The simple fact is that Social Security won’t go broke.  So for those who may be frightened by all the talk of ‘fixing’ social security, here’s the truth.  From Bruce Webb over at the Angry Bear blog.  Of course Bruce has a big advantage over political conservatives.  He knows the math.

“A couple of further notes. If retirement benefits are projected to increase in real terms by close to 100% over the next 75 years, then a projected cut of 20-25% on Trust Fund exhaustion would STILL see those future workers with larger baskets of goods than similarly situated retirees (this is what we call ‘Rosser’s Equation’).

But this real term increase doesn’t come at the expense of younger workers still in the work force, at least not without some forced special pleading. The goal clearly shown in Fig 2 is to keep overall replacement values steady with each future generation just able to hold onto its share of the overall societal increase. This seems fair to me.

There are some that insist that if you ‘really’ look at the numbers you will see that Social Security was simply too generous to earlier generations. How you reconcile this with these graphs showing that each generation will be able to afford a bigger basket of goods than their predessessor would seem difficult. Because arguments from ROI (but I could have had EVEN MORE, and screw Grandma) seem pretty hard-hearted and selfish. But perhaps someone can make the moral case in comments.”

Beezer here.  So if even the math challenged can understand that Social Security isn’t going to go broke, what the heck is going on?  Webb has an idea.

“Nope in my opinion the fundamental motive for opposing Social Security is not driven by greed as such but instead an ideology that depends crucially on the perception that Big Government is always and everywhere a failure, and that the bigger the counter-example the higher the risk to that overall paradigm. If Social Security was just headed for the cliff, its enemies would just stand back and watch it go, arguably this is where they were at in 1993. It is only when they see the coach driver beginning to get the team under control and steer it away from the cliff that they have to jump in and try to spook the horses again.

Which is why people asking why the actions of Social Security opponents don’t seem to be particularly helpful in guiding the stage coach away from the cliff are asking the wrong question, looked at in that way their actions don’t make sense at all. On the other hand if you flip it around a lot of things become clear, there being more than one definition of ‘fixing’.”

Beezer again.  There it is, that damn ideology again.  No matter the evidence.  No matter the math.  No matter the real historical record.  Republicans have so bought into the myth that the government can do no good, only harm, that such a large success like Social Security cannot be let stand.  So spook the horses and drive the program off the cliff.  That’s the only ‘fix’ the Republicans have in mind.

Beware America.  You are being sold down the proverbial river of misplaced ideology.

And as a result, they are rendered speechless much of the time.

True story.  From a C-Span call in show during the health care reform debate.

The caller complained about ‘socialist’ medicine and all the perceived evils of socialism in general and socialism in medicine in particular.  The caller was asked how he got his medical treatment.  His answer?  The Veterans Administration, possible the most purely socialised medical system on the planet.

When asked why he didn’t avail himself of private insurance his answer was “I can’t afford it.”

Liberals listening to this exchange probably didn’t get their jaws off the ground for several minutes.  They were rendered speechless.  No wonder they often lose an argument:  They can’t talk!

And this from a post by economist Maxine Udall that appeared on economist’s view:

“…[T]he spectre of “socialized medicine” prevents us moving to single payer, where the incentives for prudent life cycle management of risk across all age and income groups would be better aligned. Why, when we already have what is in effect single payer for the elderly and the poor, do some believe that single payer is “socialized medicine” and why do they fear it so?

I gained some insight into this recently when an elderly relative started complaining about “Obamacare” and how it would lead to “socialized medicine.” Knowing the person had heart surgery courtesy of Medicare and was receiving ongoing monitoring and care, I said, “I didn’t realize you were so unhappy with Medicare.” To which I received the reply: “I’m not talking about Medicare, I’m talking about socialized medicine.”

“How is Medicare different from socialized medicine?” I asked.

“Medicare isn’t socialized,” came the reply. “I pay for it. I pay every month and when I’ve had surgery, I’ve had to pay some of it. Medicare is like any other insurance.”

“Well,” I said, “I know you’re paying a premium for Part B and I know there are copayments and deductibles, but Medicare is a government run health insurance program.”

To which the reply was: “But I’m talking about socialized medicine. You know that whenever the government gets involved in anything, it never does a good job.”

“I had no idea you were having problems with Medicare.” said I. “I always had the impression you were pretty satisfied with it. And with the VA, too. I know you’ve used the VA for some care recently. What problems have you had with Medicare or the VA?”

“Well, none with Medicare or the VA, but I’m not talking about Medicare. I’m talking about socialized medicine.”

“So you’re happy with Medicare?”

“Yes.”

“Would you mind if your [adult] children could buy into it? Your son is unemployed. Would it be OK if he could buy into Medicare?”

“Well, sure. As long as he has to pay like I do.”

You were all wondering how someone could say, “Keep your government hands off my Medicare?” Well, there you have it. Now that I’ve told you, I’m still not sure I understand it. It was one of the most frustrating and at the same time enlightening conversations I have had in a long time. The person with whom I was conversing is intelligent, educated, and not senile.

I’m just not sure how to use the above information. I was unable to persuade my elderly relative. I confess that since the conversation, I have despaired that the national conversation will ever be much better.”

Beezer.  And so it goes.  Our jaws are constantly resting on the floor from our astonishment.  Liberals need to get used to the American public’s propensity to stab itself repeatedly. 

Professor James Galbraith, of the University of Texas, is a powerful speaker and writer/critic of recent economic thought.  Here is a devastating critique of what the financial sector actually did to the American taxpayer, made in a written statement to the Senate Judiciary Committee.

Former Labor Secretary under President Bill Clinton, Prof. Robert Reich, has written a strong and direct post about America’s underlying, foundational problem:  The growing disparity in incomes.

“We’re back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground.

And as long as this trend continues, we can’t get out of the shadow of the Great Recession. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing.

America’s median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class could boost its purchasing power was to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn’t pay their bills, and banks couldn’t collect.

Each of America’s two biggest economic downturns over the last century has followed the same pattern. Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation’s total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America’s total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total…..

“What we get from widening inequality is not only a more fragile economy but also an angrier politics. When virtually all the gains from growth go to a small minority at the top — and the broad middle class can no longer pretend it’s richer than it is by using homes as collateral for deepening indebtedness — the result is deep-seated anxiety and frustration. This is an open invitation to demagogues who misconnect the dots and direct the anger toward immigrants, the poor, foreign nations, big government, “socialists,” “intellectual elites,” or even big business and Wall Street. The major fault line in American politics is no longer between Democrats and Republicans, liberals and conservatives, but between the “establishment” and an increasingly mad-as-hell populace determined to “take back America” from it.”

The structural problem began in the late 1970s when a wave of new technologies (air cargo, container ships and terminals, satellite communications and, later, the Internet) radically reduced the costs of outsourcing jobs abroad. Other new technologies (automated machinery, computers and ever more sophisticated software applications) took over many other jobs (remember bank tellers? telephone operators? service station attendants?). By the ’80s, any job requiring that the same steps be performed repeatedly was disappearing—going over there or into software. Meanwhile, as the pay of most workers flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs—the so-called “talent” who reached the pinnacles of power in executive suites and on Wall Street—soared.

The puzzle is why so little was done to counteract these forces. Government could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service: big-box retail stores, restaurants and hotel chains, and child- and eldercare, for instance. Safety nets could have been enlarged to compensate for increasing anxieties about job loss: unemployment insurance covering part-time work, wage insurance if pay drops, transition assistance to move to new jobs in new locations, insurance for communities that lose a major employer so they can lure other employers. With the gains from economic growth the nation could have provided Medicare for all, better schools, early childhood education, more affordable public universities, more extensive public transportation. And if more money was needed, taxes could have been raised on the rich.

Big, profitable companies could have been barred from laying off a large number of workers all at once, and could have been required to pay severance—say, a year of wages—to anyone they let go. Corporations whose research was subsidized by taxpayers could have been required to create jobs in the United States. The minimum wage could have been linked to inflation. And America’s trading partners could have been pushed to establish minimum wages pegged to half their countries’ median wages—thereby ensuring that all citizens shared in gains from trade and creating a new global middle class that would buy more of our exports.

But starting in the late 1970s, and with increasing fervor over the next three decades, government did just the opposite. It deregulated and privatized. It increased the cost of public higher education and cut public transportation. It shredded safety nets. It halved the top income tax rate from the range of 70–90 percent that prevailed during the 1950s and ’60s to 28–40 percent; it allowed many of the nation’s rich to treat their income as capital gains subject to no more than 15 percent tax and escape inheritance taxes altogether. At the same time, America boosted sales and payroll taxes, both of which have taken a bigger chunk out of the pay of the middle class and the poor than of the well-off.

Companies were allowed to slash jobs and wages, cut benefits and shift risks to employees (from you-can-count-on-it pensions to do-it-yourself 401(k)s, from good health coverage to soaring premiums and deductibles). They busted unions and threatened employees who tried to organize. The biggest companies went global with no more loyalty or connection to the United States than a GPS device. Washington deregulated Wall Street while insuring it against major losses, turning finance—which until recently had been the servant of American industry—into its master, demanding short-term profits over long-term growth and raking in an ever larger portion of the nation’s profits. And nothing was done to impede CEO salaries from skyrocketing to more than 300 times that of the typical worker (from thirty times during the Great Prosperity of the 1950s and ’60s), while the pay of financial executives and traders rose into the stratosphere.”

Reich blames both Republicans and Democrats.  When it comes to the disheartening spread in wealth towards the wealthy and away from the rest of the country, both parties turned a blind eye to the problem.

And he says a likely result will be angrier politics as the public, not being able to connect the dots accurately, will strike out at anyone in government.

Reich warns that the likely result will be unpleasant for everyone, including the wealthy.  Beezer agrees.  The political backlash will not benefit anyone, except briefly a few political opportunists. 

Check out political cartoonist Barry Deutsch’s “the 24 types of libertarian.”

For the past 30 years, the wealthy have literally sucked up almost all of the increases in profits and income.  For the remaining population, income increases have been practically nil. Now the government sees it’s debt balloon because of the recession.  And much of this increase comes about because the taxpayer is now shouldering what used to be private debt, much of it from bank balance sheets.  Even this transfer most benefited the wealthy bank shareholders, bondholders and top executives.  They were the ones being bailed out.

But are the wealthy stepping up to increase their taxes to pay off this debt?  Nope.  Instead they are recommending that everyone else pay for it by taking cuts in Medicare, or education funding, or Social Security – spending which the wealthy don’t need because their retirement is securely funded, and they can pay for all the medical care or education they might need or desire.

The wealthy derive much of their income from capital gains, not wages.  Capital gains are taxed at 15%, less than half the top income tax rate of 39%.  But even when it comes to wage income, the current tax tables are very flat.  A household with income of $100,000 pays a slightly less percentage of their income in taxes than does a household with $10 million in wage income.

We should repeal the Bush tax cuts and restore at least a moderately progressive tax system.  All the Bush tax cuts achieved was larger government deficits and a larger percentage of wealth being transferred to the very top of the income/wage group.