Tuesday, April 9, 2013

Social Security, the imaginary crisis.

I am offended that President Obama is attempting to cut Social Security benefits by changing the way that inflation is calculated. I volunteered for my local representative's campaign (Democrat), supported my new governor (another Democrat), and have followed the President like every other political junkie. He got my vote last year, and right now I think I should have voted for the Green Party.

The numbers for Social Security don't match the rhetoric of the Republicans, or now the Democrats. Social Security has run a surplus every year that it has been in place and if the cap for social security income was raised and we made it a national priority to get more Americans to work (the percentage of Americans actually working is now less than at any point since the 1940s) which will strengthen our economy, social security, shrink the deficit, and many other things that need to happen. The Democrats are falling into the corporatists trap now. Thinking back over my knowledge of American history, the last time the Democrats passed a massive bill that created real reform that made our country better was in 1968, when my parents weren't even in school yet, which was the Civil Rights Act. Every bill the Democrats have pushed for since then has been weakened before it hits the floor hoping that the Republicans will vote for it "as is" (haha) after which the Republicans dilute the bill even more, slash taxes, slash spending (except our massive corporate income tax breaks for large corporations) and our country is the worse for it.

I have a real historical example for why governments need to boost employment in recessions. When President Franklin Roosevelt was President the economy improved from 1933 to 1937, when the economy shrank, and than increased after his second New Deal came into place. In 1937 the President and Democrats decided to focus on the deficit, after which the economy took a short tumble, until President Roosevelt got his second New Deal in place which helped the economy grow until it became a war economy. Once the changes in his reforms took hold which took some time, unemployment dropped before World War II even began. Source

Obama should not attack social security by trying to fix what isn't broken, he is doing what President Franklin Roosevelt did right now by abandoning his base in 1937 afterwhich the economy will suffer if we take that money out of senior's pockets and increase Social Security's surplus  which is bad because that money won't be in the economy helping people. When and if social security runs a deficit, the first thing is it has over $2 trillion worth of treasury bonds to cash out, so if it ran a small deficit it wouldn't be a problem for a long time.

If the government chooses to increase revenue as opposed to tap into the vast reserve of cash that has accumulated over 70+ years that is reserved for Social Security it could last for a while without changing anything (it is a complicated analysis because it is dependent on state of unemployment, wages, distribution of wealth, etc.) which wouldn't mean immediate doom, and there have been times in past where Social Security ran a deficit from 1975-1981 and nothing terrible happened. The easiest way to increase the amount of money Social Security makes would be to increase the cap that taxes are paid on, which could cover the deficit given our current distribution of income for a very long time. The alternative is to present more incentives for businesses to hire people which would reduce unemployment payments from the government and increase social security payments to the government. Given our unemployment crisis right now as a country this is my preferred approach, and that it would be sustainable assuming nothing drastic changes (like a stock market run which creates layoffs followed by a depressed economy like happened in 1929 and 2008).

Blog Every Day April 2013 post number 9

No comments:

Post a Comment