16 Aug 2010 ... In his latest article, "Attacking Social Security by Paul Krugman," Paul Krugman articulates a position not heard nearly enough: ...
www.democraticunderground.com/discuss/duboard.php?az=view_all...
sandnsea  (1000+ posts)     | Mon Aug-16-10 01:53 AM
Response to Original message |
| 4. We're going to have to raise taxes to pay back the trust fund |
 | And we're going to have to raise more taxes to keep social security at its current rate after 2037 or 2043, depending on whose numbers you look at.
Of course the trust fund went to the wealthy in the form of the Bush tax cuts so we should get that back. But they're going to pitch a fit if we raise those taxes and FICA on top of it.
And so many people either want to deny these two problems exist, or won't get out there and educate the people so they can fight with accurate information. |
They took our FICA with the Bush tax cuts and I want it back. That's not a problem but people aren't getting properly educated on that issue. They're just being told social security has $4 trillion dollars in it
After the trust fund runs out in 2037, and the income can only fund 75% of benefits, is another issue. It can be fixed by taxing FICA on all income, but if you let the Bush tax cuts lapse to fix the first problem, it'll be harder to argue for another "tax hike" to fix the second problem.
Voters, rich or poor, aren't going to understand why there needs to be two tax hikes if we don't get the facts straight. Unlike some people at DU, there are voters out there who don't think the rich should have to pay for everything. We can't lose them. 51. Asserting that "people at DU" think "the rich should have to pay everything" is a false, ad hominem
Edited on Mon Aug-16-10 10:30 PM by Faryn Balyncd
Faryn Balyncd
...unnecessarily personal attack.
The worst part of this smear is that it is false.
There is a big difference between believing that the rich, as well as everyone else, should pay their fair share, and believing that "the rich should have to pay everything".
The reality is that many on the commission want to chisel people who have paid 40+ years of payroll & self-employment taxes out of their retirement, primarily by the further rigging of the (already rigged) CPI and COLA calculations.
Paul Craig Roberts, who wrote Reagan's first tax cut bill while in the Treasury Department, is one of the few speaking out about the rigging of the CPI, which understates inflation because of numerous changes made in recent years. Yet those that desire to renig on obligations to those who have paid a lifetime of payroll taxes now falsely assert that the CPI overstates, rather than understates inflation and seek to use further rigging of the CPI as a means to cheat Americans of their retirement. Kurt_and_Hunter Yeah, I read that a couple days ago, really disagree
I understand his point in theory, that you can just look at social security as a part of the whole government and just throw all the money together.
I just think that is so dangerous to even put to paper. That's exactly what Republicans want to do, just pretend that those of us low income people, you know, the ones who don't pay taxes -- haven't been paying FICA all these years. Well we have. And it went to the Bush tax cuts. I don't want those figures compromised.
So the question becomes, where does the federal budget get the money to pay that FICA debt (in benefits) when it comes due.
The only theory I've seen is that the federal government can just keep borrowing the money, sort of a Keynes Gone Wild. But I think one should be able to look around the world at the collapsed economies and know that's a stupid idea. 13. Taxes don't fund spending at the federal level.
 | Edited on Mon Aug-16-10 02:40 AM by girl gone mad A fiat currency regime can always meet its fiscal obligations.
These economists understand how monetary systems operate. Right wing operatives take advantage of the fact that the average person doesn't understand monetary theory and use the idea of large deficits and debt levels to frighten people into acting against their own best interests by pretending that the federal government must run a balanced budget, as households do. |
......
Is it your contention that when somebody spouts ideas that are hardcore tea-party we are not allowed to correctly identify them as tea-party because doing so might offend the person espousing ideas that are hard-core tea-party?
I am not insinuating that you are a RW person.
I am assuming, having read you for years, that you are a Democrat.
And I am noting, for your benefit, that you have fallen into a mode of thought on social security that is the tea-party way of thinking about the topic, and that recognizing that fact might suggest to you that you may want to ask why the Republicans are right and Krugman is wrong on this issue because that would be the first time it had ever happened.
Boehner may be right on this and progressives dead wrong. That is possible.
But for heavens sake... do you think it is likely? ......"Do you think it's okay to look at "entitlements" as one big lump of government money, thrown in with defense and everything else?"
I prefer to think of them separately but either way it adds up the same.
(That also means we would have to think of SS payroll taxes as general revenues.)
You have government responsibilities on one side and revenue to meet the obligations on the other.
Unlike defense and everything else, however, social security has a huge revenue stream and it in pretty good shape. It takes only a small increase on the revenue side to make SS wholly solvent going out a very, very long time.
On the other hand, not one penny of the cost of the Iraq War has ever been paid for. But that isn't social security's fault!
Is the suggestion that we should reduce future Social Security benefits to pay for the Iraq War? That is what it boils down to.
SS is not a big part of any fiscal doom scenario because unlike everything else it is almost all paid for.
Why scapegoat SS for a deficit/debt it had nothing to do with? .....SS is solvent at least until 2037 and possibly solvent forever. The fact the govt stole all the money does not change the SS accounting. It is not SS's problem.
We will have a huge deficit/debt at point x in the future.
Why concede today that SS benefits down the road should be cut in order that FICA payroll taxes be diverted to some other use?
That is what we are talking about ultimately.
Before we were borrowing money from the bogus trust fund.
If we cut benefits then we will have stolen that money for real... it was collected to payout certain benefits and cutting those benefits is to renege on the deal.
Note that Krugman has not chosen either frame. He only demands that the frame chosen be consistent.
In your frame (which I agree with as politically best) the FICA taxes were paid and the govt stole the money.
Okay... so the govt has an obligation, the same as it has an obligation to pay the interest on T-bills we have sold. So no special attention to SS is called for.
There will not be a commission to consider defaulting on bonds we have sold because they are considered real promises.
So why do we have a commission talking about how to handle the promises SS made?
It's a debt. Pay the money.
If a crisis arises from paying out that money it is not a social security crisis. That's the point.
Ask the voters, even the worst red-state knuckle-dragger's, "Should Social Security benefits be reduced to pay for the Iraq War?" and it wouldn't get 5% of the vote.
So politically the only way the pugs can steal from the SS trust fund retroactively to fund their heinous excesses is to pretend that SS is the cause of a big fiscal problem and that seniors should get the bill.
But that is false.
Perhaps the pugs could put that over on everyone someday. (They've sold worse ideas.)
But why are we helping them?
....As the issuer of fiat currency, our government quite literally cannot default on its debt obligations.
Greece is constrained by the Maastricht straightjacket. The neo-liberal nightmare Greece is suffering through was quite predictable (and predicted by... whaddya know?... Galbraith and Stiglitz). Art from Ark Greece and the US are apples and oranges
Greece is a small country that cannot issue its own currency-- it must rely on Brussels (or is that Frankfurt?) to determine its allocation of euros. The United States, on the other hand, still enjoys the benefit of having the world's reserve currency, so that provides some degree of protection for the dollar since it automatically guarantees a market for dollars, even if they are seemingly issued in excess. The problem with reserve currencies, however, is that they don't stay on top of the heap forever, and once they are pushed off, they tend to become a shell of their former selves. Greyhound 2. For at least the thousandth time, no we're not. The so-called "trust fund" is a rather large pile
of treasury bonds, something like $4T worth, all bearing interest. There's no difference between the bonds that SSA holds and the bonds that the Chinese, Japanese, English, Saudis, and every state and federal pension plan, hold. The only way SS will not have enough money is if the U.S. defaults on it's debts, and the world will not allow that to happen, at least not yet.
Should that happen, the Rube Goldberg Ponzi scheme known as the global banking system would collapse and bring down everyone along with us and SS would be the least of our concerns.
This entire non-issue is a scam to get your money, that is the only truth involved in this whole non-crisis. |
Image via Wikipedia
You have probably read this, but offered for others as a concise intro to the "budget item or trust fund?" question.
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