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Tue Nov 20, 2012, 05:42 AM

The Giant Lie Trotted Out by Fiscal Conservatives Trying to Shred Social Security

http://www.alternet.org/news-amp-politics/giant-lie-trotted-out-fiscal-conservatives-trying-shred-social-security



Trying to convince the public to cut America’s best-loved and most successful program requires a lot of creativity and persistence. Social Security is fiscally fit, prudently managed and does not add to the deficit because by law it must be completely detached from the federal operating budget. Obviously, it is needed more than ever in a time of increasing job insecurity and disappearing pensions. It helps our economy thrive and boosts the productivity of working Americans. And yet the sharks are in a frenzy to shred it in the upcoming “fiscal cliff” discussions.

The most popular red herring Social Security hustlers have unleashed into the waters of public discourse has grown into such a massive whale of a lie that liberals frequently subscribe to it. The idea goes like this: We need to somehow “fix” Social Security because people are living longer – “fix” in this context being a code for “cut.” Two groups stand to benefit in the short-term from such a scheme: the greedy rich, who do not want to pay their share in taxes, and financiers, who want to move towards privatizing retirement accounts so they can collect fees. As for the masses of hard-working people who have rightfully earned their retirement, the only “fix” is the fix they will be in if already modest benefits are further reduced.

Here are five clear reasons why the life expectancy argument is nonsensical, counterproductive and based on a pack of lies.

1. Social Security’s original designers considered rising life expectancy.

On our red-herring tour, let’s start with the oft-repeated claim that the original designers of the program did not consider rising life expectancy in their calculations. Fortunately, public records pertaining to the lengthy and detailed discussions of the Roosevelt administration’s Committee on Economic Security (CES), tasked with constructing proposals for Social Security, are available for anyone to see. It is absolutely clear from the record that the designers knew that the number of people over the age of 65 was going to increase and that people were going to live longer.

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Arrow 12 replies Author Time Post
Reply The Giant Lie Trotted Out by Fiscal Conservatives Trying to Shred Social Security (Original post)
xchrom Nov 2012 OP
eridani Nov 2012 #1
xchrom Nov 2012 #2
freedom fighter jh Nov 2012 #3
DreWId Nov 2012 #5
econoclast Nov 2012 #9
econoclast Nov 2012 #6
demwing Nov 2012 #4
brokechris Nov 2012 #7
jsr Nov 2012 #8
fasttense Nov 2012 #10
Skittles Nov 2012 #11
HiPointDem Nov 2012 #12

Response to xchrom (Original post)

Tue Nov 20, 2012, 06:32 AM

1. Hope you are all phoning, emailing and faxing Congress about this

Go after them until they are screaming "Make it stop!"

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Response to eridani (Reply #1)

Tue Nov 20, 2012, 06:34 AM

2. i like that image!

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Response to xchrom (Original post)

Tue Nov 20, 2012, 07:04 AM

3. Another lie: that it is a "driver of the deficit."

As your piece points out, soc sec "does not add to the deficit because by law it must be completely detached from the federal operating budget." Yet we keep hearing that soc sec has to be, um, fixed because of the deficit problem.

Bernie Sanders has repeated over and over that soc sec does not add to the deficit. But he seems to be the only person who does. The rest of em sound like Bush and Cheney and Rumsfeld talking about weapons of mass destruction.

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Response to freedom fighter jh (Reply #3)

Tue Nov 20, 2012, 07:16 AM

5. Like a stuck pig?

I thought under Regan in 1983, Social Security was being bled dry to pay for parts of the deficit? Therefore there S.S. isn't 'balanced' not because of the system but because of constant borrowing/stealing from it to pay for other stuff.

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Response to DreWId (Reply #5)

Tue Nov 20, 2012, 07:58 AM

9. Nope. Doesn't work that way

Read my post 6 in this thread for details

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Response to freedom fighter jh (Reply #3)

Tue Nov 20, 2012, 07:17 AM

6. BUT .....

It DOES have an impact ...


Ok. Here is the history. Since the inception of SS in the thirties the rules have ALWAYS been thus :

SS tax receipts (box 4 on the W2) are used immediately by SS to pay current benefits. A surplus exists if SS collects more in current taxes than it pays out in current benefits.

SS is "off budget". The budget deficit does NOT include SS in any way. ( except perhaps the interest paid to the SSTF on their holdings of US Treasury securities ... I have to check that out ). But if the budget deficit is 500 billion dollars and SS has a 100 billion surplus, that does NOT reduce the deficit to 400 billion dollars. What it DOES do is reduce the amount of the 500 billion deficit that the government has to borrow IN THE MARKET.

The budget deficit may be 500 billion, but they only have to raise 400billion in the market. The rest comes from selling 100 billion to the SSTF. This is how it was designed. Really. You can go to the SS website and search for the official historian. They have one. There you can see for yourself that it has been like this sinse the 30's

So nobody "raided" anything. The program is working as designed by FDR

FYI. For a period starting in the LBJ administration and ending in the Reagan administration SS WAS "on budget" and SS surpluses WERE put "on the budget" and any SS surplus did reduce the reported budget deficit. They called it the "unified budget". (There is a school of thought that thinks LBJ did this to hide the true cost of the Vietnam war.) But that stopped in the 1980's and SS was again put "off budget".

What about when SS itself has a deficit? IE SS takes in less in taxes than it pays out in benefits. I think this is the first year that will happen. Then, the process works in reverse.

Suppose the government budget deficit is 300 billion dollars. But suppose further that SS has to pay out 80 billion in benefits in excess of what they collected in taxes. Where do they get the money? They redeem 80 billion of their treasuries. Ok. Where does the treasury get the money from if the government already has a deficit. They borrow it in the market. So, the budget deficit is 300 billion but they have to go to the market to raise 380 billion dollars in the market..... 300 to finance that year's budget deficit and 80 to pay off SS

So, SS doesn't impact the budget deficit, but does impact how much the government has to raise in the market.

To turn the 2.6 trillion in assets in the SSTF into the cash needed to make future payments, those assets have to be redeemed. Which means that, since the government seems likely to continue running budget deficits, to get that cash the government will have to borrow an additional 2.6 trillion dollars in the market. That is an additional 2.6 trillion on top of what they need to borrow to cover the annual budget deficits.

Seeing as how we already owe 14, 15 (is it 16 yet?) trillion dollars, the question is this .....is there a limit to how much the US can borrow at reasonable interest rates? Is the well bottomless? And if it is not, What will interest rates have to be to attract enough cash to meet our future borrowing needs?

In a sense, the current crisis atmosphere around the world plays into our hands as it increases demand for Safe assets. And nothing is safer than US treasuries. So the "flight to quality" helps keep rates down and US borrowing costs relatively low. But the crisis atmosphere abroad won't last forever. What happens to demand for US Treasuries when the Euro is "safe" again?

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Response to xchrom (Original post)

Tue Nov 20, 2012, 07:14 AM

4. The argument I hear most

Is that SSN was tied to the deficit wjen we borrowed from the fund. Paying back that debt affects the deficit, ignoring that debt strangles SSN.

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Response to xchrom (Original post)

Tue Nov 20, 2012, 07:19 AM

7. if the money is completely separated

then why was Gore proposing a "lock box"?

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Response to xchrom (Original post)

Tue Nov 20, 2012, 07:23 AM

8. They will not rest until the New Deal is destroyed

and replaced by a New Improved Deal designed for their pockets only.

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Response to xchrom (Original post)

Tue Nov 20, 2012, 08:56 AM

10. And also, Raygun doubled the Social Security withholdings so the rich could get a tax cut.

Under the guise of the Baby Boomers are coming and they will suck Social Security dry, Raygun and Greenspan double our Social Security tax for those making LESS than about $100k (in today's dollars). For those making over $100k, they don't have to pay anything on what they make over $100k. So, Mitt Romney making $20 million a year only pays Social Security taxes on the 1st $100k.

The 1983 Raygun and Green span so called "fix", created a huge surplus in Social Security. This surplus is what is suppose to be paid out to we retiring Baby Boomers. Not only did/are Baby Boomers paying for their parents Social Security, they paid for their own as well. But the Social Security tax would NOT have to have been DOUBLED if those making over $100k would have been taxed on 100% of their income like the rest of us are.

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Response to xchrom (Original post)

Wed Nov 21, 2012, 03:16 AM

11. THERE IS NO SUCH THING AS A FISCAL CONSERVATIVE

THEY ARE FISCAL HYPOCRITES

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Response to xchrom (Original post)

Wed Nov 21, 2012, 05:42 AM

12. kr

 

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