Expand Social Security

Go to ExpandSocialSecurity.com

Corporations have largely eliminated pensions. Wall Street has been pushing the campaign to eliminate public-employee pensions. The 401K scam means that most of us have little or no savings for retirement, and Social Security is meager.

We need to EXPAND Social Security. INCREASE benefits so people have live on it. Lower the age to 55, opening up millions of jobs.

Were does the money come from?

It comes from our priorities.

Where did the money come from for the Iraq war? The Wall Street bailouts? Where does the money come from for the hiige military budget? The oil company subsidies? And mostly the huge tax cuts for corporations and the wealthy?

Will Social Security Cuts Be The Democratic Party’s “New Coke?”

All the smartest people in the executive suites just knew that the taste of Coca-Cola needed “reform.” Rival Pepsi was advertising to the “New Generation” and Coke’s executives came to believe their product wasn’t what the “cool” people wanted to drink. Everyone they talked to at the executive-level strategery seminars, and all the other executive-level geniuses they spoke with daily agreed. They were the elites, and they all knew better than their old-fashioned, uncool customers what the company needed. So they all drank the Kool-Aid and came up with “New Coke.” We all know what happened next. (Hint: it was bad.)

It couldn’t have gone better for Pepsi if Pepsi had placed those executives there themselves.

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The 1983 Strategy Behind Today’s Social Security Attacks

Suppose you’re in a bar and you overhear a couple of guys in the next booth talking about a plan to steal from people’s houses. As you eavesdrop the plan unfolds: one will come to the front door pretending to be from the gas company warning the homeowner about a gas leak down the street. While he distracts the homeowner at the front door, the other one will sneak in the back door and take stuff.

So the next day the doorbell rings, and there’s a guy saying he is from the gas company. He says he wants to talk a while to warn you about a gas leak down the street…

This is what is happening with this constant drumbeat of attacks on Social Security. The attack on Social Security never goes away, it only escalates. As we go into this next round of attacks — this time it is even coming from the President* — it is more than useful to understand the background of this campaign against the program.

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Adjust Social Security For Inflation That Hurts The Elderly

A number of the DC elites are talking about changing the way Social Security checks are adjusted for inflation. This is a great idea, as long as any such adjustment measures the things the elderly actually spend money on. Let’s do it! Let’s change the way we adjust Social Security for inflation because inflation hits older people much harder.

Washington’s elites are all Very Seriously concerned that even though Social Security currently has a huge trust fund, the program might “go broke” many, many years in the future. (Never mind what this says about our country’s priorities — do we ever hear that the military budget will “go broke?”) This discussion of Social Security is for some reason so important to these Very Serious People that it overrides discussion of the climate emergency, the national jobs emergency, the crumbling infrastructure, and almost every other national problem except that our wealthy and corporations are taxed far too much. (Please click the links in this paragraph.)

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Social Security Talk With Richard Eskow

This is a good time to remind people that I had a great Virtually Speaking talk with Richard Eskow, about Social Security that you should listen to.
I joined Campaign for America’s Future’s Richard Eskow to talk about the “fiscal cliff” scare, austerity, Social Security, Medicare and how we WON the election so we really should be talking about jobs instead.
This was a GREAT hour, and hold the information you need to arm yourself to win holiday-dinner conversations with your right-wing brother-in-law.
The conversation refers to my post, Fiscal Cliff Scare Talk Follows Shock Doctrine Script as well as several posts by Richard Eskow including,
Wall Street Finds a ‘Third Way’ to Plunder Our Wealth,
The “Fiscal Cliff” Is a Hoax … and a Mel Brooks Routine,
The Grand Swindle – Veterans on a Cliff,
After the Election, a New Mandate – and New “Fiscal Cliff” Math
Click here to listen, or listen using the widget below:

Social Security is Still the Third Rail (You’ve Been Warned)

We JUST had an election where the public (not to mention Every. Single. Poll.) overwhelmingly said no cuts to Social Security or Medicare, and raise taxes on income over $250K. That ought to mean something. But the “word” out of DC is that a deal is underway that cuts the Social Security COLA and increases the income level subject to a higher tax from $250K to $400K.

Senators and Representatives who are thinking of touching the “third rail:” How many constituents are calling your office today to say, “Yes, I want you to cut the Social Security COLA”?

Readers: Have YOU called YOUR senators and representative yet to let them know how you feel?

Also: Click here to tell the President: No Deal That Cuts Benefits.

Political Suicide

Cutting Social Security makes no sense, and is bad politics because it hurts people. Old people depend on this meager benefit and by law Social Security can not contribute to deficits. But never mind the numbers, look at the social and political effects of a deal that cuts the Social Security cost-of-living-adjustment (COLA) immediately after the public voted not to do this.

The social effect: Does our society care about people, or just about money? Cuts in Medicare, Medicaid and Social Security hurt PEOPLE. Raising tax rates on the wealthy is just money. What does it tell the public about our society if their government cuts Social Security benefits immediately after we have an election in which the public overwhelmingly votes against cuts in Social Security or Medicare, and to increase taxes on $250K and up? This reported deal raises that $250K to $400K, reduces military cuts, and ignores that the same amount of money could be raised in ways that actually help the country and economy, like a Financial Transaction Tax.

Bankers got huge bonuses with government bailout money, and now you are cutting the meager benefits old people get? What does this tell the public, to cut this when one after another Democratic leader, including Vice President Biden, has stepped up to insist that Social Security is off the table? It tells the public not to trust their leaders, because the big money will win every time.

Talk about undermining “certainty” and “confidence.” Wow.

The political effect: Suicide. Seniors pay attention to the yearly COLA increase. Every single year from now on when the COLA is announced it is more than likely that seniors will believe they are getting a lower increase because President Obama and the Democrats betrayed them. This is human nature, they will think they would have gotten more (and Republicans will tell them they would have gotten more).

It will become folklore — conventional wisdom — that they would have received a much higher increase, except Obama and the Dems betrayed seniors.

Alternatives

Need to raise some money? Here are a few things you can offer instead of cutting the Social Security COLA:

  • Financial Transaction Tax on speculative investments – a quarter of a penny per share.
  • A BIG surtax on incomes over $10 million until the debt is paid off.
  • Cut the military budget a lot more. Reagan doubled it and ‘W’ Bush doubled it again. The Soviet Union is gone.
  • Get rid of oil company subsidies.
  • Rebuild the nation’s infrastructure (with American-made materials) thereby employing millions who will then be paying taxes and won’t be getting assistance, and then our economy will be more efficient and competitive in the future.
  • Retrofit (with American-made materials) our buildings and homes to be energy efficient, thereby employing millions (etc) plus our economy will have to spend less on energy from now on.
  • Make companies bring home the money they are holding offshore, and pay the corporate tax on it.
  • A thousand other ways to cut the deficit without hitting old people with the bill.

Now Please Read Richard Eskow’s Post

It seems like everything I try to say Richard Eskow succeeds in saying, and does so better than I ever could. (Seriously, read what he wrote about the CT shootings.)

Richard explains why this COLA-cut offer is a bad idea, in This Is Not America’s Deal,

This deal would make voters very unhappy. It reflects neither their wishes, their needs, or their values. They’ve already said so – to pollsters like ours and in the voting booth on Election Day. Instead of responding, this looks like another “insider deal” – another agreement that suggests the public’s values and concerns vanish once you cross the Beltway.

… The Republicans lost the last election – by a landslide, in fact, in both the Presidential and Senate races. They even lost the House — by more than 1.6 million votes. Only their gerrymandering, vote suppression, and billionaire campaign cash allowed them to retain control of that body despite a popular-vote defeat.
And only their outrageous abuse of Senate rules like the filibuster has allowed them to tie up that body and prevent it from doing its work.

Republicans lost because their ideas are unpopular. But this deal would turn those ideas into policy. This undemocratic ”Loser Take All” strategy will further alienate voters, while encouraging extremists in Congress to keep abusing the system.

… This deal would send the wrong message: that successful programs and policies – Social Security, Medicare, and progressive taxation – are problems to be fixed, not solutions to be implemented and strengthened. These programs reflect our finest values: fairness, self-sufficiency, and mutual support. And they work.

A deal like this would also distract the nation from the real sources of our economic difficulties – like wealth inequity, a shortage of good middle-class jobs, and the misdeeds of under-regulated banks and corporations.
No deal is acceptable that undermines our social contract — our common agreement to work together and help each other — as this one would. They’ve made us strong and prosperous and they must be protected.

PS If you really want to change the COLA formula, use a measurement that looks at the things old people actually spend their money on, like the cost of prescriptions or dental care. “Chained-CPI” doesn’t look at these things, so it would lower the COLA. An honest look at how the cost of living changes for old people would mean a higher COLA than now, not a lower one.


This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Saying “Fiscal Cliff” Is Taking Sides

The term “fiscal cliff” is a one-sided propaganda phrase that misinforms and triggers public fear and anxiety. The fiscal cliff is not a “cliff” and the country isn’t going to fall off anything at the end of the year. Journalists: don’t help the misinformers — don’t say or write “fiscal cliff.” Congress: when people are scared and misinformed our Congress should pause, step back and help inform us instead of rushing to take advantage of the fear.

What The Fiscal Cliff Is

At the end of the year the Bush tax cuts expire and several budget cuts start to phase in (including military spending cuts.) This reduces the deficit, and some of those cuts will slow the economy if nothing is done to restore them in the next several months. That is the “fiscal cliff” that you are hearing so much about. Except it isn’t a cliff, it kicks in gradually, Congress has a lot of time to work it out and can fix anything that is a problem.
That’s right, if nothing is done in the next several months — there is no “cliff” at the end of the year — some of those cuts will slow the economy. All the screaming and hysteria are about putting pressure on the “lame duck” Congress to do something in a big hurry, outside of the accountability of democracy and before the President and progressives have more leverage.

What The Fiscal Cliff Is NOT

Most people I talked to over Thanksgiving apparently think the “fiscal cliff” is the government runs out of money on December 31 because the deficit is so big and all kinds of terrible things happen on January 1. This is sort of the opposite of what is going on. Even the few who didn’t think it was about the country running out of money were misinformed in one way or another, with most thinking something terrible happens January 1.
The “fiscal cliff” is about taxes going up and budget cuts, which reduce the deficit. And absolutely nothing in anyone’s life will change on January 1, or for some time (weeks, months) after.
That’s right, all the people who were hysterically screaming about the deficit are hysterically screaming now because of deficit cuts. Go figure. But the reason is that they have an agenda.

Journalists Should Not Help Misinform And Scare People

The very term “fiscal cliff” misinforms and scares people. Some media outlets, like FOX News, exist to misinform and scare people. But responsible media outlets should try to help the public understand complicated issues, not help scare and misinform.
Any journalist using the propaganda phrase “fiscal cliff” is taking the side of misinforming and scaring.

Settle Down, Beavis

Everyone should settle down. There is no “cliff.” No one is going to fall off of anything. And after the first of the year the President and progressives have much more leverage in this fight than they do now — hence all the pressure to act before then.
When people are this misinformed and scared the Congress owes it to the public to stop, take a break, work to inform the public and not act in a panic. Journalists, especially, owe it to the public to inform, not misinform and scare.
Update – I wrote this and went to bed. I wake up, and there is a perfect example in the Monday NY Times titled, Debt Reckoning, The Fiscal Deadline In Washington. The write-up in the morning NYTimes email is “The New York Times is beginning a new online feature that will chronicle the talks on the fiscal cliff between President Obama and Congressional leaders.”
The clear message of this headline and summary is that the country is in crisis because of debt. The public cannot help but get the impression that the country goes broke in a few weeks. As I explained above (and as Paul Krugman explains today’s in Fighting Fiscal Phantoms) this is really the opposite of what is happening.

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Jobs Are For We, The People. Budget Cuts Are For The Billionaires. Who Will Prevail?

We have millions unemployed with millions more underemployed or just gave up looking, our infrastructure is literally crumbling, our trade deficit is horrendous, our “safety net” has eroded below minimum acceptable standards, pensions are cut or gone, the climate is getting more and more unpredictable and dangerous, and how many other problems can you name? But the billionaires will tell you that our biggest problem is too much government — the very entity that exists to fix those problems. Will we get the jobs that We, the People want or the cuts in government that the billionaires are pushing for?

Deficit Hysteria Is About Cutting Government

Keep this in mind in the coming months — the deficit hysteria and the “fiscal cliff,” are all about cutting government and the things We, the People do for each other, so that the billionaires can have more. Who benefits if we cut government – Medicare, Social Security, the “safety net” programs, education, health and safety regulation and inspection, environmental controls, bank regulation, etc.? All of these help We, the People but are in the way of the billionaires.
How do we get to this bizarre point where DC elite, the corporate media, etc are all talking about cutting the safety net and the things we do for each other, when the obvious problem is jobs? Why isn’t this vast media machine writing and talking and showing videos about jobs and jobs and jobs?

Surplus To Deficit — What Changed?

Before Reagan the country did not have a big debt problem – and then we did. Reagan implemented changes that create huge yearly deficits that added up to big debt. When Clinton left office we had huge budget surpluses, and we were actually paying off the debt. Bush implemented some changes that immediately turned the surpluses into deficits, and left office with a $1.4 trillion deficit — in one year.
So … something changed under Reagan and then under ‘W’ Bush. Are the deficit cutters talking about reversing those changes? Are they talking about fixing the things that caused the deficits that added up to this huge debt?

Sacrifice

The deficit problem came from tax cuts for the rich, the size of the military budget (Reagan doubled it, ‘W’ Bush doubled it again), effects of the trade deficit, and the revenue loss and safety-net costs (due to lack of jobs) that fall out from the Wall Street financial crisis.
Instead of fixing what caused the deficits and debt, the elites say we should all make “sacrifices” to fix the problem. Except, of course, there are no “sacrifices” for the very ones who benefited from those changes Reagan and Bush made. They got huge, huge tax cuts and to pay for the results of those tax cuts We, the People are being pushed to accept “sacrifices.” No one is talking about putting the top tax rate back up to pre-Reagan levels — back when we took care of the infrastructure and funded our schools, etc. They are not talking about hiring millions to modernize our infrastructure and make our buildings energy-efficient.
Starting about the same time as Reagan cut taxes on the wealthy the wages of people who work for a living began to stagnate and the income and wealth inequality started to accelerate. In other words, almost all the benefits from gains in our economy started to go to a few at the top of the ladder. Some dramatic numbers illustrate this. For example, you may have read that in 2010 93% of the gains from the “recovery” went to the top 1%. Or you may have read recently that the wealth of the Forbes 400 went up by $200 billion last year.
But now that it is time to “sacrifice” who is supposed to do the sacrificing? We, the People, and programs like Medicare, Social Security, the “safety net,” health and safety regulations, environmental protections, etc.

Another Billionaire Weighs In

Ross Perot is in the news today whipping up deficit hysteria, with a huge-headline assist from the Drudge Report pointing to this Politico story, Ross Perot: No 2012 endorsement, saying we could “lose our country” or “be taken over.”

“We’re on the edge of the cliff, and we have got to start fixing it now. Otherwise, we’re leaving a disaster to our children’s and our grandchildren’s future,” he said.
… Perot talks about his fear of the United States being taken over.
“If we are that weak, just think of who wants to come here first and take us over, and the last thing I ever want to see is to see this country, our country taken over because we’re so financially weak we can’t do anything and we’re moving in that direct. … We could even lose our country if we don’t get this fixed and straightened out and nobody that’s running really talks about it, about what we have to do and why we have to do it. They would prefer not to have it discussed.

Krugman On Democracy

Today Paul Krugman, in The Real Referendum, points out that the public is turning against candidates who are exposed as wanting to cut the things We, the People do for each other,

Voters are, in effect, being asked to deliver a verdict on the legacy of the New Deal and the Great Society, on Social Security, Medicare and, yes, Obamacare, which represents an extension of that legacy. Will they vote for politicians who want to replace Medicare with Vouchercare, who denounce Social Security as “collectivist” (as Paul Ryan once did), who dismiss those who turn to social insurance programs as people unwilling to take responsibility for their lives?
If the polls are any indication, the result of that referendum will be a clear reassertion of support for the safety net, and a clear rejection of politicians who want to return us to the Gilded Age. But here’s the question: Will that election result be honored?

What he means is that the public’s wishes are clear, but there are indications that after the election the “Grand Bargainers” are going to try again to cut the things We, the People do for each other, so the billionaires can have it even better. This is what the Simpson-Bowles plan is, this is what the “fiscal cliff” hysteria is about.
Will the election results be honored? Will it be jobs (We, the People) or budget cuts (the billionaires).
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Another New York Times Columnist Attack On Social Security And Medicare

The New York Times contains another elite-columnist attack on our Social Security and Medicare systems today. This time it’s in the form of an op-ed by Bill Keller. Recently and regularly, New York Times columnists David Brooks and Tom Friedman have also gone after the things We, the People do for each other.

First, The Basics Of The Borrowing

Any discussion of our deficit/debt “crisis” must start with a few quick points about the history of the “crisis”:
1) January 26, 2000, Clinton to Propose Early Debt Payoff,

President Clinton said Tuesday that the budget he will send Congress on Feb. 7 will propose paying off the entire $3.6-trillion national debt by 2013–two years earlier than had been expected even a few months ago.

2) 2001 Alan Greenspan said we needed to pass the Bush tax cuts because we were paying off the debt too quickly.
3) Bush said it was “incredibly positive news” when the budget turned from surplus to deficit because budget deficits meant there would be pressure to cut entitlements. Bush wanted to continue the “strategic deficits” plan to “starve the beast” that was launched in the Reagan years.
Republicans are following a decades-old shock-doctrine plan:

  • Use tax cuts and military spending increases to create terrible deficits that add up to massive debt,
  • Then use the resulting “debt crisis” to scare people (esp elites like Keller, Brooks and Friedman) into cutting democratic government and our ability to control the billionaires and their corporations.

But cutting government doesn’t mean the costs go away, it means that we each have to bear those costs ourselves, on our own, without the help of the rest of us. This is really about cutting democracy so the very rich can be even very-richer.

The Attack

With that out of the way, let us now turn to the latest elite attack on entitlements — those things We, the People are entitled to: the fruits of the prosperity that democracy brings us.
In a NY Times op-ed, The Entitled Generation, Bill Keller writes about the “bloat” of projected entitlement spending, blaming “baby boomers” for future budget shortfalls, because they will need to retire without living in absolute poverty, and get health care.
He writes that because budget cuts have us spending less than we should on infrastructure investment, therefore we should also spend less on Social Security, Medicare and Medicaid. “In 1962 … [a]bout 32 cents of every federal dollar, excluding interest payments, was spent on investments, only 14 percent on entitlements. In the mid-70s the lines crossed. Today we spend less than 15 cents on investment and 46 cents on entitlements. ”
Keller writes, “So the question is not whether entitlements have to be brought under control, but how. ” (These greedy seniors don’t understand that the situation has changed — we have cut taxes for the very wealthy and increased our military spending to prevent the Soviet Union from invading. Who do they think they are?)
Finally, ignoring the People’s Budget, the Budget For All, the Schakowsky Deficit Reduction Plan and all the other sensible budget plans that have been proposed by progressives, Keller writes, “At least the Republicans have a plan. The Democrats generally recoil from the subject of entitlements.”
Keller praises “bipartisan authors of the Simpson-Bowles report” — even though there was no “Simpson-Bowles report.” The commission couldn’t come to agreement and issued no report. As for the “bipartisan” Simpson and Bowles, he is referring to former Republican Senator Alan Simpson, and member of the Board of Directors of Morgan Stanley Erskine Bowles. (Please click the link.) (“Bipartisan” as used by elites like Keller apparently refers to even and odd numbered addresses on Wall Street — the crowd that gets the money if our Social Security system is dismantled.)

Social Security

Our Social Security system is critical to human beings and our economy, just like hospitals, highways, schools and power plants. It is a core institution, used by everyone, and is absolutely vital in most people’s lives. It is the foundation of our retirement security. It is our most basic protection for our families if we become disabled or die.
Dean Baker of the Center for Economic and Policy Research explains just how crucial our Social Security system is to the lives of so many of us, in Bill Keller Wants to Take Away Your Social Security and Is Either Too Ignorant or Dishonest to Acknowledge that He Is Not a Typical Baby Boomer,

Does Keller know that the typical near retiree has total wealth of $170,000. This includes everything in their 401(k), all their other financial assets and the equity in their homes. Another way to put this is that the typical near retiree (between the ages of 55-64) could take all their wealth and pay off their mortgage. After that they would be entirely dependent on their Social Security to cover all their living costs.

In other words, half of near-retirees have less than that so they depend on Social Security even more than that.
We built and paid for our Social Security system. Each generation has done its part to maintain the system’s foundations for over 75 years, and it has only become stronger. If the middle class can’t count on Social Security in their retirement years, what can it count on?
Social Security is a far safer bet than any other retirement savings available. It is vastly safer than a 401K, which is available only to a few anyway, and can disappear overnight. Corporate raiders can take your pension plan. You can’t even count on a pension plan if you are a public employee. House prices can go up or down. But Social Security is always there for us. Even the most sophisticated investors can lose everything, but you can’t lose your Social Security. Social Security is the one retirement system that really works.
Social Security is the most successful government program, and that is why so many elites hate it!

Medicare And Medicaid

A government budget cut is really like a huge tax increase on regular people because it increases what each of us pays for the things government does — or forces us to go without. This is because cuts in government spending don’t actually cut the cost of things, they just shift those costs onto each of us on our own.
For example, if you cut the the government’s Medicare or Medicaid budget our health problems don’t disappear, but each of us has to find ways to pay the cost of medical care or a nursing home on our own, with no help, often at a time when we are stressed by illness.
In Cost of Medicare Equivalent Insurance Skyrockets under Ryan Plan the Center for Economic and Policy Research (CEPR) explains what happens to the cost of health care if Medicare is eliminated. Summary: it shifts the costs to us, except each of us ends up paying seven times as much as the same care costs under Medicare. This is because Medicare covers millions, and that economy-of-scale means the government can negotiate bulk discounts, etc. that we cannot get on our own. From the CEPR explanation:

[The Republican] plan to revamp Medicare has been described as shifting costs from the government to beneficiaries. A new report from the Center for Economic and Policy Research (CEPR), however, shows that the [Republican] proposal will increase health care costs for seniors by more than seven dollars for every dollar it saves the government, a point missing from much of the debate over the plan.
… In addition to comparing the costs of Medicare to the government under the current system and under the [Republican] plan, the authors also show the effects of raising the age of Medicare eligibility. The paper also demonstrates that while [the Republican plan] shifts $4.9 trillion in health care costs from the government to Medicare beneficiaries, this number is dwarfed by a $34 trillion increase in overall costs to beneficiaries that is projected …

Our health problems won’t disappear just because government cuts out Medicare and Medicaid. But the costs of treating – or not treating – those health problems will now fall on us, individually, on our own, instead of aggregated through the mechanism of democracy. And that is money that would otherwise be spent elsewhere in the economy.

The Money

So where do we get the money to pay our bills, if not from the things We, the People do for each other? Get the money from where the money went.
Start by ending the Bush tax cuts! The Bush tax cuts not only cut marginal tax rates for the wealthy, they cut taxes on capital gains and dividends — money you get just for having money. And it dramatically cut the tax on income inherited from wealthy parents — more money that one gets just because one already has money! But ending the Bush tax cuts is just a start.
Reagan dramatically increased the military budget: In 1980, before Reagan, the Defense Department budget was $134 billion, by 1989 it was $303 billion. But that was nothing. In 2000, before ‘W’ Bush, it was $294 billion. By 2008 it was $616 billion. But that doesn’t count military-related items outside of the Defense Department. Depending on how interest debt is applied, total military spending is between $1 and $1.4 trillion. (And, by the way, wars are expensive.) (“Nothing is more important in the face of a war than cutting taxes.” –Tom DeLay)
Fix health care. Today Mitt Romney praised the way that Israel’s socialized health care system keeps costs low. WaPo: Romney praises health care in Israel, where ‘strong government influence’ has driven down costs,

He praised Israel for spending just 8 percent of its GDP on health care and still remaining a “pretty healthy nation.”
“Our gap with Israel [on health spending] is 10 points of GDP,” Romney said. “We have to find ways, not just to provide health care to more people, but to find ways to fund and manage our health care costs.”
… Israel created a national health care system in 1995, largely funded through payroll and general tax revenue. The government provides all citizens with health insurance: They get to pick from one of four competing, nonprofit plans. Those insurance plans have to accept all customers—including people with pre-existing conditions—and provide residents with a broad set of government-mandated benefits.

Get the economy moving again. Jeeze, instead of saying because we stopped investing in infrastructure therefore we need to cut other things, how about investing in infrastructure? We have millions of jobs that need to ing and millions of people looking for jobs. And we can finance it for free. The payoff will be enormous, all those people no longer needing unemployment and food stamps, all those people and construction companies paying taxes again, and the resulting economic growth cutting the debt-to-GDP ratio.

Don’t Be Fooled By Elites Hating On Entitlements

Don’t be fooled: this is really about shifting from democracy to a system where we are on our own, up against the wealthy and powerful. This is about shifting from a system where we can all be prosperous to a system where a few have all the wealth and power.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Pension Gimmicks Blamed On Workers

The student loan deal is badly needed. It should have just been extended – duh! But the 1 percenters took it hostage and demanded their pound of flesh before We, the People can preserve even this little bit of what we do for ourselves. So as part of the “sweetener” for those 1 percenters there is a corporate pension giveaway in the deal that has nothing to do with student loans. It appears they are going to let companies underfund pensions — money that should be set aside for worker pensions tomorrow will instead go into 1 percenter pockets today — and are setting up for a taxpayer bailout (or just stiffing retirees) later.

Pension Calculations Are Tricky But Regulated

This is kind of tricky, so bear with me. When companies (and governments) put money into pension funds they have to calculate how much will be needed to pay the promised pensions. This involves estimating things like how long (and how many) people will live, and how much “return” (interest, stock price increases,dividends…) to expect as the money is set aside. Key point: If you expect a too-high rate of return you can set less aside now (and put it in your pocket,) but when the time comes to pay the pensions you won’t have enough.
This is supervised by government standards and regulations. They say how much of a rate of return is allowed to be used in these calculations. A higher expected-rate-of-return allowance means less has to be set aside, so more money can go into 1 percenter pockets. So there is a lot of pressure from corporations to let them get away with overestimating, and therefore putting more in their pockets today. Since this is complex, it is easier to get away with diverting promised-worker-retirement money into 1 percenter pockets.
This student loan deal apparently lets corporations claim a higher expected rate of return, thereby diverting more money today into 1 percenter pockets.

Money Into Worker Pensions Or 1 Percenter Pockets?

For a long time the government has been allowing pension funds to use a too-high estimated rate of return, with the result that many pensions are now underfunded. Money that should have gone into savings to pay worker pensions was diverted into 1 percenter pockets, either through improved corporate bottom lines in the case of companies, or through lower taxes in the case of state & local governments. (Of course, many companies shifted worker-pension promises into 1 percenter pockets using the 401K scam — you fund your own retirement, on your own, with little help, and have to know how long you’ll live, and it turns out badly every time — but that’s for another post.)
In fact, this worker-set-asides-for-later vs 1 percenter-pockets-today issue is similar to what happened with the Social Security Trust Fund. Money from workers was set aside into the fund but was used to pay for tax cuts (and massive military increases). Now 1 percenters are demanding austerity — cutbacks in the things We, the People do for each other — instead of workers getting the money back from where the money went, namely the 1 percenters.
And since this is about money for worker retirees, and retired workers don’t have big, influential PR firms while 1 percenters do, it is convenient and easy to blame workers when the promised money isn’t there for their retirement.

The Much-Hyped Public-Employee Pension Crisis

The supposed public-employee pensions crisis is partly the result of state and local governments not setting aside enough money to pay up on pension promises (because of tax cuts). It is also partly caused by Wall Street scamming on those same governments as they got into riskier investments trying to get a high enough rate of return to make good on their pension promises. But the blame is being placed on the workers themselves.
The post Discover The Network Out To Crush Our Public Workers traced just a few of the corporate-conservative think tanks (really just PR firms) promoting the idea that public-employee unions are responsible for pension shortfalls. Almost all of these organizations traced back to Wall Street firms and individuals for their governance or funding. They are engaged in a campaign to divert attention and blame the workers themselves for pension shortfalls,

These corporate/conservative organizations are very good at manipulating the media and public opinion — it is their purpose. Their “experts” are well paid and always available to talk to reporters, appear on TV and radio shows and write articles and opinion pieces for newspapers, blogs and for their network of similar organizations. Their “reports’ and “studies” reach the conclusions that fit the strategy, and are crafted to sound just right. And there are so many of them! The result is development of “conventional wisdom” about what is going on in our society. This is why that conventional wisdom more and more reflects the corporate/conservative line. And right now the corporate conservative line is that we should think that public employees and their unions are responsible for state and local budget shortfalls.

See also Understanding The Attacks On Public Employees, Ten Holiday Attacks On Public Employees and Are Public Employee Unions Strangling Us? Also, Rick Smith And Dave Johnson Counter The Attack On Public Employees.

Others See It, Too

NY Times Editorial, The Deal on Student Loans,

The pension provision is not ideal. It could mean that more companies will underfinance their pension liabilities, shortchanging employees down the road. Lawmakers have tried to address that potential shortfall by strengthening the agency that insures private pensions with more money from higher premiums.

Thus from the Competitive Enterprise Institute, usually a most unreliable source. (The check from the big corps who want to underfund pensions must have been late.) In this case it is the same gimmick but added the the highway bill…: Threat of Pension Fund Bailouts Lurks in Senate Highway Bill, “Pension Smoothing” a License to Make Up Numbers,

The bill … would amend the Employment Retirement Income Security Act (ERISA) to allow for an accounting gimmick known as “pension smoothing,” whereby pension managers spread losses out over several years, while overestimating projected investment returns.
Specifically, this provision would expand the range of allowable projection figures, starting this year at a 20 percentage point range, to 60 percentage points after 2015. This is essentially a license to make up numbers for income projections four years out from now. …
“This accounting trick will likely expose taxpayers to potential pension fund bailouts in the future. ” …
“It would further remove pension investment return projections even further from reality, by expanding the range of allowable projections so broadly as to render them meaningless.”

Making Things Worse

To get a deal that keeps student-loan interest rates low enough for more people to afford to go to college, we had to pay off the 1 percenters with this “pension-smoothing” deal. Such is the way of Washington since we shifted from a democracy (rule by the people, for the people) to a plutocracy (rule by the rich, for the rich). Or, in this case a 1 percenter kleptocracy (rule by the rich, stealing from everyone).
But make no mistake, this deal makes the country’s future pension problems even worse. It diverts even more money from promised pensions into 1 percenter pockets. The result will be clear in 10, 20 or 30 years when people are retiring and the money isn’t there. Taxpayers will be asked for ever more “austerity” to cover money that was diverted to the 1%.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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