Daily Archives: October 24th, 2013

Patience is a Virtue


As predicted here, the Washington Post and the kiddies over at the Third Way are trotting out their new game plan which involves their old game plan: enacting what they call ‘entitlement reform.’

With a solemnity only the Very Serious sycophants of our national press corps can muster, Fred Hiatt fairly shouts in a Post editorial: “At the moment, what’s vital is fixing spending priorities.” Not, mind you, putting people back to work. Because unemployment dancing around ten percent can’t possibly be of concern for people like Fred Hiatt or those he hangs with– like Grover Norquist and his acolytes at the wonderfully misnamed Americans for Prosperity. Since Grover can’t get off his no tax jihad, and his dapper enfant terrible self has all the GOP by the no-tax-pledge-short hairs, poor granny getting a hot meal isn’t even in the cards for Fred. Hell, Fred drop kicks granny right off the playing field.

Before I get into the utter tomfoolery that Hiatt is up to here, let’s put a bullet through his verbiage: Social Security is NOT an entitlement. It is our money stuffed into a mattress we call a Trust Fund. It may have a few IOUs where cash once flowed, but it is no less our money, and our children’s money, too. As long as we can keep useful idiots like Fred or Peter Peterson’s (the billionaire who has donated one billion to cut Social Security) hands out of the cookie jar. Despite Wall Street and right-wing misinformation, Social Security, funded by our payroll tax, does not contribute to the deficit. In fact, the Social Security Trust Fund today, according to the Social Security Administration, has a $2.7 trillion surplus and can pay 100 percent of all benefits owed to every eligible American for the next 21 years. Further, unlike the huge commissions paid out to Wall Street firms, Social Security is run with very modest administrative costs.

There are a couple of reasons for the conventional wisdom being so deeply and consistently wrong. Since it was first birthed, Medicare and Social Security have been on the right wing’s hit list. They hate it. They hate it because it represents in concrete human terms everything that is problematic for their party and their ideology. Every successfully cashed Social Security check that buys groceries for Uncle Jim is one more knife in the back of their rhetorical hobby-horse: ‘Big Government failure’…Why? Because it is not a failed program. It is a wildly successful program. Before Social Security existed, about half of America’s senior citizens lived in poverty. Today, less than 10 percent live in poverty. People understand this, too. In a Pew poll, 87 percent of respondents favored present or greater Social Security spending; only 10 percent backed cuts. Big government administers both Social Security and Medicare (and Medicaid) in an infinitely more efficient manner than anything the free market could devise; because Big Government isn’t looking to make a billion dollars off the life’s savings of nearly every man, woman and young adult in the nation. All it does is stash the money in relatively safe Treasury bonds (safe, that is, so long as you don’t blow off the debt ceiling or in other ways shake the world’s confidence in the world’s currency–thank you, GOP). For years, Social Security ran a surplus thanks to interests on the Treasury bonds. If the program sees a deficit, the excess funds from previous years plus any interest earned is used to pay beneficiaries. At the end of 2011, the Trust Fund contained (or alternatively, was owed) $2.7 trillion, up $69 billion from 2010.

The luxurious sound of all that cash floating around is probably one other reason pundits like Hiatt get things so consistently wrong. Back during the Clinton era when privatization was all the rage, Wall Streeters like Robert Rubin saw lots of money for their companies if privatized ‘retirement’ accounts were set up. Thanks to the Wall Street inflicted recession of 2008, no one puts quite so much faith in the miracle of the market anymore. Fred and gang apparently haven’t gotten the memo. Conventional wisdom is a slow and ponderous beast to change, especially when billionaires work assiduously behind the scenes to help you forget just how wrong Rubin and others have been about, well, just about everything.

Finally, even if there were a dramatic and immediate shortfall (and there’s not), there is no obstacle to the government borrowing more money to meet needs and fund Social Security or put people back to work, for that matter. In fact, such spending successfully brought our economy back from the black hole of the Great Depression 80 or so years ago and it would be a useful tool today if superstition, ideological fixation and bad economics didn’t pass as conventional wisdom.

The last projections from the Congressional Budget Office show the combined cost of Social Security and Medicare rising by a bit more than 3 percent of G.D.P. between now and 2035, and that is a concern. But that number could easily come down with more effort on the health care front. In fact, if Paul Krugman is to be believed, it looks like the ACA, the much maligned Obamacare, may be bending that number downward. “True, 3 percent of G.D.P. is a big number, but it is not an economy-crushing number.” According to Krugman, “the United States could, for example, close that gap entirely through tax increases, with no reduction in benefits at all, and still have one of the lowest overall tax rates in the advanced world.” But the Third Way deficit scolds and the Fred Hiatts of the nation will not talk about this because Grover Norquist has a pack of economic dilettantes (the GOP) by the short hairs. Given the current political makeup of the House, this may be true. For now. But not forever.

Will it be true in 2016, say? Much less in 2030? That’s doubtful because all recent national polling suggest what most sane commentators predicted of the radical right’s jihad against the public interest. Bad election numbers.

Hiatt’s whining editorial amounts to tautological nonsense: if we do not cut the future benefits this exact moment, we might have to cut them in the future! Maybe so….Maybe not…. but, in either case, why now? There’s time enough for the political calculus to change. And when it does, a majority of Americans and their newly elected representatives might very well decide it’s more important for a billionaire to pay a couple of tics more in capital gains tax, or raise the Social Security Base Wage tax rather than slashing benefits for the vast majority of Americans who depend on Social Security and Medicare for their retirement years.

Patience is a virtue in this particular game. The deficit scolds know this, too. In their various incarnations, they have been trying to gut the program since Social Security was created nearly 77 years ago. Their sudden urgency seems a bit — well — let’s just call it rehearsed.