Social Security

This piece of common sense is so obvious that I’m pretty sure most people assume it is already the law. It isn’t: every government and corporation should be required to set aside in an independently managed fund all of the monies required to fully vest the pension commitments of the organization. There. Simple. Under no circumstances should the government or a corporation be allowed to ever, ever touch that money.

I am aware of the fact that at the beginning of Social Security, the government actually had to pay out to people who had never contributed money it had never collected for the program.

Your are astonished? You mean they don’t have to? You mean the government can simply collect the money required for these pensions and then spend as much of it as it wants on other things– like bizarre failed weapons systems or wars– while promising that future governments will make up the difference?

And thus we have Illinois. And Republicans claiming– it’s an outright lie– that Social Security is unsustainable. In fact, there is nothing more sustainable than Social Security, if the government would simply pay it back for all the money it stole out of the system so that Mitch McConnell could use it so he could claim to not raise taxes and still– miraculously– spend more money on Homeland Security and the military.

The Republicans act as if Social Security is funded by general revenue, so you are not really entitled to it. But Social Security was not instituted to fund general government programs. It was instituted specifically to collect your contribution to your future retirement needs. The U.S. government has been borrowing this money for years to fund other government expenditures– like the stealth bomber or the Mitch McConnell Freeway.

I suspect that a Republican government will try to find some way to keep the revenue stream without keeping the benefit. That is what they do. A tax on the working class with an upper ceiling is a Republican’s wet dream.


By the way, I’m not averse to the idea that the independence of pension funds should go two ways. The rate at which employers and employees contribute to the fund should be wisely and carefully crafted, and the benefits received should also be wisely and carefully crafted and the brains should carefully establish the correct rates and then it should all be locked in.

That means that if inflation eats away at the value of those pensions, the price of security is that they will not be adjusted beyond the rate fixed in the original agreement. That means it could be adjusted, but only if the possibility of it was factored into the original terms of the plan, including the potential costs.

That means, yes, some pensioners might be disadvantaged by high inflation at some point– but I don’t think that’s an unreasonable price to pay for real security. (I’m not going to go into it here, but people then also should be aware of the government using inflation as a tool to reduce the real cost of their obligations.)

Yeah, it’s complicated.

Pension Fraud

Public schoolteachers in Illinois do not participate in Social Security, and their pension fund is in precarious shape. Last year the fund reported having just 48 cents for every dollar of benefits it had promised, largely because the state had failed to pay the required amount of money into it for many years. NY Times, November 5, 2011

So Anthony Wiener has to resign his seat in Congress because he hit on a few women he was not married to. So Herman Cain is toast because of 15-year-old allegations. So Eliot Spitzer is out because of a call girl. Did any of these gentlemen hurt anybody as much as the state government of Illinois has hurt its public school teachers? So Obama wears a flag pin in his lapel and the Republican candidates reverently clasp their hands to their hearts during the singing of the national anthem. So Kim Kardasian got divorced after 81 days of marriage.

It’s not even close. Not even in the same universe. How different is your life going to be if you are going to get half of the pension you expected, and which you paid for? How different is your life because Anthony Wiener tweeted a picture of his underwear?

Yet Americans screamed and jumped and screeched and wailed until Anthony Wiener resigned. Yet the government of Illinois continues along blissfully oblivious to the slightest opprobrium.

Rick Perry is half right in the way that only a half-wit can be: it’s a ponzi scheme in the sense that you start paying for it at the beginning for those who are retiring at that time, and then, when you retire, you collect… So, in theory, if the taxpayers decided to stop paying into at a certain point in time, you get what happens with a ponzi scheme: the money runs out.

So, if you think we will run out of taxpayers in the future, vote for Rick Perry and he’ll do his best to get rid of Social Security. Then everyone can just put some money aside every year, year after year, so that when they retire, they will have a few hundred thousand dollars in the bank.

Uh huh.

There is nothing fiscally unsound about social security and it would take the collapse of our entire economy to make it fail. Or the massive stupidity of a lot of of legislators and the shenanigans of investment brokers and managers.

 

America Gets a Brazilian

Between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians. Poverty has fallen during that time from 22 percent of the population to 7 percent.

Contrast this with the United States, where from 1980 to 2005, more than four-fifths of the increase in Americans’ income went to the top 1 percent of earners. (Wee this great series in Slate by Timothy Noah on American inequality.)  Productivity among low and middle-income American workers increased, but their incomes did not. If current trends continue, the United States may soon be more unequal than Brazil. NY Times, January 17, 2011

That is a very striking statistic.

The most remarkable political achievement in United States history has to be the way the Republicans took money from the rich to run negative campaigns to get elected to reduce the tax burden on the rich, eliminate regulations, increase opportunities for corporate profit, and even hand over money directly to them in the form of tax breaks and rebates and outright gifts (like the airwaves for cell phone signals)… and yet were able to convince Joe Six-pack to vote for them because they stand for traditional families, prayer in schools, a strong military, and guns. It was positively ingenious. It was brilliant. The coup de gras? Deliberately creating and enlarging deficits in order to convince their supporters that government cannot be entrusted with tax dollars. The penultimate expression of this achievement– senior citizens yelling at “town hall” meetings that Obama better not touch Medicare because they don’t want the government interfering in their lives.

The Democrats have not been able to match it. That’s partly by choice. They just don’t seem quite as willing to screw the entire country on behalf one constituency. And that constituency, rightly or wrongly, believes that government should help the lower classes.

There is a legitimate debate somewhere between those who feel our lives are better if the government stays out and those feel our lives are better if the government stays in. It’s not unimaginable to me that the our nation might be more prosperous, in the long run, without government interference.

The trouble is, that’s not what the Republicans do. What they do while claiming to stay out is to jump in with both feet and hip-waders, handing over goodie after goodie, whether in the form of tax breaks, lax regulations, extensions of copyright, and so on, to the rich. Private enterprise did not create the internet– you and I did, brother, through our elected government. So where did Google’s wealth come from? And eBay? And Amazon? Where did Exxon’s wealth come from? Has Exxon ever actually paid a penny for the environmental damage they did in Alaska? Will BP ever actually pay? How much do the oil companies pay for the oil they extract from the earth? Who said the oil was theirs to extract in the first place? How do the banks get away with balloon payments and second mortgages and credit card rates in excess of 28%? Who allowed fructose into practically everything we eat, or advertising during children’s programs on TV– children’s programs! Corporations demanded and received the right to try to brainwash your children by luring them to the tv with animated cartoons and them bombarding them with ads for junk food! They are allowed to do this? Are you people mad?

They also seem to think that the government intruding on your basic right to privacy in order to address crime or terrorism is a reasonable compromise, which seems to me to be rank hypocrisy– if that’s a “reasonable” compromise, why isn’t “Social Security” a “reasonable” compromise on the idea of free enterprise?

I might, in fact, be willing to accept privatized social security if we dismantle the CIA and NSA and Homeland Security. I mean, completely dismantle them. What, you say? Crazy! There are real enemies out there! Absolutely. And some of the real enemies are old age and poverty. And you can have your CIA if I can have a vigorous, strong, and sustainable Social Security system and health care.