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View Diary: Deficits, Debt, Social Security: Building your Conceptual Toolkit (17 comments)

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  •  Does Social Security contribute to the Deficit? (2+ / 0-)
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    katiec, Citizenpower
    Does Social Security contribute to the Debt? To the Deficit?
    No. Definitively no. I'll define the terms, if you don't mind.

    Social Security and Medicare are not government spending. They are transfer payments, made within the private sector, by employers to pay for the cost of labor. Since these are not government spending, they are not part of the federal deficit and they don't contribute to the debt.

    These programs are there to require businesses to pay the complete costs of labor, so that they can't externalize it onto the government or the charity of others. They require employers to pay for workers not just while they are working but when they can't work because they are too old or disabled.

    This is the fundamental truth about Social Security and Medicare that is completely lost in today's debate. People start thinking about their financing rather than what they are. As a result it becomes a question of whether there's enough revenue and whether the money should come from a payroll tax or the general fund or whatever. This is all nonsense. It doesn't even become debatable unless you totally misunderstand what these programs are intended to do.

    They are a part of the minimum wage system. They prevent employers from exploiting workers. The revenue should come from a fee levied on each hour worked so that it is related to the quantity of labor used. That's the only fair way to allocate this and the only economic way (the way to do it that creates the least distortion of the economy).

    But the funding has been slashed and slashed for these programs.
    That's because we have a national policy for the last thirty years or so of holding down wages and shipping wealth-producing jobs overseas. If you say Social Security has a shortfall, then that's equivalent to saying that wages are too low and that there are not enough jobs. Because the funding for it comes from payroll "taxes".

    And, in fact, wages are too low and jobs are too scarce. That's because we've opened up to international trade without managing it in any reasonable way. As a result, we run a consistent trade deficit. This year it will be around $50 billion or so, and that means that at least $1.5 billion will be lost to Social Security in funds not raised because we didn't produce those products here.

    And, since the 1970s, wages have gone down (for non-supervisory workers, the kind you and I are), while worker productivity has gone up. We are making literally one-half what we should be making, and would be if workers had been paid according to the increase in productivity--as they were for decades before the 1970s. And, since 1980, the percentage of business revenue going to workers has declined from 60% to 50%. We are very simply underpaid, and that is the exact reason Social Security is underfunded.

    We need to be extremely clear about this when we talk with people about Social Security. We need to explain what it is, why it is funded in the way it is, and why this means that the only, only, only way to strengthen it is to increase the number of jobs and what they pay. (Oh, and BTW, eliminate the trade deficit, which is the first step to increasing jobs and wages.)

    We need to work on the minimum wage. There should be an international minimum wage and we need to increase the minimum wage in this country until it matches the lifetime living wage. (I'll give you a clue. The current federal minimum wage is $7.25/hour, but the lifetime living wage in a place like NYC is closer to $25/hour.)

    When someone talks to you about Social Security you need to talk to them about jobs and wages. If we paid people properly then Social Security and Medicare would be awash in cash.

    So would the federal government.

    More at the Social Security framing page on dkosopedia. I invite you to edit and put in your charts.

    •  Yes I do mind if you define the terms (2+ / 0-)
      Recommended by:
      katiec, Citizenpower

      Because for one thing I dispute your overall framing and for another there are some factual errors in your presentation particularly as to Medicare.

      But what I wouldn't mind at all is your writing any or all of this up as a post or series posts and having signed up as a Contributer to the Socil Security Defenders Group submit the stories with my guarantee that they will get published without any edits whatsoever.

      The Social Security Defenders Group has some 200 members and a certain amount of followers and probably some regular lurkers. As such any diary submitted to it and published comes with a built in audience of moderately to extremely informed readers (this self-selective quality is part of what makes Groups valuable). You and really anyone have an open invitation to tap onto this predisposed audience, and as far as I am concerned "Let a thousand flowers bloom!". Plus there are a half a dozen or so other active Kossacks with Editor privileges and equal publication discretion, so if I seem unresponsive feel free to appeal to any of them.

      But no I have little intention of forcing my own contributions into your framing and definitions. Even as I look forward to your contributions.

      Bruce Webb, Founder, Chief Editor, Head Cook and Bottle Washer of the Social Security Defenders DK Group - SocSec.Defender at - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

      by Bruce Webb on Fri Jan 04, 2013 at 08:24:01 AM PST

      [ Parent ]

      •  Fine With Me (0+ / 0-)

        I'll sign up with the group and I'll be happy to submit a post.

        You don't have to worry about "forcing" your contributions on "my" framing and definitions. The Social Security framing page is part of the wiki and anyone can create an account and edit the wiki. It isn't mine (although I, frankly, wrote it, to get things moving). It's part of the community property of the site.

        As for "factual errors", you are free to point them out. However, I have sources for the numbers I post. When I say, for example, "we are making literally one-half what we should be making" that isn't an opinion. That's based on the actual numbers from the Bureau of Labor Statistics and represent actual numbers for non-supervisory workers and worker productivity. In inflation-adjusted terms worker productivity has gone up about 83% since the late 1970s and wages have fallen more than 8%.

        I can be wrong, of course, like anyone, but there's a degree of due diligence in what I say.

        In the meantime, I'd like your help and that of others who care about this to use the framing we have. That is very, very simple and very, very compelling:

        These programs protect workers from abuse. They make sure people can survive when they are not able to work because they are either disabled or too old. The money needed for them should be paid in proportion to the labor used, which is exactly what happens with payroll taxes. They do not change the nature of money, so they are not government spending. They are part of the private sector. The basic terms don't need to be changed and benefits don't need to be reduced. What we need to do is focus on increasing employment and the pay for employment. The incidental benefit of that is that Social Security will be flush with money.
      •  I Have the Diary Ready (0+ / 0-)

        I signed up to follow your group. I have a diary ready to go. How do I put it up to make sure it's part of the group?

        •  Your post will have a Publish button (1+ / 0-)
          Recommended by:
          Liberal Thinking

          allowing you to post it to your own page or to submit it to a Group you belong to in which case it will not show up even on your page until an Editor approves it. The easiest way is to just make sure your post has the tag 'social security' attached. In which case I will see it and repost it. And if I miss it somehow you can message either the Group or me and I can pick it up after the fact. In which case you wouldn't even have to join the Group.

          I'll follow up with Invites etc to make sure that you have every avenue for getting it reposted to SSD. And if you have already posted it to your page I can do that directly. See you (or your post) soon.

 - SocSec.Defender at - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

          by Bruce Webb on Sat Jan 05, 2013 at 08:34:00 PM PST

          [ Parent ]

          •  Published (0+ / 0-)

            I published the diary, Strengthening Retirement Plans. It did not give me an option to publish it to the group. I've followed the group, but perhaps that isn't sufficient to make me a member of it.

            Please go ahead and add it to the group. I've tagged it "Social Security" (among other things), so it should be visible that way.


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