From WMDs to Social Security: More Bush Stories
You remember George W. Bush, the guy who tricked the country into a never-ending war in Iraq with stories about Saddam Hussein’s weapons of mass destruction and links to Osama bin Laden. Well, he still has 16 months left in the White House and he’s determined to do yet more damage with his famous “Bush stories” before he leaves town.
The latest Bush story is the cry that Social Security is going bankrupt and will impose an unbearable burden on our children and grandchildren. Of course, this is not the first time President Bush has gone after Social Security. Immediately after the 2004 election, he tried to use his new political capital to privatize Social Security. As a result of a massive nationwide organizing campaign, the privatization drive soon hit a dead end.
But Bush is not through with Social Security. In an apparent effort to lay the groundwork for a future president to privatize and/or cut the program, the Treasury Department is circulating a new set of Bush stories designed to convince the public the Social Security program must be changed.
The main thrust of these Bush stories is the old massive burden line. The first point highlighted in Bush Social Security Story I is that the program faces a $13.6 trillion shortfall. That should make everyone really scared.
This number looks considerably less scary if we examine it more closely. The bulk of this projected shortfall is attributable to deficits projected for the 22nd century and beyond. The problem is, life expectancies are projected to continue to rise through time. If we never change the retirement age, then we end up supporting ever-longer retirements.
Somewhere down the road, our great-great grandchildren will have to decide how much of their life they want to spend working and how much they want to spend in retirement. Assuming our great-grandchildren teach their kids arithmetic, this should not be a very difficult problem. Remember also, in 2100 living standards are projected to be three times higher than they are today; so we probably should not shed too many tears if the Social Security tax rate is somewhat higher in 2107 than in 2007.
If we retreat from the science fiction future to Social Security’s 75-year planning period (ending in 2082), the Social Security trustees project a shortfall of $4.7 trillion. This still sounds very scary because almost no one has any idea how much money $4.7 trillion is over a 75-year period. If we express it as a share of projected income over this period, the projected shortfall comes to 0.7 percent or 70 cents on every hundred dollars of income.
Still scared? Suppose we use the numbers from the non-partisan Congressional Budget Office (CBO) instead of the Social Security trustees, since four of the six trustees are political appointees of the President. CBO tells us the projected shortfall over the next 75 years is equal to 0.4 percent of projected income. This is approximately 40 percent of the current spending on the war in Iraq and about one-fifth the size of President Bush’s tax cuts. In other words, if the projected Social Security shortfall has you worried, you should be absolutely terrified about the cost of the war in Iraq and paralyzed with fear by the revenue lost as a result of President Bush’s tax cuts.
Of course, the projected Social Security shortfalls are not trivial, but at this point they are still relatively distant. CBO projects the program can pay full benefits, with no changes whatsoever, for almost 40 years. It is entirely possible the situation will have improved somewhat by then so that any tax increases and/or benefit cuts can be pushed even further into the future.
One of the main reasons Social Security is projected to face a shortfall is the government has implemented trade and labor policies that shifted income upward, away from Social Security-tax-paying workers. If we reverse these policies in the years ahead, then we could get a more equal distribution of income, and at the same time eliminate much of the projected shortfall.
There are other reasons the shortfall may prove to be smaller then currently projected, most obviously through more rapid growth. However, the main point is there are no serious projections that show Social Security facing any sort of crisis or a situation requiring action anywhere in the next two decades. The country already got led into a seemingly endless war by accepting one Bush story. It would be an entirely preventable tragedy if another Bush story played a role in dismantling Social Security.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org). He also has a blog, “Beat the Press,” where he discusses the media’s coverage of economic issues. You can find it at the American Prospect’s web site.
raise the cap on ss tax to 300,000.00 then we have no problem
Raise the cap to include ALL earned income- then we will have no problem.
“The latest Bush story is the cry that Social Security is going bankrupt and will impose an unbearable burden on our children and grandchildren. Of course, this is not the first time President Bush has gone after Social Security. Immediately after the 2004 election, he tried to use his new political capital to privatize Social Security.”
Doesn’t anybody actually read in your godforsaken country? You have a Nobel Prize-winning economist — a former Head of the World Bank, i.e. Joe Stiglitz — saying that this Social Security threat is a pile of BS, and nobody’s listening to him.
I just can’t figure you out, America — nor can I figure out the leaders of the rest of the Western world who seem determined, lemming-like, to follow you.
I bloody give up.
It’s my understanding that Social Security has a “trust fund” of nearly $2 trillion, and that we are still seeing increases to that fund every year by way of an annual surplus of SocSec taxes paid into it over the amount of SocSec benefits and administration costs paid out. Of course, we know that the “trust fund” has all been loaned to the Treasury in the combined federal budget, or in other words, spent on other things, so it isn’t really there in cash. It is there on the books as an account receivable basically from the payers of INCOME tax.
The first challenge, before all the debate about long-term solvency, is getting the $2 trillion back in cash so that it can be spent on benefits in the next decade or so. This is not a matter of raising the cap on wages subject to SocSec tax. This is a matter of raising the INCOME taxes enough to not only stop all deficit spending in the combined federal budget, but to reverse those deficits to surpluses sufficient to pay back the SocSec trust fund in about a decade. It’s not that the SocSec insurance program itself is in such bad shape. It is that the SocSec program has loaned all its assets to what, unless we raise INCOME taxes, is a flat-broke deadbeat, known as the U.S. Government. It, the deadbeat, now owes about $9 trillion total, and $2 trillion of that is owed to Social Security.
As for privatizing, there are two immense risks to citizens if we go that way.
Retirement funds used to come from three places, the old “three-legged stool” theory. First from private savings, second from a private pension, third from Social Security. With today’s mutual funds, much of the private savings is in the stock market. Pensions are going away, and those that still exist are either invested in the stock market or in derivatives (via hedge funds) that depend on the stock market. The advocates of SocSec privatization want to also invest in guess what? The stock market! Is it just me, or does anyone smell pending disaster 10-20 years out if we go that route? Where, oh where, is diversification for citizens in that dandy, just dandy, idea?
The other huge problem with privatization is that if you have a private account in Social Security, how does that get converted to an annuity (a monthly income) when you retire? As of now we have lots of insurance companies selling annuities outside social security, and your chances of “beating” most of them financially is actually poorer than your odds of beating many of the gambling games in casinos. Private financial institutions are salivating at the idea of privatizing Social Security so they can not only extract fees to “manage” your money before retirement, but, better yet, sell you an annuity from those funds and make enormous amounts (from taxpayer dollars) while you’re in retirement. They’ll tell you that competition and “choices” will benefit you, and nothing could be further from the truth.
Republicans have no plan, repeat no plan, to ever return even one cent of the Social Security Trust Fund to its intended purpose, because doing so WILL REQUIRE INCOME TAX INCREASES at the top end. Their plan is to bamboozle you with “reform.” When you hear those words being spoken, GET MAD. You have every reason to.
O.K. George. I guess you’re right - the poor and elderly will just have to EAT THE RICH!
Does the fact that Bush keeps on ‘borrowing’ from the soc sec trust fund ever seem to matter to anyone? He used it to help balance the books so as to allow more tax cuts for the wealthy. Greenspan told Reagan that if he raised worker’s payroll taxes, it would prevent a shortfall. I guess he forgot to tell all who have ‘borrowed’ from the workers’ money that that wasn’t what the increase was for.
Are these doomsday scenarios for soc sec based on NOT paying back all the extra payroll taxes that were taken from their checks? If so then Bush in effect gave the wealthy tax cuts by imposing extra taxes on workers. Oddly… that wouldn’t seem that surprising.
Bush’s agenda is anti-americans… anti the american people in favor of wealth (corporate multi-nationals included). When you starve the beast…? What happens when the beast is your own horse? Bush sabotages the America we knew for whose sake? Not ours… well not the vast majority of americans anyway.
He really does ‘attack’ his own countrymen, their constitution and their traditions. At the Boston Tea Party…Bush and Co. and their ilk would most certainly would have shouted …”Save the tea!” You know Cheney would have voted to remain tory back then.
For a more intelligently stated version…see daniel david’s post…lol
The HELL there isn’t a problem!
They are appropriating 78 BIL from current SS income and using it for other purposes, leaving IOU’s in the SS fund!
They are calculating the cost of living index, absent food and fuel cost increases, in the same way that unemployment figures are calculated ( excluding all those who have stopped looking for a job)
That’s about all I can buy with my SS income, fortuntely I don’t need a lot of medicines so to exclude food and fuel is a joke! Every month is a crisis at the end of the month. Lose any services? Pay extra to have them restored.Bounce a check………… costs $28.00, that’s 14 meals lost. Eat healthy organic food? forgetaboutit!
Seniors regularly walk up my road picking up digarded bottles and cans ( lucky the youth are feckless enough to throw them out of their cars.)
We Seniors ARE sacrificing for the war. WE weren’t asked if we’d like to. SO next time yougo into a Walmart IF YOU GO THERE………..smile at the greeter, he/she doesn’t really want to be there!
Give the old waitress a nice big tip, she’d rather be home with her shoes off!
And vote to IMPEACH!
Daniel David, good post!
DANIEL DAVID: Excellent post. It reminds me of a debate aired on C-span where someone from the Brookings Institute, I believe, was explaining the way that Bush had already circulated one of those memos. (You know how these things work, all-out campaigns intended to win “loyal” followers regardless of the facts. Think about the way those attorneys were targeted for not being Repub enough!) A hearing was held–and aired–where long-time employees of the Social Security Administration came forward to explain how the memos they were receiving advised them NOT to speak of the new policy incentive as “privatization.” These were principled employees and could smell the rat.
Apart from the serious consequences of Bush and his Grover Norquist (drown government in a bath tub) club of true believers, postulating about 70 years up the road is an act of inflated optimism, what with the looming recession brought on by the oil crisis should Bush and his neocon robber barons bomb Iran, the impacts of DU spreading, the perils of global warming, the likely boomerang of karma in the form of some attacks on our own soil… we should be so lucky to have the PRIVILEGE of speculating that far up the road with money expected to remain in our treasury.
Daniel, rucognizant, Kivals, Sioux all good posts.
I think the first step -would be correctly address how much in IOUs are actually owed to the social security fund - so we can truly understand how much the shortfall is - but more importantly -send a message to our congressmen and presidents - that we are aware that they use the fund to expend earmarks and declare balanced budgets (that are actually NOT balanced). Perhaps some sort of Amendment that the socal security trust is in inviolable and can NOT be borrowed from or against - is a prequisite to save the next generation of children. Increasing revenue - as many have suggested - to be more inclusive of higher income brackets is obviously a must. In addition - since the United States in only 49th in life expectancy (yes-pathetic but true) - a lot of this money IS being eaten up by fraud, waste and obviously pork.
In addition - I propose that assets, passive income and whether or not they are staying with their children enter into the equation. On the medicare side of this - I have seen upper middle class/ wealthy individuals milk the system of thousands upon thousands of dollars of services A YEAR. I am not talking about just spending down - but rather - elderly parents staying in multi-million dollar homes of their kids and mouthing poverty -and SO they receive home health nursing, transport, free medical care etc. The middle class schmuck who is not an inherent cheater or liar - ends up being squeezed out of the system. In addition - I feel that eligibility for both social security and medicare must be restricted to those who have worked and have social security for atleast 20 - 25 years. This will pervent thousands of immigrants free loading on the system.
I am not talking about needy, hardworking immigrants but rather ‘clever’ people who milk the system. For example - in my neighborhood I know of atleast two dozen seniors who stay with their computer programmers, businessman, diamond dealers kids - yet all of them run like mad shoopers of pre-thankgiving sales gorging themselves on medical and social security services. The recent immigrant seniors have been NEVER put a dime into the system AND they live with their children who average making $300,000 dollars a year - at the very least. Their are certain communities that appear to very adept and learning ALL the loopholes so that they can spend our money -even though they have pleanty of money of their own. I am all for re-unification of families - but bro - if you actually got the american dream (in terms of being wealthy) then leave our social seciruty system alone.
Finally - Ithink we need to give real teeth to the GAO- they have consistently found fraud in the 10s of billions associated with medicare i particular. Which will be the growing problem that NOBODY wants to tak about. How many times have we seen commercials fro Diabetic medication, home scooters etc etc where they blithely say - “Don’t worry - we will (OVER) charge medicare -as long as your eleigible - we will make SURE you get it”. Coulmbia HCA, United Healthcare, and almost every single large instituional healthcare corpaoration and hospital have REPEATEDLY been found guilty of fraud -as I said in the 10s of billions - only to weasel their way out by paying 3 percent of the fraud and admitting no guilt. I would suggest the forfeiture of stock options and personal wealth of executives until they have only 1 million dollars in personnal assets. Therefore if a CEO worth 60 million dollars was in charge - then the large institutional stockholders, upper management msut forfeit their assets equivalent to the amount of fraud. No jail time - just the most exacting position a cheatin g, lying rich person can ever suffer - the confiscation of their egregious wealth.
“Raise the cap to include ALL earned income- then we will have no problem.”
No no, you miss the point… raise the cap to include all NON-earned income.
They just want an easier way to steal it.Simple.Tony
I agree “raise the cap” and put a ’surge’ of money into the Social Security system.
Who needs social security when we have soup lines, and homeless shelters?
Who needs social security when we have soup lines, and homeless shelters?
The soup has been recalled and the homeless shelters (bridges) are falling down…we thank the lord for our Bush Blankets (discarded newspapers).
Oh I know-never mind us-we only pay taxes and fund this war.
We can pull out tommorrow for all I care.
I guess people try the military to acquire a few job skills. No one can think we have a country worth fighting for.
Why should anyone want to make it safe for the rich. Wake up people!
just read The Shock Doctrine by naomi klein.
she has unraveled the alternative history of the last 50 years by explaining that:
“The Shock Doctrine” is Klein’s ambitious look at the economic history of the last 50 years and the rise of free-market fundamentalism around the world. “Disaster capitalism,” as she calls it, is a violent system that sometimes requires terror to do its job.”
ny times review
—
sound familiar.
the false flag event of 9/11 - patriot act, homeland security, flying protocols, all of it stuffed down our throats while we were in shock.
brutal, simple and effective.
that’s why - while we are in “shock” after watching the nuclear attack of iran on tv, with wolf blitzer, ac 360 and david guergen - kiss social security good bye!
good citizens (the ones who protest) say hello to the fema prisons.
shocking, really.
Social Security is poverty INSURANCE. It has never been a retirement program. I have insurance on my house. If I never have a claim think about all that money I could have invested in a house replacement fund.
I hope a miracle happens and I am so rich I am the highest taxpayer in America. Of course, I don’t have the greed disease so I refuse to collect money just to approach infinity.
We know that the financiers who would broker social security privatization would never allow a collapse which would leave our retirees without a pension as did Enron, especially since they are sanctioned by the Bush administration. How could anyone oppose such privatization when we know that they have only the welfare of the retirees at heart?
Hi all. This is an interesting topic. I have just completed a college class on “The Fundamentals of Insurance Planning” as part of my course in Certified Financial Planning. One of the chapters was a devilishly difficult one on Social Security and Medicare. I learned a great deal about these two government programs and my initial “understandings” about many of the details of these programs turned out to be wrong. According to the book, “Social Security and Medicare are based on a system of funding that the Social Security Administration refers to “Partial Advance Funding” - meaning taxes collected are more than sufficient to pay current benefits and thus provide some accumulation of assets for the payment of future benefits. Unfortunately, we are living longer than initially planned, costing more to live out our final years -based on the initial estimates of life spans, and very few of us have enough separately-invested funds to supplement those of SS. What was even more distressing were these statements:
* Without further adjustments, the trust funds will have inadequate resources to pay claims in the foreseeable future. Current projections indicate that the assets of the combined old-age and survivors trust fund and the disability trust fund will run out about 2040. Estimates are that the Medicare trust fund will be depleted by about 2020.
* Current reserves are relatively small and could pay benefits for only a limited time if contributions to a fund ceased. In addition, the reserves consist primarily of IOUs from the Treasury because the contributions have been “borrowed” to finance the government’s debt. [Note that this book was published in 2007 - so these should be reasonably accurate determinations.]
So, there really isn’t any money there for any of us to retire on. Just Treasury IOUs -probably held in a large part by other countries who might just dump them and demand repayment whenever they want. I seriously doubt that foreign countries purchased these Treasuries simply to provide the liquidity needed to ensure the future of our Social Security recipients.
However, the most jaw-dropping part of this chapter IMHO was what President Bush did to the solvency of the Medicare fund via his “Medicare Prescription Drug, Improvement, and Modernization Act”. This single act not only devastated the Medicare Trust Fund reserves (even if they WERE just IOUs to begin with) but what it did to our seniors because of its insane program complexity, expensive annual deductibles, ridiculously high co-payments, and the infamous “donut hole” (or “coverage gap”) was really unconscionable. I had to read that section over and over again to try to understand it and, even then, I could only shake my head at the fact that a country that professed to be as advanced as ours could generate a piece of S***T legislation as this one was. It was truly a piece of legislation only a drug company could love…
All I can say is PLEASE, PLEASE don’t let G. Bush play around with the current Social Security system to “modernize it” like he did to Medicare.
David Norquist is CFO of the Homeland Security Department, DHS. You know who his bro is.
Why are we even discussing what is going to happen in 2020, 2050, 2070? We aren’t going to have a United States in 2008 if Bush attacks Iran, or if the depression hits. We aren’t going to have any humans on the planet if we don’t stop spreading atomic waste, via DU ammunition, all over the world. We should be discussing next month, and or next year in my opinion. Hell, our county is bankrupt now, our natioal debt is nearng ten trillion dollars and China virtually owns us, the dollar’s value is falling like a lead brick. Social security in 2050? S/S will be worthless if a depression hits. Do any believe that we will be recieving social security checks if we have a depression? ___ Wait and see.
Raise the cap to include all income period. And charge corporations 7 percent of their gross earnings for healthcare, disability and social security.
Daniel, rucognizant, Kivals, Sioux, iyam, very good stuff. And great passion as always with my friend Kem Patrick.
Despite all my screwups,
I realize I made a rather smart move back in Feb. I cancelled Direct TV and Dish, all magazines and newspapers and now get all my news, info, entertainment from the web. Be nice if all Americans stuck it to the mainstream in this fashion. Half the oversimplified, garb that passes for programing is finally gone out of my life! I don’t miss it at all!
Was that crap informative?
Was it objective, considering both sides?
I learned more in a week reading from you fine folks here than I did in years of Sinclair Broadcasting/Rupurt Murdock mainstream news and pointless network shouting matches.
Keep up the good work.
pac
Filibuster
just look at bush the moron’s track record, in any of his business dealings. failure after failure. other than to turn over his shares in a baseball team, that he aquired from someone elses money, for a profit, all of his dealings have come up as failures. why does anyone give this idiot’s financial comments any credance what so ever. this slime has been a failure all his life, and now he is the president of the u.s. go figure.
jimmyt (10/3 12:14a).
Thanks for depth of your post. And thanks for bringing up the extra costs to Medicare due to the addition of prescription drugs in the Republican design we got on that plan.
Republicans passed that for 3 reasons. (1) To avoid losing future elections if they didn’t pass SOMETHING for seniors. (2) To try to avoid future hospital costs of cholesterol and diabetes problems by encouraging seniors to better control these conditions via meds, and (3) Most importantly (to them) to favor a “market” solution, AKA corporations over people.
Liberals believe government should have programs for people with tax money used to subsidize people directly. The conservatives also believe in government programs (though they say they don’t) but insist the subsidies should go through corporations first, and the corporations should then provide whatever “benefits” to the people.
I have never yet seen a clear accounting of the 2006 year of our new senior prescription drug program.
How much premiums were collected by the “plans”? How much did the plans pay out for drugs? How many tax dollars were paid by Medicare to the plans? If anybody knows where this info exists, please advise below.
Bush and his cronies hate and will screw anyone who is not part of the super rich privileged class.
I’m 40 and have absolutely no faith that I’ll ever see a penny — if they’re still making pennies when I’m old enough to retire — of what I’ve thus far paid into $$.
Unfortunately, it’s proven that boy wonder always gets what he wants, and he wants $$.