Category Archives: Social Security

Social Security and its role in the nation’s debt

This information is vital when debating right-wingers who blame a large part of the deficit on Social Security…

The Washington Post Fact Checker

“Social Security has not added one penny to the deficit.”

— Sen. Richard Durbin (D-Ill.), Nov. 27, 2012

In 2011, we evaluated a similar statement about Social Security and gave it a relatively rare rating — “true but false” — which seemed to please no one. Yet as the “fiscal cliff” negotiations have heated up, Democrats have once again been using this talking point to shield Social Security from the chopping block.

Durbin, to his credit, in a speech to the Center for American Progress this week, acknowledged that Social Security’s long-term financing is an important issue that cannot be deferred. He advocates creating a commission that would separately address how to ensure 75 years of solvency to the program.  So we don’t mean to pick on Durbin since plenty of Democrats in recent days have made similar comments.

But we remain troubled by the reemergence of this talking point, especially given the further decline in Social Security’s finances in the past year. We do not think this line is a slamdunk falsehood, as some believe, but it is certainly worth revisiting.

 

The Facts

Social Security is a pay-as-you-go system, which means that payments collected today are immediately used to pay benefits. Until recently, more payments were collected than were needed for benefits. So Social Security loaned the money to the U.S. government, which used it for other things, which in effect masked the overall size of the federal budget deficit.  In exchange, Social Security received interest-bearing Treasury securities, which now total more than $2.7 trillion.As we have repeatedly explained, the bonds held by Social Security are backed by the full faith and credit of the U.S. government. The bonds are a real asset to Social Security, but — here’s where it gets complicated — they also represent an obligation by the rest of the government. Like any entity that issues debt, such as a corporation, the government will have to make good on its obligations, generally by taking the money out of revenue, reducing expenses or issuing new debt.

So what is happening today? The Congressional Budget Office tracks the flow of money in and out of the Social Security fund, and below is a summary of the data for fiscal 2013. To keep things simple, we will include transfers made for the payroll tax holiday as part of “other income.”

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How the rich created the Social Security “crisis”

Salon

The Bush tax cuts coupled with a decades-long smear campaign are the real threat to the successful program

Now and then, George W. Bush told the unvarnished truth—most often in jest. Consider the GOP presidential nominee’s Oct. 20, 2000, speech at a high-society $800-a-plate fundraiser at New York’s Waldorf-Astoria. Resplendent in a black tailcoat, waistcoat and white bow tie, Bush greeted the swells with evident satisfaction.

“This is an impressive crowd,” he said. “The haves and the have-mores. Some people call you the elites; I call you my base.”

Any questions?

Eight months later, President Bush delivered sweeping tax cuts to that patrician base. Given current hysteria over what a recent Washington Post article called “the runaway national debt,” it requires an act of historical memory to recall that the Bush administration rationalized reducing taxes on inherited wealth because paying down the debt too soon might roil financial markets.

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Debt Madness Was Always About Killing Social Security

Robert Scheer – Truthdig

This phony debt crisis has now passed through the looking glass into the realm where madness reigns. What should have been an uneventful moment in which lawmakers make good on the nation’s contractual obligations has instead been seized upon by Republican hypocrites as a moment to settle ideological scores that have nothing to do with the debt.

Hypocrites, because their radical free market ideology, and the resulting total deregulation of the financial markets, is what caused the debt to spiral out of control this last decade. That and the wars George W. Bush launched but didn’t have the integrity to responsibly finance. The consequence was a banking bubble and crash leading to a 50 percent run-up of the debt that has nothing to do with the “entitlements” that those same Republicans have always wanted to destroy.

Even Barack Obama has put cuts in those programs into play, warning ominously that a failure to lift the debt ceiling could cause the government to stop sending out Social Security checks. Why, when the Social Security trust fund is fully funded for the next quarter-century and is owed money by the U.S. Treasury rather than the other way around? Why would we pay foreign creditors before American seniors?  The answer, offered as conventional wisdom by leaders of both parties, is that we cannot endanger our credit by failing to back our bonds, even though the Republicans have aroused the alarm of the main U.S. credit rating agencies by their brinkmanship on the debt.

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Blunt Staffers Kick Out Seniors

Democratic Underground 

As Roy Blunt was touring Missouri, touting his Chamber of Commerce backing, constituents who wanted to visit with their Congressman found themselves directed to the nearest exit.

Roy Blunt probably wanted to assure the Chamber that he would vote for the privatization of Social Security and he didn’t want the seniors to hear that. 

  

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Boehner: We Can’t Have the War AND Social Security – So We Need To Cut Social Security! | Crooks and Liars

 

 

Crooks & Liars 

I saw this and I couldn’t believe it. But then I thought, well, Boehner’s only saying out loud what some Democrats seem to believe anyway: We can’t afford the war AND Social Security, so naturally, Social Security’s gotta get slashed. 

Makes perfect sense, right? Because, you know, stopping the war would be simply unthinkable! (And wasn’t it the Republicans who first promised us the Iraq invasion would pay for itself?) 

Boehner’s criticism of the Democratic agenda then moved to the recently-negotiated financial regulatory reform package, which he likened to “killing an ant with a nuclear weapon.” According to the Pittsburgh Tribune-Review, Boehner argued that the financial system would be better served by “more transparency and better enforcement by regulators.” 

The minority leader also answered questions about Social Security, which he said could not remain solvent as it is currently structured. 

Ensuring there’s enough money to pay for the war will require reforming the country’s entitlement system, Boehner said. He said he’d favor increasing the Social Security retirement age to 70 for people who have at least 20 years until retirement, tying cost-of-living increases to the consumer price index rather than wage inflation and limiting payments to those who need them. 

“We need to look at the American people and explain to them that we’re broke,” Boehner said. “If you have substantial non-Social Security income while you’re retired, why are we paying you at a time when we’re broke? We just need to be honest with people. 

No, John. How about you being honest with people? Social Security is not broke. It’s solvent through 2036 and can fund about 80% of its obligations after that. All we have to do to fix it is to raise the current tax by one percent, and remove the cap on earnings that made Republicans so happy. You know that. 

You think we haven’t noticed the class war in this country? You think we’ve forgotten that Social Security is pay-as-you-go, and doesn’t have a damned thing to do with our national deficit. Why would you say something that’s a bold-faced lie? 

Because the Republicans have been dying to privatize the system ever since it began. They hate the idea of a financial transaction happening somewhere that doesn’t make money for their corporate sponsors on Wall Street. (And let’s not even get into what would have happened to a privatized system in the crash.) 

They want workers to be desperate and disposable, grateful for crumbs. 

That’s why Republicans always want means-testing. They want to turn Social Security into a poverty program so it won’t have such broad-based support. 

They’re trying to confuse and worry people with this manufactured deficit “crisis.” And they’re telling us it’s much more important to keep the war going than to take care of the people in this country. You saw the unemployment vote last week — that’s the Republican agenda, in all its naked glory. 

They want cheap, disposable labor with no security whatsoever. And if we don’t do something soon to stop them, we’ll have it.

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