[Mb-civic] Re: LA Times Editorial, Transition to Nowhere

[Patrick Hunter]

I offered the following as a letter to the editor, LA Times.  I hope you find it useful.  Michael, your sister Wendy called to do some skiing.  Should be fun.
Pat

Re; Transition to Nowhere
LA Times
1-24-05

Great editorial!  I would pick on one point.  Social Security does not go "bankrupt" in 2042, just a little short.  As I understand it, a short fall in ongoing collections from payrolls starts around 2018.  The shortfall is then made up from the Social Security Trust Fund which is really a big I.O.U. from the general fund.  That means general revenue needs to start making up the shortfall.  (Ah, there's the rub!)  At about 2042 that fund is used up, but the system is still working.  All things being equal.  Maybe.

Payroll taxes are still coming in, just not enough to cover all of the projected requirements for the benefits at that time.  That is assuming that the usual increases are being made to benefits for inflation, that the payroll tax rates are not increased, that the retirement age is not increased, that the economic growth of the country has been relatively flat, and several other factors.  There are a number of options for increasing the revenues, or for shifting the benefit payments.  A means test may be an option.  That is, folks that don't need the benefit wouldn't get it.

So the system is anything but bankrupt.  Another simple option is just to plan on some extra contribution from the General Fund.  But back to the "rub".  That is, that the Federal Budget is already running a massive deficit.  That deficit is actually larger than is reported because Social Security is pumping over a hundred billion a year into the general fund.  The fund receives special bonds in return.  Washington politicians, everybody there, have been lying to us for years about this.  They are all in on it!

As we baby boomers start retiring, we are not going to be paying those payroll taxes; and, we are going to be collecting benefits.  This is a double whammy.  THIS is what the critics are staring at: like the train's headlight in the tunnel.  The federal government is, year by year,  going to have to raise more general revenue, and/or cut more expenses, to meet its obligations for Social Security.

The Bush crowd has lowered tax revenues on the well-to-do, and taxes paid by corporations are increasingly smaller as a percentage of GNP.  Total debt of the U.S. is higher than ever and increasing.  Military expenses are higher than ever and increasing.  This is not a pretty picture.

>From the conservative viewpoint, the answer is to shoot the legs out from under Social Security.  Their alternative is "private ownership".  An illusion is created that claims that individually owned plans are inherently better than a nationwide system.  Conservatives are always saying it is best to "stand on your own two feet".  You know what, we "been there, done that".  It didn't work in the new industrialized society before, it ain't gonna work now.  Conservatives want to get private plans started with the younger people that are still working.  They then drive a wedge between the old and the young, and they muster enough political support to cut loose social security and the elderly that depend on it.  (These are the Compassionate Conservatives!) 

Human nature, and economic realities, are what make it impossible for all Americans to have viable Security plans of their own.  Social Security exists because it works, and works beautifully. If we didn't need it, it wouldn't be there.  Getting rid of something that works, and is a national necessity, just for idealogical reasons with no basis, is a really stupid idea.  

What this analysis does reveal, is the need to deal with the failed economic policies of this country.  The U.S. is looking at an economic trainwreck, we need to get on a different track right now.
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