Stop short of the fiscal cliff
The president and lawmakers in Washington need to switch from campaign to compromise mode.
The election is decided, but don’t think that Campaign 2012 is over. Not with Campaign 2012: The Fiscal Cliff in full swing.
President Obama has been playing host to small business owners at the White House this week and planning a campaign-style visit to Pennsylvania to rally support before meeting again with Republican congressional leaders on a budget compromise.
November 30, 2012 - 6:15 AM
I truly shudder to think how this will end.
Is not going over the fiscal cliff what the electorates voted for?
I salute the RTEB for taking the Democrats to task on entitlement reform. However, the following sentence is flat-out false: “They’re right, though, in saying Social Security should be off the table for now — it is not driving the budget deficit“.
Social Security is helping drive the budget deficit.
http://www.factcheck.org/2011/02/democrats-deny-social-securitys-red-ink/
http://www.usatoday.com/story/news/politics/2012/11/28/fact-check-durbin-social-security/1732877/
http://www.usatoday.com/story/opinion/2012/11/27/social-security-fiscal-cliff/1730631/
Social Security is responsible for $152 billion of 2012′s deficit. [$51 billion came from an innate shortfall (and is projected to rapidly worsen with time), and $101 billion came from the ill-conceived payroll tax holiday.] That’s 14% of the total deficit. In contrast, Obama’s push for higher taxes on the “2%” will reduce deficits by only $80 billion or so per year. A mere 7% improvement.
We have such an stupid society that doesn’t understand math. Senator Harry should quit lying to himself.
I welcome the fiscal cliff.
If Congress and the President cannot figure out for themselves that they have to quit spending money like sailors in whorehouses, then this mechanism may be the best of an imperfect set of solutions.
Bring it on.
I think our society understands math very well. Some people’s incomes and wealth have been outstanding while the rest of us lost or barely made any headway.
http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph
http://www.washingtonpost.com/blogs/wonkblog/post/the-cbo-takes-on-income-inequality/2011/10/26/gIQAzcPqIM_blog.html
“The incomes of the wealthiest 1 percent have nearly tripled since 1979. Everyone else? Not so much.”
It is a situation that has made this nation unstable and it has to be rectified by fixing the tax code along with the spending reforms we need across the spectrum.
Back in early September, candidate Obama said the following on CBS’ “Face the Nation”, http://thehill.com/video/administration/248335-obama-more-than-happy-to-work-with-republicans-on-deficit-deal:
“What I’ve said in reducing our deficits — we can make sure that we cut 2.5 dollars for every dollar of increased revenue.”
Candidate Obama endorses a 2.5-to-1.0 spending cut to tax hike ratio for deficit reduction purposes.
Alas, in late November, re-elected president Obama proposes a slightly different spending cut to tax hike ratio: http://news.yahoo.com/blogs/ticket/republicans-scoff-white-house-fiscal-cliff-opening-bid-235943793–politics.html
Obama’s proposal, delivered by Treasury Secretary Timothy Geithner to Republican House Speaker John Boehner, called for $1.6 trillion in new tax revenues over 10 years plus some $400 billion in savings in popular entitlement programs including Medicare, the government health care plan for seniors. It also included some relief for Americans hit by the home foreclosure crisis and an extension of both the payroll tax holiday and unemployment assistance.
This is a 1.0-to-4.0 spending cut to tax hike ratio for deficit reduction purposes, and that’s not even including the spending associated with the additional stimulus actions. It’s an entire order-of-magnitude swing. No wonder Republicans are balking.
[Obama proposes extending the payroll tax holiday yet again... Why am I not surprised?]
I think it is more than fair to say that the government owes over $2 trillion dollars to Social Security. And I believe that many right wing pols (and doubtless some Dems too), want to erase that debt, not by paying it back, but by cutting benefits. Remember when Reagan raised the PR Tax to Social Security in 1983 supposedly so the “baby boomers” headed to the retirement couch would pay some of their burden? That money is owed and it is a debt just as surely and forthright as any other and it needs to be paid. Do so and stabilize the Social Security system before ANYONE dares to cut benefits or raise the retirement age.
According to Fox News: “Fully two-thirds of the national debt is owed to the U.S. government, American investors and future retirees, through the Social Security Trust Fund and pension plans for civil service workers and military personnel.”
Read more: http://www.foxnews.com/politics/2012/09/04/who-do-owe-most-that-16-trillion-to-hint-it-isnt-china/#ixzz2DjILbVY3
To #6 (Sandi): I agree that rising income inequality is a bad thing, but the question (as always), is what to do about it. It’s been rising fairly steadily regardless of who’s controlled the White House: http://www.freakonomics.com/2012/09/13/is-income-inequality-rising-and-are-a-lot-of-feathers-heavy/
Please note that some of the sharpest rise occurred during Obama’s first term.
6 – generally, those that have succeeded have been the direct recipients of government bailouts – banksters and corporate crones. So let’s prolong the policies that have created this, right?
In the face of this crisis, reports say Obama is going to spend a boatload of taxpayer money on a nice long Hawaiian vacation.
Tha man has no shame…
And again, NO ONE can claim they did not see this day coming!
“The looting did take place.
It was recognized and opposed by some membes of Congress from the very beginning. In a Senate speech on October 13, 1989, Senator Ernest Hollings (D-SC) said,
“…the most reprehensible fraud in this great jambalaya of frauds is the systematic and total ransacking of the Social Security trust fund…in the next century…the American people will wake up to the reality that those IOUs in the trust fund vault are a 21st century version of Confederate bank notes.”
During a Senate speech on October 9, 1990, Senator Harry Reid (D-NV) said,
“…On that chart in emblazoned red letters is what has been taking place here, embezzlement. During the period of growth we have had during the past 10 years, the growth has been from two sources. One, a large credit card with no limits on it, and, two, we have been stealing money from the Social Security recipients of this country.”
On March 16, 2011, Senator Tom Coburn (R-OK) uttered the following words during a Senate speech.
“Congresses under both Republican and Democrat control, both Republican and Democrat presidents, have stolen money from social security and spent it. The money’s gone. It’s been used for another purpose.”
Even President George W. Bush, one of the biggest looters, acknowledged the looting when he became desparate for more ammunition during his campaign to partially privatize Social Security.
On February 10, 2005, President Bush said,
“Now one of the myths about Social Security is there’s a pile of money sitting there accumulating, because you put money in, the government saves it for you, and then when you retire you get it out. That’s not the way the system works. Every dime that goes in from payroll taxes is spent. It’s spent on retirees, and if there’s excess, it’s spent on government programs. The only thing that Social Security has is a pile of IOUs from one part of government to the next.”
Allen W. Smith, Ph.D.
http://www.thebiglie.net”
http://www.forbes.com/ajax/comment/general/5/?contentUri=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fjohntamny%2F2012%2F06%2F03%2Fthe-ugly-truth-about-social-security-is-revealed%2F
No way in hell that the government’s folly should be paid for on the backs of retirees who did their job for all of their working lives under the promise of Social Security being there when they retired. This is the LAST place that cuts and benefit reductions should be made.
Presidents and Congresses KNOW that wars, tax cuts, stimulus, incentives and hand outs/earmarks took money out of our revenue and expecting a work force that has been shrinking for over a decade to replenish it alone is ludicrous. Cutting future benefits for those same workers is simply unconscionable.
But to be sure, all you worried about the “fiscal cliff” shouldn’t be. There will be a last minute deal, which will kick the can down the road a year, with some meaningless “concessions” from both sides, no significant decrease in spending, no significant tax code changes (although, with less room, they will be felt more) and no real change in direction on the debt.
A photo-op for the President and Congressional “leaders”, some feel-good stories about cooperation and bi-partisan success from the court stenographers, er, media…
…and nothing will change.
Sandi, retirees are ALREADY paying for it by seeing their retirement accounts drained because the inflation is making what they have worth less and less. The only way to correct that is to strengthen the dollar, and you do that by making it worth something, and you do that by decreasing the dollars in circulation and by tying it to something of value. Increasingly spending money we don’t have, and increasing dollars in circulation is no different than allowing people to print their own money. Tell me, why do you think counterfeiting money is illegal?
To #12 (Sandi): You provided a bunch of entirely accurate links that describe the actual zero-value state of the Social Security Trust Fund and then said, “No way in hell that the government’s folly should be paid for on the backs of retirees who did their job for all of their working lives under the promise of Social Security being there when they retired. This is the LAST place that cuts and benefit reductions should be made.”
So, in order to make up for Congress having stolen all that money, the burden should then fall to the young? Because that’s how it works out when you say retirees shouldn’t bear any burden. Congress has no money beyond the taxes they impose on workers, and because there is no actual money in the trust fund, taxes on those still working (i.e., younger people) will have to go up to make up for future SS shortfalls that the Trust Fund won’t actually fund.
Why should the government’s folly be paid for on the backs of the young?
[Welcome to the world of conservative economics, BTW. Conservative economists have been calling the Social Security Trust Fund an "accounting gimmick with no real value" for some time.]
“No way in hell that the government’s folly should be paid for on the backs of retirees who did their job for all of their working lives under the promise of Social Security being there when they retired.”
Disability payments also come from the Social Security fund dont they? I have 2 relatives that are on disability & need it. They can not work. But I can show you dozens of people who are on disability that can work & most of them do – for cash payments off the books. They even brag about it. Bet if we cleaned up the Disability “industry” we would save SS alot of money.
15 – Conservative economists have been calling the Social Security Trust Fund an “accounting gimmick with no real value” for some time.]
Also known as a Ponzi Scheme…anywhere outside of the government, its purveyors would be in jail.
Nothing says that this “burden should” or has to “fall to the young”, but they will indeed still have to pay into the system as the workers before them did.
How it should work is Congress cuts their own pay and benefits, cuts defense contractor spending, cuts waste on ear marks and bridges to no where, raises taxes on the people who benefited most from the last two rounds of major cuts, and learns what it means to pay for your mistakes. The retirees did not make those choices, politicians did. A stable, incremental plan can eventually get us back to level ground.
Also, I did not say “retirees shouldn’t bear any burden”, I have no doubt they will have to bear some burden and did not say they should not. Their Medicare benefits will likely need to be means tested and some services cut and costs increased. That is very different than taking away their monthly retirement income promised. The SS Taxes on those working have always been for the current retirees and never for “yourself”. The SC decided that a while back.
What Congress has, is the ability to fix this mess and to do so without being excused the debt they owe to the Social Security system them robbed.
Taxes may have to go up some on workers, I do not think anyone is expecting not to pay more in some way, but that will be to their benefit too when the baby boomers start going off the system and the surplus can be replenished. I do not know a single person who does not expect to pay for the folly of previous Administrations and Congresses. Most of us have expected to do so for a long time. We just want those who benefited the most to do so as well.
Please do not pretend conservatives did not stand by and let the raiding take place (or encourage it to gain tax cuts). Please. It was used as a means to an end. A way to hopefully end the social safety nets that they never approved of; but do not try and pretend it was ever about saving Social Security or Medicare for future retirees (the young).
I am not sure how you can steal the money, leave an IOU and then dare to call the system a “Ponzi scheme”. The money was there, it would still be there, if not for the actions of Reagan, Bush 1, Clinton, Bush 2 and their respective Congresses. ALL of that mess is left to be cleaned up by a President 47% of the nation despises and a Congress 90% of the nation despises. Lucky us!
Darren, it is not only the “Disability “industry”, that needs to be “cleaned up”. It is the government trough for business piggies that privatize profits and socialize losses and costs too. The businesses that rake in millions and billions and have low wage workers we subsidize and yes, allow disability, SNAP and other safety net expenses for, are killing this nation as surely as the neighbor on dope waiting for his check while working for cash under the bosses table.
19 – IOUs only mean anything if there is a realistic expectation they will be repaid, a demonstrated willingness to do so, and the ability to do so. Absent those, they are nothing more than theft.
Changing the rules (such as raising retirement age, shifting the burden, telling the fortunate and recently retired they are out of luck) is not repayment. It is theft with a veneer.
To #19 (Sandi): Um, no. The money would not be there. Whenever the Social Security program runs a surplus, they are required by law to invest that surplus into special Treasury Securities, which means that the extra money enters the government’s general fund and is spent along with regular income tax revenues. It’s been that way since the late 1930s. It’s a combination of FDR and the Depression-era Congress (for setting up a broken scheme) and Reagan and a Democrat-controlled Congress (for jacking up payroll taxes and then pretending that trillions of dollars would actually be saved away).
Indeed, if you look at those past proposals for investing SS surpluses in the stock market instead of Treasury Securities, you’ll see that they actually had some merit. I’ll readily admit that these schemes had issues that might have prevented them from working effectively, but at least they would have kept the money out of Congress’ hands. It would have been real savings for the future.
And please be careful with the phrase “debt Congress owes”. That’s a bad way of looking at it. Congress has no money. For them to repay a debt, they must seize the money from workers in the form of additional taxes. There’s no other way. If we can reduce (or entirely avoid) paying that debt without leaving seniors stranded, we should absolutely do so to avoid clobbering future workers who were in no way responsible for Congress’ stupidity.
I do not disagree that it was and remains theft and I offer it no “veneer”.
23 – a statement directly contradictory of your statement in #19…I am not sure how you can steal the money, leave an IOU and then dare to call the system a “Ponzi scheme”.
(a Ponzi scheme is a form of theft, you know)
I agreed that it was theft, outright theft and never said differently. I do not consider it a “Ponzi scheme” because it was not dreamed up for investors to enrich someone at the top as a true Ponzi scheme does. Yes, each successive generation pays for the one coming after them, but there is no scheme to take “new investor” money and pay it to “current investors” as “profits” to keep the investment going.
Or as my faithful Merriam-Webster defines it: “an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.
Congress makes/creates the debt, directs the collection of revenue and allocates the revenue/spending. To call it “debt Congress owes”, is more precise than to cal it debt we owe, if the truth be told. It is not a “bad way of looking at it”. It is a realistic way of looking at it.
The structure for Congress to gain and spend money does not free them of the obligation of responsibility for either. I WISH that Congresses were held half as accountable as Presidents are. They certainly should be and some will indeed go down in history as outrageous!
Even if benefits get cut, Medicare or Medicaid and Disability coverage gets reformed and cut as well, that should NEVER free Congress of paying this debt back to the Treasury. That is an AWFUL precedent and it will only create further abuse just like bailing out the “too big to fail” entities and not breaking them up so that it never happens again, has done.
What is it that makes current workers or nearing retirees “responsible for Congress’ stupidity” any more than the future workers? Nothing.
Congress is an entity, it does make and should keep obligations.
Yes Brian, “they are required by law to invest that surplus into special Treasury Securities“. Specifically “non-marketable securities issued and guaranteed by the “full faith and credit” of the federal government“.
http://en.wikipedia.org/wiki/Social_Security_Trust_Fund
“By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are “special issues” of the United States Treasury. Such securities are available only to the trust funds.
In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash.”
http://www.ssa.gov/oact/progdata/fundFAQ.html