Obama to propose social security cuts in the SOTU

    By Flavius on Mon, 12/20/2010 - 3:51pm |

    according to Robert Kuttner, via destor.

    I'm almost without exception a defender of Obama here.  Not on this one if Kuttner is right.  Not just no but damn no.  In spades.  With bells on.

    Kuttner suggests it's part of a strategy of selective pre emptive surrender.  By volunteering  a concession he'd establish his credibility as a warrior in the great deficit reduction campaign.  Which would assist him to then defend that line without being seen as dissing the electorate which -we're told - is lusting after reduced deficits always provided that is accomplished without higher taxes.  At least higher taxes on the rich.

    I think of it as the "feeding marshmallows to a bear" strategy. You'd better have a pretty big bag because the bear's going to keep coming back for more marshmallows.  Or something.

    But before the wailing and rending of garments I'll wait for the official pronouncement, or at least leak.  Don't want to prematurely exhaust my supply of righteous indignation.

    Comments

    I'm perplexed.  This is the perfect chance for Obama to just let everyone forget that Bowles/Simpson ever happened.  Kuttner reports that the administration believes that if he doesn't do this, the Republicans in the House will demand even harsher cuts and attach it to the vote raising the debt limit.  If the debt limit isn't raised I suppose the Treasury will have to stop issuing bonds until it is.  Which means the government will go without funding.  I want to do some research as to what will happen if the debt ceiling isn't raised.  Apparently it's a WMD like maneuever and Obama obviously fears it.


    by Michael Maiello on Mon, 12/20/2010 - 4:05pm

    This has been a set-up sucker play from the get-go it was built right into their tax-break scheme ... how many people noted that this exact thing was an obvious progression of the plan combined with the Obama-crafted debt commission? Almost every single one, if I recall. On this issue, there isn't really any excuse to claim being surprised - it could not have been any more obviously telegraphed.

    Why can't you just accept that Obama really agrees with the Republican economic theories? There is not one shred of evidence that he wants to do anything but exactly what he's doing. The corporatists figured it out - it takes a Democrat to gut social security. McCain could never have pulled this off.

    All your $4Trillion Trust Funds R Belonging to US!
    (you wanted to invest that long in consumer-debt based synthetic derivatives, right?)


    by kgb999 on Mon, 12/20/2010 - 5:10pm

    Sigh.  It does seem that way, doesn't it?


    by Michael Maiello on Mon, 12/20/2010 - 5:22pm

    Does it make any difference what Obama says he supports in principle, and what he will actually do with his lame excuses of the Republicans taking 'hostages'?


    by NCD on Mon, 12/20/2010 - 5:29pm

    I think if people want to make a stand on this, they're going to have to do more than just go around saying damn no with bells on.  At one point during Morning Joe today (my source for the conservative and moderate conservative view point) there unanimous agreement that there had to be some sort of cut to SS, including DLC-ist Harold Ford, Jr.  In other words, there is a strong wind blowing in favor of "fixing" entitlements. 

    Now from what I can see from the Commission's Report (and people putting "catfood" next to it isn't going to convince someone who buys into the notion that SS needs to be dealt with) the cuts would basically occur after the first $9,000 of avg lifetime income (the individual would still continue to receive 90% of that 9K).  The next bracket of average lifetime income -- $9,000 to $38,000 -- would drop from 32% to 30%.  The next bracket $38,000 to $64,000 would drop from 32% to 10%. (Currently these two brackets are one at 32%).  $64,000 to $107,000 would drop from 15% to 5%, and $107,000+ would go from 0% to 5%. 

    I'm not a SS expert on the calculations. What would these cuts translate into real life if I peaked at say $35,000 or $52,000 dollars a year.  I think if we can put some accurate ballpark figures in front of people, then there might be some more folks who will be going damn no.

    The charts showing where the payouts will be compared to the income being taken in (even without a holiday) are rather daunting. 

    And would such proposals from the Commissions such creating a new special minimum benefir that provides full career workers with a benefit no less than 125% of the poverty line in 2017 and indexed to wages thereafter, really provide an increase in the quality of life for those who are low wage earners.


    by Elusive Trope on Mon, 12/20/2010 - 5:02pm

    So if I'm reading this correctly, you lose up to $580 at $38K, lose another $5,720 at $64K, lose another $4,300 at $107K - $10,600 in all.

    You get some of it back over $107K, but you get all that $10,600 back if you make at least $319K, and another $9,000 if you make $500K.

    IOW, the proposed changes above mean additional SSI benefits for anyone averaging a high income now, but roughly between $500 to $10,000 lower benefits for anyone earning a middle class income now. So Sanders was right. The rich are never satisfied.


    by Donal on Mon, 12/20/2010 - 5:22pm

    And the middle always takes the punch.


    by Michael Maiello on Mon, 12/20/2010 - 5:28pm

    Yeah... all the "serious" voices will be people who have already accepted that cuts are inevitable.  Everyone else will be told to do the right thing an "make a sacrifice."  Thomas Friedman and David Broder will be very pleased.


    by Michael Maiello on Mon, 12/20/2010 - 5:27pm

    This proposed attack on "entitlements" can be seen for what it is in the context of the other benefits or  disabilities the middle and lower middle  classes suffer here.

    Absolutely and in comparison with the higher income groups. .

    Reecall Galbraith's description in The Affluent Society of the citizen who parks his luxury trailer , prepares a meal and opens a bottle of fine wine- in an unsanitary camp ground next to a polluted river.

    Our infrastructure is a time bomb. Medical care allotted  to those middle and lower middle groups is a crap shoot depending on the existence of last disappearing insurance...Education-no comment. Security:. A direct transfer from our pockets to the managers and owners of the military industrial complex. 

    We are getting screwed as it is and reform of entitlements is shorthand for saying if you think this is bad ,just  wait and see what we're going to do to you.next.  

    If  Friedman wants to voluntarily return his (future)social security benefits ,be my guest. I'm keeping mine. 

     


    by Flavius on Mon, 12/20/2010 - 7:44pm

    "If  Friedman wants to voluntarily return his (future)social security benefits"

    Wake up call:

    Friedman married into a huge mega-millions fortune (his wife's family), and lives on a 7+ acre estate in a huge mansionworth over $7 million, he doesn't need no stinkin' chickenshit penny ante $SS, it wouldn't even pay his gardner's wages.


    by NCD on Mon, 12/20/2010 - 9:23pm

    AT: Forgive me, but as I understand it, SS is not an "entitlement;" and therefore we have to stop allowing the spin machine to convince us that it is -- you are currently paying for yours, as I paid for mine, in payroll deductions.

    SS is your money, paid in, in advance of your retirement, that btw pays you no interest on that long-term money that you gave to the government for its use in the interim. Pretty sweet deal for the government, that -- thirty to forty years of an interest-free loan.

    Nonetheless, it's better to get it back -- damn the opportunity cost --than not having it, at the end, when one is no longer viably employable.


    by wws on Mon, 12/20/2010 - 8:01pm

    Somewhere along the way, the word "entitlement" has gained a negative connotation.  I think this has to do with people usually using to describe someone or some group who believes they are entitled to something to which they are not.  As in, "those kids think their entitled to be constantly entertained by their teacher."  Or "alcoholism is a disease of [a sense of] entitlement." 

    The basic definition of "entitlement" is a right granted by law or contract.  As I see it, social security is a de facto legalbcontract between the government and me.  They will take this money now and then give it back to me at later date.  I am entitled to it as a result of that contract.  

    Part of the reason they do this is to pay to others who need it now because they have retired from the work force.

    Now here is where it gets a little murky.  How was, for instance, the figure of 32% of my income between 9K and 68K get derives?  Why not 31% or 33% of 45%.  And is the adjust from 32% to 30% in order to keep the fund flush breaking that contract?

    I understand that the fund has been mismanaged, that Congress has dipped into from time to time.  But if overall it is a matter of the current percentages derived some time ago has, as the workforce and retired population demographics have changed, lead in the long run for too little income to cover the expenses going out - then how does one respond to the inquiry "if the contractual system is built upon those paying in are to cover the costs of the expenditures going out, then shouldn't the percentages be adjusted in order to create a balance between the expenditures and revenue in the long run?"  "Isn't that part of our responsibilities of partaking in this system?"


    by Elusive Trope on Mon, 12/20/2010 - 8:35pm

    Somewhere along the way, the word "entitlement" has gained a negative connotation.  I think this has to do with people usually using to describe someone or some group who believes they are entitled to something to which they are not.  As in, "those kids think their entitled to be constantly entertained by their teacher."  Or "alcoholism is a disease of [a sense of] entitlement."

    You mean like those in the upper crust who firmly believe they are entitled to their ill gotten gains ?


    by cmaukonen on Mon, 12/20/2010 - 8:54pm

    As a pension system, Social Security is not very generous when compared to what's offered in the rest of the developed world.  So if the program needs some help from general revenues, I say that's fine.Set proper benfit levels first and then figure out how to pay for it.


    by Michael Maiello on Mon, 12/20/2010 - 9:01pm

    Agreed.

    by LisB on Mon, 12/20/2010 - 9:23pm

    Both  the SS trust fund, and the theoretical flow of  matching payments into it from workers  and employers are purely theoretical. Or to be accurate. A hoax. As Ezra Klein tried to explain to Keith Olberman when Keith was complaining about the waiiving of those payments in 2011 as part of Obama's tax compromise.

    Depending on what serves their interest the Republicans alternately describe the Trust Fund as fictitious "no young person  should believe there'll be any funds available when they retire"  or weep crocodile tears about its inadequate funding.

     In fact the Government  gets revenue from many sources including income tax, duties, estate taxes  and these "social security contributions". And then it spends it on many requirements including " ss benefits. " and the latest tank or bomber for the DOD. Money is fungible.

    As you say, set proper benefits. To which I add  and then appropriate the funds to pay for them.. 

    When any pol  or economist  laments the shrinking of the trust fund he is simply playing us for suckers.. They all know better but try to keep a straight face while  perpetuating  the hoax of dedicated funding and a Trust Fund.

     


    by Flavius on Mon, 12/20/2010 - 9:32pm

    How exactly is it a hoax.  Every paycheck I've ever received had FICA on it.


    by Elusive Trope on Mon, 12/20/2010 - 10:24pm

    It's a hoax in  conveying the idea to Joe Lunchpail that there's a pile of money put aside somewhere with which to pay social security. With two false implications.

     1.While that pile exists Joe can be sure there's money for his ss. And

    2. When that pile has been depleted it will be impossible to pay Joe his ss.

    If for some reason the government stopped receiving all funds tomorrow. It wouldn't be able to pay SS out of some mythical pile of cash called the Trust Fund.Because it doesn't exist.   But conversely he would still be able to pay it as he does now by issuing debt.

    The idea you have to get a hold of is that THERE IS NO SOCIAL SECURITY TRUST FUND. It's a myth like the Loch Ness Monster.Started by FDR probably for some political reason in selling the program to the public..

    Think of a the Trust Fund as a piece of lined paper on which each year the Secy of  Treasury writes down the amount of money he's collected in premiums , the amount he's paid out and the net balance that is left. 

     His ability to pay benefits is exactly the same whether or not he writes those things down. It is based entirely on his abillity to generate the cash from ALL the government's sources : Income Tax, Custom duties, Social Security Premiums, Issuing bonds 

    Since  there isn't any Trust Fund then it is complely irrelevant that this non existing entity can be exhausted in 2040 or whatever. There's ain't any DOD Trust Fund but we seem to be able to build useless air craft carriers just the same.

    Know how they're paid for ?. By the subtractions from your paycheck which are labelled as  FICA.

     


    by Flavius on Tue, 12/21/2010 - 6:00am

    From I understand the Trust Fund we are dealing with today was created in the early '80s, not by FDR.  Here's one version:

    1) President Reagan appointed Greenspan as chairman of the 1982 National Commission on Social Security Reform (aka The Greenspan Commission)

    2) The Greenspan Commission recommended a major payroll tax hike to generate Social Security surpluses for the next 30 years, in order to build up a large reserve in the trust fund that could be drawn down during the years after Social Security began running deficits.

    3) The 1983 Social Security amendments enacted hefty increases in the payroll tax in order to generate large future surpluses. 

    4) As soon as the first surpluses began to role in, in 1985, the money was put into the general revenue fund and spent on other government programs. None of the surplus was saved or invested in anything.  The surplus Social Security revenue, that was paid by working Americans, was used to replace the lost revenue from Reagan’s big income tax cuts that went primarily to the rich.  

    ....

    The practice of using every dollar of the surplus Social Security revenue for general government spending continues to this day.  The 1983 payroll tax hike has generated approximately $2.5 trillion in surplus Social Security revenue which is supposed to be in the trust fund for use in paying for the retirement benefits of the baby boomers.  But the trust fund is empty!  It contains no real assets.  As a result, the government will soon be unable to pay full benefits without a tax increase.  Money can be spent or it can be saved.  But you can’t do both. Absolutely none of the $2.5 trillion was saved or invested in anything. 

    The problem with your previous post was that it was saying that the flow of FISA revenues were part of the hoax.  There is a flow of money into SS which is then turned around and paid out to those currently receiving funds. The simple way I've always understood it was that I pay for the retirees payments now, and the workers in 2040 will be paying mine. 

    Moreover, the Trust Fund does exist in a sense, but that if the Fund was to go to liquify a significant portion of those T-bills it "invested in", the U.S. Government as a whole would not be able to honor the request without raising taxes, causing everyone to go into caniptions.  A question is whether the Trust Fund can be said to be truly investing when it is just giving the money to the US government in return for some interest payments and the possibility of cashing them in at a later date.

     


    by Elusive Trope on Tue, 12/21/2010 - 9:06am

    I agree with the general concept, but unlike the rest of developed world, the U.S. of A. ain't (ever) in the mood to raise taxes to pay for proper pension system.  Of course we could slash the defense budget, but I doubt that would go over well either. 

    In my simplistic understanding of SS it was designed to be a stand alone system.  Workers pay into it and retirees receive from it.  It wasn't to be just another line item on the budget.  (The trust fund itself didn't come about until the early '80s when the revenue was greater than the expenditures and has created this whole IOU dilemma).  To do what you are suggesting would be asking to fundamentally change the pension system and given attitudes left and right and all in between, i just see it as nonstarter. 


    by Elusive Trope on Mon, 12/20/2010 - 9:50pm

    Sufficiently generous or not, the important bit part is that Social Security is not in any particular trouble at the moment. You are talking about an expansion ... while Obama is talking about cuts. I was reading the other day that social security is solvent for 17 years at current economic conditions .... that assumes we're in a damn depression forever and the tax base never comes back. The only reason we're dipping in to the general fund is to cover this absurd 2% tax holiday thing.

    If the program should be more generous, that's a different issue all together. If that needs to be accomplished, I strongly disagree that we should take what has thus far been a totally separate private investment and jumble it all up with the clusterfuck that is the congressional budgetary process. If we want a better payout, we need to invest a bit more - which means higher FICA ultimately. We're going to have to own it sooner or later.

    And to clear up another common misconception (the first being that the trust fund has a liquidity problem); congress can not by law "dip in to" the Social Security trust fund - right? Didn't we just invest in a bunch of T-Bills (exactly as China has) which provided the government capital in exchange for a modest return on the investment? Or did they do something else to get at the money I'm not aware of?


    by kgb999 on Mon, 12/20/2010 - 9:55pm

    Regarding the last paragraph: that is the whole internal IOU brewhaha which I must admit makes my brain numb trying to figure out.

    Scenario 1 (Trust Fund is an accounting fiction):
    • 1980: $1 payroll tax collected in 1980
    • 1980: $1 lent by Social Security to the federal government
    • 1980: Federal government increases spending on government programs by $1
    • 2020: Federal government raises taxes by $1 plus interest to repay the loan to Social Security
    • 2020: $1 plus interest transferred from Federal Government to Social Security.
    Scenario 2 (Trust Fund represents real economic savings):
    • 1980: $1 payroll tax collected in 1980
    • 1980: $1 lent by Social Security to the federal government
    • 1980: Federal government increases spending on government programs by $0
    • 2020: Federal government raises taxes by $0 to repay the loan to Social Security. Any tax increases that occur in 2020 would have happened anyway without Social Security.
    • 2020: $1 plus interest transferred from Federal Government to Social Security.

     


    by Elusive Trope on Mon, 12/20/2010 - 10:19pm

    Well, that *is* a brutal explanation ... which doesn't seem to make too much sense. I did some extra poking around. It seems that our trust fund is held in "Government Account Series Treasuries". They are apparently non-marketable (i.e. we can't sell them to Goldman Sachs directly) but they *do* pay interest. The info on this type of security seems scant - it appears to be the instrument they use internally.

    Basically, what the government seems to be doing is taking all revenue in to one big account (virtually speaking). Then they are utilizing all cash on hand *before* they borrow from the public market. What that seems to mean is that the surplus being collected for social security (and other stuff) is being spent on operations and they are issuing Account Series Treasuries into the various trusts. It makes total sense ... if elected officials were trustworthy. We end up paying less interest on the money that would have to be borrowed from *somewhere* for operations regardless and we make a decent institutional-grade return on the money we're collecting for social security.

    I don't see how either Scenario 1 or 2 are accurate representations of what's going on. The treasuries we've issued cost the general fund less in annual interest than borrowing the same amount of money would. Had we not employed social security revenue for expenditures, we would have still needed to spend the same amount of money for general operations - hence we would have borrowed it from somewhere at a higher cost. So, really the trust fund represents a reduction in interest for the federal government's general expenditures.  In other words the difference between public borrowing rates and the Treasury Bond rate should be viewed as a direct contribution to debt reduction by the Social Security trust. Any tax increase that occurs "in 2020" (or whenever we have to honor the bonds underpinning our debt) would ultimately be GREATER without Social Security as the lost interest savings would be added to the deficit.

    I'm still running down a few links ... but I see what they are doing. The CBO has some good stuff, hopefully I get a minute to write it up in such a way to be helpful to others.

    It still all seems to come back to us being asked to give up supplemental retirement that we have rightfully invested to secure because the damn rich people refuse to pay their taxes. We can slice it, we can dice it but the gaping hole in our national budget is caused by an unsustainable free ride the ultra-wealthy are taking. As more and more of the wealth moves into their hands (and out of circulation as far as the taxpaying public is concerned) the hole in the general budget is just going to keep getting bigger and bigger. Raiding social security isn't going to fix it - social security is not what's causing the deficit. The deficit is primarily based on underfunded recurring fixed costs (and the massive cost of the bailouts is still mostly off-book) it should be expected to continue year after year until we fix taxation .... Social Security only has so much money to feed into the maw.

    Those greedy fuckers just figure "the full faith and backing of the US government" shouldn't mean as much for the American people as it does for Goldman Sachs or China. I can't believe they'll do QE-2 but can't be bothered to service the bonds written to working Americans. That's one hell of a slap in the face - free money for the bankers who literally invested nothing to get the benefits (except massive national losses), but they can't even honor bonds that represent a cash-money investment in America by the working population. Breathtaking.

     


    by kgb999 on Tue, 12/21/2010 - 4:25am

    You're right in thinking that it ought to be the case that our creditors would worry if we disregarded that the Trust Fund is backed by the full faith and credit of the Government.

    But they won't worry. Because like almost everybody but the american people they know that the Trust Fund is a fiction.As is its full faith and credit backing.

    Say after me a thousand times. There is no Social Security Trust Fund, there is no Social Security Trust Fund, there is...........

    You get the idea.

     


    by Flavius on Tue, 12/21/2010 - 6:11am

    Why ever would I repeat something a thousand times that simply does not appear to be the case?

    The US government has debt. That doesn't change anything. Using that as an excuse to raid our assets doesn't make the assets they would like to steal any less real.


    by kgb999 on Tue, 12/21/2010 - 12:27pm

    Useful stuff. Thanks.

    A caveat - I don't think the GOP/Obama strategy is going to involve defaulting on the GAS treasuries. I don't think it's even going to involve taking the payroll tax revenue and diverting it away from paying retirement benefits - all that goes into SS will eventually go out in benefits, imo.

    What they plan on doing is turning SS into a redistributive program - middle class workers paying to support the working poor in their retirement years. That is at least the structure suggested by the Deficit Commission's report. Whereas right now it isn't a redistributive program, but more like a mandated retirement insurance program - your payroll taxes are like a premium that you pay for a guaranteed income later on. It's in a sense wrong to think of SS payroll taxes even as taxes (SS could function much as it does if it were a highly regulated non-government non-profit organization the purchase of whose 'insurance' product was mandated).

    If you change the nature of the program like that (from an insurance product to a vehicle of redistribution), the outcome starts to look absurd. - why should the MIDDLE CLASS be carrying all the burden of poverty-reduction?

    It is much like the structure of the funding for HCR: benefits for the working poor are paid for by a regressive tax (i.e. a tax on health care benefits for Unionized workers). And it is consistent with the general governing narrative of the Obama administration - protection of the investor class through guarantees on all big bank liabilities and continued financial deregulation, tax cuts for the rich, and de facto tax hikes on the middle class to pay for an improved social safety net. I'm not sure who - outside of the top 1% - this kind of idea is supposed to appeal to, though.

    There's a kind of bait-and-switch going on. They appeal to the better angels of middle class workers - 'hey guys, the poor really need this more than you, so let's hike their benefits and cut yours, okay?' and then forget to mention that while another 3% of YOUR income will now be redistributed downward, only 0.1% of the income of your average Goldman banker's income will contribute to the same redistribution. So they start out with an nice bleeding-heart 'social justice' argument and then ... fuck you in the ass, as it were.

    If, as they say, the poor ought to get more in retirement benefits, then get the money where taxing it is fairest/most efficient. I.e. a new social justice tax on the rich, a new carbon tax or a new financial transaction tax.

    Who knows, maybe they will come up with something else. But this is the direction the commission goes with and Obama has more or less endorsed it.


    by Obey on Tue, 12/21/2010 - 6:58am

    I don't see how the Commission's recommendations changes the fundamental structure of Social Security system.  It's appears that the primary changes would be in the percentages of the payout, where those in the middle class get less future bang for their buck paid into the system now.  But it has always been as far as I know those who work now pay for those retired now, with the understanding that those workers would have their retirement paid for by the future workers.   The concept of a huge surplus seems to be a relatively new concept dreamed up by Greenspan et al. and in a sense the Commission is set up to kind of make it so we just sort of kind of forget all about surpluses and how people let SS just never honor the T-bills.


    by Elusive Trope on Tue, 12/21/2010 - 9:16am

    Exactly right. The accounting semantics won't change. Just how much you pay in and how much you can expect to get out of it. I think 'real change' involves the latter. Opinions may vary I guess...

    ;0)


    by Obey on Tue, 12/21/2010 - 11:53am

    It seems the major structural change as far as that goes is the idea that what you pay in doesn't determine how much you take out. Currently, it is a function of AIME. I think the thing Obey is highlighting is the "Special Minimum Benefit". The commission co-chair report is not very detailed, but it would appear this promises to pay out a minimum benefit regardless a worker's AIME. And he's totally right. I had not really thought about that part before - that is a MAJOR change. Seems geared to give the bleeding-heart set a high horse from which to sell out America.

    The trust fund surplus was "dreamed up" by Greenspan because of the Baby Boomers. There are a shitload of 'em. As they shift into retirement, there will be a huge hit on the system as Gen X and Y try to pick up the slack. The whole idea behind building it up was to draw it down across the exact period math shows the surplus being depleted. The guy screwed up a lot of stuff, but it looks like he got this pretty much right. At some point, a definitive feature of the plan has been construed as a disaster for America.

    I think you are too caught up on the liquid cash part of the equation while they have sort of split cash flow from systemic financial arrangements. It seems more accurate to say that those working now pay for *active government expenditures* of which Social Security payouts are one. I understand why people are saying there isn't technically a "trust" fund, because the way they are taking in the revenue is kind of wacky. They aren't collecting and disbursing from a bunch of individual pools like that - they are keeping everything straight as a function of accounting and financial instruments. But this doesn't make the numbers any less real.

    I agree with Obey, I don't think the plan is to default on the bonds. In addition to the bait-and-switch that he highlights, there appears to be an accounting swindle as well which is kind of my focus on this. It looks like they are going to keep collecting the money that *should* be contributing to an increasing surplus (i.e. more Treasury Bonds in the trust) ... but they are going to stop putting bonds in the trust because now it's "fixed" ... and they'll just spend the money they are collecting "for social security" to cover government operations that should be funded by collecting taxes from the rich pieces of crap who came up with this whole scheme. Those of us with two/three decades in the workforce have contributed to a plan that promised to pay out [X] .... now they want to spend a chunk of that money on other stuff rather than raise taxes on the rich and are asking us settle for [Y] even though we have systemically contributed in such a way to legitimately generate assets that can easily pay out [X] for all participants .... so long as the system isn't raided. This is all about the rich not wanting to pay their taxes and scrambling for whatever they can cram in the accounting hole to stave off the inevitability.

    And the pisser: come 2020 these assclowns are STILL going to turn around and bitch about having to make good on the "IOUs" that will still have to be cashed in to make this whole scheme work. Is there any doubt they will have already settled in to spending 5x more than they just fleeced from our social security payments .... and still won't want to pay any taxes?

     


    by kgb999 on Tue, 12/21/2010 - 2:46pm

    Yeah, there is a benefit for the ultra-poor.  It's the middle class who gets slammed here.  These are the people Simpson portrayed as driving luxury cars to gated communities.  They will do everything possible to make it seem like the vast middle doesn't need or deserve anything but cuts.


    by Michael Maiello on Tue, 12/21/2010 - 3:11pm

    Thanks this really helps clarify some things for me.


    by Elusive Trope on Tue, 12/21/2010 - 3:53pm

    Obey: Your lucid analysis of the situation should sound the bells of alarm across our hypnotized land, esp. when you write

    "There's a kind of bait-and-switch going on. They appeal to the better angels of middle class workers - 'hey guys, the poor really need this more than you, so let's hike their benefits and cut yours, okay?' and then forget to mention that while another 3% of YOUR income will now be redistributed downward, only 0.1% of the income of your average Goldman banker's income will contribute to the same redistribution. So they start out with an nice bleeding-heart 'social justice' argument and then ..."

    The question is: how can this process be stopped? Can it? Or have the Plutocrats and Oligarchs won? Are we just fiddling eloquently while Rome burns?


    by Seahorse (not verified) on Tue, 12/21/2010 - 9:44am

    I deleted Dean Baker's take; I just saw Cmaukonen had posted it below. 

    But then we're faced with the question of what Obama wants, or the possiblity of Dems making end runs around him, garnering support, if possible, or other R's or Tea Partiers.  It could be that there are so many Americans now hold irrational beliefs of concepts that make no financial sense any longer that some unity across party lines would be hard, but we have to try, IMO.  We had dear Bernie railing about us demonstrating against the tax cut plan, and now (it seems) all this.  Whatwill be the tipping point is crazy to imagine, given how much we've allowed ourselves to be screwed.  What would civil unrest look like?  We know Homeland Security's been planning for it, but Whose Unrest is a big question.  I'm glad I can't see into their brains, frankly.  This chart is interesting as evidence of our passivity and/or powerlessness.


    by we are stardust on Tue, 12/21/2010 - 10:42am

    in the middle of all that:

    The recovery for the economy from such a situation will be difficult...

    This goes back to what is one willing to risk to draw the line in the sand.  How much short-term increased suffering for those suffering or on the brink of suffering are we willing to endure in order to make the correction to the system (and stick it to the wealthy elite)?


    by Elusive Trope on Tue, 12/21/2010 - 10:45am

    Trope: Can I suggest reading a bit at Angry Bear?  'Obama's naivete is now idiocy' and what will come next, and more.

    http://www.angrybearblog.com/2010/12/what-once-was-naivete-is-now-idiocy.html

     


    by we are stardust on Tue, 12/21/2010 - 2:17pm

    I agree, I am sick and tired of that damn word. Entitlement my arse!!


    by Richard Day on Tue, 12/21/2010 - 3:51pm

    Good old George Carlin was right.

    You know what they want? They want obedient workers. Obedient workers, people who are just smart enough to run the machines and do the paperwork. And just dumb enough to passively accept all these increasingly shitty jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and vanishing pension that disappears the minute you go to collect it, and now they’re coming for your Social Security money. They want your retirement money. They want it back so they can give it to their criminal friends on Wall Street, and you know something? They’ll get it. They’ll get it all from you sooner or later cause they own this fucking place! Its a big club, and you ain’t in it!  You, and I, are not in the big club.


    by cmaukonen on Mon, 12/20/2010 - 7:09pm

    All I can say is...A Lot of Old People with shot guns.


    by cmaukonen on Mon, 12/20/2010 - 7:19pm

    Boy are they full of themselves, if they think this will fly with the general voters.  Are they stupid?  Or do they think we are all stupid?  SS is a separate tax and fund.  Government don't want to pay back the IOU's in the trust fund.  I can see the next election race.  Everyone is going to get an opponents that will run adds on TV explaining how the incumbent voted to reduce SS to give the fat cats a tax break and where are the jobs they promised?      


    by trkingmomoe on Mon, 12/20/2010 - 9:03pm

    See comments above.


    by cmaukonen on Mon, 12/20/2010 - 9:04pm

    I don't think it is just a matter of them not wanting to pay back the IOUs in the trust fund.  The whole issue is a mess.  And even if every IOU is honored there is still a long-term issue of revenue to expenditures. 

    Of course, that won't stop them from running those commercials.  


    by Elusive Trope on Mon, 12/20/2010 - 9:37pm

    No, there's not that big difference revenue to expenditures.

    Unlike Europe, America's population isn't aging that much because we bring in new immigrants/workers, and the birthrate isn't that low either.

    So long-term with Social Security there's really not a big problem.

    Which is why they always link it with Medicare, where there is a significant deficit problem.

    "Between nail-biting and drive-by shooting, we've got a huge problem in this country".


    by Decader on Tue, 12/21/2010 - 7:39am

    To All Dag-boogers: Come and get your roasts on my Celestial Event blog.  (I'm so pissed about this I need to stay off this diary for my mental health and some of yours...)


    by we are stardust on Mon, 12/20/2010 - 9:08pm

    No need to advertise yourself, your post title resides on the left hand column along with everyone else's.  Wish I could stay up until 3AM tonight to see the moon but I doubt I will.  Thanks for the heads up, though, about the eclipse. 


    by LisB on Mon, 12/20/2010 - 9:41pm

    I love it when you're snotty, Lis!


    by we are stardust on Mon, 12/20/2010 - 10:11pm

    It only happens when the moon is right, Stardust. But I'm glad you love it. 

    But, gee, I couldn't help but notice that you do like to advertise your comments and posts at other comments and posts, so I decided tonight, since the moon was right, why not be snotty and mention it. 

    http://www.youtube.com/watch?v=I-kLeQkJRxU


    by LisB on Mon, 12/20/2010 - 11:07pm

    Well you go, girl!  These blogs are mostly for information sharing and discovery, yes?  This time my blog is for that and some fun.  Advertising?  What do I win, Lis?  I'll skip your video I think.


    by we are stardust on Mon, 12/20/2010 - 11:13pm

    What, and pass up Van Morrison?  Silly girl.

    Yes, these blogs are mostly for information sharing and discovery, yes.  And I've discovered a lot. 


    by LisB on Mon, 12/20/2010 - 11:50pm

    The Republicans have neatly framed the budget issue as government overspending which must be reined in, rather than a problem created by long term under-taxing which resulted in the government's inability to support the needs of our fellow Americans. Massive indiscriminate tax cutting has resulted in so much less money coming in to the government that we can't fund programs that were established by the rule of law.  Looking at it that way, the undermining of American prosperity sounds a bit like treason..hahaha


    by MrSmith1 on Mon, 12/20/2010 - 9:47pm

    And they were able to neatly frame it because it fits so perfectly snug with the American i've-got-mine-you-go-get-yours paradigm.  The tax issue is one of those which causes us to say "don't listen to the voice of the people."


    by Elusive Trope on Mon, 12/20/2010 - 10:00pm

    Slightly OT, and you may have read about this meeting already, but it's interesting:

    At a White House news conference on December 7 in which he announced a deal to extend the Bush tax cuts, Barack Obama chastised his liberal base for sticking unrealistically to their “purist” positions.

    What the president didn’t say was that a few hours earlier he had met with and tried to assauge some his most vociferous liberal critics -- economists Paul Krugman, Joseph Stiglitz, Jeffrey Sachs, Alan Blinder, and Robert Reich, the former Labor secretary.

    In what two participants describe as a somewhat-argumentative one-hour discussion, Obama tried to convince the group that his compromise would deliver more bang for the buck to the economy and to people most in need of help than any other politically feasible option.....

    http://www.nationaljournal.com/whitehouse/obama-tried-to-placate-liberal-economists-20101217


    by we are stardust on Mon, 12/20/2010 - 10:39pm

    I like Dean Bakers idea.

    The prospect of the U.S. government defaulting on its debt creates the sort of end of the world scenario in which Congress rushed to pass the TARP in 2008. Back then, President Bush, Fed Chairman Ben Bernanke and all sorts of other luminaries told members of Congress and the public that we would have a second Great Depression if the Wall Street banks were not immediately bailed out, no questions asked. And the money flowed.

    The prospect of defaulting on the debt will create a similar outbreak of shrill warnings of disaster. This would likely to lead to scenario in which President Obama signs whatever debt ceiling package House Republicans hand him, even if it includes the privatization of Social Security and Medicare and major cuts and/or elimination of other important programs. The argument from the administration will be that they have no choice.

    In order to avoid this train wreck, supporters of Social Security and Medicare have to restructure the options. They have to push President Obama to announce in advance that he will never sign a debt ceiling bill that includes cuts to Social Security and Medicare, the countries two most important social programs.

    These programs are crucial to the financial security and health of tens of millions of people. If there are to be changes in these programs then they should occur after a full public debate in the light of day, not as the result of Republican trickery and parliamentary game playing.

    This would be a hugely popular position since not only Democrats, but also independents and even Tea Party Republicans overwhelming support Social Security and Medicare. Furthermore, the gun, in the form of a potential debt default, is actually pointed at the Wall Street banks, not the public.

    The question is, is Obama smart enough and gutsy enough to do it. I seriously doubt it.


    by cmaukonen on Tue, 12/21/2010 - 12:17am

    Thanks. Useful.


    by Flavius on Tue, 12/21/2010 - 5:42am

    As another Obama defender, all I can say is, I think I'm going to vomit. I have no problem w/ raising the age a couple of years...a 65 year old 15 years from now will be in much better shape, and have a much longer life expectancy than a 65 year old back in the day.  And I can't say I'd have much stomach acid over some sort of means testing...but reduce benefits on the poorest while the wealthy who don't need the pittance they get from SS anyway get more...Who makes up this shit? It would be laughable if it wasn't so incredibly sad.


    by stillidealistic on Tue, 12/21/2010 - 4:24am

    a 65 year old 15 years from now will be in much better shape, and have a much longer life expectancy than a 65 year old back in the day.

    Stilli, this is one of those talking points that has been pretty much debunked. The rich live much longer (and are in great shape, I assume). Ordinary workers don't live much longer than 40 years ago, and I don't know how much the health of manual laborers at age 65 has improved over the years.

    http://krugman.blogs.nytimes.com/2010/08/13/live-long-and-prosper-2/


    by Obey on Tue, 12/21/2010 - 7:11am

    And the average is higher mostly because of the drop in infant mortality rates. Which is, of course, meaningless to Social Security.


    by Michael Maiello on Tue, 12/21/2010 - 8:03am

    Yeah, vomit right in the lap of my generation.  Raise the age?  Horseshit.  Lower the age to 55,  raise benefits for lower income brackets, lower benefits for higher income brackets and remove the cap on collections.  Time to start making sense again. 


    by kyle flynn on Tue, 12/21/2010 - 12:24pm

    Show me the math and I'd be right with you...then get it passed by the bastards in Congress.


    by stillidealistic on Tue, 12/21/2010 - 6:39pm

    I will, stilli.  And yeah, I know you will too.  And hey, I've got no illusions that the next Congress could pass anything close to those comon sense changes, but gee wiz Mr. President, you wanna start talking about tinkering with SS, start there.  You're a Democrat, remember?


    by kyle flynn on Tue, 12/21/2010 - 6:57pm

     this is a good place to start, stilli.  It's long, so just jump to the conclusion on page 13.  It'll take 30 seconds to read.  If you dig it--and I think you might--you can read more.


    by kyle flynn on Wed, 12/22/2010 - 1:05am

    I'm almost without exception a defender of Obama here.

    I can see why you would say that, flavius, but I don't think that's true.  There are a number of other regulars here who sometimes or even often defend Obama in general or specific decisions he makes, some more overtly than others.  Another Trope, LisB, artappraiser, destor, stillidealistic, and of course A-man come to mind. 

    This can present some challenges to civility at times but I think it makes for a healthier, livelier site.  I don't think this constitutes token pushback, either, by any means, but reflects the views and tendencies of a significant core group of regulars.  Granted that the intensity of the criticisms of Obama is clearly far greater than the intensity of supportive things written about him, and the tone of the critics sometimes gets pretty strident.


    by AmericanDreamer on Tue, 12/21/2010 - 9:22am

    I don't think Flavius was claiming to be the only defender of Obama here.


    by Donal on Tue, 12/21/2010 - 9:49am

    You're right.  My mistake.


    by AmericanDreamer on Tue, 12/21/2010 - 10:06am

    Right. I intended to emphasize the consistency of my suppot for Obama,  not its uniqueness.

    Whichever adjective applies , it will be sorely  tested If Obama sells the pass on social security.


    by Flavius on Tue, 12/21/2010 - 12:19pm

    Flavius, Destor, and Co.,

    Good morning.

    Could you please provide a link to the article that claims this? It is alarming news if true. 

    Seahorse


    by Seahorse (not verified) on Tue, 12/21/2010 - 9:28am

    http://dyn.politico.com/printstory.cfm?uuid=EB5E9565-C4A8-7E36-747EADB1F4AAB099

    Robert Kuttner wrote it.


    by Michael Maiello on Tue, 12/21/2010 - 9:39am

    These days when I see references to the upcoming "SOTU" address here at dag my mind is starting to see it as the "STFU" address (that is, to the liberals, progressives, leftists, the other outcasts and wild-eyed, occasional NY Times-reading radicals, centrists, dictionary-definition conservatives, independents, moderates, and, oh, regular Americans who would use none of these labels to describe themselves, who think SS is a valuable program that should not be weakened, and need not be).  


    by AmericanDreamer on Tue, 12/21/2010 - 11:09am

    I think you are right, AD. The man seems pretty good at tailoring his talk only to those who count. We counted up to the election. Since then? Not so much, eh? I guess someone musta' taken our place when we weren't looking.


    by SleepinJeezus on Tue, 12/21/2010 - 11:16am

    Is this be a hoax?  While the Politico name looks like the web site, the rest of the page is not at all the politico format.  I can't find Kuttner's name among the people writing at politico and, frankly, I don't know why Kuttner would be writing there since, as editor of The American Prospect, he has his own publication where he can comment at length.


    by AmiBlue on Tue, 12/21/2010 - 8:12pm

    Cross-posting; it was at Huffpo,too.  On thier webpage, type "Robert Kuttner'; it should give you all his diaries.


    by we are stardust on Tue, 12/21/2010 - 8:41pm

    Latest Comments