Monday, February 14, 2011

Why The Harping on Social Security?

Americans are living under a misconception. 88% think that Social Security is in big trouble. Because of this big trouble it needs radical change. What kind of radical change? What else but privatization. Who would benefit from that action? Of course Goldman Sachs and other financials. But you gotta do what you gotta do.

There's just one problem. In fact Social Security is not in big trouble. It's actually in really good shape. Or at least it was in 2005.

But that was before Obama's Social Security tax holiday. This may change things. Obama's tax cut of course cuts taxes for the wealthiest Americans by radically reducing the estate tax. It increases taxes on the poorest Americans. And it jeopardizes the pension program relied upon by millions of poor people. The tax cut holiday is like the temporary Bush tax cuts. Unlikely to be restored to their former level. As a side note, though the majority of Americans supported the Obama tax cut deal overall they opposed the Social Security tax holiday by a margin of 57 to 39.

Obama is turning a program that is wrongly feared to be in trouble into a program that might end up in trouble. Conservative think tanks and some media are conditioning the young to not expect a Social Security check when they retire. Both of these things serve the interests of certain powerful corporate elite. That's where real power resides.


HispanicPundit said...

Here is what the CBO says regarding social-security:

Over the next few years, the program’s tax revenues (that is, the trust funds’ receipts excluding interest) will be approximately equal to its outlays. However, starting in 2016, as more of the baby-boom generation enters retirement, outlays as scheduled under current law will regularly exceed tax revenues. As a result, under current law, both trust funds will gradually be depleted.

That should be the date of 'crisis': the point where outlays exceeds tax revenue. And that is projected to happen within "the next few years". Keep in mind that this CBO report was released prior to Obama's payroll tax holiday. So social-security was nearing crisis point soon even before the payroll tax holiday.

Second, what about the vast amount of middle class people that enjoy the extra money because of the payroll tax holiday? That has to count for something. Personally, if I had the option, I would gladly take my payroll contribution and my employers payroll contribution and be able to invest it myself. I'm pretty sure I can get more than the return typical of social-security funds.

Third, privatized social-security accounts are better than status quo social-security primarily because they really are owned by the person. There would be no need for an elusive "social security trust fund", because the trust fund would be people themselves. Just like my senator cannot decide what to do with my 401k, in the same vein, he would not be able to decide what to do with my privatized social security trust fund.

Fourth, by reducing the estate tax, congress was merely following the will of the people. Just as keeping Bush's tax cuts polls well.

Jon said...

Still, according to your link you have until 2042 before the trust fund reserves are depleted with no changes. If you increase the tax from 12.4% to 14% though you bring the plan in to balance. That's just not that big a deal. It's also worth noting that the plan can pay a substantial, but slightly reduced benefit indefinitely. So why the perception that it won't be present for current young people?

Of course what Obama has done is go in the opposite direction. And who wanted that? Goldman Sachs did and the American people didn't. So that's why it changed.

Do you really think Obama cut taxes because the American people wanted it? The American people supported some of it and not other parts of it. Almost all of it reflected the wants of Goldman Sachs (save for the unemployment benefits), including the part that Americans don't want (social security changes).

I know you think it's great that the middle class got a so called temporary tax cut. But the thing is they didn't want that. They'd rather have a government program they can count on when they retire and they'd rather also help disabled and widows via a public plan. Do you think we should have democracy where the government policy reflects the will of the public or should we live in a world where government policy is heavily skewed towards the wants of the wealthiest corporations?

HispanicPundit said...

You are quite selective in your poll analysis Jon. The polls show support for the estate tax cut (in fact, it ranks the highest in importance), the polls show a general strong support for the Bush tax cuts.

And the polls will probably show a strong support to keep the payroll tax cut - and a resistance to raise it.

You claim social security also polls well. I am not disagreeing with that. I am merely showing that polls go in all sorts of contradictory directions. Quit trying to paint a picture that isn't there - or is atleast alot more cloudy than you realize.

Jon said...

I don't see that we have any conflicting polls. I said in the initial post that Americans overall supported the tax cut. I pointed to polls that say the same thing you are. The estate tax cut was favored. Overall extending the Bush tax cuts was favored. On the specific Social Security tax holiday, that was opposed. Are you aware of a poll that shows something different?

Actually, I don't think I said Social Security polls well. You're confusing me here.