Social Security 101

This is what you need to know to follow every discussion on Social Security.

First of all, Social Security works by having those workers presently working pay for those workers presently retired. I remember my dad explaining this to me back in 1969 or 70, when he was retiring and we were moving to town. I asked him how Social Security worked and he explained that people of his generation were receiving a gift. That he was going to be receiving monthly checks and the total amount would almost certainly surpass what he had paid in to it.

Social Security is an insurance program. It is not a savings plan. This means that the money you pay in to it is used to pay claims. If you do not reach retirement age, you will receive no money back. If you live past 100, your benefits will never run out.

Understanding this is the key to understanding why George W. Bush's plan to privatize Social Security was a farce. People were going to be allowed to invest their Social Security payments in the stock market. Social Security would have been in an immediate financial crisis, unable to pay out the benefits it was committed to paying. Either it would have gone bankrupt or the government would have had to raise taxes. The end result would have been that money raised from a tax on the working and middle class would have been used to increase investment in the stock market.

From its creation Social Security has been treated as a financially independent entity. The government calculates how much money is taken in, and how much is paid out, and it knows that today it has a $2.6 trillion surplus. It plans ahead and knows that this is enough money to pay every benefit owed to every eligible American for the next 25 years. It also knows that in about 12 years it will start running into deficits. Either retirees need to receive a little less in the way of benefits or more money needs to be paid in to the system. In the budget shutdown game from earlier this year, Obama agreed, by reducing inflation adjustments, to cut the amount of money retirees would receive. He has since backed off on this, but not before losing the waning support of people like me who think that given the great expansion of wealth at the top 1/10th of 1%, it would be more proper to have them, rather than the working class, pick up the slack. But I digress.

Conclusion. Social Security is financially sound. It will need an adjustment some time, but that adjustment is very minor.

So why does Social Security somehow keep entering into every serious discussion about reducing the national debt? This is because in 1968, during the Johnson administration, the government adopted the unified budget. Prior to that time, Social Security dollars were held completely separate from the rest of the federal budget. After 1968, Social Security continued to maintain its own records concerning income, expenses, surplus or debt, but the federal budget added the net surplus or deficit from Social Security to the national debt number. This means that without the Social Security surplus the national debt would be $2.6 trillion higher than we are being told that it is.

Another way of looking at it is to note that in 2010, Social Security's total income was $781.1 billion and its expenditures were $712.5 billion. (All numbers from Wikipedia). This means that $68.6 billion was taken in 2010 from the Social Security tax and used to pay for other operations of the federal government. By about 2023, Social Security will begin drawing down on the surplus paid in to the system by baby boomers. The federal government will then have to find other sources of revenue.

The defense of Social Security is, to me, a basic test of whether a candidate is a true Democrat. Social Security is 100% funded by the American worker and his employer. It is a tax which does not target wealth. Income over $106,800 is not taxed. It is an example of a government program that is has worked exceedingly well and which today has no deficit.

Any call to end Social Security or to reduce the payment of Social Security benefits can only appear as an attempt to maintain the present circumstances in which a tax on the American wage-earner and his employer is being used to finance the general operations of the government.

When President Obama agreed to reduce future payments to Social Security retirement beneficiaries, he showed his true colors. He sided with the ultra-wealthy against the interests of the working and middle class. He revealed once again that he is neither a liberal nor a true Democrat.

http://donaldleach.blogspot.com/

Wall Street vs the American People

It is revealing to read in the paper on the same day about the Occupy Wall Street movement and the fact that the Obama campaign is breaking records in the amount of money it is raising. From Wall Street. It brags to its supporters about the record number of individuals who have donated, but the record amount of dollars it has received it owes largely to Wall Street.

It has been interesting how many people don't get the point of Occupy Wall Street, including people who are in many ways anti-establishment. I'm thinking of Paul Tukey, my expert for organic lawn care, who filled me in on the Obama administration's quiet approval of genetically modified (he calls it "mutant") alfalfa and Kentucky blue grass seed. Leave it to Suze Orman, of all people to understand it completely (see her October 11 blog: http://www.huffingtonpost.com/suze-orman/occupy-wall-street-approv_b_1005128.html).

Main points: The very year that the taxpayers bailed out the Wall Street "banking" industry, its leadership was maintained and was even paid its normal bonuses. Today these mega-"banks" are once again showing hefty profits. Meanwhile there are still 10 million more people unemployed today than before the crisis. Those who were conned in to buying houses they couldn't afford are living in poverty, sending their kids to schools with 50 kids in a classroom, seeing their police forces cut and dealing with whatever healthcare they can finangle through Medicaid. And it is not just the poor who have been left behind. "Inflation-adjusted median house income declined 7.6% from June 2009 to June 2011." (Suze Orman)

No one resents the wealth of Steve Jobs. The technology to which he contributed will be one of the pillars of the future, post oil economy. Wall Street bankers have done nothing to improve the long-term well-being of the American people. This is so clear to me that it leaves me astonished to listen to people who have no awareness of it.

A few numbers from my April 29, 2011 blog post: Wall Street banker Henry Paulson at that time was being paid 2.4 million dollars an hour. The combined salary of the top 25 hedge fund managers was listed at 25 billion dollars. This is enough money to pay the salaries of 658,000 school teachers. The Plain Dealer confirmed the accuracy of one of our local state senators when she asserted that the banking crisis brought about a loss of $5.5 trillion to American home owners. Banks as we knew them in our childhood shared in the cost of the bad loans they made. These banks did not.

I'm yearning for an alliance with the Tea Party. Could it be that they are not the same as the new Right? When the Tea Party first emerged, I was profoundly hopeful. Then they were suddenly putting forth notions that I still don't think represents them. It seems that they felt a need to put their authentic concerns on more intellectual grounds and became the victim of the right-wing (corporate money-making) propaganda machine.

For a populist alliance with the Tea Party, the left has to realize that the Democratic party has sold out to big money. The Tea Party has to end its alliance with big money. That would allow a national move to take back our government, which seems to be the common ground of the alienated on both the left and the right.

Our candidates for City Council get elected by going around and talking to the voters. We just had one at our door. He wants the support of the people. That is where we have to get to with our federal congressmen. Our Supreme Court ruled that spending money is a form of speech and that corporations, now considered to be people, have the constitutional right to spend as much money as they wish in pursuit of political aims. The right-wing justices did not need to make this ruling. They picked on a minor case (Citizens United vs The Federal Election Commission) to bring about a radical increase in the power of big money over our democracy. The Justices supporting this decision and, in particular, its leader John Roberts need to be impeached.

Slogan coming from Occupy Wall Street: "I'll believe corporations are people when Texas executes one. "

I'm using the term corporation excessively and inaccurately. Big money is also private companies like Cargill and Koch Industries. Also, I understand that corporations are diverse and not unified. But it seems to be the term which best reflects my concerns. I'm trying to shout as loud as I can that big money is squashing democracy. It provides us with our news, and is increasingly funding propaganda research so that its news can refer to its own studies.

The characteristic argument is that government can't do anything right, but it never focuses on how much of our taxes end up in the pockets of the very people getting rich by saying that government can't do anything right.

Lincoln said we fought the civil war so "that government of the people, by the people, for the people, shall not perish from the earth."