Because of the size of the Baby Boomer retiring generation we are near the point where Republican's have always maintained the Social Security Trust Fund would run out of money.
There is a kernal of truth to this notion. Social Security began as a sort of ponzi scheme, government had no money in the midst of the Great Depression to create a fund to start paying social security for old folks, so they funded payments to old retired people from payroll taxes on people still working, which has been the basic scheme ever since. So a generation with fewer workers and more retired folks drawing social security faces a challenge to fund the program. So Republicans think we should therefore let the program sink into oblivion.
This is a perfect example of the fundemental flaw in Republican ideological belief driven by their view from the top of society.
Here is a little history snippet that demonstrates the fallacy. From the end of the Civil War through 1932 Republican economic theories dominated. Governments role was to help business and otherwise stay out of the way. In that period as a country we endured a depression on average every 6 or 7 years, with a sprinkling of recessions in the periods between depressions.
Since the enactment of the Social Security Act in the 1930's there has not been a single depression, and recessions have been relatively rare. Hmmm, I wonder why.
Perhaps government programs like Social Security, Unemployment Insurance and Disabilty Insurance provide a floor under consumption? When the private sector world is in a panic about economic conditions and afraid to spend money because they may lose it, those "entitlement" folks just keep on spending as they normally spend.
But what about the fact the bean counters say the Social Security Trust Fund doesn't have enough money? The view from the top led Republicans to believe the way to build a good economy is to shower benefits on the wealthy which they have done for the last 40 years with tax cuts, tax deductions etc. The result has been to the extent the economy developed new wealth it went to rich folks who pay very little into the social security trust fund. Meanwhile the workers whose payroll taxes support the trust fund have endured stagnant wages for 40 years. So the Social Security Trust fund has been on a starvation diet from misguided policy.
Entitlements are not simply a benefit to the folks who receive them. They benefit the entire economy. History has demonstrated that, like a sailboat without a keel, an economy without a base of support will constantly capsize and end up dead in the water. Insuring that base of support continues is an investment, not a handout.
Sunday, February 9, 2020
Will Social Security Survive Our National Debt - Part 1
Being a former Republican I was confused for a long time about the Republican parties blase attitude toward the constantly rising National debt. Growing up the Republican party I knew viewed debt was an anathema.
Perhaps Republicans have been cutting taxes for 40 years despite a rising National debt because it could help them undermine Social Security?
The concept of Social Security - government acting to insure folks have an income in their old age, flies in the face of Republican belief that business does everything better than government.
Social Security is also a painful reminder of the failures in Republican ideology. Federal government programs creating Social Security, unemployment insurance and disability insurance for workers were all enacted by Democrats during the Great Depression. In the decade leading up to the Great Depression Republicans had controlled both Congress and the Presidency. For a couple years after the Depression started Republicans, still in control, did nothing, confident business would pull the country up by its bootstraps. Instead the depression kept getting worse so in November election in 1932 voters threw out the Republicans and handed the reins to Democrats. Thereafter Democrats dominated from 1933 until Ronald Reagan was elected in 1980 as the country enjoyed unprecendented prosperity.
So Republicans my entire lifetime have been hostile to Social Security. As recently as a couple years go then House Speaker Paul Ryan was still talking about curtailing or eliminating "entitlements". But that idea has never played well with voters so a direct attack on Social Security will never happen.
But for the last couple decades Republicans, and Wall Street, have been pushing the idea workers "can't rely on Social Security" (so they better give all their savings to Wall Street). The idea was to get younger folks used to the idea Social Security is unreliable so if Republicans abolish it, voters won't get in too much of an uproar.
Well, after a decade of Republicans spouting that line we ended up in the Great Recession with a huge stock market crash, housing market crash etc. That put a kink in their efforts to convince folks to trust Wall Street instead of Social Security. Now another decade down the road we have a stock market valued at 150% of our nations GDP - a gross bubble that just seems to keep expanding, so another lesson in the dangers of Wall Street is probably just over the horizon someplace.
But, I realized a few years ago, Republicans back up plan is still in place. The reason they are so willing to pump up the National debt in order to give tax cuts to the wealthy is if the debt gets really outrageously high they can claim we can't afford Social Security.
Democrats in the 1930's tried to protect Social Security from that sort of machination by creating a social security trust fund - all the money from payroll taxes on workers went into the trust fund which could not be raided for other government expenses.
Yet over the years Republicans have managed to fund income tax cuts for the wealthy by "borrowing" from the Social Security trust fund. Somewhere around 30% of the National debt we all owe as a country is actually workers money "borrowed" from the Trust fund by Congress to cover tax cuts for the wealthy.
It was slimy but they have gotten away with it for years. The reality is voters would be in total revolt if someone tried to take away social security, but until push comes to shove Republicans will have stashed away money from generations of tax cuts for the wealthy partly funded by Social Security Trust money.
Perhaps Republicans have been cutting taxes for 40 years despite a rising National debt because it could help them undermine Social Security?
The concept of Social Security - government acting to insure folks have an income in their old age, flies in the face of Republican belief that business does everything better than government.
Social Security is also a painful reminder of the failures in Republican ideology. Federal government programs creating Social Security, unemployment insurance and disability insurance for workers were all enacted by Democrats during the Great Depression. In the decade leading up to the Great Depression Republicans had controlled both Congress and the Presidency. For a couple years after the Depression started Republicans, still in control, did nothing, confident business would pull the country up by its bootstraps. Instead the depression kept getting worse so in November election in 1932 voters threw out the Republicans and handed the reins to Democrats. Thereafter Democrats dominated from 1933 until Ronald Reagan was elected in 1980 as the country enjoyed unprecendented prosperity.
So Republicans my entire lifetime have been hostile to Social Security. As recently as a couple years go then House Speaker Paul Ryan was still talking about curtailing or eliminating "entitlements". But that idea has never played well with voters so a direct attack on Social Security will never happen.
But for the last couple decades Republicans, and Wall Street, have been pushing the idea workers "can't rely on Social Security" (so they better give all their savings to Wall Street). The idea was to get younger folks used to the idea Social Security is unreliable so if Republicans abolish it, voters won't get in too much of an uproar.
Well, after a decade of Republicans spouting that line we ended up in the Great Recession with a huge stock market crash, housing market crash etc. That put a kink in their efforts to convince folks to trust Wall Street instead of Social Security. Now another decade down the road we have a stock market valued at 150% of our nations GDP - a gross bubble that just seems to keep expanding, so another lesson in the dangers of Wall Street is probably just over the horizon someplace.
But, I realized a few years ago, Republicans back up plan is still in place. The reason they are so willing to pump up the National debt in order to give tax cuts to the wealthy is if the debt gets really outrageously high they can claim we can't afford Social Security.
Democrats in the 1930's tried to protect Social Security from that sort of machination by creating a social security trust fund - all the money from payroll taxes on workers went into the trust fund which could not be raided for other government expenses.
Yet over the years Republicans have managed to fund income tax cuts for the wealthy by "borrowing" from the Social Security trust fund. Somewhere around 30% of the National debt we all owe as a country is actually workers money "borrowed" from the Trust fund by Congress to cover tax cuts for the wealthy.
It was slimy but they have gotten away with it for years. The reality is voters would be in total revolt if someone tried to take away social security, but until push comes to shove Republicans will have stashed away money from generations of tax cuts for the wealthy partly funded by Social Security Trust money.
Subscribe to:
Posts (Atom)