Economics
Without The B.S.**: Killing Social Security
[** Double entendre intended.]
Will
Right Wing Tactics Kill Social Security?
Social Security, the safety net for
seniors established during the New Deal, is in a vulnerable position right
now. It has been under-funded since the
1990’s. While there has been plenty of
money in the Social Security Account to pay for present obligations – right now
a surplus of approximately $2.7 Trillion – this surplus needs to grow a lot
more to meet the needs of the generation of Baby Boomers that are starting to
retire now with even more retiring in the next decades.
President Clinton established a
commission to study the funding that was needed. The Commission made recommendations. Nothing was done. President Bush (W) established a commission
to study the problem. The recommendation
was to privatize Social Security. Right
after the start of Bush’s second term (January 2005), President Bush went on a
campaign visiting several states to sell his idea of privatizing Social
Security. His effort was so unsuccessful
that by April he gave up. And once
again, nothing was done to fund Social Security. President Obama has done nothing to shore up funding
Social Security for future obligations; and, worst yet, barely brings the
subject up.
Social Security makes an interesting
political football for both political parties.
Republicans have criticized Social Security right from its start in the
1930’s. Their tactics have been to scare
people that Social Security will not be there when they retire. They have been doing this for decades. They usually talk about an “unfunded
liability” – the figure varies today, $126 Trillion if you lump Social Security
with MediCare and every other government program, or $23 Trillion for just
Social Security alone if you run the program out forever, or $10 Trillion if
you run it out over the next 75 years.
What is an “unfunded liability”?
Well, when you had your kids you probably took on an unfunded liability –
to pay for their future medical costs, clothing (for girls), food (for boys),
education, etc., etc. But you paid for
these things. You paid as you go. Social Security is paid the same way – a pay-as-you-go
system. To meet the unfunded liability
of Social Security will require only a couple of percentage points of future
payrolls – the future payrolls will grow with a growing economy and growing
wages in that economy. Now Democrats
play the scare game as well as the Republicans.
They like to use the Republicans as whipping boys to hold up against
working folks when the funding of Social Security is shown in a shortfall.
Right now there is political
gridlock in Washington. Nothing is
getting done. We had a Great Recession
in 2008-2009. Monetary action by Ben
Bernanke’s Fed was the primary fix while the fiscal action from the President
and Congress was inadequate and hampered because of the gridlock. Could this gridlock be by design for those
Libertarians and Right Wing adherents who want to downsize the Federal
Government? They have been echoing this
posture for many decades but have never won enough elections to have control of
Congress and the Presidency. But there
are enough of them in Congress to prevent Government action at the Federal
level. So, is this inaction at the
Federal level just a consequence of the split between Red States and Blue
States; or, is it by design, a strategy?
This past weekend Nicholas Confessore
had an article in the January 11, 2014 New York Times which addresses this
strategy from a different perspective at the state and local level.
Although
it is a different perspective the results can feed into the aims of the Right
Wing and Libertarians like the Koch Brothers (David and Charles): make the
Federal Government ineffective and get your programs through at the state and
local level.
So,
what is the future for Social Security if gridlock and inaction at the Federal
level are the rule for the day?