The Wall Street Journal said that Social Security and Medicare “have contributed to larger deficits set to exceed $1 trillion in 2020.” This is the big lie promoted by Wall Street billionaires to try to get cuts in Social Security benefits. For more than 30 years, Social Security has brought in more than it spent, which has led to the large trust fund. In fact, Social Security has run a surplus, and made the federal government deficit smaller than it otherwise would have been.

The Trump administration has already broken its campaign promise to not cut Social Security or Medicare; its budget proposal has $900 billion in cuts to these two programs over the next ten years.

What none of the major or corporate newspapers mention is what happened the last time Social Security had a shortfall in the 1980s. There was no trust fund then, so the government borrowed money until it worked out a plan to raise the Social Security tax rate on workers from 5.4% to 6.2% – a 0.8% increase that was matched by employers. Today a similar tax rate increase of 1.1%, or $11 on every $1000 of income, would do the trick.

This tax increase could be even smaller if the Social Security tax were made fairer. Right now, it is a regressive tax, that is, a tax that falls more heavily on lower-income taxpayers. The Social Security tax also only covers wages and salaries up to $128,400. So one way to make the Social Security tax more fair would be to lift the cap so all wages and salaries are taxed. Medicare already does this.

Another way would be to have Social Security tax all other forms of income that are not currently taxed. This is would include interest, corporate dividends, business profits, rental income, or capital gains from sales of stock that mainly go to high income individuals.

Either of these would reduce the need to increase the Social Security tax rate, and doing both might eliminate the need to raise the tax rate at all.

Last but not least, the projected end of the Social Security trust fund is because the trustees expect immigration to fall in the coming years. While this is what Trump and the Republicans want, increasing immigration would help overcome the funding issue, as immigrants tend to pay more in Social Security taxes than they receive in benefits.

Working people who rely the most on Social Security for their retirement and disability need to expose the lies of Wall Street and the politicians, including some Democrats. We need to fight any and all efforts to cut benefits. We also need to fight efforts to privatize Social Security, which would hand our retirement savings over to Wall Street.

#SanJoséCA #PoorPeoplesMovements #US #PeoplesStruggles #SocialSecurity #Medicare #austerity #DonaldTrump

San José, CA – On August 14, Social Security will be 80 years old. President Franklin D. Roosevelt signed the Social Security Act into law during the Great Depression to curtail mass poverty among older Americans. Today the Social Security benefits go to 39 million retirees, 11 million disabled people, and 9 million dependents or survivors of the retired or disabled. Social Security has brought down the poverty rate for the elderly so the poverty rate for elders is actually lower than working age adults or children.

But House Republicans have passed a rule that prevents the government from maintaining benefits for those collecting disability insurance. With disability tax revenues coming in at only 81% of benefits next year and the disability trust fund to be exhausted, benefits will either be cut or funds must be raised to maintain the benefits.

The Obama administration has proposed shifting $330 billion from the $2800 billion Social Security trust fund, or about 12% of the balance, which would maintain disability payments at least through 2033. This shift has been made before. But House Republicans have responded with a rule to prevent this and have called for a short-term loan which would be paid back. While this would prevent the 19% cut next year, it could lead to even greater benefit cuts further in the future.

Today the FICA (Federal Insurance Contribution Act) payroll tax allocates 0.9% of our paychecks to Social Security Disability Insurance and 5.3% to the Old Age and Survivors Insurance fund. An increase of 0.2%, or $2 for every $1,000 of earnings, would bring the disability insurance program back into balance.

A better approach to helping Social Security would be raise the limit on Social Security taxes. Right now only the first $118,500 of earned income is taxed, and dividend, interest, and capital gain income are not taxed at all. As more and more income goes to the rich, less and less income is taxed by Social Security. If the income cap on Social Security were lifted, like the Medicare portion of the FICA tax, the revenue shortfall could be avoided. This would only hit the top 5% of the population by income, but this option is never seen in the corporate media or among politicians in Washington, DC, who are controlled by the wealthy and Wall Street.

What the Republicans hope to do is to use the Disability Insurance funding shortfall to re-open the debate on cutting Social Security. Wall Street billionaire Peter G. Peterson has contributed a billion dollars to his foundation that is pushing for cuts in Social Security benefits by trying to promote a climate of ‘crisis.’

In fact, Social Security did run short of funds in 1982 and had to borrow from the U.S. government. Then Congress raised the FICA tax rate on workers from 5.4% to the current 6.2% (a 15% increase, or $80 for every $1000 of income). This was enough to cover benefits, pay back what was borrowed, and build up a trust fund for the retirement of baby boomers. This trust fund is now $2800 and should maintain the balance for Social Security until 2033. Another small increase in the FICA rate, or even better, removing the income ceiling on FICA, can maintain the program for the foreseeable future.

#SanJoseCA #PoorPeoplesMovements #SocialSecurity

San José, CA – On August 14, Social Security will be 80 years old. President Franklin D. Roosevelt signed the Social Security Act into law during the Great Depression to curtail mass poverty among older Americans. Today the Social Security benefits go to 39 million retirees, 11 million disabled people, and 9 million dependents or survivors of the retired or disabled. Social Security has brought down the poverty rate for the elderly so the poverty rate for elders is actually lower than working age adults or children.

But House Republicans have passed a rule that prevents the government from maintaining benefits for those collecting disability insurance. With disability tax revenues coming in at only 81% of benefits next year and the disability trust fund to be exhausted, benefits will either be cut or funds must be raised to maintain the benefits.

The Obama administration has proposed shifting $330 billion from the $2800 billion Social Security trust fund, or about 12% of the balance, which would maintain disability payments at least through 2033. This shift has been made before. But House Republicans have responded with a rule to prevent this and have called for a short-term loan which would be paid back. While this would prevent the 19% cut next year, it could lead to even greater benefit cuts further in the future.

Today the FICA (Federal Insurance Contribution Act) payroll tax allocates 0.9% of our paychecks to Social Security Disability Insurance and 5.3% to the Old Age and Survivors Insurance fund. An increase of 0.2%, or $2 for every $1,000 of earnings, would bring the disability insurance program back into balance.

A better approach to helping Social Security would be raise the limit on Social Security taxes. Right now only the first $118,500 of earned income is taxed, and dividend, interest, and capital gain income are not taxed at all. As more and more income goes to the rich, less and less income is taxed by Social Security. If the income cap on Social Security were lifted, like the Medicare portion of the FICA tax, the revenue shortfall could be avoided. This would only hit the top 5% of the population by income, but this option is never seen in the corporate media or among politicians in Washington, DC, who are controlled by the wealthy and Wall Street.

What the Republicans hope to do is to use the Disability Insurance funding shortfall to re-open the debate on cutting Social Security. Wall Street billionaire Peter G. Peterson has contributed a billion dollars to his foundation that is pushing for cuts in Social Security benefits by trying to promote a climate of ‘crisis.’

In fact, Social Security did run short of funds in 1982 and had to borrow from the U.S. government. Then Congress raised the FICA tax rate on workers from 5.4% to the current 6.2% (a 15% increase, or $80 for every $1000 of income). This was enough to cover benefits, pay back what was borrowed, and build up a trust fund for the retirement of baby boomers. This trust fund is now $2800 and should maintain the balance for Social Security until 2033. Another small increase in the FICA rate, or even better, removing the income ceiling on FICA, can maintain the program for the foreseeable future.

#SanJoseCA #PoorPeoplesMovements #SocialSecurity

Newark, NJ – The People’s Organization for Progress (POP) put a Hands off Social Security picket line in front of the Essex County Social Security building, April 16. Hundreds of drivers blew horns. Passersby stop to talk and show solidarity. Other participating organizations included the International Action Center, One People One Nation, Veterans for Peace and the Coalition to Save Our Homes.

The protest was in response the Obama administration’s proposed cuts in cost of living adjustments for Social Security. A new “chained Consumer Price Index” would replace the established CPI with a lower percentage. The expectation is that Social Security outlays would be reduced by several hundred billion dollars over the next ten years. It is another proposal to support Wall Street profit demands by plundering the living standards of the masses.

That a Democratic administration would propose such a thing has caused widespread shock. The impact would be far broader than senior citizens, since families and dependents are also supported by Social Security. The protest showed that neither POP nor the other organizations nor the masses will have any of it. Wall Street’s attack on Social Security must be stopped.

#NewarkNewJersey #NewarkNJ #POP #SocialSecurity #PeoplesOrganizationForProgress

With the debt limit extended to May 18, two other deadlines face the federal government. On March 1, the ‘automatic’ across the board spending cuts are supposed to take place. These cuts were voted into law in 2011 and are taking into effect because the government could not agree on how to make the cuts. $55 billion would be cut from military spending (exempting military pay), and $55 billion from non-defense spending (exempting Social Security and Medicare).

The other deadline is March 27, when funding for the federal government runs out. The federal government doesn’t have a budget in place for Fiscal Year 2013, which began Oct. 1, 2012. Instead, there is a temporary agreement to continue funding at last year’s level through March 27. If there is no budget and no agreement to extend funding by then, a partial shut-down of the federal government would start. During the last shut-down in 1995 and 1996, health care for veterans, toxic waste clean-up, national parks and immigration applications were among the programs cut back or stopped.

Congressional Republicans, headed by former vice-presidential candidate Paul Ryan, now claim that they will put forward a plan to balance the federal budget in ten years without raising taxes. In past budget proposals, which have called for balanced budgets in 30 years, the Republicans have targeted Social Security and Medicare, even though these two programs have not contributed to the federal government debt. The Republicans will try to use the threat of across-the-board cuts and/or a partial government shutdown to get what they really want: cuts in the safety net for the elderly and disabled, in order to protect tax cuts for the rich and continued funding for the military, which protects the worldwide empire of U.S. corporate interests.

#SanJoséCA #SocialSecurity #Capitalism #Medicare #FederalDebtLimit

Tallahassee, FL – The afternoon clouds were dark, but even the threat of rain couldn't stop students, retirees, and union members from taking a stand against federal budget cuts. About 35 people rallied outside of Republican Congressman Steve Southerland’s office here, Dec.10, demanding no cuts to Medicare, Medicaid, or Social Security.

The protest was part of a national day of action called by the AFL-CIO and other trade unions in response to the so-called ‘fiscal cliff.’ If Congress does not act by Jan.1, 2013, they will trigger a set of austerity measures, budget cuts and tax increases.

Carrying signs that read, “Don’t cut my Medicare benefits,” and “No more tax cuts for the rich,” protesters listened to a short stack of speakers in the parking lot below Southerland’s office.

Republican lawmakers, like Southerland, have pushed for deep cuts to programs that support workers and retirees, like Medicare and Medicaid. President Barack Obama and the Democratic Senate have proposed a compromise that includes meager tax hikes for the richest 2%, coupled with cuts to Social Security and Medicare in the form of increasing the eligibility age.

Michael Sampson, a student at Florida State University, fired up the crowd with a passionate speech explaining how budget cuts by politicians benefit the rich at the expense of working people. He said, “We see the politicians of the 1% trying to balance the budget on the backs of the hardworking people who built this country. And it is a shame!”

The crowd erupted into cheers and chanted, “When Medicare is under attack, what do we do? Stand up! Fight back!”

Next, protesters heard from David Jacobsen, the President of the Northwest Florida AFSCME Retiree Council, which represents more than 600 retired workers.

“We want legislators to keep their hands off these programs,” said Jacobsen. Speaking to Republican proposals that would force working class retirees to pay crippling bills, he added, “Medicare should never, ever, ever be a voucher program. It should be available to young people the same way it is available to me now.”

After Jacobsen’s speech, the protesters marched upstairs to Southerland’s office chanting, “They say cut back, we say fight back!” The crowd packed inside the small office and asked Southerland’s staff to pass on their demands to the congressperson.

Taking video using an office cell phone, the staff recorded a message of retirees and students speaking out. The footage was sent directly to Southerland’s phone via text. The protesters then reconvened outside briefly to discuss future actions.

For more in depth analyses of the ‘fiscal cliff’ see: http://www.fightbacknews.org/2012/9/25/federal-government-course-austerity-2013

#TallahasseeFL #PoorPeoplesMovements #BudgetCuts #crisisOfCapitalism #SocialSecurity #Medicare #fiscalCliff #CongressmanSteveSoutherland

According to the Congressional Budget Office, the wars in Iraq and Afghanistan could cost more than $1.5 trillion over the next ten years. The Bush tax cuts for the rich will cost about $600 billion dollars over the same period of time. Ending the wars and restoring the taxes on the rich would save more than $2 trillion, and, including savings from lower interest payments, would save about $2.6 trillion, more than the recent debt limit deal.

Let’s be clear. The real issue is not the deficit, it is about keeping taxes low for the rich and continuing to fund our present and future wars, while cutting programs that serve poor and working people. Social Security and Medicare did not cause the federal debt. In fact ever since the FICA payroll tax that pays for Social Security and Medicare was raised in the 1980s, these two programs have run surpluses and have helped to pay for the wars and tax cuts for the rich.

Half of all workers have no private pension plans, so Social Security is their only guarantee of income security when they retire. For more than a quarter of seniors who are lower-income, Social Security provides over 90% of their retirement income. About 40% of seniors have no private health insurance, and would suffer the most from any cuts in the Medicare.

Unfortunately, the fact is that the vast majority of politicians in Washington D.C. are more beholden to Wall Street and/or the Tea Party than they are to the interests of poor and working people and seniors. What is needed to be build a mass movement for economic justice that can unite workers, both union and non-union, and oppressed nationality communities, especially African Americans, Chicanos, and Latinos, who have the least income and wealth are who are hit hardest by cuts in government services. Students and youth and seniors are especially vulnerable to these cuts. We need to demand that the politicians bring our troops home now, end the Bush tax cuts for the rich, and protect Social Security, Medicare, and other government programs.

End the Wars!

Tax the Rich!

No cuts to Social Security, Medicare, and other programs for poor and working people!

#SanJoséCA #SocialSecurity #TeaParty #Medicare

This is the fifth in a series. See parts one, two, three, and four.

San José, CA – On Aug. 2, President Obama signed into law a bipartisan deal to raise the federal debt limit and cut federal spending. The deal increases the amount that the federal government can borrow by $400 billion now and calls for about $1 trillion in spending cuts over the next ten years. A bipartisan committee of congress people and senators will propose another $1.5 trillion in cuts, and the debt limit can be raised by about $2 trillion more.

The debt limit deal did not include any increases in taxes, which was a major victory for the Republicans and their Tea Party supporters. The Wall Street Journal editorial after the debt deal hailed it as “A Tea Party Triumph.” The lack of any tax increases is also a victory for the rich, who were able to keep the big tax cuts made by the Bush administration. Big businesses, like General Electric, which paid no corporate income taxes last year despite earning billions in profits, were also winners, as there was no increase in corporate taxes.

The big banks and other financial titans of Wall Street pushed hard for the debt deal. By cutting federal spending and reducing the amount of new bonds that the government would have to sell to borrow money, the prices of bonds will be higher. This will benefits banks, insurance companies and other investors in government bonds. Hedge fund managers will also continue to pay taxes at a lower rate than most workers.

While there were almost no specific cuts (other than a cut in federal student loans to graduate students), there will be cuts to programs that serve poor and working people. Banks and businesses have an army of lawyers and piles of cash to contribute to politicians’ election campaigns to make sure that their interests are protected. The federal government is also likely to cut back on aid to state and local governments, leading to even more cuts in schools, health care and social services at the local and state levels. The debt deal puts the federal government on a path of austerity that state and local governments have already started down.

The debt limit deal also opens the door to cuts in Social Security and Medicare. While the initial $1 trillion in cuts does not include these two programs, the deficit cutting committee is almost certain to recommend cuts to both programs. Both Social Security and Medicare have been running surpluses as the FICA payroll taxes have been greater than the benefits paid, leading to a combined $3 trillion in trust funds for these programs. But Social Security and Medicare will be on the chopping block while the two biggest contributors to the federal debt – the wars in Iraq and Afghanistan and tax cuts for the rich – are not.

Last, but not least, the federal spending cuts will make a weak economy even worse. With unemployment above 9%, the federal government needs to spend more, not less, to stimulate the economy and create more jobs. No other sector of the economy is willing and able to spend more. Consumer spending is limited by high unemployment, falling home prices and still high levels of debt. Businesses are earning record profits and have some $2 trillion in cash, but are not willing to spend and hire more. State and local governments, whose taxes are down because of high unemployment, are cutting spending and jobs. The growing financial crisis in Europe and their slowing economies are going to reduce demand for U.S. exports.

Only the federal government has the ability to borrow and spend more during bad economic times. But the will is gone, with both the Tea Party-inspired Republicans and the Wall Street-backed Democrats all too willing to cut spending. There is a short-run danger that this could be enough to tip the economy into another downturn. But even if the economy continues to grow, the limits on federal spending will leave no safety net for the economy when the next recession hits, increasing the prospects of a major depression much more likely in the future.

#SanJoséCA #SocialSecurity #federalDebt #Medicare #DebtCeiling #austerity

The Bipartisan Senate Proposal is being pushed by the so-called Gang of Six – Saxby Chambliss (R-Georgia), Tom Coburn (R-Oklahoma), Kent Conrad (D-North Dakota), Mike Crapo (R-Idaho), Dick Durbin (D-Illinois), and Mark Warner (D-Virginia). Four of them were members of the National Commission on Fiscal Responsibility and Reform which was unable to pass a proposal to cut the Federal Budget deficit. This proposal has been welcomed by President Obama, who said that he endorsed the thrust of the proposal.

In contrast to the House Republican proposal to end Medicare, cut programs for the poor and give big tax cuts to the rich, the mainstream media has described the Bipartisan Senate Proposal as a more balanced plan that would raise $1 trillion in tax revenues while cutting $3 trillion in spending.

Don’t believe this hype.

If one reads the [actual proposal](http://www.washingtonpost.com/wp-srv/politics/documents/gangofsixproposal07202011.html?hpid=z1) the executive summary states on page one that “If the CBO (Congressional Budget Office) scored this plan, it would find net tax relief of approximately $1.5 trillion.” The proposal would lower the top tax rate for high income individuals and families from 35% to 29% and repeal the Alternative Minimum Tax, which would allow high income individuals and families to not pay any taxes at all. It would also cut the corporate tax rate from 35% to 29% or less, and not tax foreign profits at all, at a time when corporations are sitting on record amounts of cash (about $2 trillion).

The bipartisan proposal would also cut Social Security by cutting cost of living increases. Social Security payments are indexed, which means that they are adjusted each year for inflation. Social Security currently uses the Consumer Price Index or CPI to make this adjustment. The bipartisan proposal would shift to the chained-CPI, which they claim is more accurate than the CPI, but would result in Social Security payments losing about 0.25% in adjustments each year, or about $3 a month for a typical person getting Social Security. While this doesn’t seem to be much, it adds up each year, so a 65 year old retiring to go on Social Security would lose almost $55 a month if they live the average 18 years, and more if they live longer.

The fact is that seniors almost certainly face a higher inflation rate than the CPI, since they have to use more health care services. Over the past year, prices for medical goods and services have risen almost twice as fast as for all other prices, excluding food and energy.

So why is President Obama backing this proposal? One reason is that Wall Street wants a big cut in spending to make sure the price of billions of dollars of U.S. government bonds is maintained. The bond rating company Standard and Poor’s warned that unless there was a $4 trillion deficit reduction, they would reduce the rating on U.S. government bonds from the current AAA (the highest) rating. This would cause the price of bonds to drop and interest rates to go up. Time and again, Obama has shown that he is more interested in protecting the interest of big banks and Wall Street than the interests of poor and working people.

*Next: the Congressional Progressive Caucus proposal*

#UnitedStates #SocialSecurity #Medicare #BipartisanSenateProposal #GangOfSix

San José, CA – In less than a month, the federal government will have to either raise the limit on how much it can borrow, or will have to slash spending by $120 billion each month. This is about 40% of total spending, or about the same as stopping all payments for the military and Social Security, the two most costly federal programs. The Republicans in the House of Representatives are threatening not to raise the debt limit unless the federal government promises to slash spending on domestic programs, including dismantling Medicare and putting most of the cost of health care on seniors.

This is the first of three economic commentaries to explain this issue. This commentary will be about how the large federal government debt came to be. The next two will be on what the Republican congress and the president are negotiating and what should be done about the federal budget deficits and debt that would help poor and working people.

Today’s federal government debt, often called the ‘Public Debt,’ goes back about 80 years to the Great Depression. In 1930, just after the start of the Depression, the federal government debt was very small, about $16 billion or 15% of the size of the economy as measured by GDP.* Almost all of this was borrowed during World War I, when the debt went up seven-fold.

Between 1930 and 1944, the federal government borrowed large sums of money, first to pay for the New Deal programs to try to aid those hurt by the Great Depression, then a much larger amount to pay for the military costs of World War II. By this measure the public debt went from 15% to 50% of GDP at the start of World War II, and topped out at 120% of GDP in 1945.

But between 1945 and 1980, the public debt fell to only about one-third of GDP. This was because the economy grew relatively quickly after World War II, boosting GDP. At the same time, the federal government did not have to borrow a lot, as their budgets were more or less balanced between tax revenues coming in and spending going out. Then in the 1970s, economic growth slowed but inflation picked up. Inflation made the money value of GDP go up, but the money value of the debt did not.

The big rise in the federal debt came over the last 30 years. There was a big increase in the 1980s as President Reagan cut taxes, especially for the wealthy, and increased military spending, leading to large budget deficits that added to the public debt. This was briefly reversed under the Clinton administration, which raised taxes on higher incomes and limited increases in government spending, leading to federal budget surpluses, where tax revenues were greater than spending, from 1997 to 2001. Tax revenues also went up with the long economic expansion in the 1990s, which went on for 10 years without a recession, the longest in U.S. history.

But then in 2001, the new Bush administration cut taxes, again benefitting the wealthy the most, invaded and occupied Afghanistan and Iraq, and dramatically increased military spending. There was also a recession in 2001, with a long jobless recovery, that cut tax revenues. Federal budget deficits came back and the federal debt grew rapidly. Then when the recession that began in 2007 was followed by the financial crisis in 2008, federal tax revenues sank as more and more people lost their jobs (about 80% of federal taxes come from income and payroll taxes).

The Obama’s stimulus spending in 2009 and 2010 came to about $800 billion dollars, or a bit less than 6% of the total public debt that is now more than $14 trillion ($14,000,000,000,000 or over 90% of GDP). The other 94% of the public debt mainly comes from three things: wars (from World War I and World War II to the current wars in Afghanistan and Iraq), tax cuts in the 1980s and 2000s, and the loss of taxes and extra spending on unemployment insurance and other social welfare programs during bad economic times.

Note that spending on Social Security and Medicare is not why the federal debt is so large. In fact, Social Security and Medicare taxes (known as FICA or federal Insurance Contribution Act – look for it on your paycheck!) have been greater than benefits paid, so that the combined programs have built up a surplus of more than $3 trillion. If Social Security and Medicare had run balanced budgets over the last 25 years, federal budget deficits would have been much larger during this time.

\* Economists usually measure the public debt against the Gross Domestic Product, or GDP, which is the total value of output of goods and services produced and about the same as the total amount of national income. Using this measure allows one to compare the public debt over time as the economy grows and prices change.

Next: what the Republican Congress and the President are negotiating, and what should be done about the federal budget deficits and debt that would help poor and working people.

#SanJoséCA #SocialSecurity #federalGovernmentDebt #Medicare

Under the cover of deficit reduction, the co-chairs’ proposal is really pushing the Republican and Wall Street agenda of cutting Social Security and Medicare while lowering the tax rates for the wealthy and corporations. The proposal to further increase the retirement age would hit lower-income Americans the hardest, as they are falling further and further behind the life span of the well-to-do. Some of the biggest cuts would come from Medicare reimbursements for doctors, which would lead to less access to medical care, as doctors switch to higher reimbursements from private insurance.

The co-chairs want to cap tax revenues and propose dropping the top personal tax rate from 35% today (which would rise to almost 40% in January if the Bush tax cut is not extended) to between 23% and 28%. The corporate tax rate would drop from 35% today to 26% to 28% and multinational corporations would not have to pay any taxes on profits from abroad, which can be more than half of their total profits.

One way that the most recent recession differed from the Great Depression is that the rich have done relatively better this time around. During the 1930s, inequality of income went down as the well-to-do suffered relatively more than today. New Deal programs such as the Works Progress Administration jobs program, Social Security and unemployment insurance benefitted working people.

But between 2008 and 2009, the share of income going to the 20% of households who had the highest income (over $100,000) actually went up from 50% to 50.3%, with most of this gain going the top 5% of households (making more than $180,000) who saw their share of income go up from 21.5% to 21.7% of total income. The actual share of income going to the most well-to-do is probably even greater, as capital gains (income from sale of land, businesses, stocks, bonds, etc.) are not counted and non-wage and salary income, such as interest and dividends that mainly go to higher-income households, are more likely to be underreported.

This growing inequality is no surprise, since the government bailed out the big banks while millions of homeowners have been foreclosed. Corporate profits and the stock market are back to levels from before the financial crisis began in September 2008, while there are still 5.8 million fewer jobs, more than a year after the recession officially ended. College administrators are getting big raises while workers and classes get cut and student fees are at record levels. Military spending is up while spending on education is down. The list goes on and on, as the rich try to put the burden of the crisis on working people. This ‘deficit reduction’ proposal is just one more scheme to make the rich richer and the poor poorer.

#UnitedStates #EconomicCrisis #SocialSecurity #BarackObama #DeficitCommission

La administración del Presidente Bush ha dado a conocer sus planes de iniciar la privatización del seguro social creando cuentas de inversiones personales con los fondos que hasta ahora habían sido destinados a las prestaciones sociales. Dicho plan le permitiría a Wall Street recaudar hasta 15 billones de dólares por año por manejo y asesoría de las cuentas.

Como se sabe, el seguro social es la base para las pensiones de la mayoría de los trabajadores. Se estima que dos tercios de los ancianos reciben más de la mitad de sus ingresos del seguro social y que el 90% del ingreso de un tercio de ellos depende del seguro social. El seguro social asegura además a las familias de los pensionados y a personas permanentemente discapacitadas; de hecho un 30% de las pensiones que otorga el seguro social cubre a personas no pensionadas. Es un programa eficiente, considerando que menos del 1% del total de los impuestos se destina a costos administrativos.

De la misma manera en que la administración Bush utilizó la supuesta amenaza de las armas de destrucción masiva para ganar apoyo para la invasión y ocupación de Iraq, así también creó el mito de que el seguro social quedará en la bancarrota y por esa razón no podrá beneficiar a los trabajadores de hoy.

Si en verdad los cálculos oficiales son correctos y no se efectúa ningún cambio en cuanto a impuestos o prestaciones, el seguro social contará con suficientes fondos para 38 años más. Entonces o se efectúa un recorte de un 25% en las prestaciones o se aumentan en un tercio los impuestos a la nómina de los trabajadores.

En la actualidad los impuestos sobre la nómina de los empleados es de un 12%, con éste se paga el seguro social a los beneficiarios. La mitad proviene de las contribuciones de los trabajadores y la otra mitad proviene de la compañía que los emplea; por consiguiente, los fondos que se deducen del salario del contribuyente habrían aumentado del 6% a un 8% en 40 años.

Los cálculos oficiales son tan poco creíbles como la evidencia de las armas de destrucción masiva. Dichos cálculos se basan en el supuesto de que el número de inmigrantes se vería reducido y de que el crecimiento económico sufriría una baja de más de la mitad, hasta un nivel inferior al de los años que precedieron a la guerra civil cuando la economía estadounidense era eminentemene agrícola.

Quienes apoyan la privatización del seguro social actúan con una doble moral cuando argumentan que el seguro social quedará en la bancarrota porque la economía decaerá de forma dramática, a la vez que prometen un aumento del valor de las acciones de la bolsa basándose en épocas pasadas cuando la economía tuvo un crecimiento a pasos agigantados. La bolsa de valores nos quiere hacer creer que nuestras inversiones aumentarán en la misma medida que el precio promedio de las acciones (aproximadamente un 10% por año en los últimos veinte años). Sin embargo, el inversionista promedio sólo obtuvo gananacias entre un 2% y un 3%, lo cual no es suficiente ni para compensar por la inflación debido a que las gnancias por el alza de las acciones de la bolsa benefician principalmente a la bolsa, y a ejecutivos y demás personas influyentes que manejan el sistema.

La administración Bush oculta el hecho de que hasta una parcial privatización del seguro social tendría un costo de uno a dos trillones de dólares, debido al hecho de que el sistema del seguro social se sostiene gracias a las contribuciones de los trabajadores. Es decir, con las contribuciones que realizan los trabajadores de hoy por medio del pago de sus impuestos, se paga la seguridad social de los pensionados de hoy. Los fondos que se destinen a las cuentas de inversiones privadas tendrían que cubrirse ya sea con aumentos en los impuestos, préstamos, o con la reducción de las prestaciones sociales.

Los fondos del seguro social sufrirán una caída cuando la generación de aquellos que nacieron en la era posterior a la gran depresión y a la segunda guerra mundial (los “baby boomers”) se pensionen en los próximos cinco años y acaben con los fondos del seguro social, el cual cuenta actualmente con un trillón y medio de dólares. Sin embargo, el problema de la solvencia del seguro social a largo plazo se podría resolver de manera significativa si se expandiera la base de los impuestos. Hoy por hoy, el seguro social se sostiene por medio de un sistema regresivo de impuestos a los salarios menores de $87,900. Cualquier ingreso superior a dicha cifra y cualquier ingreso derivado de bienes raíces, bonos, acciones u otro tipo de inversiones no paga impuestos. Sería más justo que el impuesto del seguro social se aplicara a todo ingreso pues así obligaría a pagar impuestos a los que reciben buenos salarios y a los ricos, además de que aumentaría los fondos con que cuenta el seguro social en más de un 20%. De ser adoptada hoy, esa medida generaría suficientes ingresos para solucionar el problema de la disminución en los fondos del seguro social, aún sobre la base de los cálculos oficiales. No obstante, el presidente Bush y el partido republicano trabajan en favor de los ricos y jamás adoptarían esa medida. Por tanto debemos crear conciencia entre los trabajadores sobre el mito de la bancarrota del seguro social y organizarnos para combatir a la administración Bush y a Wall Street que nos quieren despojar de nuestro seguro social.

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Commentary

George Bush is trying to scare the American people into privatizing Social Security by claiming that there will be a crisis 40 years from now. Before jumping on the privatization bandwagon, it would be a good idea to look at two countries that already partially privatized their government pension programs: Britain and Argentina.

Following their reelection in 1984, Britain's Conservative Party passed a law allowing workers to opt out of the guaranteed government pension program and into private investment accounts. The Conservatives had already reduced the government pensions by linking them to prices instead of workers wages (another idea the Bush administration is throwing around). The result of privatization? “A bloody mess,” according to the Financial Times, a major business newspaper in Britain.

British government pensions are now the lowest in Western Europe. The privatization scheme cost the government billions of pounds (at current exchange rates a British pound is worth about two U.S. dollars). The real benefits went to insurance companies and other financial institutions that skimmed off as much of 30% of workers' contributions. These so-called investments were so bad that financial companies were later forced to reimburse retirees to the tune of 12 billion pounds. With the private investment accounts in such a mess, a half million British workers gave up their accounts last year and moved back to the government pension system.

Argentina's privatization effort ended up being bad not only for retirees, but also played a part in the country's recent economic crisis. As part of their free-market policies, Argentina partially privatized their government pension program in 1994. Tax revenues were diverted to private accounts, forcing the government to go deeper into debt. Economists Dean Baker and Mark Weisbrot estimated that the cost of privatization (including interest) was the same as the Argentine government deficit during the years after 1994. These deficits contributed to the eventual government default on their loans, and the painful economic crisis that saw the Argentine peso lose two-thirds of its value, drove the unemployment rate over 20%, and led to a further cut in government pension benefits.

With a track record like this, why would the Bush administration make such a strong push to privatize social security? It is part free-market ideology and part payback to Wall Street. But whatever the reasons, it is a recipe for disaster – not only for workers, but also for the economy as a whole.

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Social Security is the foundation for most workers’ retirement. Two-thirds of the elderly get more than half their income from Social Security benefits, and one-third rely on Social Security for more than 90% of their income. Social Security also insures the families of retirees and the permanently disabled – indeed, about 30% of all Social Security benefits go to non-retirees.

Just as the Bush administration raised the threat of ‘weapons of mass destruction’ to whip up support for the invasion of Iraq, they have created the myth that Social Security will go bankrupt and won’t be there for today’s workers. If the ‘official estimates’ are right, and no changes are made to taxes or benefits, Social Security has enough funding for 38 more years. Then, either benefits would have be cut by 25%, or payroll taxes raised by one-third. Currently, payroll taxes that pay for Social Security are about 12%, half paid for by workers and half by the company, so tax taken out of your paycheck would have to rise from the current 6% to about 8% – in 40 years, mind you!

These so-called estimates are about as flimsy the administration’s evidence of weapons of mass destruction in Iraq. They are based on the assumption that the number of immigrants will actually decline from today’s level and that economic growth will drop by more than half – to the slowest rate since before the Civil War, when the United States was an agricultural nation.

Supporters of privatization are also two-faced – in that they argue that Social Security will go broke because the economy will slow dramatically, but then they hold out the promise of big increases in stock prices based on past history when the economy grew quickly. Wall Street also wants you to believe that your investments would rise at the same rate as the average stock price (about 10% a year over the last twenty years). In fact, the typical stock investor only saw between a 2 to 3% gain, not even enough to keep up with inflation, since the benefits of rising stock prices mainly went to Wall Street, corporate executives and other insiders who rig the system.

The Bush administration also would like to hide the fact that even a partial privatization of Social Security would cost one to two trillion dollars. This is because Social Security is a ‘pay-as-you-go’ system, where today’s workers pay taxes that pay today’s retirees’ benefits. The monies diverted to private retirement accounts would have to be made up in higher taxes, more borrowing or lower benefits.

Social Security will have a funding shortfall as the baby boom generation, born after the Depression and World War II, begins to retire in the next five years and run down the Social Security trust fund, which has about a $1.5 trillion in it right now. But the long-term funding problem for Social Security could be largely solved if the tax base was expanded. Right now Social Security is paid for by a regressive tax system that only taxes wages and salaries up to $87,900. Any pay above that, and any income from real estate, stocks, bonds or other investments are not taxed at all. Expanding the current Social Security taxes to cover all income would not only be fairer, by taxing the incomes of the well-paid and wealthy, but would also increase tax revenue by more than 20%. If started now, this would be more than enough to cover the Social Security shortfall, even under the unrealistic ‘official’ estimate.

But Bush and the Republican Party work for the rich, and would never take this step. So for now, we will need to educate workers about the myth of ‘Social Security bankruptcy’ and organize to fight the Bush administration and Wall Street’s grab for our Social Security benefits.

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