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mygif

and on that note, you can find me in the bottom of a bottle somewhere..

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Aisling said on May 14th, 2011 at 5:27 pm

It wouldn’t be so sad if it weren’t so true.

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mygif

This is more cynical than a nihilist’s horoscope. Troubling how much of it can be seen in reality.

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Hairious Maximus said on May 14th, 2011 at 6:15 pm

The money isn’t there John. That’s all there is to it. We simply can’t afford to keep getting further and further in debt whilst still providing the same level of services, as we are with the status quo.

Now, there are legitimate economic arguments about both the desired level of government spending, and how best to raise revenue for it; but spinning a lurid paranoid fairy tale isn’t even close to being one for either. Instead it reads like the lunatic ravings of the John Birch Society, ranting on about shadowy conspiracies involving communism and the new world order.

There is not a secret Scrooge McDuck-style vault with countless billions swindled away, and we can’t simply unceasingly raise taxes further and further for ever. This is a hideously difficult and serious problem, and there are very few out-and-out villains here.

Pretending otherwise, and in particular pretending that the sole cause of all of our economic ills is down to handful of EVIL politicians who hate poor people, removes you from having any semblance of a serious political argument, and ever closer to being the naked homeless man screaming at his own genitals.

tl;dr Get a job you hippy! >_<

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Oliver Warbucks said on May 14th, 2011 at 6:37 pm

The only issue I really take is the thought that Social Security really is a savings account, or something that was ever really in a “lock box,” as was said during the Clinton administration. At best, it’s just another debt we promise to pay back.

Sure, we’ve found ways to make it solvent for what feels like an indefinite number of years in the future, but money paid into Social Security has been spent countless times over, even soon after it was first implemented. It feels a lot better in this regard to think of it as money spent on social services we’ve greatly expanded upon since its inception, a practice that was much easier to justify so long as the working population outnumbered the elderly.

Of course, fixing Social Security is far easier than Medicare/Medicaid, and would involve little more than increasing the retirement age, but people have invested so much into this fight that any give on either side will be looked upon as a catastrophic defeat.

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the Prowler said on May 14th, 2011 at 7:28 pm

Great piece, John. Very succinct, and despite what some other commenters may say, a credible overview of the dynamic ruining American politics.

To the nay-sayers I reply: it’s always striking to me how little interest Americans have in what happens beyond their borders. For a country that was once the apex of modernity, the place where best practices where either invented through vigorous trial-and-error or imported and implented post-haste, it sure seems like an insular place these days.

As an European, I would say: tax the ultra-rich (both individuals and corporations), tax them until they bleed. Kick big business and its contributions out of Washington. Cut down on military spending (have us holier-than-thou Europeans pick up some of the slack) – thousands of nukes is enough of an effective deterrent, right? Legalize drugs, and tax the shit out of it. Reform your winner takes all electoral system of states and districts, and go for proportionate representation of a plurality of parties that then form coalition gov’ts. Spend like maniacs on education, welfare and healthcare, so as to become a true meritocracy again. Maybe annex Mexico for cheap labor, and Canada for raw materials (I’m not kidding). At the very least, make sure to use the next war to *make* money, not just spend it.

I’m just spitballing here, but that should get you lot started.

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mygif

@Hairious Maximus: Of course the money isn’t there. It was all spent in the form of tax breaks and subsidies to large corporations that, coincidentally, spent considerable sums of money on electing people who insisted that lowering taxes wouldn’t lower government revenues or lower the quality of government services. Those same people are now insisting that we have to accept reductions in the quality of government services, because the money “just isn’t there”.

The money was there ten years ago. It’s not there now. In the intervening time we had hundreds of billions of dollars of tax cuts for the ultra-rich. It does not take Sherlock freaking Holmes to figure out where that money went. :)

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Hairious Maximus said on May 14th, 2011 at 8:34 pm

@John

I have to disagree.

Tax loopholes certainly cost, but they’re very small fry compared to the real problem of the spiralling cost of state entitlements. Any plan to square the deficit that involves cutting spending, as any plan should given that spending cuts are generally significantly more reliable then equivalent tax rises, must take aim at them.

And no, the money was never there, we just allowed ourselves to pretend that it was. Government spending was rising against revenue for decades before Bush’s tax cuts, and the effect of those was pretty damn paltry in any case. The recent recession just hastened things up slightly.

Yes, it sucks that we didn’t grasp that nettle sooner. But that’s an argument for more urgency, not less.

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Oliver Warbucks said on May 14th, 2011 at 8:40 pm

Well, there have been two recessions in that span, both of which make up as much of our current debt situation as both wars, Medicare Part D and the Bush tax cuts combined according to the CBO: http://media.npr.org/assets/img/2011/05/03/debtchange_custom.jpg?t=1304442620&s=3

Not that I disagree with your basic premise about Bush’s economic plan not making a lick of sense.

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Tim O'Neil said on May 14th, 2011 at 9:12 pm

“This is a hideously difficult and serious problem, and there are very few out-and-out villains here.”

Yes, actually, there is one major villain at the root of all these problems. It’s called “capitalism,” and it just doesn’t work, at least not the way we’ve been using it.

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Meanderthal said on May 14th, 2011 at 11:41 pm

Of course the money is there. We just think it’s more important to spend it on bombing brown people than on helping Americans who need it.

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highlyverbal said on May 15th, 2011 at 2:19 am

“…they’re very small fry compared to the real problem of the spiralling cost of state entitlements.”

This statement compares two numbers. I would like to know the specific values for those numbers so I can verify your comparison.

Citation please?

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just_some_guy said on May 15th, 2011 at 4:07 am

Hairious,

“they’re very small fry compared to the real problem of the spiralling cost of state entitlements.”

State entitlements that happen to be spiraling because our economy took a crap and our jobs were outsourced. When you have 15 million people out of work for more than two years, yes, entitlement programs are going to cost a bit more money. I worked 60 to 70 hours a week almost every week last year. I took in around $50k. My company’s CEO took in $19 million on base pay and an estimated $50 million in additional bonuses and stocks. I received a raise this year of a mighty 3%. My CEO received the same raise. Mine ended up being taken back after a month, his is still in effect.

My company cleared $9 billion in post-tax/post-expenditure profits last year. We laid off thousands of people at the beginning of the year.

So tell me, what are these corporations doing to help get us out of the situation we’re in with entitlement programs?

I will grant that the age limit does need to be increased for Social Security. But we also need to raise taxes. If nothing else, it works towards adjusting for the giant amount of inflation that’s headed our way, so that we can keep things at current unworkable levels, rather than making it worse.

We also need to cut our defense budget. Yes, we need to protect ourselves. No, we don’t need to be spending near that amount of money that we are. Why don’t we look at that before we start cutting medical benefits, social security benefits, and social safety nets?

You talk about how tax cuts are not worth getting rid of, but how about subsidies to businesses that are making record profits. When the oil companies get up in front of Congress, as they did this week, and say that they should not be punished for doing well by having their subsidies taken away, I have a problem. Taking away subsidies is not punishment. It is taking away assistance money that is no longer needed.

While these oil companies accept these subsidies, they turn around and donate large amounts of money to people running for office, hoping to land a friendly politician on their payroll. And this is just one example of large businesses doing exactly what John describes, which you call the rantings of a lunatic.

While John may or may not be a lunatic, a naked man yelling at his genitalia, this is certainly not proof of it. Are all of our problems traceable to corrupt politicians? Not at all. Just like all of our problems cannot be traced back to people who say discussion of said politicians is just pointless, mindless rambling, and continue to stick their head in the sand. But rest assured both are certainly part of the problem.

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mygif

I agree, too many people are taking welfare when they don’t need to do so- like oil companies.

I mean, if we can’t afford subsidies for NPR and Planned Parenthood, how the hell are we able to support a multi-billion dollar industry?

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mygif

John, you should write this stuff for your weblog. You’d explode. This is pure brilliance.

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For Social Security, let’s look at the actual data (the following is from http://www.socialsecurity.gov/cgi-bin/ops_series.cgi, Select Financial Data for Multiple Time Periods, Select Calendar Year and All Years and Press Go.) Some of the column headings have been changed so that they fit better in this email (i.e. “Profit” is actually “Net Increase in Assets” and “Savings” is actually “Assets at end of calendar year”).

Old-Age, Survivors, and Disability Insurance
(Amounts in millions)
Savings
Year Income Outgo Profit Balance
==== ======= ======= ======= ========
1987 231,039 209,093 21,946 68,807
1988 263,469 222,514 40,955 109,762
1989 289,448 236,242 53,206 162,968
1990 315,443 253,135 62,309 225,277
1991 329,676 274,205 55,471 280,747
1992 342,591 291,865 50,726 331,473
1993 355,578 308,766 46,812 378,285
1994 381,111 323,011 58,100 436,385
1995 399,497 339,815 59,683 496,068
1996 424,451 353,569 70,883 566,950
1997 457,668 369,108 88,560 655,510
1998 489,204 382,255 106,950 762,460
1999 526,582 392,908 133,673 896,133
2000 568,433 415,121 153,312 1,049,445
2001 602,003 438,916 163,088 1,212,533
2002 627,085 461,653 165,432 1,377,965
2003 631,886 479,086 152,799 1,530,764
2004 657,718 501,643 156,075 1,686,839
2005 701,758 529,938 171,821 1,858,660
2006 744,873 555,421 189,452 2,048,112
2007 784,889 594,501 190,388 2,238,500
2008 805,302 625,143 180,159 2,418,658
2009 807,490 685,801 121,689 2,540,348
2010 781,128 712,526 68,602 2,608,950
Notes:
Profit is income less outgo.
Data are provided by the Department of the Treasury in monthly reports.
A table total is not necessarily equal to the sum of its rounded components.

What this shows is that for every year in this table, Social Security income has been greater than its expenses. That difference has been invested in the Social Security Trust Fund (“Savings”) which invests in the safest of possible investments, namely interest bearing government securities or interest-bearing Special Issue U. S. Treasury bonds. The value of that Fund at the end of 2010 was over $2.5 trillion. Since 1937 when Social Security was started, any extra money above and beyond expenses has always been invested this way.

The estimates I’ve seen suggest that Social Security will not have to dip into the trust fund to start paying benefits for another 15 years and the trust fund will not be exhausted for another 25 years after that. And those numbers assume the payment of full benefits as currently defined w/o raising the retirement age or making any other changes.

Now I don’t know about you, but that does not sound like “broke” to me. This sounds like what every person does that has a job and is able to pay all of their expenses and still have money left over to put into savings for when it is needed.

Now the people who suggest that the trust fund is empty do not understand how investments work. When you loan money to a bank (as the Social Security Administration is loaning money to the US government), that bank does not just let that money sit around letting the magic interest fairy do its work. Instead, they turn around and spend that money on other investments that are intended to pay back more than the amount invested. The same is true for the investments that the Social Security Administration has made in the US government and also true for every person / company / foreign government who buys these same types of investments. The US government uses that money however it wants to and pays the money back on demand with interest. What the numbers say is that for $2.5 trillion of the US debt which comes from Social Security as of 2010, none of that money will even begin to need to be repaid for another 15 years. And even then, only small portions of the money will be repaid growing over the following 25 years.

Now if you want to ensure that Social Security is able to keep the trust fund going for even longer, the easiest and most straight forward way of doing that is to raise or remove the cap on Social Security wages that is currently set to something over $100,000. Currently someone who makes $100,000 pays the full percentage (let’s say 3.5% since I don’t have the exact percentage handy) of their taxable wages to Social Security while someone who make $1,000,000 dollars only pays into the fund for the first $100,000 they make which means that they only pay 0.35% of their income to Social Security.

Now anyone who thinks this is a Ponzi scheme must also think that life insurance (or most any time of insurance for that matter) is also a Ponzi scheme. After all, in order to pay benefits to survivors of people that die, the insurance company will use the money that everyone else is currently paying in order to fulfill that claim (yes, they will also use the money that the person who died paid in but there is a chance that they may not have paid in enough to cover the full benefit). This is no different than how Social Security works which is why it is actually called Social Security Insurance.

Sorry for the long post, but I’m really tired of all the lies and misinformation out there on Social Security. Social Security is not broken and there are very easy things that can be done to ensure that Social Security continues even longer than the 40 or so years currently estimated.

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mygif

Wanna make this even more depressing?

Consider that for a lot of marks the scheme was sold by telling them that someone else will get hurt. Someone they don’t like. Lazy poor people, creepy queers, those guys who don’t look/act/worship like them.

And look how many marks embraced that to their hearts.

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PokerAlice said on May 16th, 2011 at 12:51 am

Social Security overwhelmingly benefits the middle to upper class. This is mostly because a) the higher your class status, the longer you live, the more benefits you collect, and b) if you are lower class, your spouse likely works as well, meaning spousal benefits are negligent, as opposed to the upper classes, in which non working spouses are compensated with their spouse’s benefits. Just FYI.

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@PokerAlice

Yeah… that’s just not true. First of all, the Social Security formula is actually somewhat redistributive so that lower income people actually get a much higher percentage of their average lifetime earnings. Second, the SSA calculates all potential benefits amounts for each person and then pays out the HIGHEST benefit they are entitled to. Thus, if the spousal benefit is higher, the person gets that. If it’s not, it means your work history got you a higher benefit. Finally, the middle and upper classes don’t need that money nearly as much. Social Security is actually much more important and valuable to the elderly poor because they need it.

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Rawrasaur said on May 16th, 2011 at 6:34 pm

It’s rather interesting to see the different views on social security, but from what I’ve read, there really isn’t much *in* the social security trust.

Borrowing against social security has been a pretty common thing, and right now much of the fundage there has been replaced by US treasuries, which, in order to be cashed in, will just be added to the current federal deficit.

So is the money there? It is on paper, but in practicality it’s as “there” as the money the USA owes to foreign interests.

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PokerAlice said on May 16th, 2011 at 6:37 pm

@Aragon

I’m not arguing that it isn’t more essential to the lower classes; in fact, I think it ought to favor them more seeing as they do need it. But the majority of benefits are still received by the upper to middle class. It is still true that the lower classes work longer, therefore paying into social security for a longer period of time, and on average receive benefits for a shorter period of time. Although benefits are somewhat redistributed, they still do not compensate for this differential.

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PokerAlice said on May 16th, 2011 at 7:10 pm

@Aragon

Also, re: my comment on spousal benEfits, my point was not that spousal benefits might be higher in sheer amount than that which might be received by a working spouse but that the overall benefit to the couple is diminshed. This is because if both spouses work, both are paying into Social Security for their benefits, versus a case in which only one spouse works/pays into Social Security yet both receive benefits. I apologize for that miscommunicatiob.

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dangermouse said on May 16th, 2011 at 7:11 pm

we can’t simply unceasingly raise taxes further and further for ever.

go on

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dangermouse said on May 16th, 2011 at 7:12 pm

no really please, tell me more about how we’re raising the taxes higher and higher all the time

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dangermouse said on May 16th, 2011 at 7:17 pm

So is the money there? It is on paper, but in practicality it’s as “there” as the money the USA owes to foreign interests.

Which is to say, pretty much the maximum of being-there that any investment anywhere can be, the sort of there that you would have to be superhumanly stupid, dishonest, and/or a Republican to believe is somehow not-there.

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mygif

Great comment, JCtx. That was eye-opening.

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