Hillary Clinton on Social Security Expansion: Words are Wind. A Cold Wind.

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By Lambert Strether of Corrente.

Social Security, the social insurance program first implemented by Bismarck in 1889, was described by then-Emperor Wilhelm I as follows: “[T]hose who are disabled from work by age and invalid[ism] have a well-grounded claim to care from the state.” Social Security was implemented in the United States by FDR in 1935, and we generally formulate Wilhelm’s “claim to care” as the wish that elders[1] should be enabled to retire in dignity (in the vulgate, without having to eat cat food). Of course, Social Security policy does not only affect all-too-soon-to-be old codgers like myself, but all citizens who’ve entered the labor force and paid the payroll tax, and all citizens who are making life decisions today, based on what their for future retirement will be.[2] So Social Security policy has a huge impact, society-wide. (We should also note that a Republican budgetary Easter egg means that Social Security benefits will probably become a major issue in Congress in late 2016.)

Here’s the baseline for the left on Social Security. From The Nation:

With boomers retiring without pensions or adequate savings, progressives have proposed expanding Social Security benefits …[3]. Obama, by contrast, has proposed cutting Social Security benefits as part of a “grand bargain” with the Republicans on deficit reduction, a position greatly appreciated on Wall Street. Clinton, like all Democratic candidates, will promise to protect Social Security, but will she support expanding it?

Let’s start with the caveat that with Hillary Clinton, as with Bill Clinton, you’ve always got to parse the words. Here’s a dryly hilarious passage from the Wall Street Journal:

Corrections & Amplifications:

Sen. Hillary Rodham Clinton said that when it comes to fixing Social Security, “putting everything on the table is not an answer. Raising the retirement age is not an answer. Cutting benefits is not an answer.” This article incorrectly summarizes her as saying cutting benefits or raising the eligibility age were “off the table.”

(You have to read that passage a few times to see that although cutting benefits and raising the retirement age each by themselves might not be “an” answer, taken together they might be “the” answer. See how easy?) Anyhow, one shouldn’t allow the evident glee the Journal’s writer took in composing that correction to detract from the fact that you always have to parse the words of Clintons very, very carefully. They are, after all, like Obama, lawyers trained at top schools.

With that caveat, this post will focus on Clinton’s views of what Wilhelm I’s “well-grounded claim to care from the state” by elders might mean to Clinton in practice, if it does not mean Social Security expansion. First, I’ll present Clinton’s views from her campaign site, the campaign trail, and the Democratic debate; then I’ll contrast those views to other political figures (Warren and Sanders); and finally I’ll drive some trucks through the loopholes in Clinton’s words.

Clinton’s Views on Social Security Expansion

From the Clinton campaign site:

“We need to make sure what we already do, like Medicare and Medicaid and Social Security, to provide a level of security and support for people, continues to work really well.”

Throughout her career, Hillary has spoken out for seniors and stood up for Medicare and Social Security, and she is committed to preserving, protecting and strengthening these lifelines for today’s seniors and for future generations. Seniors have paid into these programs for a lifetime, and they’ve earned those benefits[4] when they retire.

On Social Security, Hillary Clinton has stood firmly against Republican efforts to privatize the program and weaken it for our seniors. She believes that we should enhance—rather than roll back—Social Security, especially for women.

As president, Hillary will defend against the efforts to privatize Medicare and Social Security, and will work to enhance both programs for our most vulnerable seniors.

What do words like “provide a level of security and support,” “work really well,” “preserving, protecting and strengthening,” and “will work to enhance” mean operationally? Do you see the word expansion there? Because “enhance” could mean just about anything, right? (And mentally mark down the underlined words “especially for women,” and “our most vulnerable” for later use.)

At a New Hampshire roundtable discussion (April 20, 2015):

“Let’s just take a deep breath here as a country and say, ‘OK, we are going to have a retirement issue and people who worked hard deserve to have enough security when they retire so they can have a good quality of life.’ So I’m 100 percent committed to that,” Mrs. Clinton said.

What do words like “enough security” and “good quality of life” mean operationally? What exactly is Clinton “100 percent committed” to? If not expansion, what?

From a campaign spokesperson clarifying Clinton’s views after that roundtable (April 20, 2015):

[Talking Points Memo] had previously asked the Democratic presidential candidate’s campaign about her position on Social Security —whether she supported expanding it as liberal Democrats have been arguing recently or what she thought of proposals like some of the likely Republican 2016 field.

Spokesman Jesse Ferguson responded, “Hillary has a record of fighting against privatizing Social Security and opposing cuts to seniors benefits and, as she said yesterday, dealing with challenges facing older Americans is a top priority for her.”

“Opposing cuts” doesn’t mean expansion. And what on earth does “dealing with challenges facing older Americans,” a “top priority,” mean?

And from the first Democratic debate (October 13, 2015):

CLINTON: Well, I fully support Social Security. And the most important fight we’re going to have is defending it against continuing Republican efforts to privatize it.

BASH: Do you want to expand it?

CLINTON: I want to enhance the benefits for the poorest recipients of Social Security. We have a lot of women on Social Security, particularly widowed and single women who didn’t make a lot of money during their careers, and they are impoverished, and they need more help from the Social Security system.

And I will focus — I will focus on helping those people who need it the most. And of course I’m going to defend Social Security. I’m going to look for ways to try to make sure it’s solvent[5] into the future.

What do words like “fully support” and “defend” mean? Do they mean “expand”? I’m guessing no, since Clinton could have answered “Yes” to the moderator who asked her the direct question. And while we’re at it, why isn’t the best defense a good offense? Surely the best way to “defend” Social Security would be to expand it? (And again, mentally mark down the underlined words “the poorest recipients,” “they need more help” and “those people who need it the most.”)

Other Views on Social Security Expansion

Before giving my own interpretation of Clinton’s views, let’s look at what some other political figures have to say. Elizabeth Warren (2013):

Seniors have worked their entire lives[6] and have paid into the system, but right now, more people than ever are on the edge of financial disaster once they retire — and the numbers continue to get worse.

That is why we should be talking about expanding Social Security benefits — not cutting them. Senator Harkin from Iowa, Senator Begich from Alaska, Senator Sanders from Vermont, and others have been pushing hard in that direction. Social Security is incredibly effective, it is incredibly popular, and the calls for strengthening it are growing louder every day.

Indeed. Senator Sanders from the Democratic debates (October 13, 2015):

My view is that when you have millions of seniors in this country trying to get by — and I don’t know how they do on $11,000, $12,000, $13,000 a year — you don’t cut Social Security, you expand it. And the way you expand it is by lifting the cap on taxable incomes so that you do away with the absurdity of a millionaire paying the same amount into the system as somebody making $118,000. You do that, Social Security is solvent until 2061 and you can expand benefits[7].

And Sanders shows what an effective defense of Social Security looks like (October 12, 2015):

And, [Sanders] said, he had done “everything I could do to stop the Republicans—and, sadly, the President and a few Democrats—from cutting Social Security, through the chained C.P.I.” The chained C.P.I., a different way of calculating the annual cost-of-living increases in Social Security, would likely have lowered the increases for most people, and Obama proposed adopting it in his 2014 budget. Sanders helped lead the opposition, and the President recently stopped pushing for the proposal. “It was a tough fight,” Sanders said. “But now, as a result of a lot of grassroots activism, the debate is about expanding Social Security rather than about cutting it.”

So Warren and Sanders are quite clear on expansion; Clinton, to be charitable, is not. In fact, her words are a cold wind, as we shall now see.

Issues with Clinton’s Views on Social Security

To begin, remember the words I asked you to mentally mark down? (To review: “especially for women,” “our most vulnerable”, “the poorest recipients,” “they need more help” and “those people who need it the most.”) Think about it: They all imply that Clinton wishes to introduce Social Securiyt benefits that are defined using eligibility requirements (“especially,” “most vulnerable,” “poorest”, “need”). That is, Clinton proposes to convert Social Security from a universal program of social insurance to a welfare program. This is a poisoned chalice that will destroy Social Security as we know it. Social Security should not be means-tested:

Medicare and Social Security are not handouts to the needy. They are not even intended to be a safety net. In their design, they promote the fundamental notion that dignity and good health in old age are not special privileges that can be bestowed or taken away. They are fundamental rights that every working American who has contributed productively to the economy can expect to enjoy. As James K. Galbraith told me in an email, “It’s insurance, not charity.”

Make no mistake: If means-testing on the wealthy is allowed, conservatives will keep pushing until that same means-testing is applied to the middle class, who increasingly must rely on Social Security and Medicare in times of economic uncertainty and job insecurity.

Even the Democratic think tank Campaign for America’s Future calls Social Security means-testing a Trojan Horse:

What alarmed Social Security activists is that underneath Clinton’s positive language [in the Democratic debate] – “fully support,” “enhance” – appears to lie support for policies, including from leading conservatives like Pete Peterson – that would actually undermine Social Security.

Rep. Paul Ryan (R-Wis.), the House Ways and Means Committee chairman who is being wooed to take over as House speaker, was broadly attacked for proposing a plan that singled out Social Security’s “poorest recipients” for protection. Ryan proposed “progressive price indexing” that would reduce benefits for the top 70 percent of wage earners while maintaining benefits for the bottom 30 percent. When Ryan first proposed this in 2010, coupling this with a plan to divert Social Security funds into stock market accounts, the Center for Budget and Policy Priorities concluded that ‘the result would be a system in which Social Security is very unattractive to affluent people … These changes would risk undermining the broad-based support that Social Security now enjoys'”

Like your insurance policy, when you file a claim the size of the check you receive is not based on your income or net worth; it’s based on the amount of coverage you purchased. Car insurance companies that paid less in claims to Mercedes owners, presumably because they are wealthier than owners of a working-class Chevy Cruze, would lose high-end customers – and eventually would collapse.

Now let’s look at something Clinton isn’t mentioning today, but has mentioned in the past: A commission, that favorite device in official Washington for diverting hard choices to an unaccountable body. Here’s Clinton in a campaign 2008 debate, at Drexel University in Philadelphia, PA (October 30, 2007):

A: I have said consistently that my plan for Social Security is fiscal responsibility first, then to deal with any long-term challenges. We would have a bipartisan commission. All of these would be considered. I do not want to balance Social Security on the backs of our seniors & middle-class families.

(Ah, memories: the 2008 campaign, when Obama, campaigning in Iowa, put Social Security on the table to differentiate himself from Clinton, after progressives, amazingly enough, had gotten Pelosi to take it off the table under the Bush administration.) And here’s Clinton in a primary debate with Obama at the National Constitution Center in Philadelphia, PA (April 16, 2008):

OBAMA: [to Clinton]: I think we should be honest in presenting our ideas in terms of how we’re going to stabilize the Social Security system and not just say that we’re going to form a commission and try to solve the problem some other way.

CLINTON: I am totally committed to making sure Social Security is solvent. You’ve got to begin to rein in the budget, pay as you go[8], to try to replenish our Social Security Trust Fund. And with all due respect, the last time we had a crisis in Social Security wa 1983. Pres. Reagan and Speaker Tip O’Neill came up with a commission. That was the best and smartest way, because you’ve got to get Republicans and Democrats together. That’s what I will do. And I will say, #1, don’t cut benefits on current beneficiaries they’re already having a hard enough time. And #2, do not impose additional tax burdens on middle-class families.

OBAMA: That commission raised the retirement age, and also raised the payroll tax. So Sen. Clinton can’t have it both ways.

And what’s the model for that commission? Everybody knows that:

When Mrs. Clinton last weighed in on Social Security, she supported a bipartisan commission to tackle the program’s long-term financial imbalance. The widespread view was that such a commission would lead to a compromise in which Democrats support benefit cuts in return for Republican support for a tax increase, all to extend the life of the program.

People on both sides have pointed to a 1983 bipartisan agreement, reached by a commission, as a model.

“The last time we had a crisis was 1983. President [Ronald] Reagan and Speaker Tip O’Neill came up with a commission,” she said. “That was the best and smartest way, because you’ve got to get Republicans and Democrats together.”

(Arguably, it’s better for Republicans and Democrats to do nothing than to get together and make things worse.) Anyhow, the bipartisan [genuflects] Reagan [genuflects] O’Neill deal was — and I didn’t understand this 2016 – 1983 = 30 years ago, and got suckered: I wanted to “save Social Security” — was the one where my payroll taxes were raised to “pay for”[9] my mother and father’s Social Security and my own. That was fine, an act of filial piety, but what was not fine is that the Reagan-O-Neill deal also turned Social Security into a tiered program where benefits vary by age; they get worse, the younger you are. That’s unconscionable, and one excellent way to expand the program would be to make benefits age-neutral. (The random distributution of government services based on arbitrary criteria seems to be a feature of neoliberal programs generally; it certainly is with ObamaCare.) Right now, as a society, we’re sending the message that your dignity in old age should depend on your birth date. Is that really the message Democrats wish to send?

Finally, can we make a reasonble guess at what Clinton’s commission would come up with? I think we can. Chained CPI:

Back in 2013, Obama drew loud complaints from the left for embracing chained CPI for Social Security. In plain language, chained CPI is a different way of measuring cost-of-living increases that most people expect would result in lower Social Security payments over time.

That’s not a bug. It’s a feature.

Left-wing groups want to move things in the opposite direction. The Progressive Change Campaign Committee (PCCC) has sought backing for a measure that was first proposed in 2013 by then-Sens. Mark Begich (D-Alaska) and Tom Harkin (D-Iowa.)

That plan would scrap the ceiling for Social Security contributions and promises to give workers $452 more per year by the age of 75.

Backing such a proposal would go some way to answering the question that many ask about Clinton, on the left and elsewhere: What does she really stand for?

Well, if you want to know what Clinton stands for, one approach — I can’t come up with Clinton’s own views on Chained CPI — is to find out what the famed Clinton network thinks:

As for chained CPI being a “Boehner-McConnell demand,” referring to House Speaker John Boehner and Senate Republican leader Mitch McConnell, this echoes a talking point made by the White House. McConnell did mention chained CPI in a television interview as an indication that Obama was serious about reducing mandatory spending; Boehner implicitly referenced in a letter to Obama by urging a proposal, along the lines of a new plan advanced by Erskine Bowles, as an “imperfect, but fair middle ground.” Bowles, incidentally, is a Democrat and former chief of staff to Clinton.

[A] prominent Democrat was a driving force behind the development of the concept, and others, such as Bowles, have embraced it, as well. … Opponents of chained CPI would do better to drop the partisan attacks and acknowledge that some Democrats are as responsible for promoting chained CPI as Republicans.

So Chained CPI is bipartisan [genuflects] and supported by at least one prominant member of the Clinton network. So I think we can guess what would be on the agenda of a Social Security Commission under a Clinton administration: Chained CPI, gutting benefits, and (“think of the widows!”) turning Social Security into a welfare program, destroying its universal character.

In summary:

  • Clinton will not commit to Social Security expanson
  • Clinton would like to turn Social Security into a welfare program, destroying it
  • Clinton would like a Social Security Commission, and past such commissions have produced unconscionable results.


I don’t much listen to political figures speak aloud, any more; I much prefer transcripts. (You can color them with Magic Markers!) As a result, I’ve lost touch with the tone and timbre of Clinton’s voice, and I’ve really struggled to bring to consciousness the metaphor that Clinton’s voice reminds me of. Finally I did: From William Gibson’s novel of virtual reality, Count Zero, where Beauvoir explains “ice” (Intrusion Countermeasures Electronics) to the young protagonist, Bobby:

Ice*, all the really hard stuff, the walls around every major store of data in the matrix, is always the produce of an AI, an artificial intelligence. Nothing else is fast enough to weave good ice and constantly alter and upgrade it.

Hillary Clinton’s speaking voice reminds me of an AI weaving ice around itself: Her words are a hard, shiny, artificial protective carapace, constantly and inventively altered to hide the Turing Test-passing intelligence and store of data within. Go back and read Clinton’s words, and see if you don’t agree.

The words: “As President, I’ll expand Social Security” would be very simple to say. Clinton should consider saying them. I can’t imagine why it’s so hard.


[1] I prefer “elder” to “senior” because elder, to me, connotes the human qualities that come with age, where senior merely connotes status. There are, after all, some advantages to having seen this or that type of change cycle through society two or three times, or to remembering a time when it was actually possible to reach a human through a phone tree. And you kids get offa my lawn!

[2] MMT teaches that Federal taxes do not “fund” spending, and proceeds from the unexceptionable premise that society’s provision of services is determined by the real resources, human and otherwise, available in the economy. Hence, the tendentious concern by some for Social Security’s “solvency” — decades off, even reasoning from non-MMT premises — is often a cynical ploy, pushed by those who, even after the disastrous outcome of our social experiment with 401(k)s, would prefer that Social Security be privatized so they can collect fees from managing the money. Ka-ching. That said, the “solvency” issue is outside the scope of this article; the link just given covers that discussion well. Of course, even if one believes that taxes do fund spending, one might question the trade-off between boondogggle aircraft carriers or gold-plated fighter aircraft that catch on fire, and the human dignity of elders, or one might ask “Where’s my bailout?”, the question that tugged at Ben Bernanke’s heartstrings so painfully.

[3] Tax policy omitted as not germane; see note [2].

[4] See note [2].

[5] See note [2].

[6] I’m tired of the “worked all their lives” trope, even though it’s true. How about we make the criterion “didn’t cause any real damage,” instead? That way, financial parasites wouldn’t get any Social Security benefits at all. I suppose, since that violates Social Security’s principle of universality, that would be poor public policy, since that would only encourage parasites to suck more from their hosts while still active. But still.

[7] See note [2].

[8] See note [2].

[9] See note [2].

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. digi_owl

    Leaking bold tag in the notes header.

    Also, one do wonder what difference it makes to have a government filled with lawyers vs say one filled with engineers.

    1. NOTaREALmerican

      Not sure it would matter. The smartest-n-savviest people run all powerful organizations. Being a lawyer just means you were smart-n-savvy enough to recognize that “the law” is a tool which you can use to be very successful in life. People with brains configured to be engineers generally don’t realize this until late in life, if at all.

    2. Torsten

      Also, one wonders what difference it makes to have a government filled with lawyers vs say one filled with brain surgeons.

  2. Ditto

    Clinton supporters claim she is not trying to apply a means test, which raises this question:

    How does one cut through the mental fog of the Democratic base, which seems to be in complete denial about the party leadership ?

    I have tried and honestly it seems impossible.

    1. NOTaREALmerican

      You have the problem backwards (you need to think like an engineer here).

      People have brains configured specifically FOR specific types of bullshit:

      1) Mommy bullshit: Blue Team, New Testament, authoritarian, hierarchical (aka liberal (no neo), socialist).
      2) Daddy bullshit: Red Team, Old Testament, authoritarian, hierarchical (aka conservative, fascist)

      You can’t challenge the bullshit the brain is configure to believe. The brain would have no ability to create a safe reality without the bullshit it’s configure to believe. It would cause trauma.

      1. Lambert Strether Post author

        To binary for my taste; Yankees v. Cowboy-level schematicism and over-simplification.

        I also believe that the brain is highly configurable in near-real time. That would have been adaptive, obviously.

        And not especially on topic for this post.

        1. NOTaREALmerican

          Not so sure… No other explanation for all so many societies having the same Mommy/Daddy philosophy/behavior/political/religious split with the same people fighting for year defending the same illogical stories for centuries and centuries and centuries…

          Re: I also believe that the brain is highly configurable in near-real time

          Maybe some, but I sure don’t see this happening in most.

            1. Lambert Strether Post author

              Run a candidate who supports the policy you support? Support those views in all your various venues? Ridicule and punish politicians and apparatchiks who take the wrong view?

              This is not hard. It just takes awhile. And there’s a lot of blocking and tackling.

              1. Ditto

                I don’t see how that addresses the base’s willingness to buy the con. I would assume not believing the con would be the baseline to running a candidate against it. In other words, I can’t convince someone to look at a new car if they are convinced the lemon is wonderful.

                1. NOTaREALmerican

                  “The con” is all there is. It’s what life is about. The smart-n-savvy “feast” off the dumb-n-clueless using “the con”.

                  Think of it this way: There’s a fixed percentage of authoritarian true-believing Mommy and Daddy brains in all societies. Based on history it seems to be well over 50%, leaving the skeptics and non-believers in the minority (ALWAYS). The political parties and religions that exist, MUST exists, to organize these particular kinds of brains. If the Mommy and Daddy parties/religions didn’t exist their be chaos which is why these particular parties/religions DO exist: over time, the smart-n-savvy people created them to screw the dumb-n-clueless using “the con”.

                  So forget about trying to change anybody’s mind (aka brain configuration). It’s not possible OR takes way to long to matter (I think this long term process is call psychotherapy, btw, could take years).

                2. NotTimothyGeithner

                  I just wish them luck winning Republican and low information voters. Some people have to reach rock bottom.

                  They can blame you for the inevitable loss, but if they want to nominate a very flawed candidate who has actively supported unnecessary wars they shouldn’t be surprised when people don’t vote for their team.

            2. NOTaREALmerican

              You can’t change how people’s brains “think”.

              Doesn’t mean you can’t change society tho. California (basically) started the movement which stopped people in the US from smoking.

                  1. Yves Smith

                    That it flat out ridiculous. Computers and machines are not capable of cognitive dissonance, for starters. And this is thread-jacking, fact-free and “any stick to beat a dog,: ALL of which are a violation of the site’s Policies. One more remark like this and you go into moderation.

      2. Gaianne

        Inherent in this model is the assumption that Americans remain eternal children–that they never grow up.

        But that’s all right: Americans do remain eternal children.


  3. Carolinian

    Wasn’t husband Bill primed to privatize SS before Monica, the blue dress and all the gory details intervened? I believe it was an opt out scheme where younger people could put their SS savings into stocks.

  4. sleepy

    My first internet read of the day and I get a week’s worth of anger.

    I hope she loses her ************ and goes down in glorious defeat.

    1. NotTimothyGeithner

      But her husband was elected President with 46% of the vote against 41 and his only recessionary economy, and remember President Gore? Or how Hillary was really close to winning in 2008? Or how her cronies oversaw the Democrats only losing control of Congress once in 90’s? She’s super electable.

      Supreme Court! Abortion rights…for people who can afford them because Hillary won’t fight for rights for everyone. It’s just not politically viable

      1. Arizona Slim

        In 1992, the election results broke down this way:

        43% Clinton
        38% Bush
        19% Perot

        Which made Clinton a plurality President.

  5. grayslady

    I prefer “elder” to “senior” because elder, to me, connotes the human qualities that come with age, where senior merely connotes status.

    Perhaps “status” is the wrong word choice? Old is old. To me, senior is more appropriate for referring to anyone over age 65. Elderly implies infirmity, and while there are definitely infirmities that catch up with you as you age, many seniors are spry and active in spite of the infirmities. That doesn’t mean we don’t need additional financial help, especially with food and non-covered medicines. This isn’t a moral issue. Aging results in the decline of our body’s systems, regardless of past activities or habits.

      1. grayslady

        Ahhh. I see. I think we assassinated our tribes, elders and all. Your predecessors were apparently more civilized.

  6. NotTimothyGeithner

    Wasn’t she Moynihan’s choice to replace him back in 2000? I cant find articles that don’t revolve around Hillary stalking Moynihan. My memory is a tad hazy, and I might be confusing gossip even from team Hillary when they were ring to justify her residency in New York. We know how much Moynihan wanted to gut Social Security, but he did oppose Clinton’s welfare destruction.

    1. Arizona Slim

      Recall that she was supposed to run against Giuliani, but he was diagnosed with prostate cancer and dropped out of the Senate race. So, a replacement was found: Rick Lazio. And Clinton cruised to victory.

      1. Vatch

        (I had a network glitch when I first posted this, so if this is a duplicate, I apologize)

        Here’s the start of note 2:

        [2] MMT teaches that Federal taxes do not “fund” spending, and proceeds from the unexceptionable premise that society’s provision of services is determined by the real resources, human and otherwise, available in the economy.

        This has come up many times here at NC, and I think this is only partially true. If taxes don’t fund government operations, then the government must create money to pay for commodities needed to run the government, for services provided to citizens, and salaries for government employees. Theoretically, government could be completely funded by the yearly creation of money, but this would cause significant inflation.

        Example: Imagine an economy worth 10 trillion dollars, and a government budget of 1 trillion dollars. If taxes are no used to fund the government, then the money supply will increase by 1 trillion dollars. If the economy hasn’t grown by that much, there will be up to 10% inflation. Each year that the government operates, it will have to create 1 trillion dollars adjusted for inflation. So that could be 1.1 trillion dollars the second year, 1.21 trillion dollars the next year, etc.

        In reality, government operations are partially funded by the creation of money, and partially by taxes. So in the example above, imagine that the economy grows by 5%. That means that the government can fund half of its operations by creating 500 billion dollars (5% of 10 trillion), and it can fund the other half of its operations by tax revenues of $500 billion dollars. So in this case, government is partly funded by taxes, and partly funded by the creation of money.

        Have I overlooked something or made a logical error?

        1. NOTaREALmerican

          Re: Have I overlooked something or made a logical error?

          What MMT and what-ever-it-is-we’re-using-now-is-called both forget about is this: who controls the government when it has unlimited spending ability.

          Assuming the economy is 10 trillion dollars and the government budget is 1 trillion dollars (and there were no taxes) this would mean that the politicians would have no reason to keep the budget at 1 trillion dollars. The next year, it could be anything. Want a cool new war: no worries. How about we fix that “infrastructure”: sure (and let’s add a few lanes to all the freeways while we’re at it – oh the “Progressive” want high-speed-rail, sure lets do that too). And, (worse), the “citizens” would LOVE it. Who doesn’t want free bling (I know I do).

          Unfortunately, the only way to control the politicians (aka the sociopaths that run things) is if they have limits on what they can spend. When there’s limits on what the politicians can spend (say: this war OR that infrastructure) then the choice is between “citizen” Billy getting more bling OR “citizen” Bobby getting more bling. But, only when that happens will Billy and Bobby fight for control of “their politician”. If Billy and Bobby get everything they want, well why even bother to vote?

          Limits on what politicians (aka sociopaths) can spend are the only thing that make government controllable. We have perpetual war now because we can “afford” to because of debt. But, when the old-farts get their SS, cut and the wars don’t stop, maybe then we’ll see some serious political discussions about “the limits of what people can expect from their government”.

          Disclaimer: Also an old-fart. I’m gonna collect every dime I can get too.

            1. NOTaREALmerican

              Re: The constraint is real resources. If you don’t want that those “limits” managed democratically, how do you want them managed?

              That’s what I’m wondering too.

              Democratically seems not to be working, anywhere.

              So, it seems the limits have to be “smart-n-savvy sociopath” proof. (Which, yeah, I know isn’t possible either).

              I’d sure hate to see our current crop of smart-n-savvy operators (gov, media, corp) get hold of this line and use it to their benefit:

              In this theory, sovereign government is not financially constrained in its ability to spend; it is argued that the government can afford to buy anything that is for sale in currency that it issues.

              Cool: perpetual wars, forever!

              Oh, you mean there’s more after THAT sentence?

              The only constraint is that excessive spending by any sector of the economy (whether households, firms or public) has the potential to cause inflationary pressures.

              Well, golly, (say the sociopaths) we’ll NEVER let THAT happen. (But, if it did, who would benefit, oh yeah…)

              1. Lambert Strether Post author

                None of this is germane either to the post, or to MMT, since we’ve had fiat money since Nixon closed the gold window.

                There are two daily links sections for random proffers.

                1. NOTaREALmerican

                  Re: since we’ve had fiat money since Nixon closed the gold window.

                  Yeah, and democracy couldn’t control that either.

                  I don’t know what the solution is either. But it sure won’t be MMT; unless somehow the people start electing “moral people” (which wouldn’t be very safe for the society or very human).

                  1. Lambert Strether Post author

                    Category error: “The solution to problems in democracy is not MMT” is like saying “The solution to problems with the electrical system is not open-heart surgery”; the category error renders the statement is vacuous. That is why it’s not a claim that I made, in fact. So this comment is strawmanning, and it’s broken-recording, too. Stop it. Take a break.

            2. Vatch

              From the beginning of the Wikipedia article:

              In MMT, money enters circulation through government spending. Taxation and its legal tender power to discharge debt establish the fiat money as currency, giving it value by creating demand for it in the form of a private tax obligation that must be met. In addition, fines, fees and licenses create demand for the currency.

              Yes, I agree with this. The first time that the government spends the money, the government is creating the money. This happens once per unit of money. After that, the government must either create additional money, which can be used one time, or it can use previously created money. The only way for the government to use the previously created money is to get that money from taxation (or fees).

              So what MMT seems to be saying is that money is not created by taxation, but that government operations (with the exception of the year in which the money is created) are funded by taxation.

              MMT also says this (Wikipedia):

              MMT claims that the word “borrowing” is a misnomer when it comes to a sovereign government’s fiscal operations, because what the government is doing is accepting back its own IOUs, and nobody can borrow back their own debt instruments. Sovereign government goes into debt by issuing its own liabilities that are financial wealth to the private sector. “Private debt is debt, but government debt is financial wealth to the private sector.”

              Translation: Government is not funded by borrowing. But there’s nothing here about whether or not government is funded by taxation. Clearly, government is partially funded by taxation.

              1. Lambert Strether Post author

                Why “clearly”? Fiat means just that, fiat. (The dollar derives its value from the fact that the government, as monopoly issuer, can demand payment of taxes in dollars.) See Warren Mosler on “How to turn litter into money”:

                Yes, that’s statist…

            3. Just Ice

              The banks’ perennial argument is that democracies CAN’T manage the money supply.

              However, banks have ALWAYS been implicitly* privileged, in at least the US, so it can’t be said, at least in the US, that democratic control of the money supply has ever been tried.

              So yes, let’s have MMT but let’s deprivilege banks too unless you want a competing source of price inflation for which the monetary sovereign will be blamed, if history is a guide.

              *Because we’ve never had a proper Postal Savings Service or equivalent.

        2. craazyboy

          So in this case, government is partly funded by taxes, and partly funded by the creation of money.

          Have I overlooked something or made a logical error?

          The government borrows existing money thru treasury bond sales. (the part of spending in excess of taxes) The only ones that “create” base money is the Fed. It is equivalent to the size of the Fed balance sheet. Currently $4.5 trillion, before the GFC it was $900B, and in 1913 it was a much smaller number, of course.

          You also need to broaden your example of the government purchasing commodities. Actually, broaden it to imports and exports and the resultant trade deficit. Unless you have zero trade deficit, you can’t say you have a balance of US output and US consumption. Not to say we shouldn’t try doing that.

          1. Just Ice

            “The only ones that “create” base money is the Fed. “

            Interesting point since the Fed creates fiat for both Federal deficit spending AND for the private banking system and since all Federal taxation is paid with fiat then yes, the Federal government is funded with BOTH money creation AND taxation (of the fiat created for the private sector).

            So it follows that if we truly want the Federal government to be funded without taxation then we must eliminate the fiat creation of the Federal Reserve? At least for the private sector? Else a large portion of the economy will go untaxed?

            My how privileges for the banks obfuscates things – deliberately so, imo.

            1. Just Ice

              ” Else a large portion of the economy will go untaxed?”

              Correction: Otherwise the ability of the Federal Government to spend without price inflation is infringed upon for private interests.

        3. Lambert Strether Post author

          That’s not how the plumbing for the money flow actually works; it might seem like a “tax input pipe” must be hooked up to a tank from which a “spending output” pipe emits money, but it isn’t.

          1. craazyboy

            I don’t see why you’re so confused about this point Lambert. The IRS, a division of the Treasury, collects taxes. The Congress approves spending. The government spends. The bills go to the Treasury. The Treasury writes checks from their account full of the tax money. If they come up short, they sell Treasury bonds. It really does work that way!

      2. bkrasting

        Hmm. Last seen SS was part of the Unified Budget. Pretty far from MMT.

        SS takes 28% of all federal tax revenues today. How big a portion of the pie would you like?

        The “fix” is 4% of taxable payroll (1.5% of GDP). $300b in new taxes – forever.

        For two income couple, wife makes $50k at the library, husband makes $75k from his own plumbing biz.

        The 4% SS tax increase comes to an extra $4,000 a year. Not an easy sale.

        To get it all from the rich sounds easy, but as Biggs says it would be the biggest tax increase in history. Not an easy sale either.

        1. abynormal

          Brucie, So Glad You Showed Up to Make Your Annual Donation while i’m still online! pony up sweetie or i’ll stop being sweet…

        2. Ed S.

          The 4% SS tax increase comes to an extra $4,000 a year. Not an easy sale.

          No — the 4% SS tax increase is NOT the “fix”. The SSA actuary report says 2.68% in 2015 (down from 2.88% in 2014). Your “4%” is some CBO guesstimate pulled from drawing a straight line from now to 2050. At least use real data.

          Here’s the fix (from the article you referenced):

          SSA’s actuaries project that immediately lifting the payroll tax ceiling would improve Social Security’s actuarial balance by about 1.91% of payroll

          That leaves 0.77% left. So that’s, umm, $750 on your librarian / plumber couple.

          And, for what it’s worth, that -2.68% actuarial number bounces around annually — but the estimate has been negative since 1984.

          1. bkrasting

            The difference between CBO and SSA is the mortality assumptions that are used. SSA says we will die younger, CBO says we will live longer.

            A discussion of why CBO changed its assumptions on mortality. If you don’t like this, wait a few years, SSA will catch up to where CBO is. 4% is the number to consider for policy.


        3. craazyboy

          Putin just mentioned the Russian defense budget is $55B and the US defense budget is $570B. We also handle war costs off budget and add those figures directly to the national debt at the end of the year.

          So you have a problem with $300B keeping around 90% of US citizens alive after age 65?

          And what about the price of US healthcare – for all ages and a cost for both the working private sector and Medicare/Medicaid? Estimated at twice the cost of other 1st world countries.

          1. sam s smith

            The problem is that $300 billion would go to poor people that don’t deserver it as opposed to defense contractors that provide jobs.

    1. Ed S.

      In addition to note[2],

      1) Biggs works for American Enterprise Institute – so he’s assuredly not an impartial observer.
      2) Biggs concludes (irrespective of note[2]) that in order to “close the gap” we’d need to increase SS tax anywhere from 2 to 4 percentage points. Which is, of course, not possible. Or we could remove the income cap, which would reduce the so-called gap by 71%. Which is also not possible.

      So, to conclude — even using Biggs own calculations, it’s more than possible to “fix” the issue.

    2. Strangely Enough

      Funny how “unfunded” never comes up wrt to things that we don’t pay into, i.e. bailouts, wars, “Defense,” but, rears its head constantly for things that we do pay for…

      1. blert

        It’s strictly a term of art conjured up for pension funds.

        It comes from the world of insurance. Period.

        You won’t find it used to describe ANYTHING else in the budget, either.

        Things are “funded” or not.

        Normal budget items never achieve the status of “unfunded liabilities.”

        In the corporate world, the accountants deem funded liabilities as being removed from the balance sheet.

        A classic example would be the ‘sinking fund’ for a corporate debenture. Most all are ‘funded off’ the balance sheet before they are actually extinguished. That final process is entrusted to a ‘trustee bank.’ ( Typically State Street Bank — Boston banks totally dominate this segment of the financial industry, which is obscure to the general public.)

    3. Paul P

      The “$11 trillion unfunded liability” is a scare tactic. The 75 year shortfall for Social Security is estimated by the 2015 Social Security Trustees Report to be 1.26% of GDP.

      Dean Baker has often pointed to this petty terror of the big number. Most recently in “Wage Growth Continues to be the Key to Social Security Solvency.”

  7. Ed S.


    Seriously awesome recap

    A few minor amplifications (and thanks for indulging me):

    HRC’s “fight” is actually well defined – it’s a “fight” against privatization. From your website quotation: As president, Hillary will defend against the efforts to privatize Medicare and Social Security (emphasis added). Not a fight to retain current benefit levels, let alone increase them (for anyone). It’s a fight against turning SS over to GS. I also wonder if “fight” and “defend” is much like the use of the word “conversation” – which is not a discussion between two (or more) equal parties but is a kabuki that lets people contribute ideas to a decision that has already been made. If HRC was serious about SS, the statement would be: As president, Hillary will defend against the efforts to privatize veto any bill that privatizes Medicare and Social Security. Otherwise, it’s “Well, we fought hard and defended as well as we could, but didn’t carry the day”.

    More generally, HRC’s words are devoid of meaning (or more correctly – she means exactly what she says – which is nothing of substance). This enables the listener to project their own ideas and conclusions into what is being said. Not only with SS, but with EVERY policy proposal. As you point out, What do words like “fully support” and “defend” mean? (and I’d add enhance as well). They mean whatever the listener think that they mean.

    Here’s the SS game plan: 1) “Fight” (kayfabe) against privatization. Win that fight BUT 2) Gotta means test “benefits” so the program can stay “solvent” which 3) Over the mid-term makes SS just another middle class tax which can then be killed in the future.

  8. jonf

    I have this real problem with saving for something forty years in the future. (especially if there is no cash lock box, ha) But, alas, that is what the PTB say we must do. Still, how does one defeat ignorance if it is never confronted? Do we really believe taxes don’t fund anything or are we just kidding about it?

    I share your distrust of HRC. I thought she was phony during the debates since it would have been rather easy to be crystal. If Bernie is really interested in this thing, he will have to challenge her. That was a very big disappoint to me first time around.

    One thing I had not thought of was the idea of a commission. A friend of mine thought a commission would be swell and I nodded. Now I will retract it, since it is only another way to cut benefits with no blowback, since it would be “bi partisan”. The idea of opening up an avenue to attack it as welfare is also abhorrent.

    Great post. Thanks

  9. nathan goldhaber

    the only time during the endless campaign for president that politicians can be called out in their bullshit is during a debate. with so practiced a rhetorician as hillary this would involve challenging her statements, perhaps over and over on television in front of millions of people who would certainly wake up and remember
    what was said if there was actual verbal combat to stimulate the senses and hopefully wake up the brains.

    to accomplish this would involve, first off, fending off the ridiculous television inquisitors with their next question next question mentality and insisting on staying with one point. but second, and most importantly, it would take an alert and tenacious debater like elizabeth warren. i’m not sure that bernie sanders is that type of denater. his approach seems to be to speak his mind and let the others speak theirs. he might say something like, that’s not good enough, etc. but he doesn’t seem to probe or thrust and parry. with so wily a duellist as hillary something like that is necessary.

    if these issues mean so much to bernie, he’d better try.

    a second way is for his campaign to channenge her directly in ads and call her out that way. that would force the issue to the forefront.

    short of this i fear we will have a means tested welfare program.

  10. TG

    The words: “As President, I’ll expand Social Security” would be very simple to say. Clinton should consider saying them. I can’t imagine why it’s so hard.

    Indeed. But consider: Obama would have no problem uttering these words – and then doing the exact opposite, while claiming that he was really doing it. It’s his utter shamelessness that makes Obama such a powerful agent of the oligarchy. (‘TPP etc. are the most transparent trade agreements in history’ – yeah, and TPP is locked in a vault that only congressmen can see, and the other components of Obamatrade are so toxic that not even Congress gets to see them).

    So given that Clinton is a sociopathic grifter whose only motivation is selling out the national interest for money (and, presumably, status), and given that she can certainly hire speech writers as talented as those that work for Obama, why isn’t she a better liar? There is something wrong with her (I mean, other than her being evil and all). Why does she insist on these tortured lawyerly evasions when she could just plain out lie and get away with it?

    BTW here is The Donald himself on the matter: “Social Security faces a problem: 77 million baby boomers set to retire. Now I know there are some Republicans who would be just fine with allowing these programs to wither and die on the vine. The way they see it, Social Security and Medicare are wasteful “entitlement programs.” But people who think this way need to rethink their position. It’s not unreasonable for people who paid into a system for decades to expect to get their money’s worth–that’s not an “entitlement,” that’s honoring a deal. We as a society must also make an ironclad commitment to providing a safety net for those who can’t make one for themselves.”

    Does The Donald really mean this? I have no idea – he has no personal executive or legislative track record on the matter. But I do know that Hillary Clinton is on the opposite side for certain.

    1. SumiDreamer

      ” There is something wrong with her (I mean, other than her being evil and all). ”

      Sentence of the week!

      This country is run by BENT lawyers and (covert) neocons, in which both of the categories she is the Poster Woman.

      I am one of the elderly women who gets the lowest amount of Social Security and Hills is the LAST person (besides Pete Peterson) I would want advocating for me to get a fair shake at a livable income. Like she give’s a ratz azz.

      Her steel velvet caccoon takes alot of deconstructing.

      TY for a great article and discussion.

  11. charles 2

    It is interesting to actually follow the link referring to Bismarck social security. As for Hillary Clinton’s words, one must be careful of their meaning.
    “old age” meant really really old : Age expectancy at 60 in Bismarck time was around 13 years. By putting a threshold at 70, the German State was not expecting to pay a long time !
    “claim” indeed went both ways. The, very young, German empire relied crucially on conscription, which enabled first the dominance of Prussia in what was the confederation of German states, second allowed for the victory against the French in 1871 and the establishment of the empire itself. Wooing the veterans of the German reunification war was a smart move by Bismarck and secured “patriotism” for what was to come. The link was made even more clear as the retirement age was lowered to 65 in the midst of WW1 butchery in 1916.
    As we see in our current financialized and leveraged society, creating multiple claims and counter-claims between several social groups in not necessarily in the common interest…

  12. skippy

    With the departure of our late LNP treasurer and the topic at hand I would like to present a keynote speach he gave in 2012…


    17 APRIL 2012


    I wish to thank my friends at the Institute of Economic Affairs for the opportunity to discuss an issue that has been the source of much debate in this forum for sometime….that is, the end of an era of popular universal entitlement.
    There is nothing much new in the debate other than the fact that action has now been forced on governments as a result of the recent financial crisis. Years of warnings have been ignored but the reality can no longer be avoided.
    Despite an ageing population and a higher standard of living than that enjoyed by our children, western democracies in particular have been reluctant to wind back universal access to payments and entitlements from the state. As we have already witnessed, it is not popular to take entitlements away from millions of voters in countries with frequent elections. It is ironic that the entitlement system seems to be most obvious and prevalent in some of the most democratic societies. Most undemocratic nations are simply unable to afford the largesse of universal entitlement systems.


    Skippy…. As with the American case, its blatantly an ideologically driven agenda with the numbers purely abstractions used to justify its advocacy, once the abstractions are removed the intent is clear….

  13. Paul Tioxon

    I believe dems should move beyond tax and spend policies to simply print and spend policies. For example, stock buy backs by the private sector corporate world uses profits from the balance sheet or ZIRP fabricated fictitious capital to buy back shares of stock, moving cash from the balance sheet to the shareholders who sell their shares in the buy back tender offer price. This along with tax dodge offshoring of profits keeps cash from going back into the economy as investments, fully funded pensions, real wage increases for the entire workforce not just the Golden Parachute crowd.

    So, in order to balance what is removed altogether by the stock buy back and spend money back into the economy, I propose the US Treasury use the public sector to balance the lost capital by depositing an equal USD amount into The Social Security Trust Fund for every dollar in stock buy backs. All past dollar amounts can be calculated to fund Medicare expansion, disability, etc. But not Medicaid. Medicare expansion going forward is issued also covering former Medicaid qualified citizens. Medicaid should simply be rolled into Medicare, with equal coverage before the law, no 2nd class citizenship medical coverage.

    So, if the private sector gets to destroy capital, fine, without taxing anyone, money can be placed into the hands of the people who have worked to actually create and sustain the economic well being of the nation as a whole. And those are the people who have paid into Social Security. A baseline living pension, of say $30,000 per person with the minimum amount to buy into it of working time can be offered, resulting in married retired couples having a household income of $60,000 per year.

    If corporations soak up profits by cost cutting by means of wage suppression, underfunded pensions or no pensions at all, but skimpy 401ks, lousy medical or no medical benefits etc and then turn around and destroy the profits in a financial engineering scheme to drive up share holder value, destroying profits in the process, it is no wonder that the economy keeps contracting as the money in circulation keeps avoiding the people who need it live and would spend it, thereby expanding the economy and creating more jobs.

    Expand Social Security and Medicare but don’t tax and spend instead, print and spend backed by the well documented assets of stocks bought back corporations and then destroyed.

    Problem solved AND I JUST MADE AMERICA GREAT AGAIN!!! You’re Welcome.

  14. blert

    Since Americans are living too long, the retirement age simply HAS TO GO UP.

    Beyond that, the administration is going to have to stop Cloward-Pivening the SSDI fund.

    It’s already tapped out.

    Whether it’s Muslims into Europe or everybody into America — under a welfare state regime — the natives are drained to benefit the instant arrivals.

    Cloward and wife were fundamentally wrong. When ‘the system’ — any system — is insolvent it sheds load.

    It is never the case that an insolvent entity re-jiggers the payouts so as to be more generous and more inclusive for those who didn’t pay in anything.

    Russia (1998) is illustrative. The aged pensioners were simply cut off and left to starve. Within short order, millions died. However, being elderly, their deaths were toted up — for the record — as being due to old age. These were, overwhelmingly, war widows.

    One might take note that there was no call to re-jigger the payouts for any dependent class.

    And, lest we forget, there was an exodus out of Moscow… led by minorities. The last to arrive were the first to leave — but, of course. Any national capital is totally dependent upon resources sent from afar.

    An end to the American scheme would trigger a wholesale exodus of economic migrants… which are all that there are.

    Those truly repressed, in danger, can’t even make the transit. They are being murdered by ISIS and others — right quick.

    Refugees — they’re not coming in.

    Hijrah, yes.

  15. TheCatSaid

    In a recent Inverted Alchemy post, Dr. David Martin makes the point that according to a recent Communication from the Board of Trustees of SSA, the Disability Insurance fund component of Social Security will run into problems in 2016. A short excerpt:

    Since 2010, Social Security’s costs have exceeded its tax income and its non-interest income combined and are expected to do so through 2024 “and beyond”. In their Communication, the Board of Trustees have stated that the Disability Insurance component of the OASDI will experience “fund depletion” in 2016 and that the OASI funds will be depleted by 2035. What this means is that in 2016, the program will be able to meet only 80% of its statutory obligations. In other words, 60 million Americans will have 20% less to spend beginning in 2016 while the FOMC expects spending to grow during the same period. Take 20% of a population and cut their purchasing power by 20% (to say nothing of the increased tax that will be placed on current wage-earners rising a gross 2.62% thereby wiping out the FOMC PCE projection) and you’ve got a massive problem. The FOMC and the Social Security teams don’t have the same crystal balls. Not surprisingly, Social Security wants full employment so that they can collect tax and fund themselves. The Fed wants unemployment below 6%. The trouble is that Social Security bases its solvency estimates on employment numbers that don’t currently exist and are not projected to exist thereby accelerating their insolvency. And it gets much worse.”

    Read the full post to get the necessary context, which includes the recent Federal Open Market Committee (FOMC) actions: Fed decision to maintain near-zero interest rate, yet the Social Security projections have been based on higher interest rates over the last several years–leading to wildly inaccurate projections by various parties.

    Martin makes a couple recommendations in light of it:

    “it’s reasonable to carefully examine where discretionary spending is most vulnerable to senior purchasing power reduction and begin by unwrapping these positions. More broadly, on the U.S. domestic front, general interest-rate dependent sectors are likely going to suffer disproportionately to other sectors.”

    I recommend reading the full article. It assembles dense, factual information from several directions that, when combined, reveal a startling picture that is not yet in the public or political awareness. Martin predicts the wheels will start coming off around election time. I haven’t heard any financial, economic or political sites discussing this yet. It will probably become one of those disasters “no one could have seen coming”.

    1. blert

      ZIRP not only trips up every pension scheme in sight — it’s preventing the origination of new enterprises across the board.

      The Fortune 500 is never the source of net new employment. Big Business is the business of substituting capital investment for labor. That’s why it’s big.

      Net new employment only occurs inside small firms, generally; with astounding growth for the rare super success story. ( Apple, MSFT, Intel, H-P)

      The seeds to new enterprise come into being when assets held by the old are invested in the next generation. This is manifest with Sand Hill Road in Palto Alto: the venture capitalists.

      But the segment that really puts employment up is that of the small firm – funded by ‘angels.’ These investors use INTEREST income.

      When their interest income collapses to zero, ALL of them pull in their horns.

      No-one facing retirement dares liquidate assets to invest in an uncertain new firm.

      Instead, an asset panic hits. Overnight the collective reaction is to pile up even more assets.

      Hence, in a loopy, round about way, ZIRP destroys intangible wealth.

      The authorities do not makes this connection.

      Yellen and company don’t travel in those circles.

      They are as blind as Louis XVI.


  16. J.D. ALT

    This is a great discussion, but what is striking to me—a la Note No. 2—is that the underlying premises of what’s being bandied about here are that (a) taxes fund federal spending; (b) the federal government cannot collect enough taxes to pay for all the things politicians have to (or want to) promise in order to get elected; (c) therefore skillful politicians (like Clinton) become masters at saying things that sound like a promise about something the government will spend money to accomplish while, at the same time, reassuring everyone that taxes will not have to be increased, since everyone has bought into premise (a) as a starting point. The great struggle that our political process will continue to have is trying to figure out a way to get out of the “box” of premise “a”. I don’t know of a single politician—including Bernie Sanders—who’s figured out a way to do that yet.

  17. Gaylord

    What difference does it make? it doesn’t matter what a candidate says, especially during a campaign. What they say and what they do in office are often the opposite (as happened repeatedly with Obama). However, I would like to see more inclusion of what Dr. Jill Stein has to say, please.

  18. RD (Recovering Democrat) ;-D

    From my reading of Mrs Clinton’s words, I believe that she’s referring to the Social Security Special Minimum Benefit For Low Lifetime Earners, which is practically obsolete today.

    Hence, calls to revamp the benefit ‘floor,’ so that monthly benefits are not below the FPL, or the Federal Poverty Level.

    Proposed Revisions to the Special Minimum Benefit for Low Lifetime Earners

    Social Security’s special minimum benefit is declining in relative value, does not provide a full benefit equal to the poverty threshold, and reaches fewer beneficiaries each year.

    Members of Congress and other key policymakers have proposed several methods for revising the special minimum benefit, either as part of reforming Social Security more broadly or as stand-alone policy options.

    Most of the new options would index the benefit to wages, helping ensure its sustainability into the future. The options differ in how they define a “year of coverage,” how many years of coverage are required to be eligible for any benefit increase, and how much the full benefit increase should be. Those choices will determine who will receive the benefit increase and how adequate their benefit will be. . . .

    Which is not to say the overall benefit should not be increased–it should. Especially, since so many Americans have little retirement savings and/or pension plans, aside from their Social Security benefits.

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