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Crossposted from Hillbilly Report.

It seems in these debt limit talks some of the "reckless spending" both Republicans and Corporate Democrats are talking about without adding new revenues is entitlement spending. Entitlements that include Social Security. Despite the fact that the Social Security trust fund regularly runs surpluses that are raided for real "reckless spending" such as tax cuts for the very greedy and wars of failed ideology.

Everyone in Washington seems ready to do one thing. Steal your Social Security. Of the proposals made to "insure the solvency" of that program one thing that keeps coming up is lowing the cost of living adjustment, or COLA which means only one thing. Less money for more of the people who need it the most:

Many deficit reduction proposals under discussion reportedly include a lower cost-of-living adjustment (COLA) for Social Security benefits. This change in how to calculate the COLA would reduce it by an estimated 0.3 percentage points per year. This seemingly small cut would erode benefits over time. Under the proposed COLA, an average-wage worker retiring this year would, in 2031, receive $1,754 less in annual benefits. This represents a decline of 5.4 percent in the next 20 years.

http://www.epi.org/...

Worse yet this reduction will compound over time so in essence the longer you live and the older you are the more money you lose:

The COLA cut would affect all Social Security participants, including current retirees. It is even worse than an across-the-board benefit cut, because the reduction compounds over time: the oldest retirees tend to be the poorest ones. Proponents argue that such a cut is a technical fix, based on the claim that the current COLA overstates inflation. However, as EPI economist Josh Bivens explains in a recent briefing paper, the current COLA likely understates the inflation faced by seniors, who devote a much greater share of their income to health care expenses than is reflected in either of these two ways of calculating the COLA.

This chart illustrates:

Photobucket

The sad part as pointed out by Hillbilly and many others is that Social Security still runs surpluses and is not part of the problem. The problem is someone is constantly picking it clean because it belongs to all of us.

Even sadder is too many of us believe the hype, propoganda and lies. Too many of us are too easily whipped into a frenzy to oppose our own interests for a snappy slogan. Until Americans as a whole are smart enough to fight for themselves for a change we will continue to see much more of the American dream stolen away from our hands. The real cost of the raiding of the Social Security surplus time and again is freedoms we fought for and won long ago. The freedom to age without financial hardship.

We can only hope our fellow Americans still want to be great and stand up for themselves once again.

Originally posted to RDemocrat on Wed Jul 27, 2011 at 06:44 PM PDT.

Also republished by Social Security Defenders.

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Comment Preferences

  •  Your thoughtful diary is relevant no matter your (5+ / 0-)

    age. The breadth of the cut you describe hits all working and disabled Americans who either are on or will be on Social Security as their primary source of income.

    As that is the great majority of us, this is a great, big, fat deal.

    Hate is going on in this world and it has to stop. Hate causes a lifetime of pain. ~ Mark Stroman 7/20/11

    by 4Freedom on Wed Jul 27, 2011 at 06:54:39 PM PDT

  •  RDem - just a nit (1+ / 0-)
    Recommended by:
    RDemocrat

    According to the Hillbilly report, and everything else I have read, Social Security started running annual deficits a few years ago and will have a cash flow deficit again this year. The Trust Fund has a surplus of $2.6 Trillion which is held in interest bearing Treasury notes, which it has started to cash in. In your diary you state that the Trust Fund "still runs surpluses" which you may want to edit based on the Hillbilly link.  With the boomers retiring the forecast is that the annual cash flow deficits in the Trust Fund will expand and the cashing in of the Treasury notes will accelerate.

    "let's talk about that"

    by VClib on Wed Jul 27, 2011 at 07:11:59 PM PDT

    •  No, not really — (0+ / 0-)
      surplus of $2.6 Trillion which is held in interest bearing Treasury notes, which it has started to cash in

      It has been using interest on the surplus to the extent needed. The rest is accrued to the SS trust fund. No bonds have had to be cashed in but the amount going into it is just the remaining interest.

      The fund should remain about the same but not growing as fast. If this down turn runs a whole lot longer they may have to tap the corpus of the trust.

      That is what it is for!

      The Baby boomers have started retiring. That is why the trust has been allowed to build. It is meant to be spent for the baby boomers. If not now, when?

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Fri Jul 29, 2011 at 10:53:11 AM PDT

      [ Parent ]

  •  This is what went wrong (1+ / 0-)
    Recommended by:
    Above59th

    I have no problem with modifying social security to extend it till the end of the century.  I actually think this is the responsible thing.

    However, the government doesn't have the right to take money from social security.

    If a pension fund manager in the private market took money out of the fund, and spent it on other parts of his business without replacing it, he would go to jail.  It isn't his money.

    For some reason the government can raid funds with impunity.  This has to stop.

    •  Name one other thing is can do with it? (0+ / 0-)

      Yes, your problem with the trust fund has been brought up since before the program even existed. It has been used by  both left and right.

      Because, it is pretty much true.

      The huge problem is that there aren't too many options:

      (1) Lock it in a vault.
      (2) Put the excess into the general fund.
      (3) Buy foreign government bonds and gold
      (4) Buy private assets

      (1) is terrible since by the time you took out your $1 that you placed into the trust 30 years ago, it isn't worth jack anymore. Inflation kills this idea.

      (2) Is what we currently do. Some will say just pay down the debt, but regardless of how it is reported - unified or now, the government would just use the extra debt room to consume more and you have the current situation. It sounds nice in theory that every penny should go to debt deduction, but in practice since dollars are fungible, it just means some other dollar that would have done to debt reduction is spent in its place.

      (3) This might be the best option. It is essentially buying up foreign currencies then parking it in foreign debt to accrue interest. The big plus is that it gets the money out of the domestic hands that can spend it. The problem is that might not hold up. It seems like it would just funnel back to us pretty quickly.

      (4) This is just so ripe for abuse. So Congress would not only control regulation and tax policy of companies, but now could invest in it in those same companies? Talk about the mother of all special interest problems. We might as well just nationalize all these firms then.

      There just isn't really a good alternative, so it is not an easy thing to solve. Although there has to be something better than the way we are doing it.

      •  No, your ideas are silly. (0+ / 0-)

        It is safest in treasuries where it is now.

        The US treasuries are the best and safest. That's why other countries park their funds in it. Which is to say, they buy Treasury bonds too.

        is terrible since by the time you took out your $1 that you placed into the trust 30 years ago, it isn't worth jack anymore. Inflation kills this idea.

        This is the sillyist. You don't place your money in the trust then take it out. SS is insurance that you buy for an annuity. You are guaranteed payments in your older years — for life. You are guaranteed payments if you become disabled. Your dependents are  guaranteed payments if you die.

        Plus the funds are earning interest.

        I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

        by samddobermann on Fri Jul 29, 2011 at 11:05:16 AM PDT

        [ Parent ]

    •  They aren't. See above. (0+ / 0-)

      No one is raiding funds. SS shouldn't be included in the deficit. It just is to make it look better. All surplus over payments goes to the fund.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Fri Jul 29, 2011 at 10:55:20 AM PDT

      [ Parent ]

  •  RDemocrat, you and your (0+ / 0-)

    organization's hypothesis is wrong.

    1 You are guaranteed payments, but not a level of increase.

    2 Your can't project COLAs without stating your assumptions. Your assumptions are wrong here. The old COLA, which the original Actuary for SS, is not designed for stability and is based on wage inflation — which in the old days was often  greater than actual inflation.

    The last two years the COLA has been 0 but there has been some cost inflation. Thus the chained CPI would have been something which is greater than nothing!

    Until we get back to robust employment and wage growth the chained CPI is likely to be greater. And at the better time more income tax money will be going into the treasury so Social security can be augmented by a) changing the cOLA again or b) extra payments such as the $250 checks that have gone out several times.

    The second may actually be better because the windfall allows buying something special — or saving and spreading.

    This whole panic is nuts. Very few can do accurate projections for 20 years into the future. No one has yet stated their assumptions so all of these claims could be using different or flawed assumptions.

    Your organization is discrediting itself by promulgating this alarmist poppycock.

    I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

    by samddobermann on Fri Jul 29, 2011 at 02:32:18 PM PDT

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