scot free on all of their income above that amount. In other words, an individual who earns $106,800 pays the same Social Security tax as a multimillionaire. That’s wrong.
Applying the Social Security payroll tax on those with the most income, say over $250,000 a year, would correct this inequity. According to CBO, applying the tax to all income would provide all the revenue that Social Security needs for the foreseeable future-- for our kids and grandchildren and great grandchildren.
Yes. Why the hell not? Just because Grover Norquist has a bunch of Republicans by the cojones with his little pledge doesn't mean that it's impossible to do this. But first they have to take SS off the table for the present and start making the case for this logical tax hike for the future. (These things take time to percolate --- the Right will easily wait 20 years for items on their agenda to bubble up to the surface.)
Because when you step back and think about it, while Obama and boyz may have thought this was just a terrific Obama Goes To China legacy maker when they first fashioned this Grand Bargain strategy two years ago, it's insane that we are talking about economic problem 30 years out when right now we have 10% unemployment and an economy that slipping back in to recession. Indeed, it's so insane that it's very presence on the menu explains why the administration is so willing to walk on this third rail: it's Krugman's Human Sacrifice to the Bond Gods theory. It isn't science, policy or even politics. It's magical thinking.
And yet, strangely enough rich people will do very well in all this regardless. Isn't that odd.