Campaign to Cut Entitlements Picking Up in U.S. Posted on May 11, 2010 by Yves Smith The first part of this two part series proved to be very popular among blog readers, given the level of comments, so I thought I’d feature the second part, which was posted by Real News Networks on Monday. Enjoy! Post navigation ← Links 5/10/10 Alford: EU Shock and Awe Violates Powell Doctrine → Subscribe to Post Comments 107 comments attempter May 11, 2010 at 3:27 am It’s been clear for months now, since he first announced this priority in latter 09, that at the core of Obama’s Reagan idolatry is his nightmare of gutting Social Security and Medicare. Obama would view it as the consummation of his presidency if he could succeed where Bush failed, to privatize Social Security for the benefit of the banks. Here we see the ultimate example of where Democrats opposed something Bush wanted to do (one of the only times the Congressional Dems actually did fight back hard), not because they opposed it in principle, but because they wanted to reserve the accomplishment for themselves. Jojo May 11, 2010 at 3:53 am I’m liking this Real News channel! As I understand it, SS runs a surplus and would not be in any difficulty IF Congress would stop raiding the surplus each year. Why is this point rarely if ever mentioned? Here’s a couple of articles on SS privatization: =============== Here’s how it could be worse During the Bush administration, proposals to privatize Social Security were in vogue. Here’s why today’s retirees can be very happy it didn’t happen. http://money.cnn.com/2009/01/13/news/economy/sloan_retirement.fortune/index.htm ================ ================ Twelve Reasons Why Privatizing Social Security is a Bad Idea Greg Anrig, Bernard Wasow, The Century Foundation, 12/14/2004 Addressing Social Security’s potential long-term financing challenges by taking the dramatic step of diverting its payroll taxes to create new personal accounts will have drastic consequences for federal finances, future retirees, and those who rely on the system the most. Learn more about twelve major reasons why less costly and less painful reforms should be considered instead. Click on the links below to jump to different parts of the document or download in PDF format here. * Introduction * Reason #1: Today’s insurance to protect workers and their families against death and disability would be threatened. * Reason #2: Creating private accounts would make Social Security’s financing problem worse, not better. * Reason #3: Creating private accounts could dampen economic growth, which would further weaken Social Security’s future finances. * Reason #4: Privatization has been a disappointment elsewhere. * Reason #5: The odds are against individuals investing successfully. * Reason #6: What you get will depend on whether you retire when the market is up or down. * Reason #7: Wall Street would reap windfalls from your taxes. * Reason #8: Private accounts would require a new government bureaucracy. * Reason #9: Young people would be worse off. * Reason # 10: Women stand to lose the most. * Reason #11: African Americans and Latin Americans also would become more vulnerable under privatization. * Reason #12: Retirees will not be protected against inflation. http://www.socsec.org/publications.asp?pubid=503 ==================== gruntled May 11, 2010 at 9:25 am I think we’ll be getting rid of Obama before he manages to gut SS and other social programs. This November will be Democrats’ Waterloo. This “bait and switch” Obama pulled on the voters will not go unpunished. renato May 11, 2010 at 11:42 am They will punish him by electing Republicans even more eager to deliver the coup de grace. lambert strether May 11, 2010 at 9:31 pm The two parties prop each other up, and if one falls, the other one will to. Frankly, I’d rather be dealing with Rs who just outright want to slaughter the useless eaters, than deal with the Ds who want the same policy outcome, but salve their consciences by blaming impersonal forces. bobmc May 11, 2010 at 11:10 pm ocial “security” is the greatest integenerational wealth transfer in history. It is clearly unsustainable. Do I wish it could continue?……yes But it will not. It is fundamentally wrong for me to pay for your old age. And don’t start with the “I paid in” crap the avg retiree lives for 12+ yrs and exhausts their contributions to SSA in 7. It will not be sustained. The only question is what to do next It will be those voters. under 30 who wake up to the fiction of benefits “promised” that will decide how we escape the fantasy of Social In-Security. Externality May 12, 2010 at 3:28 am “It is fundamentally wrong for me to pay for your old age.” Similar arguments can be made against tax-payer funded childcare, schools and universities. As a non-parent, what obligation do I have for young people? Let their parents (if known) pay for them. Forcing adults to subsidize children is unfair and has a disparate impact on LGBTs and groups that have few or no children. renato May 12, 2010 at 8:52 am One must go further: “it is fundamentally wrong for me to pay for my old age. I must not live or die with dignity! Instead, all this money withheld should be used to bail out banks.” Julien June 2, 2010 at 10:35 am they must be something in the water or foods we eat in the state because it seem to me that more and more people tend to have only half a brain. “I don’t want to pay for old age people” “I don’t have children why should my tax dollars be contributed to any type of school” “As of now my house is safe why should my taxes pay for the fire department” “my taxes for war, healthcare, transportation, the police ect… and on and on for you that have only half a brain, it will be beneficial to use it and think rather you want a country or not…in order to have a vibrant country, you must have a strong society. Society and individualism are different things…I don’t know what cause it but United State is sick intellectually Glen May 11, 2010 at 4:21 am The Tea Party ought to love Obama. He’s slowly getting rid of Social Security, Medicare and Medicaid through a combination of forced enrollment in private health care, two unfunded wars, massive tax payer give aways to Wall St, and never ever raise taxes on Wall St bankster types, or cut back on funding military boondoggles. All this, after wiping out your home value, your pension, and your job. He’s like a smarter, smoother, Bush II. eric anderson May 11, 2010 at 9:22 am “The Tea Party ought to love Obama…” I understand you’re trying to be comical, but good ironic humor requires some element of truth to be effective. I would say the objective of Tea Partiers is to restrain government deficit spending so that Social Security will not go bankrupt. Or course Medicare needs to be reformed. This Administration signed a bill with big cuts, but I don’t believe they will ever materialize under this version of health reform, because there are no real cost controlling measures. It is a path to higher deficits. You guys are getting all excited about Obama making deficit cutting noises, when he really has no intention of doing any such thing. His last deficit reduction plan only affected about one fifth of the total federal budget with a spending freeze. That’s not going to help, because the growth in spending is in the other four-fifths. On debt and deficits, Obama is all talk. The action is spend, spend, spend. Surely if you read a newspaper article or two you would realize this. Anonymous Jones May 11, 2010 at 1:30 pm While I agree 100% with you regarding Obama and deficits, I do not believe many of the politicians or media members who speak at Tea Party rallies would actually enact deficit-reducing policies. There has been only one president of the last five who has made any headway at all regarding meaningful deficit reduction, and the party in which that man ran for office will never make the same mistake again. This is the constant problem we have every time this Tea Party topic comes up. Yes, I have no doubt many of the people in the movement are sincere about smaller government. As I’ve said before, I believe they are a small minority and I believe most of them are incorrect about their own consumption preferences, but I do believe they are sincere (just misguided, which is different than lacking intelligence). But being misguided about their own preferences isn’t even the biggest problem. The problem is that the politicians in the Tea Party movement are duping these people as much as Obama is duping progressives. These politicians are going to make a lot of talk about reducing government and then they are going to go right back to the policy of socialism for the rich. I’ve seen these rallies on TV and in person. I find them almost indistinguishable from Republican events. Maybe I’m wrong, but I’ve seen no evidence to think so. Kevin de Bruxelles May 11, 2010 at 4:11 pm AJ, What you are saying was perfectly illustrated when before addressing the Tea Party convention, Sarah Palin scratched out “budget cuts” and replaced it with “tax cuts”. As you imply, no deficts are going to be cut in America any time soon. The only battle is about which group of people will benifit from these deficits. wunsacon May 11, 2010 at 1:40 pm >> All this, after wiping out your home value, your pension, and your job. I partly agreed with you up until this statement, which doesn’t make sense given the chronology of events. sgt_doom May 11, 2010 at 8:10 pm Glen, you are sooooo right, and anyone who refuses to acknowledge that Obama has appointed the most anti-worker, anti-labor, anti-union and anti-future types to his administration is living in Wonderland, and in complete and total denial, as the posts following yours will succinctly demonstrate. When Bush #1 falterned on NAFTA, they brought in Team Clinton to seal the deal. When Bush #2 faltered on privatizing Social Security, Medicare and public education, they bring in Team Obama to seal the deal. Bad cop, then even worst cop. Appears to be working…. Anybody notice that something close to $1 trillion is embezzled from Medicare/Medicaid every year, by those corporations buying up pharmacy and loading down people’s billing in a fraudulent manner, but the administration- and congressionally-pressued HSS can’t touch them…. lambert strether May 11, 2010 at 9:33 pm sgt_doom: It’s called the ratchet effect. Evelyn Sinclair May 12, 2010 at 10:38 pm Thank you!! “The Ratchet” is very nicely thought out and written. I’ve had similar observations, but these are pinpoint-focused thoughts. I also like to use the ratchet analogy for the way the Wall Street crowd makes money. (Down market or up market, they win. Long or short they win. Profits or bailouts they win!) Abhishek May 11, 2010 at 4:36 am Social Security ,Medicare and Medicaid have to be reformed because of the current and past profligacy.The unfunded liabilities of these programs cannot be funded by the projected revenues of the government. attempter May 11, 2010 at 5:34 am Ok, first end the Bailout, the war, Big Ag subsidies, and all other corporate welfare, cut weapons spending to rational levels, and institute a rational, fair marginal income tax rate. We’ll see how the finances are after that. Then we can see about these entitlement programs. carl rite May 11, 2010 at 9:06 am Not a prayer in hell with this kinda argument–makes too much sense. Big $$ does not want it. We lose–again. Carlos eric anderson May 11, 2010 at 9:27 am Here is where a lot of movement conservatives, Republicans, and Tea Partiers would agree with you. 100%. Well, you might get some arguments about defense spending cuts, but really there is a huge amount we could reduce there. We simply cannot afford the costs of military empire, troops in 100 different countries, etc. But basically, I think you have left and right in agreement here. Why can’t we get any action? attempter May 11, 2010 at 9:35 am I guess the main reason is that even most who think they really want reform still want to buy much of what Wall Street and Washington are selling. They still want to be debtors and consumers. And they buy into alot of the top-down-orchestrated divide and conquer idiocy. Greg May 11, 2010 at 3:01 pm I understand the sentiment but I think the better and more truthful route is NOT to end these things you mention but to simply and accurately explain how and why they came to be. Many jobs have been saved/created by these actions. Corporate welfare is popular with corporations because it WORKS!! Now this doesnt mean we can revisit these things and make adjustments where necessary but to act like a scorched earth cutting wouldnt be disruptive and cause A LOT of grief is disingenuous. By pointing out how these subsidies work and why it will become OBVIOUS to everyone that the system we have grown up in is NOT a private run system and is NOT a govt run system but a HYBRID system. Its time to put the extremists out to pasture. Corporations dont want a completely hands off govt any more than most of the citizens. Most American corporations have gone begging for the subsidies they get (and scorn for everyone else). We NEED to talk about that and stop pretending that it will ever be substantially different. renato May 11, 2010 at 3:12 pm It doesn’t just work Greg. It works like gangbusters. Hundreds of millionaires have been created this way. We owe it to future generations of banksters to make sure this is the gift that keeps on giving. Doug Terpstra May 11, 2010 at 10:11 am You’re right about past (and current) profligacy—but on military and corporate welfare—not profligacy on SS. What is almost always omitted by the privatizers, is that, although it is facing future problems, SS is entirely self-funding and extremely efficient. That’s why the billionaires for SS reform want it: free money for Wall Street Gaming, the last great prize of pirate booty. sgt_doom May 11, 2010 at 8:11 pm You are right, dood, nothing must EVER touch all those debt-financed billionaires who have pilfered all the money — I bet you find arithmetic very, very difficult…. purple May 12, 2010 at 4:41 am Of course it can be funded – by expropriating the wealth of the ruling class. koshembos May 11, 2010 at 6:02 am Not saying much new, just look at the assembly of billionaires proclaiming that the disaster is around the corner if hard working little earning people will be allowed to retire semi-comfortably after 67 (for men). They sound like unfunny comedians. These billionaires also share another distinction. All of them made their money by speculation, gambling and government dole. None of them produces anything somebody else can buy. If the whole country will be speculating and gambling, we indeed face a disaster. Exactly what happened the last year and a half. They are scared for a country of gamblers because that the only vision they have. Last but by no means least, look at history. Doing away with social security is the wet dream of the Republican Talibans since FDR; nothing has changed. Peterson, in particular, still carries early childhood memories of the great depression that according to his Takibanistic view happened because of FDR. renato May 11, 2010 at 11:40 am There was no gambling. They own the casino; the house always wins. sgt_doom May 11, 2010 at 8:13 pm You are correct, of course, renato, they do actually own all the exchanges, and thus control the markets they rig, manipulate than do controlled leveraged speculation on….. sgt_doom May 11, 2010 at 8:12 pm You are correct, of course, but please allow me to elaborate a bit: they made their money by peddling debt, then transerring their debts onto the public shoulders of the rest of us (it’s called monetizing their debt). Sechel May 11, 2010 at 6:03 am Interesting to see Robert Rubin. Despite his checkered history he’s clearly very much calling the shots. What does this guy have to do to get discredited? I could say the same for Greenspan. Thomasina Jefferson May 11, 2010 at 9:45 am They are doing exactly what their class expects them to do. They may be discredited in our view – and they couldn’t care less about that – but they are not discredited at all with their fellow Capitalists. sgt_doom May 11, 2010 at 8:14 pm To get discredit, Rubin must pull the future promise of a Goldman Sachs partnership away from Prez Obama….. billwilson May 11, 2010 at 7:11 am Defense! Before cutting entitlements it is time to take a serious look at cutting the massive defense budget. The US can no longer afford to spend 50% of world defense expenditures (with no obvious military enemy). ONLY after defense has been tackled, and tax rates on the wealthy restored to previous levels should the discussion move on to entitlements. purple May 12, 2010 at 4:45 am Sorry, a very few most live ‘forever’ regardless of the consequences for the rest of us. Be glad that air isn’t scarce, or they would find a way to make it into a commodity. MadHemingway May 11, 2010 at 7:29 am Boeing just rolled out the Phantom Ray yesterday. They have no customers for it, but they built it anyway hoping to get the Defense Department to buy it in the future. Impressively. Stupid. http://www.kmov.com/news/local/Boeing-unveils-unmanned-aircraft-93336119.html Robespierre May 11, 2010 at 11:39 am Don’t really know how they will get that to work without a pilot being nearby. Think propagation delay. Haigh May 11, 2010 at 8:24 am Taking the retirement responsibility of one generation and putting it on the backs of a younger generation is a crime against humanity. The baby boom perpetuated this crime and today’s under 40’s appear to lack the courage to do anything about it. goinsouth May 11, 2010 at 8:32 am This shows a remarkable lack of historical knowledge. The Boomers have had nothing to do with Social Security except pay into all our lives. We paid for our grandparents’ and parents’ generations, but are looking at cuts when it’s time for us to collect. Social Security was a New Deal program, enacted a decade before the first Boomer was born. Haigh May 11, 2010 at 8:45 am The baby boomers have to take responsibility for voting for Democrats and Republicans who took no interest in fixing the funding model of Social Security. And we are now confronted with Bailout Baby Boom. Dirk van Dijk May 11, 2010 at 10:57 am So the extra taxes we paid into SS to build up the trust fund were jst a figment of our imaginations. No interest in its future fuding my ass. That is EXACTLY why the trust fund is there. Thproblem was that Bush raided it to pay for Iraq and big tax cuts fo these jerks wh re calling or cutting SS. Oh buy the way, up until the Great Recession hit, the SS tust nd was traking better than the low cost scenario in the SS report. Under that scenario, the SS system is solvent forever. Haigh May 11, 2010 at 11:22 am Dirk, An explanation of the “Trust” Fund and its history can be found here: http://en.wikipedia.org/wiki/Social_Security_Trust_Fund There’s irony in its name. Imagine inheriting a “Trust Fund” and finding out it only contained debt. wtf May 11, 2010 at 1:31 pm That debt is Treasury Bonds. I.e. the debt is owed TO the SS fund, not by it. You are a fool. michael May 11, 2010 at 1:49 pm And you show a lack of understanding. No reasonable person will argue against today’s younger generation paying the *same* percentage of their income into SS and MedicXXX as the baby boomers did during their work life. However, the payments of the younger generation will not suffice to cover all entitlements. So now what, Mr. and Mrs. Baby Boomer? Eric May 11, 2010 at 5:58 pm For the last 3 decades participants in Social Security have payed into the system at rates that have created a very large deferred credit. These participants have not been exclusively Baby Boomers by any means, but it is accurate to point out that most of Boomers’ working careers have taken place during the time that the credit has been built up. This credit represents a significant financial risk for those who paid into it: pay considerably more than is needed for years and years with only an act of political faith that the credits will be redeemed as intended. Again, I admit that the group at risk is not composed exclusively of Boomers, but to be on the butt end of absurd criticism such as is found here while overfunding SS for years and getting to the back end of the “deal” and find (as we should have expected) powerful interests attempt to wriggle out of their end of it is a little too much for me. Baloney, unthoughtful baloney and ill-intentioned baloney is what I see here. Haigh May 11, 2010 at 7:46 pm Message to wtf above, Eventually, it may be the Baby Boom, or it may be a generation not yet born, there will be a generation who will be repaid ten cents for every retirement dollar they saved. And this generation will feel like fools for Trusting the Federal Government. run75441 May 11, 2010 at 9:59 pm michael: “And you show a lack of understanding. No reasonable person will argue against today’s younger generation paying the *same* percentage of their income into SS and MedicXXX as the baby boomers did during their work life. However, the payments of the younger generation will not suffice to cover all entitlements. So now what, Mr. and Mrs. Baby Boomer?” So now what Michael? Increase the SS withholding Tax by 1 tenth of one percent for the next 10 years for both the employee and the employer and the gap of ~2% goes away. Wow, that is a tuffy . . . If that is the real prblem. In 2040 when the TF is due to expire, the economy may be going great guns and the date of experation pushed out. If you do nothing and within one year of the TF depletion; the benefits will be cut by ~30% to match what SS takes in at this point in time. I wish I was paying what we paid in SS Withholding pre-83; but, we aren’t. You will face the same issue shortly. Pay it, as there is no 200.5k or private investment that will payout in the same manner. carly May 11, 2010 at 8:57 am Succeeding generations pay one way or another. If SS and Medicare are severely curtailed, who’d be making up the difference in the elder’s support? Their children, of course. Thank God for these entitlements. My mother’s recent medical crisis would have bankrupted her and her children’s families. The death panels so dreaded by Palin and her dittoheads would be the only other alternative, like it or not. LeeAnne May 11, 2010 at 10:13 am Social Security has been prepaid; it is not an entitlement. Nor is any other pension included as a job incentive an entitlement, except for perhaps the extreme military family cradle-to-grave socialist system. Squeezing corporations with mergers and acquisitions into mass firings and incentives to off shore jobs as well as corporate taxes are the ‘entitlements’ that need reform. Gavshire Hathaway May 11, 2010 at 1:10 pm SS has been prepaid? Sort of. Except that it was “prepaid” with one hand, and “spent already” with the other. The notion of a trust fund is a joke. There is nothing there, except IOUs, to be paid by future generations. Like it or not, your notion of retirement is contingent on future generations honoring the false promises of the pathetic, corrupt, lying, thieving banksters and politicians. sgt_doom May 11, 2010 at 8:17 pm those IOUs are in t-bills, and if they don’t hold up, then forget those greenbacks in your wallet, dood…. Externality May 12, 2010 at 1:27 am These IOUs are called Treasury Bonds. So your position is that it is wrong to expect future generations to repay Treasury Bonds held by Social Security. Do you also think it is wrong to expect future generations to repay treasury bonds held by Wall Street or China? sgt_doom May 11, 2010 at 8:16 pm I realize, Haigh, that facts have never entered into that silly little pea-sized head of yours, but you might examine the facts for a change: Social Security was doubled under Reagan, and it has been running a strong surplus, and should for awhile, no matter how spendthrift the previous administration was, and how little has changed with the Obama Administration. Try doing the math, or reading an actual book for once…. Externality May 12, 2010 at 1:29 am These IOUs are called Treasury Bonds. So your position is that it is wrong to expect future generations to repay Treasury Bonds held by Social Security. Do you also think it is wrong to expect future generations to repay treasury bonds held by Wall Street or China? bob May 12, 2010 at 2:12 am Sanctity of contracts- Contracts with and between the corporatocracy are held above those contracts between human beings. Being a human and not a corporation is a detriment in modern jurisprudence. Example of it in action- Bank buys Greek debt, knowing full well the entitlement packages already promised by the government. The bank comes back, a few years later and finds out that there might not be enough money to pay the bank. The banks then force the government to ‘sanctify’ the contract by cutting the state employee right out of a pension. Don’t think it stops in Greece folks. The banks are also capable of sanctifying taxes on working people higher too, in order to their ‘money’ back. Imagine their surprise when they get help from those people that they are going to tax. LeeAnne May 11, 2010 at 8:47 am yves, I look forward to watching the video and reading comments. But, enjoy? Mickey Marzick in Akron, Ohio May 11, 2010 at 8:56 am According to the adherents of MMT, deficit spending by the US is not the “problem” these luminaries and their political sycophants make it out to be. WHY are they even talking about “reforming” Social Security then? It certainly isn’t likely to win votes or political kudos. Or is this outside the scope of MMT? It’s politics – not about finance and monetary theory? Explain it to us… speculation is permitted here. Or are the market high priests doing God’s work on earth demanding additional sacrifice? God says to Abraham kill me a son… Quetzalcoatl the plumed serpent out for blood? Bless me father for I have sinned… Or in a more secular world, is it simply that anyone retired with a pension – public or private – or hoping to retire shortly has been deemed a “looter” by the “producers” [market gods]? Legacy costs in a world that Atlas Shrugged? Or is it simply because we can… explanations are no longer necessary. Become like us and you will understand. Fundamentalism – religious and/or secular – when taken to its logical conclusion is TOTALITARIAN. Raw power for the sake of power… the ultimate aphrodisiac [Henry Kissinger]. sgt_doom May 11, 2010 at 8:18 pm It’s called NEOFEUDALISM…. Mickey Marzick in Akron, Ohio May 12, 2010 at 7:29 am Used the word ‘neofeudalism’ on this site more than once myself! Maybe we’re beginning to get it… when it may already be TOO late! Rdan May 11, 2010 at 9:07 am There are several aspects to the retirement programs that take time to sort out. But to approach Social Security as a program 1.that is working as intended including currently, 2.as not part of the general budget but a program with a dedicated revenue stream (unlike many entitlement subsidies we like to call military spending and ag support since we put it on the credit card) 3.to provide a minimal floor as insurance for having an average life and savings when you get old, your younger self paying your older self, 4. and falsely accused of having problems like intergenerational fairness (define that please…my sons 401K not paying the same as mine?) and worker to retired ratio (never heard of productivity?) 5. the money you deposit in a bank is lent out as loans, correct, the ious to be repaid with interest…or is it not your money anymore (oops…banks go bankrupt) Most of what you think you know about Social Security is wrong. run75441 May 11, 2010 at 10:03 pm Hi dan! Obviously you are making too much sense, so no answers! Peripheral Visionary May 11, 2010 at 9:22 am Social Security is a bit of a red herring; it is a reasonably stable program that can be ensured by only a few minor adjustments, specifically floating the age of eligibility to be in line with life expectancies. The real bottomless pit is Medicare, and that will not be fixed until the cost of healthcare can be brought down. Pushing back age of eligibility is also needed, but will only partially fix the funding gap. The current fee-for-service model is broken, in that it encourages excessive medical care and leaves the system perpetually vulnerable to excess and fraud; at a bare minimum, the government should switch over to a subscription model, where healthcare providers are paid a fixed amount to provide a complete range of medical services to Medicare recipients. It is all a bit of a moot point, however, as significant reforms of entitlements have little chance of being enacted, as both the left and the Tea Party right are adamantly against them (the Tea Party, despite a reputation for fiscal conservatism, has been shown by opinion polls to be very much opposed to any significant reform of entitlements, Medicare in particular.) If there are to be any changes at all, it is likely that they will come only after a full-blown fiscal funding crisis has erupted that absolutely requires changes to the system. eric anderson May 11, 2010 at 9:30 am Which poll shows that Tea Partiers are against entitlement reform? How were respondents selected? What was the wording? I know a few Tea Party people, and I am certainly sympathetic to them as well. This just doesn’t sound right. Kelli K May 11, 2010 at 10:37 am I agree with just about everything you have written today, and I too am sympathetic to the Tea Party movement as a whole. But I have to admit that where Medicare is concerned the TPers are mildly to wholly schizophrenic. That is, they hate deficits and are concerned about out of control spending but then Obama proposes taking away from Medicare (to give to a more generalized Obamacare system, but still) and they go ballistic. No program is less sustainable long term than Medicare. But we can’t cut it. And here I think two things are at work: TPers skew older, so are very sensitive to Medicare changes; and this is a convenient club to beat Obama up with. To be philosophically defensible, TPers need to embrace entitlement reforms. But let’s face it, no one is being consistent in this debate, least of all the talking head in this video and their acolytes on this chat board. You can sneer at Petersen and his crowd (and I do) for their hypocrisy, but that doesn’t mean they are wrong about the crisis around the corner because of entitlements. They are hypocrites with a point. And where do some of the people on this thread get the idea that anyone is talking about privatising Social Security? That died an ignoble death under W’s reign. What is being discussed are reining in spending, maybe means testing, etc. Yves, for the record I am not a huge fan of this REal NEws series, but as always, it’s your blog and readers like me are free to not click and watch. Cheers! Greg May 11, 2010 at 3:13 pm “But let’s face it, no one is being consistent in this debate, least of all the talking head in this video and their acolytes on this chat board. You can sneer at Petersen and his crowd (and I do) for their hypocrisy, but that doesn’t mean they are wrong about the crisis around the corner because of entitlements. They are hypocrites with a point.” Peterson and his acolytes are wrong about the NATURE of the crisis. They say its a funding crisis…….its not………it never is. The crisis, when it comes, will be of a real nature; How do we allocate the scarce health care resources? How much should we try to keep 75 yr old people living to 76? How much should we try keeping 24 week old babies alive? Its not about money, except to the people who have lots of it and wish to maintain their stronghold on their current allocation of goods and services. Externality May 12, 2010 at 1:31 am The same people who advocate denying healthcare to elder Americans who worked all their lives also DEMAND that we provide high-end medical care to prisoners. What is the purpose of providing a kidney transplant to someone on death row or statins to someone serving a life sentence? Criminals serving effective life terms should be rationed first. renato May 12, 2010 at 8:55 am You will no doubt be cheered by the news that prisoners get insufficient and malpractice-ridden medical care that is usually “too little too late.” Even more cheering is that skimping on care benefits prison shareholders. Cheers! Evelyn Sinclair May 12, 2010 at 10:59 pm I’ll start respecting the Tea Partiers when they start protesting US Military presence where we don’t belong — and the financial wast that goes with THAT. They focused on one issue (Obama care evilness) because they were wound up and sent out to do so by the insurance business. Astroturf. We’ve all seen the interviews with all these people who are so angry and scared they’re out holding up a sign, but they are utterly confused about why they’re doing it and don’t know much about the facts of the matter they’re so apoplectic about. It’s kind of pitiful. Well, except the ones who are mostly upset because they have a black president…. But hey — if you talk with Tea Party people, ask them if they don’t think it would be time better spent to be protesting the US presence in Afghanistan and Iraq. Bring home the soldiers, stop the killing, the atrocities, and the financial waste and corruption at the same time. Enough money for health, schools, maybe even enough for some human dignity and decency — so kids aren’t eyeing people like their parents as liabilities. Peripheral Visionary May 11, 2010 at 5:16 pm Eric, I know quite a few people who would fall into that category as well, but my distinct impression is that they are, as someone else said, conflicted on the matter. In general, they don’t seem to like having to take Medicare and SS, but in a vacuum of other options, tend to support keeping it in place. The poll I cited is here. http://www.nytimes.com/2010/04/15/us/politics/15poll.html?partner=rss&emc=rss “But in follow-up interviews, Tea Party supporters said they did not want to cut Medicare or Social Security — the biggest domestic programs, suggesting instead a focus on ‘waste.’ “Some defended being on Social Security while fighting big government by saying that since they had paid into the system, they deserved the benefits. “Others could not explain the contradiction.” Luke Lea May 11, 2010 at 9:14 pm I’ve been on Medicare for several years now and your are right, the fee-for-service model is even more out of control than when I had private insurance with a $1000 deductible and 20 percent copay. Being a long=term cancer patient I have had plenty of experience The waste is enormous. The only good thing was the doughnut hole, believe it or not: it made you think twice about brand names and discretionary prescriptions (like testosterone patches in my own case). I could tell some horror stories. Jerry May 11, 2010 at 9:35 am Don’t increase the age of Social Security…..I’m willing to leave my job to someone younger (job creation, revenue generating)….let’s get some of our money back…i.e how about if everyone pays tax not just 45% of us and I talking about all those at the top…get the Teachers to pay into Social Security…etc…I voted for Obama but it’s time to impeach him….let the discussions begin ..He’s backdoor blocking the Fed audit, not creating any jobs, and next week the unemployed start to fall off the roles as they will hit the 99 week limit…watch for the unemployment figures to drop (only because no new unemployment extension) I’ll be out helping people set up the tent cities and checking the grocery stores for food they are getting rid of to feed people…. Mickey Marzick in Akron, Ohio May 11, 2010 at 9:44 am Yves, Are Social Security and Medicare “entitlements” in the same sense as AFDC, WIC Coupons, Food Stamps, Section 8 [rent], utility subsidies, mortgage interest deductions, or the various forms of corporate welfare? OASDI and FICA contributions are taxes – deferred income – paid into a fund for usage at a future date. One has to contribute a sufficient amount before one even qualifies for Social Security. In this respect don’t these programs differ from the aforementioned “entitlements”? Does portraying Social Security and Medicare as “entitlements” exacerbate this perceptual problem? Are all government programs, with the possible exception of Defense, to be deemed entitlements a la Grover Norquist? renato May 11, 2010 at 11:25 am They are not entitlements. They are NON-ENTITLEMENTS. You are not entitled to get any of your money back that you pay into the government. That’s money for the oligarchs, not you! sgt_doom May 11, 2010 at 8:20 pm EXATIMENTO, Mr. Marzick (assuming that’s a he) – and if you are a girl, I’m now proposing. It is a pay ahead tax, which is very negative to the citizenry, what all with those hedge fund guys able to defer their personal income indefinitely, and those hedge funds based offshore to avoid further taxes, and the fact that 70 percent of US-based corporations pay no taxes due to offshore profit laundering…. Mickey Marzick in Akron, Ohio May 12, 2010 at 10:50 am Sorry… sgt_doom. Just happen to be a 58-year old single heterosexual male in the postindustrial wasteland of NE Ohio… The NEW ECONOMY wherein the technopeasantry labor happily on the corporate manor… NEOFEUDALISM, if you will. Mike Vronsky May 11, 2010 at 9:47 am Why does the president have to appoint a blue ribbon commission (or whatever the latest catchphrase is) to do his and congress jobs? Still working my way through ECONned, and found the statement made by Pete Pete’s lackey about presenting the ‘financial facts’ to a townhall rather humorous. Reminds me of the old joke about the business that needed to hire a new accountant and the only question the company president had was: 2 + 2 = ? sgt_doom May 11, 2010 at 8:23 pm While reading ECONned, please pay especially close attention to pp. 201, 209, 244-245, & 252. These are most enlightening to those who are still on the upward learning curve…. maynardGkeynes May 11, 2010 at 9:50 am “The Tea Party ought to love Obama. He’s slowly getting rid of Social Security, Medicare…..” @ Glen 4:21am: Glen, helloooo. He’s black. LAS May 11, 2010 at 9:53 am Social security is the one thing that has worked extremely well over the past 70 years. Since it is such a plum, all the failed financial managers in government and private industry are eyeing it to source their rescue in the future. In other words, they’d dearly love to tear down the house to keep their fire going. When what we need to do is restore progressive taxation, restore capital gains taxes to what they had been before Bush, tax financial transactions to some degree, control medical cost proliferation, lower what we spend on the MIC, tax users of natural resources for profit, and perhaps delay the start of retirement for healthy individuals by up to 1-2 years. We also need to pass regulation of the financial industry and shrink that sucker. A substantial portion of our deficit follows from having been econned by over-powerful apologists for their looting. LeeAnne May 11, 2010 at 9:58 am That these particular exemplars of everything rotten in the system beginning with pundit Brooks and his supercilious Tom Wolfe channeling; Clinton with his sellout of working people and big tilt to the right even as the pummeled him personally; Peterson’s government insider winnings in the $billions; Robert Rubin crimes gutting rule of law for Wall Street; Greenspan the Ayn Rand devotee nut; Alan Simpson with his resentments targeted historically toward old people with prepaid social security that didn’t require they gamble on real estate and the stock market for; $trillions of taxpayer money handed over to banksters covering their gambling losses and guaranteeing future gambling losses all over the world while fighting taxes on both the living and dead super rich, is the best example of chutspa ever seen on the face of the earth. Money isn’t enough for these people. Its Power they want. Their open contempt for the people of this country can be partially explained by the older guys who don’t realize how much accurate information and analysis is now available in a way and at a speed that they who have never used the Internets can barely conceive of. Doug Terpstra May 11, 2010 at 10:17 am Very well declared! As noted earlier, if you’re not angry, you’re just not paying attention (or suffer diminished capacity). carly May 11, 2010 at 10:51 am “It’s power they want” Exactly. Hard to believe these characters, these PIGS probably were taught the same oh-so-taken-for-granted ideals in school: justice, patriotism and that we’re all in this thing together. When did they change? My tin foil hat is telling me I on the ball patriot was right and not a mere crank. Siggy May 11, 2010 at 10:07 am Since its inception, the US Tax Code has been an instrument of social policy. The core objective of the code is to redistribute income from earners to nonearners. Social Security (Old Age, Survivors Insurance Act) was specifically enacted as an income redistribution tax targeted to benefit the aged and the elderly indigent. As is the case for all legislation, Social Security is a contract. There has been no amendment to alter the core objective of Social Security. There have been amendments to alter the degree of taxation and the degree of provided benefits but the core contract stands intact. The government must honor the contract or the population shall be entitled to redress. The first course of redress is by way of the ballot. The second is revolution and the replacement of the government in its form and officials. Mr Peterson wants to alter the existing contract by reducing benefits. His rationale is that we can no longer afford the level of provided benefits. I suggest that his point of view is wrong. To afford the current level of benefits, now and in the future, we simply need to raise the level of the taxes that fund benefits. We could start by making all income, ordianry and capital gains taxable for the purposes of social security. We could also tax the so-called carried interest income as ordinary income as opposed to capital gains. Mr. Peterson would not like that because a very substantial part of his income is in the form of carried interest. With that insight it becomes a bit clearer that Mr. Peterson’s crusade is more about self interest than about the welfare of the Republic. Cutting entitlements is not the answer, raising taxes is, especially with respect to that cohort whose incomes are so high. During the Eisenhower administration the highest marginal tax rate was 90%. That marginal rate was, indeed, confiscatory; nonetheless, the economy propered. The better discourse to be pursued is that which explores why it is that the currency has lost so much purchasing power and why it is continuing to lose purchasing power. In that regard we would do well to consider the difference between borrowing to fund pure consumption and borrowing to fund production. Doug Terpstra May 11, 2010 at 10:33 am Siggy, your solution is indeed elegant, inarguably fair and inevitable. Therefore it must not be allowed to see daylight. “To afford the current level of benefits, now and in the future, we simply need to raise the level of the taxes that fund benefits. We could start by making all income, ordianry and capital gains taxable for the purposes of social security. We could also tax the so-called carried interest income as ordinary income as opposed to capital gains.” Did not Obama broach that very solution, at least as appropriate for the “table”? Ah, but that was the same Manchurian Candidate, turned war president, who then deep-sixed the single-payer voice into a very dark hole at the outset. His stealth attack on healthcare, Medicare, artfully designed to explode, may in fact be a strategic prerequisite to looting SS. Matt T May 11, 2010 at 11:41 am Sometimes this blog really veers into left field. Taxes are high enough; they do not need to be raised, and in fact doing so will only reduce the attractiveness of the U.S. as a place to live and do business. Now, there’s no obvious reason that the payroll tax should be capped out at $90k as it is currently – but beyond that, raising taxes is a dead end. The fundamental problems with these programs are obvious: 1) life expectancy is now 78+ years, instead of 60-65 as it was in 1933. 2) There are fewer workers coming along behind. There is simply no way around this. More old folks living longer + fewer workers to support them = less money for old folks. The longer it takes us to come to terms with this and implement the needed changes, the worse off we’ll be. By the way, the first episode of this program completely lost all credibility when it claimed that “Social Security has $3 trillion saved up.” As if the money flowing into SS had been saved and invested wisely (in an SWF arrangement, see Norway) rather than pissed away in the general fund, and replaced with IOUs. renato May 11, 2010 at 11:47 am will only reduce the attractiveness of the U.S. as a place to live and do business. The U.S. is already totally unattractive in this regard. Just ask any of us people living in tax havens already. renato May 11, 2010 at 11:50 am Here’s an idea: eliminate all taxes in the U.S. except for a VAT on food. Pj May 11, 2010 at 2:10 pm Matt, Do the math. I did. Social Security should always have an abundance of funding, as most users die long before they get out what they put in. The baby boomers’ unprecedented productivity and wealth has provided social security and government with the kind of funding every politician or power seeker drools over. They MUST have the money to do with as they wish. The average retiree collects checks for 11 years before dying, accumulating during that time approx. half of what they put into the program. The statistics are there for everyone to see on the census bureau website. Even as politicians squawk about this “unsustainable” program which must end in their lifetimes, their own concrete statistical facts give proof to the lie. And isn’t it interesting that our legislators are guaranteed their own “social security”, yet feel no qualms at usurping our own? Our government is corrupt and no longer serves the populace. They must all go. Evelyn Sinclair May 12, 2010 at 11:12 pm Wow! Thanks for pointing these things out. I think this intelligence is some kind of deep dark secret, because I’ve seen a lot of really UGLY attacks on “Baby Boomers” saying stuff about how we are a burden on the young by merely existing, and how they’ve got to pull the plug on us…. And I’ve never come across what you just brought up! The assumption has been put forth ad nauseam that we will be taking out more than we put in — EVEN though we paid DOUBLE; once for our elders and then for ourselves, starting under Reagan at Greenspan’s behest. A link the the exact page would be nice. Doug Terpstra May 11, 2010 at 12:08 pm In addition to enacting racial profiling in order to eject brown-skinned itinerant carpenters named Jesus, red-state Arizona did just that recently to try to balance its bankrupt budget—taxing groceries for the first time in many years. Now if we could just figure out a way to levy a tax on air… Brilliant! Old Fart May 11, 2010 at 12:54 pm You guys and gals are playing with yourselves if you think there will ever be significant cuts to Social Security and Medicare. A bill or two might pass, but the day that my check (and that of the boomers’) gets cut is the day you will REALLY see action in the streets. The old folks generation, massive and articulate and political-when-the-want-to, knows how to work the crowds, and the polls, believe me. Not a prayer. The mantra will be, cut the banksters bonuses, then come see me. Cutting those entitlements = Have your Revolution now. renato May 11, 2010 at 12:58 pm Forgive us. We forgot your generations fantastic record of voting in your own interests. michael May 11, 2010 at 1:53 pm Right. And you will force the younger, paying generations, if necessary at gunpoint to work the hardest to finance your retirements? Don’t make me laugh. Pj May 11, 2010 at 2:19 pm Children, It always makes me laugh when one generation blames the next or previous for the problems that exist in their own. Exactly what are you doing to correct the problems that you wrongfully attribute to the generation that came before you? How are you actively fighting for your rights and those of your fellows? How are you working to change the world and our government, which is each generation’s charge and duty? We were hoodwinked, my friends, just as you are being hoodwinked now. We were lied to, my friends, just as you are being lied to now. We were robbed, my friends, just as you are being robbed now. We were ignorant, my friends – but you don’t have that same excuse in today’s interconnected, informational age. The question is what do we do about it? I would suggest you do what we did when we were young: fight back. Protest, carry signs, question your representatives, show up at the voting booths, post your thoughts on blogs, do everything within your peaceful power to initiate change. Change begins with education and attitude. Or, you can blame the previous generation. And see where that gets us all. MindTheGAAP May 11, 2010 at 2:47 pm You better hope that the “children” don’t do anything, because their primary solutions are to leave the country or to avoid their taxes. However, blaming the “children” for their parents’ mistakes seems very…well, very typical of the entire baby boom generation’s mentality, actually. MyLessThanPrimeBeef May 11, 2010 at 6:52 pm Luckily, Bonobo apes don’t seem to have the problems Homo Not-So-Sapiens Not-So-Sapiens busy creating for themselves on a daily basis. michael May 11, 2010 at 11:12 pm I am a late baby boomer. I’ve decided in the late 90’s that the promises being made were unsustainable, and would never be paid out in real terms. And I acted accordingly, and took those matters in my own hands. Actually this has nothing to do with generational conflict, but is about ignoring reality and believing lies. kevin de bruxelles May 11, 2010 at 2:39 pm And exactly where will your leverage come from? You will vote out the Democrats? Oh gee, you would really be pulling out the big guns there! Obama knows that getting a second term depends on him cashing in his political capital with the left to introduce the Chilean privatized pension scheme into America. Note that the police, military and other security forces will be exempt from this change, just as they are in Chile. You may want to ponder that fact for a few minutes. SARose May 11, 2010 at 1:05 pm MattT; Those “IOU’s” currently held by the SS Trust Funds (there are four) are actually federal government securities. If you know anyone who buys T-bills or other federal securities for investment purposes, they would probably not appreciate their investments being characterized as just IOU’s. Large corporations, pension funds and sovereign wealth funds would also bristle at their investments’ being reduced to the status of IOU’s from our federal treasury. The problem with Social Security is that it is as much a political program as an economic one. By a simple vote of Congress, the government can renege on the payoffs that these bonds promise, i.e., default, or change the terms of the bonds’ payouts. That’s why it’s so important to elect congressional representatives and senators who absolutely refuse to do so and look for other ways to cut the federal budget or increase income to the treasury. Turning the responsibility for shoring up SS, and guaranteeing the securities held by the trust funds will be paid as promised, over to a group of unelected millionaires and billionaires is cowardly and outrageous, even if final passage of their recommendations is left up to congress. As of now this commission’s recommendations must be voted on as a whole, with no modifications, on a strict up-or-down vote of both houses of congress. The final report of the Bipartisan Commission on Fiscal Responsibility and Reform is due in December. Anyone who cares about the solvency of Social Security or wants Medicare to survive should start raising holy hell to their congresscritters NOW about what this group of plutocrats may propose and the rules by which their recommendations are to be enacted. Eric L. Prentis May 11, 2010 at 2:27 pm President Obama is the banksters’ errand boy and his actions are beneath contempt; Obama should call himself what he is: a double-crossing lying politician. Obama’s Janus faced treachery knows no bounds; I can’t stand looking at his face nor listening to his speeches. Please, please, please, let all the incumbents running for office in November, lose big. Hugh May 11, 2010 at 3:44 pm Vice President Cheney’s hatchetman David Addington said it best: “We’re going to push and push and push until some larger force makes us stop” This is a perfect description of our elites and their view of their looting. renato May 11, 2010 at 3:46 pm …except for the part about a larger force…which doesn’t exist… renato May 11, 2010 at 3:47 pm also, they don’t actually have to push; it’s just handed to them as a matter of course. purple May 12, 2010 at 4:48 am Many people are ‘for’ entitlement reform until they realize it affects them. renato May 12, 2010 at 9:00 am The vast majority of people though understand that they are entitled to nothing. Simply to call it “entitlement” means it’s “bad.” sharonsj May 12, 2010 at 12:11 pm Well, it’s time to get out my rolling walker and prepare to storm the White House. If they think us old folks will go away quietly, they are crazy. If Social Security really was broke, the politicians and Wall Street wouldn’t be trying to get their hands on it. Keep that in mind when you support entitlement reform. And why is the budget being balanced on the backs of the elderly, the poor, the disabled, widows and orphans? The commission mentioned the defense budget in passing and then never again. Yeah, all those contractors really need our money first and to hell with the rest of us. Comments are closed. Tip Jar Please Donate or Subscribe!