Oct 04 2012

The President Agreed With Mitt Romney on Social Security in the Debate

(10 am. – promoted by ek hornbeck)

And it’s not just people like me that support the Democratic Party Platform over any politician that noticed this. It was one of the President’s biggest most enthusiastic supporters; Ed Schultz of the Ed Show on MSNBC.

Let’s look at the transcript:

LEHRER: All right? All right. This is segment three, the economy. Entitlements. First — first answer goes to you, two minutes, Mr. President. Do you see a major difference between the two of you on Social Security?

OBAMA: You know, I suspect that, on Social Security, we’ve got a somewhat similar position. Social Security is structurally sound. It’s going to have to be tweaked the way it was by Ronald Reagan and Speaker — Democratic Speaker Tip O’Neill. But it is — the basic structure is sound.

And yes, I know the President offered a touching anecdotal of what SS has meant for his family and I respect that; however I’m going to borrow a line from someone whom I won’t speak for, but it’s a good line anyway so I’ll tweak it for my POV on this. Mr. President, don’t tell me what you believe about Social Security, you have shown what you plan to do with Social Security by agreeing to another Greenspan commission like “tweak.” So I’ll tell you what you really believe and why that is a problem.

For Instance, a brilliant brave MMT economist from the UKMC named Stephanie Kelton outlined the real facts about Social Security in order to protect it from “it’s saviors.”

Fact #1: Social Security is not “broken.” It is not “going broke.” It will, as Eisner told us more than a decade ago, “be there” as long as we protect it from its so-called saviors.


Eisner, Robert. “Save Social Security from its Saviors”, Journal of Post Keynesian Economics, Vol. 21, No. 1, Fall 1998). This is, in my view, the most honest and concise essay on the subject.

Bell and Wray. “Financial Aspects of the Social Security ‘Problem'”, Journal of Economic Issues, Vol. 34, No. 2, June 2000.

Fact #2: The balance in the Social Security Trust Fund is absolutely irrelevant when it comes to the government’s ability to make payments, in full and on time – today, tomorrow and forever.


Eisner (again) who said, “Accountants can just as well declare the bottom line of the funds’ accounts negative as positive – and the Treasury can go on making whatever outlays are prescribed by law”.

Bell and Wray again.

Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.” (1997)

Greenspan: “I wouldn’t say that pay-as-you-go benefits are insecure, in the sense that there’s nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The question is, how do you set up a system which assures that the real assets are created which those benefits are employed to purchase” (2005)

Social Security isn’t broken. It doesn’t need to be “fixed”. Why on earth would we play along with this charade in order to give cover to the Democrats?  Doesn’t anyone remember 1983?  For anyone who doesn’t, that was the last time we saw “incremental reforms” of the kind many “progressive” economists support.  As a result of those reforms, today’s workers are contributing more and retiring later.  And for what?  Those reforms were supposed to make the system solvent for 75 years.  Now, here we are, less than three decades later and it’s still “broken”?  And we’re supposed to defend further, incremental cuts?!

It’s pretty bad when even Alan Greenspan admits the truth about our money system(and strangely enough he even admits the Greenspan commission he was in charge of didn’t even need to exist but he’s not a moral man) but it is not acknowledged by the President still clinging to Clinton-ite revisionist economic history about the virtue of balanced budgets; the kind that led to 2 recessions and a private debt bubble run up off of private households fueled by the underlying depression 33 years into the making. As referenced above by the absolute facts, the fact that SS needs the kinds of “tweaks” the President is referring to with the Greenspan commission reforms to “save it” is absolute BS.

This position is hereby indefensible so I’m going to say so. This is why, though I don’t impugn the motives of those that say they want to raise the cap and other fixes(I have cited and do respect many of the economists she is criticizing though she is absolutely right to do so), because if there really were constraints that would be the responsible way to do it, but it’s actually irrelevant to the financing of the program. It doesn’t help to accept that argument as Stephanie Kelton is saying in this piece because this is a political game and giving respect to that argument is a losing strategy because the argument is complete nonsense.

This isn’t an arithmetic game as far as financing the program because we create dollars as a currency sovereign and can always meet our obligations with every treasury security and special issue security in Social Security to finance SS income. The better more beneficial argument on this path would be a two pronged solution where the President and all of our Democratic leaders say that income inequality and the fact that minimum wage has not kept up with inflation is an utter disaster because it is, for multiple reasons. In order for the minimum wage to be in line with inflation the minimum wage would have to be $10.66. The president said he would make an effort here, but he has not and he didn’t talk about it in the debate either.

Since SS is tied to a wage index, if 90% of wages were once again captured(they do not capture 90% of wages anymore because of 33 years of income inequality) that would solve the projected shortfall(though the shortfall will not bankrupt the program and payroll taxes do not need to finance benefits) AND it would add the needed boost to fix our economic problems. People would buy things and would be able to pay down some of their debts if they had disposable income which are where our economic problems are. We all suffer from income inequality because our spending and lack thereof is all related. That’s the fucking disaster! NOT the stupid bipartisan deficit BS we hear politicians drone on about while too many of us let them.

We should just mandate that we just fund SS like current law dictates we automatically fund Supplementary Medical Insurance (SMI) Trust Funds in Medicare. We can also decide SS is too big to fail and just fund full benefits like we have decided our military is too big to fail(and must remain strong as the President says spending more than the whole world’s defense budgets), which is a shame, because we need cuts to the military and those commitments need to go into the pockets of human beings that can spend as well to gain resources for their well being rather than bombs. Bombs that kill human capacity ie people we can export to, and now sadly even american citizens abroad thanks to the subversion of our laws.  

There was no talk of cuts to the military(and no one is worried it is going to go broke), only to social security as we can see from history what “tweaking” means. It’s all up there in Stephanie Kelton’s piece for you to read and her research is solid as a rock like the rest of the UKMC’s research. It was “tweaking” in 1983 that raised the full retirement age to 67(what the president is clearly referring to), when we desperately need to lower the retirement age to 55 as James Galbraith says so workers can retire and give openings to the younger workforce but to also have more automatic income suppliers to our economy because spending is income. But somehow the well being and living standards of seniors and those around them that love them are never part of the “tweak.”

Not to mention that whole Greenspan commission deal was a ripoff for seniors even if you accept the shitty standards of that deal. Regressive payroll taxes for workers were raised providing the trust fund surplus in the promise that the wealthier income tax payers would foot the bill later according to that deal and the flawed logic behind it. Well now is the time for income tax payers to step up but have they? Does Congress care about making them uphold their end of that deal? Nope.

They’re not really even being asked to in a serious way, and since the 2010 Bush tax cut sellout which led to the debt ceiling debacle as I predicted, why would they think they have to? Therefore as Stephanie Kelton says, here we are again talking about “fixing social security” and way too many so called Democrats have already forgotten this history and just accepts this BS. And when it’s pointed out many of them get mad at me, because during an election I’m just not supposed to say that for superstitious reasons? I don’t know why acknowledged facts upsets some people, but unless we demand that there is acknowledgment of the fiscal and monetary reality our system is capable of operating under with regard to financing our social insurance programs, there’s not really much of a choice here in this debate after all.

We should NOT be letting Mitt Romney control the terms of this debate or agreeing with him on social security lies like the President is doing. We should not be agreeing with Mitt in any way because that viewpoint is destructive and dead wrong. It also makes it look like Democrats don’t stand for anything when we don’t offer a bold contrast to the lies. It’s partly why this debate didn’t go very well for the President. We should demand Democrats do not support anymore sellout deals like the Greenspan commission deal and do our best to pressure all our leaders to acknowledge the empirical data that supports everything Stephanie Kelton laid out in this diary.

Our economy, human lives, and the productive capacity within those lives our economy is based on depend on acknowledging these facts and not being hostile to them regardless of election season.

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