Obama: Gut Social Security Now, Don't Wait Till The Election

[stockholmer]

http://www.zerohedge.com/contributed/obama-gut-social-security-now-dont-wait-till-election

Incredible that a Democrat would propose loud and clear that our Social Security system should be gutted starting immediately to get an up-tick, illusory as it may turn out to be, in GDP just before the next election. But President Obama's proposal http://www.chicagotribune.com/news/nationworld/ct-obama-speech-remarks,0,4877784,full.story to cut the employee portion of our payroll taxes in half and also cut payroll-taxes for small businesses will do just that. The two measures would remove $240 billion http://www.nytimes.com/2011/09/09/us/politics/09tax.html?_r=1&ref=us from our Social Security system during 2012 and hand it over to consumers and businesses so that they can do some magic with it.

Will that nudge up GDP? Not by much. The problem is that the money we consumers spend goes into products that are to a great extent imported. Hence, our trade deficit will rise. This has already happened with the current payroll-tax cut. Since January, it has given consumers about $80 billion in additional spending money. And true: It nudged up consumer spending. At the same time, our trade deficit, http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf particularly with China, skyrocketed. YTD through July, it hit $433 billion. Same period last year: $330 billion. The $103 billion increase is largely attributable to rising consumer spending (including the impact of higher prices). A humongous trade deficit like this, aside from being a terrible drag our economy, is also subtracted from GDP (GDP = Consumption + Investment + Government Spending + Exports – Imports). And true again: GDP so far this year has barely budged though consumer spending is up.

Will it create jobs? Well, let's look at our current payroll-tax cut. And we see that a few jobs are being created in the U.S., but not many, and none last month. Meanwhile, lots of jobs are being created in China. Coincidence? Maybe not. This is the result of many years of corporate efforts to offshore production and services to countries where labor is cheaper (15.4 Million Missing Jobs) http://www.testosteronepit.com/home/2011/9/2/in-the-bowels-the-jobs-report-154-million-missing-jobs.html . So the impact on job creation, thanks again to our trade deficit problem, will be minor. So, what does cutting payroll taxes accomplish? It reduces the flow of money into the Social Security system by $240 billion a year.

And no one can ever let a payroll-tax cut of this magnitude expire. It would be perceived as a huge tax increase. It's already happening. The current one is supposed to expire by the end of December. But heck no! Instead, an even bigger one is being proposed to take its place. So this won't be a "temporary" cut. It'll be permanent. At least until the money is gone—maybe in a decade or so if disbursements stay at current levels. Presidential candidate Rick Perry, who called Social Security a Ponzi scheme and monstrous lie, and who wants to unwind it, couldn't have come up with a more effective plan to put his campaign rhetoric into action.

snip

[Mimosa]

1. Insightful commentary.

I agree with most of the points, especially regarding the trade deficits.

[BzaDem]

2. Not one penny is removed from the Social Security trust fund. The general fund reimburses the

trust fund for every dime not collected by the payroll tax.

[durablend]

4. Until the general fund has no money left for it

But I guess he's SOOOOOOOOOOOOOO dreamy so who the hell cares. :eyes:

[BzaDem]

9. The general fund cannot run out of money. The US can borrow, and that is exactly what the

bill does.

[Pholus]

17. Yes, and costs to the general fund can be used to say that Social Security is not paying for itself.

That lie USED to be easy to refute. Not so much now.

[hansberrym]

29. THAT is the the point of it, plus weakening of the notion

that we paid into social security, so we deserve our fair share when we retire. In the future they will be able to claim that in fct we did not put out fair share in, so we shouldn't expect to get out what the last cohort received.

[Pholus]

47. Bravo to the plan...

Well thought out as is typical with the same old group of suckers.

Us.

[woo me with science]

5. Try thinking TWO steps ahead.

:eyes: :puke: :nuke:

[stockholmer]

8. so all that means is another $240 billion Increase in the deficit over just the next 12 months that

now will have to be CUT from the budget on top of the cuts from the budget deal. And we all know that NEW 240 billion in cuts sure as hell isn't coming the war machine budget. Hello austerity 2.1.

The SS 'trust fund' is full of IOU's in the form of US treasuries (and all have been completely borrowed against long ago), and I for the life of me cannot understand how so many¨in the USA think that those treasuries aren't going to be liquidated along with rest of the US assets when the massive financial collapse happens due to the inability to roll over any further debt through new treasury sales and the the concurrent dollar debasement through explosive monetary supply expansion. These and several other systemic exogenous shocks will be the primary drivers of the above mention crack-up.

[BzaDem]

11. Yes, the entire point of Keynesian stimulus is to INCREASE the deficit.

If it didn't increase the deficit, it wouldn't be stimulus.

You can predict a future impending fiscal crisis along with everyone else that has been wrong about it. But you aren't going to see one. The dynamic of a liquidity trap is that markets (metaphorically) line up for hours begging to shovel all their money into treasuries. Not the other way around.

We can borrow for 10 years at 1.92 percent and 30 years at 3.24 percent. That should be a signal to you that you are wrong.

[Fumesucker]

12. Thirty years of tax cuts and what do we have to show for it?

Economy sucks? Tax cuts will fix it..

Economy is roaring? Tax cuts will make it even better.

I'm reminded of the Kinks' Have a Cuppa' Tea, just replace "Tea" with "Tax Cuts"

If you feel a bit under the weather,
If you feel a little bit peeved,
Take granny's stand-by potion
For any old cough or wheeze.
It's a cure for hepatitis, it's a cure for chronic insomnia,
It's a cure for tonsillitis and for water on the knee.

Chorus

Tea in the morning, tea in the evening, tea at supper time,
You get tea when it's raining, tea when it's snowing,
Tea when the weather's fine.
You get tea as a mid-day stimulant
You get tea with your afternoon tea
For any old ailment or disease
For Christ sake have a cuppa tea.

[BzaDem]

39. There is a large difference between marginal tax rate cuts for the rich, and tax cuts for

the non-rich in a liquidity trap.

[Fumesucker]

46. When the payroll tax cuts come back to take a huge chunk out of our ass...

There's going to be a large contingent of people here on DU saying: "No one could have predicted this will backfire.".

[BzaDem]

51. You articulating it is going to backfire without any evidence does not mean it will backfire. n/t

[Fumesucker]

55. So at what point are the payroll taxes going to be raised again?

When the economy has recovered and unemployment is five percent or so?

[Bluebear]

58. Crickets

[BzaDem]

61. When the economy gains enough traction that the Fed can resume its normal process of setting

interest rates to help the economy.

This will be long before the unemployment rate hits five percent. In fact, during the 1981-83 recession, unemployment went over 11%. Yet during the entire time after unemployment hit its peak, the fed had significant traction to cause the economy to recover (which is exactly what happened). No fiscal expansion was needed.

Fiscal expansion is only needed in a liquidity trap, which is very rare.

[Fumesucker]

62. But raising the payroll taxes again is going to be a political act..

Not an economic one..

The politics of raising the payroll taxes again is going to be extremely dicey.

[defendandprotect]

57. MIC -- which should include the intelligence networks/CIA -- and NO Medicare 4 All -- !!!

[Name removed]

15. Deleted message

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[TheKentuckian]

20. Where is the stimulus and where does the hit get offset

in a world where "shared sacrifice" means if the creek don't rise we expect to restore a few pennies on the dollar in tax rates to those with virtually all the resources?

George W' Bush's drunken sailor routine for eight years should indicate that it really matters how money is spent, whether it will actually simulate the broad economy.

[BzaDem]

43. Obama said the offsets would include closing corporate tax loopholes in the future.

So it is running a deficit now and making up for it later (textbook Keynes).

Of course, Congress isn't going to close corporate tax loopholes. But this doesn't really matter, since Congress is not going to enact anything Obama is proposing anyway. The point is simply that in an ideal world, a payroll tax cut (preferably not offset at all but if necessary offset with closing of tax loopholes in future years) is good policy, when we are in a liquidity trap bordering on deflation.

[TheKentuckian]

64. In an ideal world you'd have a targeted refundable credit or better direct hiring

to do or support doing some of the trillions of dollars of very much needed work and modernization we must do.

It is a sloppy funding mechanism and dangerous tactics in the current political environment.

There is no circumstance were this would be "ideal" stimulus, the real dollar benefit to those most likely to need to spend is minimal. The fact that the cut is already in place also means it is an anti-contraction rather than stimulative proposal and even there the benefits are debatable and certainly negligible.

The proposed employer side cut is pure corporate right shrink the pig scheming and it is absurd folks are even playing along.

[defendandprotect]

50. Bad for citizens/nation but good for banksters -- cost an additional half a percent to borrow

the $120 BILLION to cover the extension in tax cuts for the rich!!

What farce -- !!

Social Security was never intended to run a SURPLUS -- it was a pay as you go system --

Coincidently, neither was Congress intended to do its business in Cloak Rooms --

in back rooms with Big Pharma and the private H/C industry -- or in the manner of a

Super Congress we've had to beg for access to their discussions!


Citizens need to hire a 100 or 200 Erin Brockovich's on contingency and let's find out

if this RW Uncle Sam is prepared to be a public "dead beat" -- ???

[MannyGoldstein]

13. Let me get this straight: the $2.6 trillion borrowed from SS so far can't be paid back

because it's all spent - tough shit on seniors. But the new money owed to the SS Trust Fund, this time it'll teally get paid back, we promise!

Do I have that right?

[madokie]

32. Thats the way I see it too

[BzaDem]

44. No, you do not have it right. Both the 2.6 trillion borrowed from SS and the new money owed to the

trust fund will be paid back unless the statute is changed to not require it.

[MannyGoldstein]

48. But Obama, the Republicans, and many Democrats are trying to change the statute

so that the money will not have to be paid back. They want to slash benefits so repayment is unneeded.

[defendandprotect]

52. We need to unite on Social Security -- hire a 100 or 200 Erin Brockovich's .... and let's find

out if this RW Uncle Sam is willing to be a public dead beat?

Amazingly, seniors aren't even united in any way except thru AARP which is an

insurance company and which has done its share of selling them out!


They've crashed all the pension funds -- they don't want workers to be able to

benefit by any means to protect themselves from fascism --

and it also looks like costs of Global Warming damage over the last 15-20+ years

may have something to do with this cashing in --

401K's have also involved large losses for young people who didn't know value could

drop if you didn't say the "magic words."

People also in at least two rounds with Stock Market couldn't get through to cash

in their stocks as they dropped --

I know our kids lost company stock that was worth $44,000 and they ended up with

$11,000 by the time it was over.

And I know some of their friends lost money on 401K's --

Unregulated capitalism is merely organized crime --

We need to put capitalism in the dumpters --

and most of our elected officials with them --

Would be redundant to say, imo, they cannot be trusted --



:evilgrin:



PS: Think we all know that once this kind of damage is done, it doesn't get turned around.

[Bluebear]

65. +

[defendandprotect]

53. Well, what's the tab-- $1 BILLION every day in interest? How many nations do we owe ... ???

They can't tell China and Mexico and X, Y, and Z countries that they're not

going to get paid --

To pay them off would probably require tax increases on rich --

Better idea for them is to continue to steal from Social Security Trust Fund --

And, who's opposing them -- ?


How many Democrats do you see out there sounding off the way Socialist Sen. Bernie

Sanders is doing?

Where are the Democrats who should be putting Obama's feet to the fire for his

outrageous attacks on Social Security and Medicare?


Anyone still think that Obama didn't make sure that universal health care wasn't passed?

Back room deals with Big Pharma and private H/C industry -- and bragging about it --

See: Rahm Emmanuel -- says it was planned --

MEDICARE FOR ALL IS A HUGE DANGER TO ELITES -- as far as profits and as far as making

citizens more secure vs corporate/fascism!



:hi:

[Exilednight]

16. You're right, they don't take pennies from the trust fund, they take billions. Clinton

balanced the budget by filling in the difference with somewhere around $40 billion from the trust fund. It was suppose to get paid back, but never did.

[Donnachaidh]

23. sure -- let's comingle funds to blur the protections that SS always had

while cutting the flow of money into it will allow the complete gutting of a program Obama has had in his sights since his first election.

This is a corporate raider MO -- and it's something he should be called on every day till November 2012. THIS move is evil, and traitorous to the voters least able to fight back.

[defendandprotect]

54. Exactly ... SS was never intended to run a surplus ... which was carried in General Budget ...

and which disguised the huge costs of the MIC budget -- !!!

Besides working as a slush fund for elites -- !!

[Mimosa]

33. Lenders, including China, can say NO.

China and Japan have their own troubles. So do some other financiers of our debt. Really, the day may come when China says NO.

http://www.whiteoutpress.com/articles/wach/china-warns-us-not-to-miss-debt-payment812/

[Yo_Mama]

38. Right - and assets in the trust fund have no value

if the US government can't raise the money by borrowing or by raising taxes or by a combination of the two.

Does anyone really believe that we will be able to raise taxes across the board by 3.1% on every worker in the US earning less than $108K in January, 2013?

?????

[defendandprotect]

3. Think it's further proof that the mission is to destroy Social Security not to get re-elected ...

Couldn't be clearer --

[SammyWinstonJack]

40. That is crystal clear. And probably the reason we got stuck with Obama in the first place.

Run off any real progressive candidates was the plan in '08 and from now on.

I hope Obama is proud of his legacy and it won't be what he thinks it will be.

[leftstreet]

41. They don't want to destroy it. They just want it in the hands of the Free Marketz!

Don't be such a gloomy!

:hi:

[defendandprotect]

49. They want to destroy it as far as any benefit to citizens is concerned .....

Granted, Capitalism is always about elite pay day and little else --

They've been raiding the pension funds for more than 20 years now ...

Coincidentaly, we've had 15-20+ years of huge environmental/insurance

losses due to Global Warming --

Heard Anita Lowey/D-NY the other day on Schultz or Olberman -- the damage

from Irene in NY is estimated to be 1.5 BILLION.


Overall the damage is going to be loss of humanity and the planet -- don't

much care about humanity except for the suffering -- but do kinda care about

an actual living/healthy planet sitting in the sky here.


:hi:

[Name removed]

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[mfcorey1]

7. This is foolishness!

[Bluebear]

10. Spam

[Name removed]

14. Deleted message

Message removed by moderator. Click here to review the message board rules.

[dionysus]

36. LOL hart/edwards '12!!1!!

:rofl:

[B Calm]

18. Who is actually running this country?

[woo me with science]

19. ...

[B Calm]

22. Best government global corporations can buy. . .

[defendandprotect]

56. "Congress is under the control of the oil and coal industries" .... Al Gore/Rolling Stone

In the article, Gore also spends a lot of time discussing our corporate-media --

or what might be called our Goebbels' style press --



Re the "unarguable" creation of this American Empire ...

"... has been facilitated by the poiwer of the corporate mass media, increasingly

falling into fewer and fewer hands. The ownership of the corporations that today

control the information available to the broadest portion of the public can be

traced back to the same families and companies who backed Hitler."

"Rise of the Fourth Reich" by Jim Marrs 2008


Nor was it simple coincidence that Nixon's White House was studying old Nazi propaganda films.



And, then, of course, there's "Operation Mockingbird" -- a long standing program by CIA/US

[defendandprotect]

66. "Congress is controlled by oil and coal industries" --- We need to wake up fast--!!!

[enough]

21. k&r (nt)

[L0oniX]

24. I'm going to go into business ...picking up dead old people in the streets.

It's the job of our future.

[JoePhilly]

25. Nonsense article.

Besides lying about Social Security being cut, the author pretends not to know that the flat jobs numbers are being driven by GOP Governors who are slashing public sector jobs.

And then to argue that Perry couldn't do something more to kill SS is a hilarious falsehood.

Obvious hit piece.

[stockholmer]

26. nonsense back at you, if you honestly believe that most job loss is due to GOP governors cutting

public jobs, you really do not know what you are talking about, on so many levels.

Such a 2-party false paradigm acolyte you be. The US sham corporatist political system counts on your continued kool-aid drinking whilst asleep at the mental wheel.

------------------

The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can "throw the rascals out" at any election without leading to any profound or extreme shifts in policy.

- Carrol Quigley, Tragedy and Hope (1966)

[JoePhilly]

27. Ok .... and then ....

The stimulus was designed to end in Dec 2010. Which brought the unemployment rate down to about 8.8 - 8.9%. Since the GOP House as done NOTHING about the jobs situation, other than obstruct, we've seen it tick bac up some ... but no mention in this article.

The article lies about cuts to social security, and IGNORES factors impacting overall job numbers.

Its a hit piece and nothing more.

[stockholmer]

30. the stimulus (in the form it took) was a bust, the inflation it created actually made things worse

And if you think that a 240 billion CUT directly from the chief funding source of SS (ie the payroll tax) is not a direct assault on the programme itself, then I really do not know what to tell you.

I am sorry if my tone came off a bit harsh, btw, no ill will intended towards you whatsoever. I just think that as long as the Democrats (who 'in theory' espouse so so much more of what I believe in in terms of core values than the Republicans) cannot come to grips with reality and try all-ot to do the only 2 things that will save the country, then I have no choice but to call the whole US federal system a sham.

Those 2 things are simply stated:

1. End the goddamn murderous, financially ruinous, bloody empiric war machine and its global butchery.
2. Crush once and for all (not 'reform it' or some other such bollocks) the international banking cartel's (and yes, that includes the US Federal Reserve, IMF, World Bank, and the big Evil in the room, the BIS) death grip on the entire systemic base of the nation at all meta-levels.

If the Democrats at least start this awesome and insanely hard process path, then they have my, and most of the rest of the world's ever-lasting gratitude and respect. Until then, the vast majority of them are nothing but platitude-spouting rented out corporatist shills.

[Autumn]

28. Best damn Democracy money can buy

for those who can afford it. The rest of us, not so much.

[MineralMan]

31. Unrec.

Hit piece. That is all.

[TBF]

34. Recommend. nt

[adhd_what_huh]

35. total garbage...don't waste time reading Obama hate nonsense

[Bluebear]

42. Thanks for kicking

[blindpig]

37. Only Nixon could go to China.....

This is a despicable betrayal of the people.

[elleng]

45. It is incredible, and it didn't happen.

[Tx4obama]

59. Unrec. n/t

[Tx4obama]

60. Social Security is in NO danger of being weakened by a payroll tax holiday.

Social Security is in no danger of being weakened by a payroll tax holiday.

Read this: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=769413&mesg_id=769413


p.s. And please stop the fear-mongering :)

[TheKentuckian]

67. No as in zero? Wishful thinking, when do you think it will be politically plausible

to restore the funding? Keeping in mind that rescinding the same Bush/Obama tax cuts can only pay for so much and in fact need to be restored just to stop the bleeding in the budget and isn't really an offset at all.

[mdmc]

63. ..