Felix Salmon pulls back the curtain to show who’s pulling the strings:
Trudy Lieberman has a good post at CJR on the “surprisingly broad consensus” around the need to reduce the fiscal deficit in general, and to take aim at Social Security in particular. “Social Security,” she writes, “is the one issue on which the electorate is not divided” — but that hasn’t stopped a bipartisan group of Washington grandees from preaching doom whenever it is brought up.
More generally, the idea of “fiscal responsibility” seems to have become as American as motherhood and apple pie — both parties preach it, and say the other guys are the profligate ones. The group of people saying “hey, we print our own money, interest rates are at zero, inflation is not an issue, the corporate sector isn’t borrowing, there are a thousand more important things to worry about right now, why on earth is everybody worried about the deficit all of a sudden” is in a decided minority.
The obsession about fiscal prudence is a new phenomenon, and can be dated, pretty much, to 2008, when Blackstone went public and Pete Peterson took his billion dollars in proceeds and decided to use it to found the Peter G Peterson Foundation. Wherever fiscal prudence is preached, Peterson’s money can nearly always be found…
One of the most annoying parts of the fiscal debate, at least for me, is the way in which it has become synonymous with spending cuts rather than tax hikes. Say “fiscal balance” and people start thinking in terms of means-testing Social Security, rather than, say, implementing a carbon tax or a financial-transactions tax. And so we get the likes of Paul Ryan being taken very seriously — Mitt Romney is positively gushing about him, these days — even as the idea of paying for expenditures by raising taxes becomes increasingly un-American.
Reasonable people can differ on the question of how important it is to balance the budget, but I think it’s fair to say that there are lot of screamingly important issues, from endemic long-term unemployment to global nuclear proliferation, which aren’t getting a fraction of the attention that fiscal policy is getting. Which only goes to show, I think, just how powerful Pete Peterson’s targeted millions can be.
Pete Peterson, needless to say, is not ‘donating’ his millions so much as he is investing them — in a longterm scam offering him, if he can fool enough people / buy enough politicians, a very respectable ROI.
Not that he doesn’t have plenty of help, much of it from people who should know better. It’s well worth reading Trudy Lieberman’s whole post, too, because she focuses on the media’s failures intersecting with those of our political ‘masters’:
… The media haven’t reported much about how the nuts and bolts of proposals to fix Social Security would affect ordinary people, but they’ve done a super job of showing how Social Security’s opponents have brought one of the biggest segments around to their way of thinking—Congressional Democrats, including the second ranking member of the Senate, Dick Durbin, who is often the media’s go-to guy for the progressive perspective. It’s kind of a validation of Cato’s manifesto. As Politico reported, though Durbin had long allied himself with Social Security supporters, he said he’s been convinced that action is vital. “If we don’t do something and do it quickly bad things can happen in a hurry,” he said.
“We used to have Democrats speaking out (in support of the program) which we don’t have today, “ says Eric Kingson, co-director of the advocacy group Social Security Works. It was the Democrats who pushed for the payroll tax holiday—helped along by the media, which have passed along their quotes about assisting working people. Too often the reportage has glossed over the negatives of the tax cut, without noting what would happen if the tax is not restored. Kingson’s group and others, including some Republicans, argued that if the payroll tax is not restored and the government must borrow money from the Treasury to pay benefits to current recipients, Social Security will contribute to the deficit, which it doesn’t do now. That will produce more reasons to change the program. “Once the dominant view on each side of the aisle was that seniors need Social Security, and it was fair to everyone,” said Kingson. “Generations were not in conflict.”…
It’s really sad that it will be the Dems who gut Social Security. What is this country coming to? I don’t recognize it.
Too be honest, I’ve come to hate this style of reporting. I don’t know how to articulate it yet, but something about it rubs me the wrong way.
Shameless OT here but Craigslist founder is doing a fundraising drive for the National Wildlife Federation for everyone that uses the hashtag #squirrels4good. I posted my most favorite memory of a squirrel
Please RT with the hashtag #squirrels4good. Thanks
If we don’t pay down the nation’s credit cards, we’ll never be able to afford to invade Iran.
It is quite depressing to see how many people don’t understand that “expansionary austerity” is an oxymoron.
@Joseph Nobles: What we need to do is send our elderly to invade Iran. Two birds, one stone.
“If we don’t pay down the nation’s credit cards, we’ll never be able to afford to invade Iran.”
You say that like it’s a bad thing.
WTF is this shit?
Isn’t it so weird how Democrats said that Republicans were the profligate ones because they put the Iraq War on the country’s credit card. Clearly that was as ridiculous for Democrats to say as it is for Republicans to say that Social Security is causing the deficit. Both sides do it!
Oh, and in case I wasn’t clear, Felix Salmon can go fuck himself with his “both sides do it” “shape of earth — views differ” bullshit.
“It is quite depressing to see how many people don’t understand that “expansionary austerity” is an oxymoron.”
And then there are people like stuck, who will blissfully ignore sound economics because one economist was on the “wrong” side of the 2008 Democratic presidential primary race. Ya idjit, if you don’t like hearing it from Krugman, go read DeLong, or Romer, or Thoma, or Eichengreen.
This isn’t rocket surgery. Even David Frum gets it.
“Felix Salmon can go fuck himself with his “both sides do it” “shape of earth—views differ” bullshit.”
Sorry, this time you’re wrong. The difference between D and R is roughly equivalent to the difference between murder and felony murder.
So Democrats were wrong when they screamed about how the Iraq War was putting us trillions of dollars into unnecessary debt? Fascinating.
I was just at a gas station where they have those annoying gas pump TVs, and got to hear a bit from Bloomberg News asserting that according to a new report, by 2030 (I think) Social Security will be out of money!
It was damned annoying, especially since I doubt there are many people exposed to it whose immediate reaction would be to think (correctly) “that’s just a bald-faced lie.”
@Burnspbesq: What, now you’re arguing with yourself?
Well he did follow up with this:
2008, of course being the year a Democrat was elected president. Coincidence, no?
Actually I think Salmon’s observation is off. They didn’t just trot out “tax’n’spend librul” 4 years ago–dusted it off, more like it.
i dont give a flying fuck. what about the surplus its been to the budget these past 30 years…. hm?
This doesn’t sound like the real burns, but whatevs, and wtf are you talking about,you sound like a glue sniffer.
edit – or is the entire blog sniffing glue, so we are back to dems and Obama fixing to gut SS and medicare?
The Moar You Know
We have two wars to pay off. Raise our fucking taxes already.
@Mnemosyne: I think you are misreading Felix Salmon, He’s not talking history, he’s saying that in the here and now the Democrats appear to be deserting the field and siding with the enemy on Social Security.
Well, the Dems that voted for it were. It’s not like there wasn’t enough time in the runup to that legislation to craft temporary legislation to raise revenues proportional to the cost of the war. We already knew we were fucking ourselves economically after two rounds of tax cuts, Afghanistan, and then the mini-recession that started after 9/11.
I read the Salmon piece. I didn’t see the evidence for this statement. What am I missing?
@The Moar You Know: Better yet, let’s just have our paychecks directly deposited to the dept of defense.
Whenever another Republican takes office, their concern for deficits will vanish along with the next huge tax cut for the wealthy, and the next unfunded middle east war.
@Jay S: More over Felix is saying that the debate on fiscal balance is now confined by the “certainty” that taxes cannot be raised. He’s describing the Overton window in process.
@The Moar You Know:
What kind of fucking socialism is this? I paid a total of 0.98% of my income in federal taxes last year. How the fuck can I create jobs when big government is usurping my hard-earned income and redistributing it to lazy motherfuckers lounging in the beautiful Afghanistan mountains, living off the government dole rather than get a real job!
I demand a tax cut or I’m going Galt!
Oh for fuck’s sake. I’m so sick of this shit I could puke:
Jesus fucking christ. Is there ONE American corporation that doesn’t behave like a morally bankrupt criminal? ONE? HELLO?
@Martin: What, commenting on Balloon Juice isn’t considered going Galt? Now I feel like I’ve just wasted the last two years of my life.
@Baud:The author he quotes says it outright, but in his first paragraph he says:
in reference to Social Security. It seems to me he’s describing a new phenomenon.
Check your bag. Is it on fire?
@Jay S: Well, that quote you have is pretty weak sauce.
As far as Lieberman’s piece goes, she says:
She also quotes Durbin:
Of course, that says nothing about what he would do.
So is there something else, or is this really another instance of baseless hand-wringing about Democrats?
though Durbin had long allied himself with Social Security supporters, he said he’s been convinced that action is vital. “If we don’t do something and do it quickly bad things can happen in a hurry,” he said.
FSM that’s discouraging. He’s bought into a lie. (Or he’s been bought, if you want to be less charitable about his motives.) SS will be fine until 2036 if we do nothing, and until forever if we raise the cap.
@Baud: Well, it is, but I’m going Galtier. Super-Galt. Mega-Galt. Afro-Galt, if needed.
In protest of my crippling tax rate I feel compelled to only buy food imported from Italy, and I may have to key my kids teachers cars and spend the next year putting my mailbox flag up even when there’s nothing in the box, just to make sure I get my $934 back.
I just hope the election and the fate of America and mankind won’t be decided by the blogs. If so, We are fucking doomed, stick a fork in us,
@Baud: I think there’s some baseless handwringing in there.
If we act now, urgently, we can make changes that should be sufficiently small as to be uncontroversial (yeah, I know the GOP doesn’t do uncontroversial, but seriously, they should be). But if we wait, the changes needed get larger – to the point that they will be major structural changes to SS. That’s what the GOP wants – they want to break SS. If we wait until 2036, then basically we’re irrevocably fucked. Think of SS as a 30 year mortgage with 0% down. If you want the house paid off in 2036, you should have taken the mortgage out in 2006. Today you are starting today, you need to put about 20% down. Hard, but tolerable. If you wait until 2018, you’re putting 40%. Hard, possibly to the point that it’s not possible. Wait until 2036 and you almost certainly can’t do it at all.
So I disagree with the general premise – urgent action means minor action. Waiting means bigger actions, and the GOP wants nothing more than major action on SS.
It’s a big frackin pool of money. All their patrons want it. Eventually they will get it (H/T George Carlin).
@Martin: Figures. And when the GOP takes over the government and privatizes Social Security in order to make it “solvent,” it’ll be the Dems fault for not acting sooner to fix Social Security when they were in power.
Durbin “Social Security”
and came up with this hit, from April 19, 2011.
It kind of does make Durbin sound like he thinks it’s OK to cut SS. OTOH, it’s not exactly clear how deep the cuts should be. And it sounds like he’s talking about making the cuts in service to preserving SS, rather than balancing the general fund budget.
OTOH yet again…it claims he thinks the idea of cutting SS “for the wealthy” is reasonable. (Main problem here, aside from hurting the universality of the program, is that it’s a known fact that cutting the benefits to the wealthy yield very little savings, unless you define “wealthy” in a way most people wouldn’t.) And this crap:
WTF is wrong with these people?
Google Durbin Social Security. Here’s one talking about his evolution on the subject: http://www.huffingtonpost.com/curtis-black/dick-durbins-deficit-politics_b_920619.html
The debate has shifted, and not for the better.
ETA Or what liberal said.
From Senator Dick Durbin’s website:
[Note: I should add that I’m not making any analysis as to what degree Durbin’s text above describes his recent or likely actions and/or rhetoric with regard to the matter, simply that this is currently a brief text version of his opinions as posted on his website. Obviously, reality remains free to be much more complex.]
Not in itself an unreasonable claim, just looking at the numbers.
OTOH, we’re dealing with people who claim the SS trust fund is a fiction. Implicitly, they’re claiming it shouldn’t be honored. Why would we want to take actions to slow the draw down of the trust fund if the people we’re dealing with plan on looting it?
That sounds nice and all, but why should people like me who actually work (and make over the cap) pay more, while people who “earn” capital gains (either by sitting on their asses, or by some kind of
legalized theftrent collection) not have to pay anything?
This would sooooooo be worth a little extra sacrifice and volunteering and effort, both in terms of actual policy improvements and in terms of gleeful, pure, shameless schadenfreude:
You have no idea how personally annoying I’m going to be to these dickhead shitbags who have been strutting their loudmouth asses around me the last 4 years if not only is Obama re-elected but the R’s lose the House and don’t get the Senate.
Yes, yes, it’s a petty personal level of analysis, but, fuck, that world’s real too.
@liberal: @Jay S: @El Cid:
So the three of you have linked to three articles talking about Durbin’s attempt to reach a deal with Republicans on Social Security that apparently would have raised some revenue and cut some benefits for wealthy seniors.
Without debating the merits of Durbin’s stance, I simply don’t see how anyone can reasonably extrapolate from Durbin (and a couple of conservative Senators) any kind of statement about the Democratic Party generally.
Not Durbin’s official website. Try this.
The Moar You Know
Wish me luck, I’m trying to convince my wife to leave. I’m done with this country. It is literally full of morons and I don’t see the point in sticking around to see how it all ends. I know what happens when the stupid people win.
And make no mistake, they have.
Quaker in a Basement
You know what would be cool?
If Peter Peterson hired Erick Erickson. That would be awesome.
Well, they shouldn’t.
Yeah, that’s the gambit.
If we delay, the GOP’s arguments gain weight and they will inevitably win public support. It’s really difficult to win the public over on legislation that isn’t critical. Once it’s critical – once SS is declared an existential threat to the US economy, then they’ll be able to get seniors to sell out their own children.
If we act now, we have to go it alone and to lay bare the GOPs plan. That’s the problem with healthcare, with Medicare, the national debt, etc.
The scale of the changes can be really quite small, in fact. The proposal to change how we index benefits/contributions to inflation would cover it for quite a while. It’d very slowly increase the rate at which the payroll tax cap goes up, and very slowly decrease the rate at which benefit increases go out. It helps on both ends, and doesn’t structurally change the program in any way.
I’m still trying to figure out how this is different than the shrieks that Obama and his Catfood Commission were totally going to kill Social Security in
2009 2010 2011… no, seriously, you guys, in 2012 it’s totally going to happen! I swear!
Sorry, but I need a little more than the same old fearmongering I’ve been hearing for almost four years that OMG you guys Obama is totally getting rid of Social Security! Pete Peterson! Catfood Commission! I saw it on DU! It’s totally going to happen!
@Baud: I made no extrapolation, either about Durbin’s actual position(s) or the party at large. He was brought up. I Googled. I quoted. I linked.
If I don’t say that this represents the position of the Democratic Party as a whole, etc., then it’s better not to assume that I am suggesting that.
It’s his campaign website, or so I naively assumed. Obviously it’s not his Senate site. Both sites represent choices made by politicians (as officials and as candidates) about what to emphasize, to claim, and to whom to do so.
You have to suspect that what’s going on behind the scene is that both political parties have realized that basic economic/technological trends like offshoring and automation are making the middle class melt away like snow in a furnace.
So both political parties see their most important job as making the vanishing middle class comfortable by telling them soothing stories about the greatness of America and the bright future that’s ahead for them, in the manner of a nurse soothing a dying cancer patient at a hospice by telling rosy tales about how marvelous heaven will be.
@mclaren: American politics as hospice. Cheery.
Obama has proposed changing that as part of his budget. Cap gains and dividends taken above a certain amount would be subject to payroll taxes.
It doesn’t meaningfully raise revenue for SS, but I agree it’s an important fairness issue that should be resolved.
Through the magic of tachyon communication, in which particles travel faster than light, the answer to your question arrived before you asked it:
@The Moar You Know:
@Cacti: But they will still be interested in ending Social Security. They’ve wanted to do so since it was started and they are closer now, I believe, than ever before.
wingnuts been clamoring about spending when they were out of power, and dems do the same thing when they are out of power. This is not some phenom starting in 2008. It has been going on since the founding, as a spring board for all sorts of ideological word fights. And if you think the democrats are going to gut the social safety net, or privatize it, then you are just wrong and needing to emo up yourselves. Not gonna happen, but medicare is a different matter, and most of the rhetoric about SS is really about some nearing problems with that program and keeping it solvent. Democrats are rightfully very worried, as we should all be about the insane posturing of wingnuts about not raising taxes and revenues as some kind of maniacal religion, and I think are just trying to find ways to deal with that and also the coming problems with medicare. SS is the backbone of this society these days, and dems are not likely to commit political suicide from giving in to the privatize scheme, unless they just don’t have the numbers to prevent it.
this thread and earlier ones today are some of the worst fear mongering bullshit I have ever seen on this blog. That is all.
The amazing thing in all of this is that, of the two founders of Blackstone (the other being Steve Schwarzman), Peterson is actually the lesser evil.
I’m not sure about these cookies. They don’t look like you made them.
Judas Escargot, Your Postmodern Neighbor
@The Moar You Know:
@Mnemosyne: Well, you’re right. However, the day to deal with SS will come, and I think there’s a valid concern that the debate will begin with the Dems halfway in the GOP camp, and the GOP demanding that a soylent green commission be formed or else they’re going to shut down the government.
The Moar You Know
Nailed it. A pleasure to read some brutal truth, thanks.
FWIW, the Democratic governor of Illinois is proposing raising the retirement age for public employees, and increasing employee contributions by 3 percent, effectively a pay cut and an IOU. If it can happen in Illinois, it can certainly happen at the national level.
Oh, yeah, and Illinois employees don’t pay into SS. Fuckers.
@El Cid: yeah, sorry. I roped you in to the general discussion unfairly.
Actually, I think we reached that day around 1998 and things have slowly swung back ever since. There are leading Democrats who parrot the deficit hawk phrases about how we need to fix Social Security, but their solutions usually turn out to be things like raising the salary cap.
People worry about the pronouncements being spouted by unelected jackasses like Erskine Bowles, but the actual Democratic leaders in Congress sound a lot more like Nancy “How about ‘never’?” Pelosi.
The prophet Nostradumbass
@The Moar You Know:
and go where?
Average monthly benefit of a retired worker: $1,230 ($14,760)
Maximum monthly benefit: $2,513 ($30,156)
(ETA: Monthly benefit amount from SSA website, annual amounts are my calculation.)
If we play around with means testing, SS becomes a welfare program. Think about trying to live on $14,760 a year — can the average worker really be able to take a reduction (even a small one) in benefits? SS was supposed to be part of income you had in retirement, for how many people is it all that they have now? (I know, I’m shrill and I don’t understand things… but $14,730 is LESS than my unemployment was.)
@PurpleGirl: SS was always a welfare program. It was never a retirement program. The whole point of SS was to keep people above the poverty line.
Several of the proposals floated would tie the minimum SS benefit to the poverty level – either at 100% or some fraction above it. It’s currently a few % above the poverty line for a single individual.
Evolving Deep Southerner
@Quaker in a Basement: FTW
@Martin: Okay. So by that thinking, we’d only be acknowledging that it’s welfare. But do you think a person getting less than $15,000 a year can take ANY cuts to benefits and survive (not live, survive)?
@Martin: Yes, and you always were a Republican. Fuck you – you want to steal from old, poor people who have paid in their whole lives.
Now, if you want to talk about raising the limit to solvency, here and now, we’re all listening. But why should we all get our benefits cut because our leadership went on a 30 year binge of cutting the income of the middle class?
Which Democrats were those? The same Democrats who reliably voted for every Defense authorization bill, and every emergency appropriation?
Sorry, what you think you remember simply didn’t happen.
@Mnemosyne: One last time. I’ll try and be clear. Neither I nor Felix Salmon are screaming about democratic sellouts or cat food commissions except to the extent that crap is moving the debate. This is triage. People who are focused on the minor problems of Social Security are missing the big picture. It is avoiding dealing with real problems here today. The time wasted on fighting about this plays into the hands of people who want to kill the ACA, Medicare and Medicaid as well as Social Security. People who see the failing economy as a political opportunity. This is in part a diversionary tactic. It’s treating a sprain while the patient is having a heart attack.
@PurpleGirl: Any plan to change the inflation rate has been coupled with setting a floor to the benefits – the intention being that the low-end of the beneficiary scale would see no reduction even in presumed future benefit increases. It’d only slow the rate of higher tiers.
Here’s the thing, though: I am disputing Salmon’s (and your?) notion that the debate has actually moved anywhere. Pete Peterson is doing the same thing he’s been doing since 2008, and the debate hasn’t moved an inch since Pelosi put her foot down in 2006.
Salmon may be reporting what he’s hearing from other media elites when he says things like, “Say ‘fiscal balance’ and people start thinking in terms of means-testing Social Security, rather than, say, implementing a carbon tax or a financial-transactions tax,” but that’s not actually what most people or most Democratic politicians are thinking and saying.
I think Salmon is reporting from inside the media bubble and doesn’t realize it.
@Mnemosyne: Absolutely, He may be wrong in what he is saying. But he is not saying what you thought he was saying when we started this conversation. This is not a both sides do it argument. It is an argument about where the field of debate is. I lean toward his view that it has moved in very broad ways, focusing the debate on budget balancing rather than on addressing the real problems staring us in the face.
Really? What am I stealing? What rate of inflation were people promised? Were they promised CPI-U? Or is it CPI-W? What about C-CPI-W? Or what about some of the less commonly used indexes? If we changed the COLA to CPI-W * 10 next year, and then said ‘holy fuck, that’s too much!’ and rolled it back to CPI-U * 2 the year after, would we be ‘stealing from old, poor people’ because we’re only giving them 1/5th the increase that we were the year before, if 2x the increase from two years before?
Well, minimum Social Security benefits 30 years ago paid out about 90% of the poverty level for an individual. Now it’s about 108%. So, relative to the real measured baseline that we use in this country, minimum benefits have increased about 20%. Median household income for retirees right now is about $30K. Only about 10% have incomes below the poverty line, and almost all of them are there because they’re SS ineligible.
SS has been unquestionably successful, but it’s also grown slowly relative to all other measures of inflation. Now, that’s fine and all – less poverty is unequivocally a good thing, but there’s an entitlement now on top of that entitlement – one that benefits should apparently grow faster than was promised. Reducing that to only growing as promised is now ‘stealing from old, poor people’? Good to know.
Perhaps we should have doubled the COLA rate – then all of our retirees could be earning more than the national median income. How awesome would that have been?
Okay, I can’t tell if you’re picking up Salmon’s argument or Trudy Lieberman’s argument at CJR, because I think Salmon is actually arguing something different than Lieberman is.
I think Lieberman is 100 percent on the money when she criticizes the media itself for driving the debate:
Frankly, I think Salmon is trying to deflect her criticisms of the media by putting the blame onto Peterson and his foundation rather than doing what Lieberman did, which is to take a hard look at the media themselves and realize that they are part of the problem. Salmon seems to be saying, “Well, sure, the media sucks, but it’s not our fault. It’s that mean ol’ Pete Peterson sending out his press releases!”
Also, too, Salmon is pretty much required to maintain the “both sides do it” pose if he wants to make excuses for his industry. Otherwise, he might have to ask hard questions like, “Gosh, are these two things that the media agrees are equivalent actually equivalent?”
@Quaker in a Basement: And then they got married, hyphenated their names, and named their children Peter Eric and Eric Peter.
@Martin: Martin, the COLA formula was set by law. When Alan fucking Greenspan raised every middle class person’s taxes to pay for it. So fucking pay it.
And are you seriously arguing that we should return to the poverty level? Is that your measure of Social Security? Fuck you twice over.
And what is your problem? Why shouldn’t we raise the cap, collect the revenue and pay people what we promised them? Do you think we shouldn’t, for some reason? Are you really that Republican?
@dollared: The COLA was designed to match inflation, not exceed inflation. It currently exceeds inflation. That’s a problem when contributions are flat to inflation (by definition) and outlays are growing relative to inflation. I’m sorry if that math pierces some ideological bubble, but it’s pretty much a straight-up math problem. The change to index doesn’t cut anyones benefits, it merely takes future increases (which nobody can anticipate because they’re done in real-time) and calculates them more accurately. The COLA that was proposed in the 70s was the best model they could come up with. Since then these nifty things called computers got really powerful, along with a bunch of other economic changes, and allowed us to calculate a better CPI.
I have no problem raising the cap. I have no problem treating dividend and cap gains toward payroll contributions. I have no problem using the other proposals that would do all of the above. I even have no problem with Simpson Bowles plan that would change the bend points – the result of which is that the low-end SS recipients would see decently sized increases in benefits and the folks at the high-end would see lower benefits (relative to income). The payout gap would close, and the contribution cap would nearly double. This only for future beneficiaries. Things already get a bit dodgy before then, however.
My point about the poverty level is that for over half a century SS paid out below poverty line for the lowest benefit bracket and nobody really said fuck about it. Now that it’s paying out a few percent above, even just holding it at that rate suggests I want to turn grandma into soup – that the only acceptable solution isn’t to keep the rate where it is (which makes me a Republican, apparently), but to keep it increasing each year inperpetuity. If you want to know why the payout curve blows up so badly in 30 years, it’s because when you compound interest, especially when the formula doesn’t decrease benefits when we have deflation like in 2008 and 2009, even those teeny-tiny amounts over baseline grow into massive amounts. SS only works when the inflows and outflows balance (or the inflow exceeds outflow). They don’t balance – and they have to balance. And raising the cap won’t balance it because it’s still going to compound on the outflow. You’d have to keep raising the cap until there was no cap, and then you’d have to raise the rate every year – for everyone.
You have an inflow with no 2nd derivative and an outflow with a positive (if small) 2nd derivative. Plot the two functions – pick any intercept or any first derivative value, no matter how much larger the inflow exceeds the outflow, and the outflow curve will eventually cross and rapidly exceed the inflow curve. There is no escaping it. Talk about all of the other things you want, but unless you fix that one thing, you’re just shoving fingers in the dike.
How’s this as a further compromise – in exchange for the reduction in CPI by moving to C-CPI, have that automatically applied to minimum wage and defer the move to C-CPI for current beneficiaries by 5 years? Every year minimum wage would increase by the same index as the COLA. Since payouts are based on income, the automatic increase in minimum wage would both automatically increase the lowest payout bracket and automatically increase contributions until people retired. You get both greater revenues in the near term and a way of inflating the base payout with minimal impact on current beneficiaries.
@Mnemosyne: The use of the contemptuous name “catfood commission” is justified but this commission did not descend miraculously from the sky. It was totally Obama’s initiative as were the appointments of pinhead and cockroach as the co-chairs.
Said commission never achieved a majority-approved report. But the mandate-less, anti-SocSec ramblings of pinhead and cockroach have still been used as fodder for the SocSec vultures. For example:
The questions are:
1) why did Obama insist there be a catfood commission?
2 why, oh why, pinhead and cockroach?
It’s not clear whether this is about extreme naivete or 12-dimensional chess … against SocSec.