Hey everyone, I finally posted a diary! And… it’s totally not the subject matter I had in mind for my first diary! I was going to write about making stuff in America, and I still plan to, but something came up.
You see, I have a good friend who is a tea partier. Some of the fun in our friendship is the ability to trade jabs back and forth on political topics. We actually find common ground sometimes; it’s amazing! But something recently said by her prompted me to really sit down and write a long response. It was about social security, and her argument was that she would better invest the money she was paying into social security in the private market, and it was in response to me saying that the far right wanted to eliminate social security. To my surprise, she was actually in favor of doing away with social security.
I can’t just let that sit. I wanted to put up my work for some peer review before I send it off, and this seemed like the natural place to post it. I’ll be watching the comments, and if anyone has some constructive criticism I’d greatly appreciate the feedback! (She also was talking about the Department of Education, and I mentioned the EPA in our conversation. So I included bits about them, too.)
First, let’s talk about unemployment insurance, which was created at the same time as social security. The idea is that workers pay into it while employed, and should they become unemployed by factors outside of their control (i.e., layoffs), then they have some level of income for a time so they can pay their bills and survive while they look for a new job. This really is insurance. The advantage here is that since those on UI still have income, they can buy food, clothes, and other essentials, and money keeps moving through the system. Even if their job loss comes at an awful time when some other catastrophe drained their savings, they have something to live off of for a time, and businesses that provide these essentials still have sales. If the people on UI didn’t have this safety net, then when they are laid off, they stop spending, probably lose their house (depressing house values from oversupply), and fall off the grid! That means that those companies that were in the business of supplying those essentials also see a drop in sales, and layoff more people, leading to a cascade effect. FDR noted this idea when he signed UI into law. It’s for these reasons that UI is extremely economically stimulating. In fact, McCain’s 2008 economic advisor did a study showing that UI has a 1.6 return to the economy. That is, for every dollar sent out to those receiving unemployment insurance, $1.60 of GDP is generated in the economy. There are a lot of other major economists that agree with this view.
Now, let’s look at social security. Millions of Americans rely on social security to live. For many, it’s their only income. For others, it’s the difference between comfort and extreme poverty. More than twenty million Americans rely on it. I repeat: 20,000,000 people. I somehow doubt that Wal-mart stands ready to employ 20M additional greeters. What do you think would happen if you cut social security off for those twenty million people? I mean outside of having seniors living (and dying) in the streets. (If you think I’m exaggerating on that, think again. Before social security went into play, well over 50% of seniors were living in poverty in the US. Many studies say that number is actually VERY low and could be as high as 80 percent, while only around 9% are in poverty now.) Think about it. Twenty million people with their income evaporated. That’s like twenty million people getting laid off overnight, with no unemployment insurance. What do you think would happen to the economy then?
But WAIT, you might say. If we stopped collecting social security taxes, more people would have money in their pockets! Yes, this is indeed true. In this case, one of two things can happen: the person with this extra money might spend it, or save it.
Saving money to a certain degree is a good thing. It’s great that you’re future-minded enough that you want to start saving. But, saving money doesn’t stimulate the economy very much. Even investing in the stock market tends to be very weak in terms of its stimulative powers.
This means that the money now not being spent by seniors who need it isn’t being anywhere near as stimulative as it would have been, slowing the economy substantially. But what if that person spent it instead? Then when said person hit retirement age, they would wind up on the streets with the other homeless seniors. Even spending most of it and saving a little wouldn't be anywhere near as economically stimulative as just making sure those seniors have a baseline income, and even when you do things right and save, sometimes there's an asshole on Wall St. that's more than willing to steal that money for their own gain. What would you tell someone that has otherwise done everything right, only to watch all their savings get obliterated by those irresponsible assholes? At least there's social security, right? Oh, wait.
One thing you have to understand is that social security is not a personal investment vehicle. That’s a pension or a 401k. Social security is a social contract in our society that says when you hit retirement age, you don’t have to live in a cardboard box and eat cat food until you die. This is true whether you were on top of the income brackets or just a low-level worker your whole life. You don’t have to stop sleeping at 50 for fear of what happens at 65, there is a safety net to catch you, even if you did everything right with your savings only to see it all wiped out by a bunch of irresponsible assholes on Wall St. (see: October 2008). One thing that should be clear now is that such a thing just happened not too long ago, and I’m willing to bet that there are millions of people nearing retirement age that are very, very happy that social security is going to be there to catch them.
Also, the whole idea of privatizing social security that was being pushed by the Republicans now seems awfully silly in hindsight, doesn’t it? I mean the idea of giving the funds to the very same people that caused this mess and needed Bush’s TARP program to keep the economy from, in McCain’s words, cratering? Where would we be if we went ahead with that idea in the early 2000’s? And given all this, if we did eliminate social security, how long do you think your own savings and investments would be worth anything?
Saving can be a very, very good idea. I’m all for you taking a portion of your paycheck and putting it into savings, but doing it at the cost of eliminating social security would be like only shooting yourself in the foot once to save money on bullets.
Next up is the Department of Education. You mentioned that if I had a kid I would try to home school them or get them into a private school. This is true, but only if I could afford it. Most people can’t afford things like that, and the beauty of a public school system is that even if you can’t afford private education or lack the ability to home school your child, we can still have a literate, educated population, generation after generation. (I seriously doubt I would be able to afford private education for any children I have. That costs mad money.)
I do agree that some of the ideas being pushed at the national level for education aren’t good ideas. These policy initiatives can be changed without killing the whole department, however. If anything, the DoE needs more funding, not less.
Did you know that it’s thanks to the DoE’s Pell Grants that millions of people (mostly young adults) can afford to go to college? Millions, my friend. Including: ME. If it wasn’t for the government’s help, I would never have gotten this far. Tell me, would you have been happy if I had never had a hope of getting a degree?
Other western countries are far more driven in getting their young into colleges. A student in France gets a lot of financial help, all the way own to discounts on public transit. How many generations missing these opportunities would it take to fall being to a point where we look like the world in “Idiocracy” to the rest of civilization? I’m guessing not many.
The EPA I shouldn’t even need to address. As I said, it’s budget fairly minimal compared to the overall federal budget, and the good it does is immeasurable. The Post-Tribune did a wonderful look at the history of the Clean Air Act a while back, specifically in the context of our home region.
Our government does a lot. My goal isn’t to tear it down, but make certain it works for all people, not just people that have a lot of money. If you are concerned with the level of taxes you pay, I’d recommend taking a look at the corporate tax rate. I’ll wait. … Seems pretty high, doesn’t it?
Well, it turns out that’s not really what companies pay. In fact, a GAO study showed that two-thirds of US corporations paid $0 in income taxes between 1998 and 2005. $0. Zip, zilch, nada. It’s still happening, too. Last year, Bank of America paid: $0. Citi Bank: $0. G.E.: $0. You PERSONALLY paid more in taxes than those huge mega-corps, despite billions in profits. That’s what kind of loopholes exist in our tax codes, just for our mega-businesses.
Excuse me, but I made a mistake above. They don’t simply “exist”. They were purchased, put into place by politicians who just happened to get lots of money spent on their behalf from people that just happen to be on the payrolls of giant businesses. Maybe it’s just me, but I can’t help but feel if these businesses are going to use American infrastructure and laws and marketplaces to make absurd amounts of money, they should pay some level of taxes. That would go a long way to closing the deficit. If people wanting to shut down the federal government get into power, especially when they’re being helped into office by huge amounts of corporate advertising thanks to Citizens United, do you think they’ll make certain that these companies start paying their fair share?
Three pages in Word, and it’s time to wait for the next installment. I’m going to be writing down and publishing more of my ideas in the future, I hope you’ll read them.
Regards,
Tom
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Note that this is a letter between friends, not a scientific document, so forgive me if I can't find all my sources right now. But for some of it you can check Rachel Maddow's 10-21-10 show, as well as this link http://voices.washingtonpost.com/... and this one http://www.politifact.com/... . Also, I feel rather tired, so odds are I made some typos. Please forgive those.