OK

God save Social Security from its friends. Because they don't understand the harm that they are proposing in putting forth 'progressive' 'fixes' to Social Security 'crisis'.

In 1999 a couple of little known economists (and not well enough known even now) named Dean Baker and Mark Weisbrot published a book called Social Security: the Phony Crisis. The introduction is on-line and linked. While a lot has happened since 1999 the fundamental thesis of 'Phony Crisis' has held up very well - Social Security is not broke, faces no crisis, and needs no particular change in its current financing structure. And what it certainly DOESN'T need is any proposal to extend FICA rates to capital gains or indeed even lifting the current payroll gap more than marginally.

Now this will seem like heresy and indeed like treason for a guy that is Founder of the dKos Social Security Defenders Group and indeed has the effrontery to use socsec dot defender at gmail as one of his mail accounts. I mean doesn't this guy know ----- (fill in the blank) about Social Security? Well oddly I do. In particular I have studied the numbers. More heresy below the Orange Squiggle of Obvious Sellout by Traitor Bruce.

The first thing for Progressives to realize is that the claim 'Social Security doesn't contribute to the deficit' is dead wrong. Not wrong in spirit mind you, but wrong as a pure matter of definition of 'deficit' and 'contribute'.

In point of fact Social Security has been running surpluses (as that is defined in federal budget reporting) every year since 1983. And STILL projects to run surpluses for a few years coming. Which is to say that using the top line number EVERYONE in the media and in CBO scoring to measure 'THE deficit' Social Security is 'contributing' to it. By REDUCING IT.

Now I can sense people shaking their heads out there. Because as informed people understand Social Security is officially 'off budget' and so can't contribute to deficits. Well it turns out that the first part of that is true. Social Security is by law 'off budget'. Moreover Social Security is by law prohibited from borrowing from the public to finance benefits should current revenue and assets ever fail to cover those benefits. In fact under that same current law such an event could only be addressed by an immediate cut in benefits so that the outgo met the then current inflow of revenue. And it is that projected overnight cut in benefits of around 25% in or around 2033 that is the very definition of 'crisis'. But the fact that Social Security is legally off-budget and prohibited from borrowing doesn't mean it can't 'contribute' to 'deficits' or 'debt'. While it would seem to follow it just doesn't.

The key to unraveling this is to understand the nature of the Social Security Trust Funds (there are two). The first SS Trust Fund was formally established with the Social Security Amendments of 1939 not to be any kind of investment fund or pension fund but instead to be a reserve and buffer for what was otherwise a Pay-Go Insurance Plan. While it is true that the law has required that all Social Security revenues in excess of current benefits be held in interest earning securities it turns out that the bulk of those earnings have to be retained simply to maintain the mandated level of reserves. Moreover there would actually be an active danger to Social Security if the level of reserves gets too high above that mandated minimum, and I would argue that the Trust Fund has been too close to that 'too high' level for years now. At least on a combined basis. Because as alluded to there is no 'Trust Fund' but instead two Trust Funds. And it turns out that one is currently drastically underfunded and has been while the other one is relatively flush.

All of this is probably so dense as to seem gobbly-goop. And maybe not worth any Kossacks wasting time on. Because this poster has GOT to be wrong here. Because everyone knows Social Security is funded by regressive taxation and the right answer is to restore progressivity by raising the cap or extending taxation to capital. Why it is a no-brainer!!

Well except some people with very fine brains designed the cap and the principle of not extending FICA to capital back starting with the CES in 1934. And produced what has been the most popular government program maybe in history, enough that it was once dubbed 'The Third Rail of American Politics' because anyone who dared touch it would be electrocuted electorally. But now a bunch of progressives seem to have bought into the right wing messaging of 'crisis' and are advocating 'fixes' based on what is still a Phony premise.

Social Security doesn't need a dime from billionaires. It just doesn't. Now food stamps, and infrastructure, and universal health care, and early education, and investments in climate change amelioration all need more than a dime from those billionaires. In fact I would happily return to Kennedy or Eisenhower top taxation rates to extract those dimes in many multiples. Just don't screw with a Social Security system that was designed on purpose NOT to rely on those dimes.

My motto: "NO to Chained-CPI, NO to Scrap the Cap, NO to 'Fixes' to a 'Crisis' that DOESN'T EXIST". Don't buy into Phony Crisis.

Slings and arrows welcomed in comments. Because I know this won't go down well.

EMAIL TO A FRIEND X
Your Email has been sent.