Editor's notes: this bit of nonsense came to one of my email boxes from MoveOn.org. That's right. They think I am on their side. We offer three reference articles. Understand that the national debt, at whatever level, is a complicated matter. And, it is complicated for a reason - the people who drive our debt do not want any of us to understand exactly what is going on. Our economy is a debt driven beast. Take "debt" out of the equation, and the beast dies. Can a nation exist without debt ? Not really -- no more than any of us, on an individual basis, can. Can a nation survive if it spends more money than it's annual obligations ?? Probably not -- no more than you and I could, on an individual level. It's Economics 101, folks. They want you to believe that it is much more complicated than that... jds
Top 5 Social Security Myths
Myth #1: Social Security is going broke.
Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits—and again, that's without any changes. The program started preparing for the Baby Boomers' retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.
The truth: in a report written by none less than Timothy Geithner, payments will exceed income by 2016. Which means, of course, that there is no surplus. Such is a ridiculous lie, one that borders on stupid. Of course, if we have a surplus, if we can pay all scheduled benefits until 2035, we do not need to adjust the retirement age and that is the suggestion of libs and conservatives. Understand the problem is so serious that it will take 75 years to bring actuary balance into effect IF SS taxes are raised sufficiently (reference 1) As is the case with such discussions arguments can be involved and quite confusing. As you study this out, keep in mind Geithner's conclusions as well as the information in this article (reference 2 and reference 3)
Myth #2: We have to raise the retirement age because people are living longer.
Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What's more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.
The truth: look at the moronic conclusion in the above: MoveOn says - people are not living longer, it is just that more of them survive infancy !! Hmm. Last time I looked, "surviving infancy" is the very definition of "living longer." The fact of the matter is this: there are many more people in the SS system at retirement age than there were back in the '30s. We are not going to quote "evidence" to support this conclusion. It isn't necessary because the fact is not disputed in normal circles - it is a fact commonly held.
Myth #3: Benefit cuts are the only way to fix Social Security.
Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.
The truth: MoveOn wants you to think that fixing Social Security is different from "strengthening" Social Security. In fact, they want you to think that SS does not need "fixing," while admitting in the same paragraph of thought (above) that it is not sustainable without an increased soaking of the rich. Finally, conservatives do not think that cutting benefits is all that is needed to fix on Social Security. MoveOn gives no references, here, because none exist !!!
Myth #4: The Social Security Trust Fund has been raided and is full of IOUs
Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.
The truth: the "treasury bonds" MoveOn refers to are "special treasury bonds," not real treasury bonds. All of the monies "invested" on these bonds has been spent on general budget items. Indeed, these "treasury bonds" are nothing more than I.O.U.s. This is an accounting trick of the Left. Look, if a government fund (SS) "invests" in government treasuries, government is borrowing money from itself. Let's not become morons during the reading of this post. Also, the MoveOn assessment of Bush's plan is a flat out lie. Bush wanted to put only a relatively small percentage of the monies collected for SS into private investment programs. Social Security for the 55 year old crowd and older would not have been effected by the Bush plan.
Myth #5: Social Security adds to the deficit
Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.8
The truth: what an idiotic statement. Indeed, Social Security is not figured into the budget. Neither is Medicare. Neither is emergency aid for national disasters, either here in the US or in foreign countries. But it all applies to the public debt. So, "why are these financial matters not budget items?" There are several reasons, but the first that comes to mind is the fact that if these issues are not counted, the reported annual deficit is better than it really is. Understand that there is annual debt, public debt and structural debt, to name a few of our deficit considerations. Apparently, MoveOn knows nothing of any of this . --- jds
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