Smothering Social Security

I have been wondering why Republicans keep mentioning social security, since it is part of the budget but it is self supporting. The answer is pretty clear of you look at the numbers. Working families have "put aside" $1.2 trillion in the social security trust fund between 2000 and 2009. The brings the social security trust fund to $2.5 trillion, every penny of which has been borrowed by the congress to support tax cuts for the wealthy. If social security is not "reformed", that money will have to be paid back to working families. That means that instead of "borrowing" more and more from people with average incomes of less than $28,000 a year, hedge fund managers earning over $1 billion a year and now getting over $100 million tax breaks under the Bush (and Clinton) tax cuts, may start having to pay the taxes that were normal when Richard Nixon was president, and everyone was doing a lot better than working people are today. Paying lower taxes when you borrowing money from working families (and just as much from China) is not fun at all when you have to pay both back. Best idea is to trick them out of being repaid; tell them that asking for their money back is asking too much.

The chart shows the growth of assets in the social security trust fund, now roughly twice what we owe China, but George W. Bush once called it "just pieces of paper", apparently meaning that workers had contributed $2.5 trillion, but since he and congress had spent it, all that the trust fund actually has are the same sort of "pieces of paper" that the government of China holds. This link will open a page in a new tab, showing the yearly contributions of workers to the trust fund, over $100 billion surplus each year from 1998 to 2009 and every penny of it spent by congress, a congress that calls any request for repayment, an "entitlement" as though you inherited a title rather than you are asking for the return of your own money. Note that the top 25 hedge fund managers in 2009 had incomes of (average) more than $1 billion each, and they got tax rates, 15%%, less than the full cost of social security to workers, and nobody denigrated those tax breaks by suggesting they were not earned, even though neither Clinton nor Bush ever explained how those tax breaks would be paid for. It was enough for those two guys that billionaires would be helping them (with speaker's fees), after they left office.

Asking poor people to work to 69 before they start asking for their money back, is a good idea if you have been getting big tax breaks you don't want to give up. Never mind that our health care is such that many poor people don't live until they are 69, or only live a year or two after they start collecting social security, never getting back half the money they put in.

Nobel Laureate in economics Paul Krugman has his own take on this:
http://krugman.blogs.nytimes.com/2010/12/01/destroying-retirement-in-order-to-save-it
December 1, 2010, 10:48 am
Destroying Retirement In Order To Save It

Bowles-Simpson, the revision, is out. It has not improved.

I think it is worth pointing out that like so many proposals from that side of the political spectrum — for this is, very much, bipartisanship as a compromise between the center-right and the hard right — this one involves a fundamental piece of strange logic. Namely, it argues that in order to head off the dire prospect of future cuts in Social Security benefits, we must … cut future Social Security benefits.

Also: in response to the point many of us have made about raising the retirement age — that only the affluent have seen life expectancy rise faster than the retirement-age rises already in the law — the plan promises special exemptions for those with physical hardships.

Let’s think about that. Right now we have a retirement system that has the great virtue of not being intrusive: Social Security doesn’t demand that you prove you need it, doesn’t ask about your personal life, doesn’t make you feel like a beggar. And now we’re going to replace that with a system in which large numbers of Americans have to plead for special dispensation, on the grounds that they’re too feeble to work for a living. Freedom!