The Top 5 Social Security Myths – Anyone who insists Social Security is broke probably wants to break it

There is not crisis, when it comes to Social Security. Move On nails it.

Social Security is under attack and we need to fight back against the lies.

Have you heard that Social Security is going bankrupt? Driving up the deficit? In crisis?

Well none of that is true. These are all myths that opponents of Social Security have been spreading to scare people into accepting benefit cuts this fall. But the myths are taking hold—so we have to fight back with the facts.

So we’ve put together a list of the top five myths about Social Security, along with the real story. Can you check out the list and then share it with your friends, family, and coworkers?

Share the list by going to http://pol.moveon.org/ssmyths?id=22136-1748949-T3Yr7Lx&t=1 If you’re on Facebook, share it by clicking here. If you’re on Twitter, tweet it here.

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.

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.

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.

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.

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

Defeating these myths is the first step to stopping Social Security cuts.  Can you share this list now?

Thanks for all you do.

–Nita, Duncan, Daniel, Kat, and the rest of the team

Sources:

1.”To Deficit Hawks: We the People Know Best on Social Security,” New Deal 2.0, June 14, 2010
http://www.moveon.org/r?r=89703&id=22136-1748949-T3Yr7Lx&t=4

2. “The Straight Facts on Social Security,” Economic Opportunity Institute, September 2009
http://www.moveon.org/r?r=89704&id=22136-1748949-T3Yr7Lx&t=5

3. “Social Security and the Age of Retirement,” Center for Economic and Policy Research, June 2010
http://www.moveon.org/r?r=89705&id=22136-1748949-T3Yr7Lx&t=6

4. “More on raising the retirement age,” Washington Post, July 8, 2010
http://www.moveon.org/r?r=89706&id=22136-1748949-T3Yr7Lx&t=7

5. “Social Security is sustainable,” Economic and Policy Institute, May 27, 2010
http://www.moveon.org/r?r=89707&id=22136-1748949-T3Yr7Lx&t=8

6. “Maximum wage contribution and the amount for a credit in 2010,” Social Security Administration, April 23, 2010
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/240

7. “Trust Fund FAQs,” Social Security Administration, February 18, 2010
http://www.ssa.gov/OACT/ProgData/fundFAQ.html

8.”To Deficit Hawks: We the People Know Best on Social Security,” New Deal 2.0, June 14, 2010
http://www.moveon.org/r?r=89703&id=22136-1748949-T3Yr7Lx&t=9

The Reagan, Bush, Bush bill is coming due

This puts the last 30 years in perspective. Voodoo economics was never about economics, it was a political ploy. We’ve let it go on too long and it’s time for the wealthy to start paying their fair share again. The political genius of supply-side economics. And it should start with ending the Bush Tax Cuts for the wealthy.

To understand modern Republican thinking on fiscal policy, we need to go back to perhaps the most politically brilliant (albeit economically unconvincing) idea in the history of fiscal policy: “supply-side economics”. Supply-side economics liberated conservatives from any need to insist on fiscal rectitude and balanced budgets. Supply-side economics said that one could cut taxes and balance budgets, because incentive effects would generate new activity and so higher revenue.

The political genius of this idea is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?

How did supply-side economics bring these benefits? First, it allowed conservatives to ignore deficits. They could argue that, whatever the impact of the tax cuts in the short run, they would bring the budget back into balance, in the longer run. Second, the theory gave an economic justification – the argument from incentives – for lowering taxes on politically important supporters. Finally, if deficits did not, in fact, disappear, conservatives could fall back on the “starve the beast” theory: deficits would create a fiscal crisis that would force the government to cut spending and even destroy the hated welfare state.

That’s it!! Voodoo/Trickle-on/”supply-side” economics was always about driving up deficits so high to force cutting social programs. That’s why Obama’s Catfood Commission is so horrible. And this idiotic political strategy continuing means bad news for our nation and the world economically.

Since the fiscal theory of supply-side economics did not work, the tax-cutting eras of Ronald Reagan and George H. Bush and again of George W. Bush saw very substantial rises in ratios of federal debt to gross domestic product. Under Reagan and the first Bush, the ratio of public debt to GDP went from 33 per cent to 64 per cent. It fell to 57 per cent under Bill Clinton. It then rose to 69 per cent under the second George Bush. Equally, tax cuts in the era of George W. Bush, wars and the economic crisis account for almost all the dire fiscal outlook for the next ten years (see the Center on Budget and Policy Priorities).

Today’s extremely high deficits are also an inheritance from Bush-era tax-and-spending policies and the financial crisis, also, of course, inherited by the present administration. Thus, according to the International Monetary Fund, the impact of discretionary stimulus on the US fiscal deficit amounts to a cumulative total of 4.7 per cent of GDP in 2009 and 2010, while the cumulative deficit over these years is forecast at 23.5 per cent of GDP. In any case, the stimulus was certainly too small, not too large.

The evidence shows, then, that contemporary conservatives (unlike those of old) simply do not think deficits matter, as former vice-president Richard Cheney isreported to have told former treasury secretary Paul O’Neill. But this is not because the supply-side theory of self-financing tax cuts, on which Reagan era tax cuts were justified, has worked, but despite the fact it has not. The faith has outlived its economic (though not its political) rationale.

So, when Republicans assail the deficits under President Obama, are they to be taken seriously? Yes and no. Yes, they are politically interested in blaming Mr Obama for deficits, since all is viewed fair in love and partisan politics. And yes, they are, indeed, rhetorically opposed to deficits created by extra spending (although that did not prevent them from enacting the unfunded prescription drug benefit, under President Bush). But no, it is not deficits themselves that worry Republicans, but rather how they are caused: deficits caused by tax cuts are fine; but spending increases brought in by Democrats are diabolical, unless on the military.

Indeed, this is precisely what Jon Kyl (Arizona), a senior Republican senator, has just said:

“[Y]ou should never raise taxes in order to cut taxes. Surely Congress has the authority, and it would be right to — if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that’s what Republicans object to. But you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans”

What conclusions should outsiders draw about the likely future of US fiscal policy?

First, if Republicans win the mid-terms in November, as seems likely, they are surely going to come up with huge tax cut proposals (probably well beyond extending the already unaffordable Bush-era tax cuts).

Second, the White House will probably veto these cuts, making itself even more politically unpopular.

Third, some additional fiscal stimulus is, in fact, what the US needs, in the short term, even though across-the-board tax cuts are an extremely inefficient way of providing it.

Fourth, the Republican proposals would not, alas, be short term, but dangerously long term, in their impact.

Finally, with one party indifferent to deficits, provided they are brought about by tax cuts, and the other party relatively fiscally responsible (well, everything is relative, after all), but opposed to spending cuts on core programmes, US fiscal policy is paralysed. I may think the policies of the UK government dangerously austere, but at least it can act.

This is extraordinarily dangerous. The danger does not arise from the fiscal deficits of today, but the attitudes to fiscal policy, over the long run, of one of the two main parties. Those radical conservatives (a small minority, I hope) who want to destroy the credit of the US federal government may succeed. If so, that would be the end of the US era of global dominance. The destruction of fiscal credibility could be the outcome of the policies of the party that considers itself the most patriotic.

In sum, a great deal of trouble lies ahead, for the US and the world.

It’s time for all of this to end.

The deficit now and in the future, Social Security has nothing to do with it

Our deficit issue(s) in this country can be explained and fixed very easily. But one thing must be pointed out from the beginning. There is no crisis when it comes to Social Security.

Social Security now or in the future has nothing to do with the deficit.  Doing anything to Social Security or it’s benefits now or in the future will do nothing to fix our current deficit problems.

In the short-term our deficit is caused largely by three things. As this graph shows those are – the Bush Tax Cuts, two wars, and the economic slow down.

In the long-term the deficit problem is caused by the explosion in the cost of health care. Without some form of cost control, like a public option, health insurance corporations will not cut costs. The CBO released a letter yesterday stating that a public option for health care would cut the budget by $68 billion through 2020.

CBO estimates that the public plan’s premiums would be 5 percent to 7 percent lower, on average, than the premiums of private plans offered in the exchanges. The differences between the premiums of the public plan and the average premiums of private plans would vary across the country because of geographic differences in the plans’ relative costs. Those differences in premiums would reflect the net impact of differences in the factors that affect all health insurance premiums, including the rates paid to providers, administrative costs, the degree of benefit management applied to control spending, and the characteristics of the enrollees.

[...]

The bulk of those budgetary effects would occur in the second half of the decade; the savings estimated for 2019 are about $14 billion. Although CBO and JCT have not yet extended to 2020 the models they use to estimate insurance coverage, the proposal would probably reduce the federal budget deficit by about $15 billion in that year, bringing the total budgetary savings through 2020 to about $68 billion. As discussed in CBO’s letter, those estimates are smaller than figures that have been previously reported regarding the savings from establishing a similar public plan because those previous estimates were related to legislation that differed in a number of ways from what was enacted.

It is obvious to anyone who takes the time to learn about the issue that Social Security has nothing to do with the deficit now or in the future. Also watch these tow videos. First this one from Strengthen Social Security.

There was also panel from yesterday at Netroots Nation titled “Obama’s Social Security ‘Death Panel’”. (Link to video here – scroll through related videos until you see the title). Here’s a liveblog of the panel. And

“Southern Strategy” still in effect

Rachel Maddow is a national treasure and she does an awesome job of showing how the “Southern Strategy” works. As she says it’s not about racism. It’s about a political strategy that scares ignorant (not stupid there’s a difference) white people into voting for Republicans, in particular in the South. And she shows Fox News for the GOP propaganda machine that they are. After all Roger Ailes worked for Nixon when the “Southern Strategy” was put in place, Scaring white people for fun and profit.

Visit msnbc.com for breaking news, world news, and news about the economy

Fox News has run with a few different stories this year that they really pushed all on their own. They weren’t mainstream news stories — they weren’t even news, really. They were Fox agenda items, all following a very, very similar narrative. There was the Van Jones controversy, with Fox morphing the president’s renewable-energy policy expert into an ex-con who served time after the Rodney King race riots — not true. The other great Fox News crusade of the past year was against ACORN, an almost all-minority community organizing group which Fox characterized as stealing taxpayer money and an election. More recently, Fox News has crusaded against the New Black Panther Party, after video surfaced of two wackjob blacks at a polling station during the 2008 election. The Bush Justice Department investigated and found that the wackjobs hadn’t intimidated voters that day, and Fox News has continued running the same footage over and over and over again.

The message? They’re coming for you, white people. They’re coming for you. Black people are coming for you, to take what’s yours.

This week Fox News got a new crusade, alerting the world that an “Obama administration official resigned just a short time ago after she was caught on tape appearing to tell an audience that she had used her position to racially discriminate against white farmers.” Except that USDA official Shirley Sherrod had told that audience no such thing.

Do you notice anything about those four stories — Van Jones, ACORN, the New Black Panther Party, and now Shirley Sherrod? This isn’t about racism. This isn’t a story about picking on black people. This is a story about political outcomes, about the tried and true political strategy not of targeting black people but of targeting white people, about making white people feel afraid of African Americans as if they are not fellow Americans but rather a threat to what white people have.

That’s beautiful. And she’s right. It won’t stop until white people stop being taken in by the scam.