Social Security is secure, WaPo goes mad

A Washington Post editorial today on Social Security lets the cat out of the bag:

Social Security is not a cause of the current or future debt…

The editorial is piss-poor at best, and Dean Baker gives is a proper burial here, Has the Washington Post Gone Mad?

The piece begins by telling readers that: “THIS YEAR, for the first time since 1983, Social Security will pay out more in benefits than it receives from payroll taxes — $41 billion. This development is not an emergency, but it is a warning sign (emphasis in original).” It certainly is a warning sign. The falloff in Social Security tax revenue is a warning that the economy is seriously depressed due to the collapse of the housing bubble. Double digit unemployment leads to all sorts of problems, including the strains that it places on pension funds like Social Security.

In a sane newspaper the next sentence would be pointing out the urgent need to get back to full employment. Instead the Post tells readers:

“Too soon, this year’s anomaly will become the norm. By 2037, all the Social Security reserves will have been drained and the income flowing into the program will only be enough to pay 75 percent of scheduled benefits. If that sounds tolerable, consider that two-thirds of seniors rely on Social Security as their main source of income. The average annual benefit is $14,000. Those who care most about avoiding such painful cuts ought to be working on ways to bolster the program’s finances — and soon, when the necessary changes will be less drastic than if action is postponed.”

Let’s see, it would be intolerable to have Social Security pay 75 percent of scheduled benefits in 2037, but one of the Post preferred cuts is raising the retirement age to 70,a 15 percent cut in benefits when fully phased in. So the Post thinks it would be just fine to have beneficiaries get 85 percent of scheduled benefits in 2037.

Not to mention if the retirement age goes up to 70, then people between 65 and 70 get their benefits cut by 100% for 5 years. 70 seems like an arbitrary number and we always have to keep in mind that to fix Social Security FOREVER all that needs to be done is to remove the payroll tax cap on wages.

The problem with the Catfood Commission, aka debt commission, dealing with Social Security is in the quote above. Social Security has nothing to do with the current or future debt so it should not be part of their purview. Dave Johnson says is better, Is It A Social Security OR A Deficit Commission?

Ever since President Obama set up the Deficit Commission all the talk has been about Social Security? Why?

Social Security is separate from the rest of the US budget, is separately funded, has a huge trust fund and, most important: Social. Security. Does. Not. Contribute. To. The. Deficit.

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So is it a DEFICIT commission or is it a SOCIAL SECURITY commission? If it is a deficit commission, then stop all of this talk about cutting Social Security, please, and start talking about the deficit. Everyone knows the deficit was caused by tax cuts for the rich and the huge increases in military spending that occurred under Reagan and then again under Bush II. (Note – there is no more Soviet Union.)

Social Security works, is popular, and is secure for many years to come. It needs to be tweaked to make it secure forever. The WaPo needs to come back to sanity on this issue and stop being a demagogue on this issue.

[UPDATE]: Did I mention that Social Security works, Social Security Keeps 20 Million Americans Out of Poverty.

The new “Chicken Hawks”

Dean Baker nails it, The Budget Deficit Chicken Hawks.

Most people are familiar with the concept of “chicken hawks.” Chicken hawks are the politicians who are anxious to send other people to risk their lives in war, but somehow managed to avoid service when they had the opportunity to fight themselves. Former Vice-President Dick Cheney and former President George W. Bush are the leading members of the chicken hawk society.

It turns out that we have a similar story with budget policy, where there appears to be a large contingent of budget deficit chicken hawks. The deficit hawks have been filling the news lately. These are the folks who are yelling that something terrible will happen if we don’t reduce the deficit. Most of them seem to have missed the fact that something terrible is now happening. We have almost 15 million people unemployed and 9 million underemployed, with several million facing the loss of their home in the next few years.

People of all ages are seeing their lives wrecked by a economic disaster that was entirely preventable, if the folks running economic policy were not too incompetent to notice an $8 trillion housing bubble. In fact, one of the reasons that this bubble did not get noticed was that, even before the bubble burst – creating large deficits – the deficit hawks were running around yelling about the deficits. These deficit hawks were able to get far more attention for their whining than the people who were warning about the dangers posed by the housing bubble.

Now that we have seen the collapse, rather than supporting action to get the economy back on its feet, the deficit hawks are again yelling about the long-term deficit. But what is really striking is that many of the people who whine loudest about the deficit are the most reluctant to take steps to reduce the deficit – at least when it involves powerful interest groups.

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It is not only Wall Street that is protected by the deficit chicken hawks. The insurance and pharmaceutical industries can also count on the deficit chicken hawks. As all budget analysts know, the country’s long-term budget problem is due to our broken health care system. We pay more than twice as much per person as the average in other wealthy countries.

But the deficit hawks are scared to talk about fixing the health care system. This would hurt the insurance industry, the pharmaceutical industry, and other powerful interest groups. When America Speaks came to health care, they said reform was off limits. They only wanted participants to talk about cutting Medicare and Medicaid. The elderly and the poor don’t have powerful lobbies like the industry groups.

Basically, the deficit chicken hawks want deficit reduction, but they only want it to be at the expense of the elderly and the poor, hence, their attacks on Social Security and Medicare. Of course, the public is not anxious to go along with gutting the programs on which they and their parents depend, which is why the deficit chicken hawks prefer to do their work through commissions that hold secret meetings.

The deficit chicken hawks also don’t have much commitment to honesty. When America Speaks reported its results to the public and President Obama’s deficit commission, it noted that one cut to Social Security, raising the retirement age, got majority support from participants. However, it turns out that this result was based on a software error. When the error was corrected, support fell to 39 percent.

Remarkably, America Speaks did not have the integrity to publicly acknowledge and correct this mistake. It just quietly changed the number on its web site. This is the sort of behavior we should expect from deficit chicken hawks, who want to attack the programs on which so many ordinary working people depend, while protecting the interests of the rich and powerful.

There is no crisis or deficit when it comes to Social Security. Every discussion about the deficit must start and end with letting the Bush Tax Cuts expire.

Dean Baker destroys the Catfood Commission

The Deficit Commission Refuses to Talk to Anyone Who Knows About the Econom.

Erskine Bowles, the co-chair of President Obama’s Deficit Commission and a director of the Wall Street investment bank Morgan Stanley, claimed that the current economic crisis (which is projected to add more than $4 trillion to the national debt) was “largely unforeseen.” This is not true. Competent economists saw the crisis as an inevitable outcome of the housing bubble. It is remarkable that the deficit commission seems to be relying exclusively on economists who could not see this $8 trillion bubble, the collapse of which wrecked the economy.

The commission also does not appear to be considering any measures that would challenge powerful interest groups like the pharmaceutical industry, the insurance industry, highly-paid medical specialists, or the Wall Street banks. Rather than incur the wrath of these powerful interest groups by reining in medical expenses or reducing the rents earned by Wall Street bankers, the commission seems intent on taking back Social Security and Medicare benefits for ordinary workers. The reporters covering the commission should be reporting on the failure of the commission to follow its mandate in this respect.