- Planned is death by a thousand cuts - aka "creeping
normalcy," defined as a way to make major changes seem normal if happen
slowly, incrementally like boiling a frog unaware it's dinner until cooked.
- Social Security and Medicare are dinner. Yet both are
insurance, not welfare, programs funded by (worker-employer) payroll tax
deductions. They're contractual federal obligations to eligible recipients
who qualify. You'd never know it the way both programs are publicly discussed,
explaining everything but the truth. More on that below.
- On August 14, 1935, the Social Security Act became law,
known as the federal Old-Age, Survivors, and Disability Insurance program
(OASDI). It provides retirement, disability, survivorship, and death benefits.
It's still America's most effective poverty reduction program that's worked
remarkably well since inception. It exists to provide secure inflation-adjusted
retirement or disability income, unlike risking personal savings to create
private wealth that may end up losing it.
- Despite bogus claims, it's not going bankrupt. When properly
administered, it's sound and secure, needing only modest adjustments at
times to assure it.
- On July 30, 1965, Lyndon Johnson signed the Social Security
(Medicare) Act into law, enrolling Harry and Bess Truman as its first recipients.
- Medicare.gov calls it "the nation's largest health
insurance program," covering 40 million Americans. It's a "Health
Insurance program for people age 65 or older, some disabled people under
age 65, and people of all ages with End-Stage Renal Disease (permanent
kidney failure treated with dialysis or a transplant)."
- America's aristocracy wants Medicare and Social Security
ended, citing the nation's burgeoning debt and enormous unfunded liabilities
for both programs. The web site usdebtclock.org lists them as follows:
- (1) the US National Debt: nearly $14 trillion;
- (2) Social Security Liability: nearly $15 trillion;
- (3) Prescription Drug Liability: nearly $20 trillion;
- (4) Medicare Liability: nearly $78 trillion.
- Total: nearly $113 trillion plus the National Debt.
- Most important is that future liabilities mask today's
soundness that can stay that way if current programs are properly administered.
That's omitted from hyped scare tactics to convince future recipients to
make unjustifiable sacrifices. Like them or not, they're coming, major
media reports promoting the idea as well as politicians from both parties.
- On August 9, 2010, for example, a New York Times editorial
headlined, "The Latest on Medicare and Social Security," saying:
- "Of course, neither program is sound for the long
run. (Yet there's) time for lawmakers to reform and strengthen both (for)
the long haul. (Required is) a combination of benefits cuts and tax increases,
which could be distributed fairly and phased in over decades."
- A May 13, 2009 Wall Street Journal report headlined "Social
Security, Medicare Face Insolvency Sooner," saying:
- Medicare "will be depleted by 2017," Social
Security by "2037." In fact, neither program is endangered as
explained above. Yet the report continues:
- "Any attempt to address long-term fiscal problems
will require big changes to the way entitlements are funded or paid out."
- False, but don't expect major media reports to explain
or side with recipients about programs too important to be weakened or
- Yet in his January State of the Union address, Obama
announced plans to "freeze government spending for three years,"
starting in 2011, saying he'd form a bipartisan fiscal commission to cut
the deficit and tackle entitlements by imposed austerity at a time massive
stimulus is needed.
- Called the National Commission on Fiscal Responsibility
and Reform (NCFRF), it's co-chaired by two deficit hawks, former Senator
Alan Simpson (R. WY) and Erskine Bowles, former Clinton White House Chief
of Staff. They headed an 18-member team, stacked with like-minded members,
elitists knowing their futures are secure.
- Their mandate: slash Medicare, Medicaid, Social Security
and other social spending, continuing a decades long process of transferring
wealth to America's super-rich. On November 10, they issued their proposal.
An earlier article addressed it, accessed through the following link:
- Among other recommendations were:
- -- ending or capping middle class tax breaks, including
deductions for home mortgage insurance and tax-free employer provided medical
- -- lowering income taxes dramatically to 9, 15 and 24%,
down from six brackets ranging from 10 - 35%;
- -- slashing corporate tax rates from the top 35% to 26%;
- -- making deep Medicare cuts as well as increasing Medicaid
- -- raising the Social Security retirement age to 69 by
2075 as well as reducing annual cost-of-living increases.
- A second Bipartisan Policy Center (BPC) commission co-chaired
by former Senator Pete Domenici (R. NM) and Alice Rivlin, former director
of the Office of Management and Budget and the Congressional Budget Office,
issued its own proposal called "Restoring America's Future."
- Its recommendations include:
- -- indexing Social Security benefits to life expectancy
to reduce them as longevity increases;
- -- eliminating annual cost-of-living adjustments, bogusly
claiming inflation is overstated, especially for retirees facing costly
- -- instituting a one-year payroll tax holiday for workers
and employers to save $650 billion, supposedly to be replenished from future
general revenues; in fact, it's a way to help kill Social Security as discussed
- -- sharply cutting Medicare and Medicaid benefits;
- -- simplifying the tax code to two brackets (15 and 27%),
favoring the rich;
- -- eliminating home mortgage and most other deductions
- -- taxing employer provided health insurance; and
- -- instituting a 6.5% national sales tax, hitting ordinary
- An earlier article providing more details, including
on Obama's planned austerity, can be accessed through the following link:
- Nancy Altman is co-director of Social Security Works
(strengthensocialsecurity.org), an "American coalition (representing
over 50 million Americans) united around the simple proposition, Strengthen
Social Security...Don't Cut It."
- Its seven principles include:
- (1) Social Security didn't cause the federal deficit;
it shouldn't be cut to reduce it;
- (2) it shouldn't be privatized;
- (3) it shouldn't be means-tested;
- (4) future revenues should come by raising the payroll
tax ceiling, requiring those earning more to pay their fair share;
- (5) the retirement age shouldn't increase further;
- (6) benefits shouldn't be cut, including by reducing
annual inflation-adjusted increases; and
- (7) benefits "should be increased for those who
are most disadvantaged."
- In short, Social Security (Medicare and Medicaid) should
be strengthened to provide greater, not lower, future benefits.
- Obama's Destructive Payroll Tax Holiday
- The proposed 2% worker earnings cut for one year is a
stealth indefinite extension scheme to drain hundreds of billions from
the Social Security Trust Fund. Doing so will irreparably weaken its ability
to pay future benefits, the idea being to destroy the program altogether,
perhaps first by privatizing it.
- Social Security Works explained how the tax holiday "could
unravel" the whole system as follows:
- (1) "It's easy to enact tax cuts - it's very hard
to end them."
- (2) Doing so results in a substantial tax increase -
$2,000 on $100,000 a year earners, $400 for those making $20,000.
- (3) "Restoring the 2% lost....would be a nearly
50% tax increase (for) 94% of all Americans...."
- (4) House and Senate Republicans oppose any increases.
So do many Democrats, especially in election years or when economic conditions
- (5) Obama's proposal undermines Social Security's long-term
solvency. Repaying what's lost from general revenues is greatly impeded
by the size of the deficit and planned austerity coming to reduce it.
- (6) Maintaining the 2% cut indefinitely will cause massive
benefit cuts and eliminate any chance for improving them, notably for society's
poor and disadvantaged.
- (7) Middle class households will also be harmed, violating
Franklin Roosevelt's pledge that:
- "We put those pay roll contributions there so as
to give the contributors a legal, moral, and political right to collect
their pensions and their unemployment benefits. With those taxes in there,
no damn politician can ever scrap my social security program. Those taxes
aren't a matter of economics, they're straight politics."
- FDR never met Obama or congressional Republicans and
Democrats. What he gave, they'll end, violating a government-mandated right.
- (8) A payroll tax holiday is another step toward privatization,
a sure way to kill it, the way 401(k)s destroyed private pensions, leaving
workers at the mercy of marketplace uncertainties that can wipe out life
savings during hard times.
- Social Security Works concluded, saying:
- "There are better ways to provide stimulus to the
economy - and that do less harm to Social Security - than a tax holiday."
- According to the Center for Budget and Policy Priorities
(CBPP), one way is by extending the 2009 Making Work Pay Tax Credit, adding
much more stimulus than a payroll tax holiday. It gives workers a refundable
tax credit, increasing the size of the paychecks. At 6.2% of earned income,
it provides maximum $400 for working individuals, $800 for married taxpayers
filing joint returns.
- A payroll tax holiday is a bad idea any time, besides
doing little to stimulate economic growth. "The most efficient way
to boost consumer spending is to put money into the hands of people who
will spend it quickly rather than save it." It's most effective when
given to low and middle-income workers, not high-end ones who'll save,
not spend, their windfall.
- "A payroll tax holiday does not score well on this
front - too little of the benefit goes to lower-income households struggling
to make ends meet and too much goes to higher-income taxpayers, who are
likely to save a significant (portion) of any new resources they receive."
- Besides killing Social Security, that's the whole idea,
of course, transferring more wealth to the rich, what Republicans and Democrats
endorse, including Obama.
- In contrast, the Making Work Pay Tax Credit poses no
threat to Social Security. The payroll tax holiday may destroy it. Republicans
signing on as a concession masks their real intent, the same one they've
had since Social Security's enactment, a program they strongly opposed
as well as Medicare in 1965. Now both parties oppose them.
- A Final Comment
- Obama's payroll tax holiday will drive a stake into Social
Security's heart, or as Hall of Fame former baseball announcer Bob Prince
used to call Pittsburgh Pirate home runs: "Kiss it goodbye."
Fans cheered. Deathly silence will greet Obama's proposal once recipients
know they've been scammed. Republicans and Democrats plan it unless an
aroused public stops them.
- Stephen Lendman lives in Chicago and can be reached at
email@example.com. Also visit his blog site at sjlendman.blogspot.com
and listen to cutting-edge discussions with distinguished guests on the
Progressive Radio News Hour on the Progressive Radio Network Thursdays
at 10AM US Central time and Saturdays and Sundays at noon. All programs
are archived for easy listening.