Sunday, December 16, 2012

What If The Peasants All Start Talking Like This?

In Washington the Social Security narrative has been captured by the political classes and stood directly on its head, the better to tear it to shreds.  So powerfully has this been done that even the word "entitlement" has been transformed to mean not something deserved but something somehow undeserved, a handout, an unfair demand by the grubby "takers" on the unappreciated "makers."

Rarely do you find retorts like that of sociologist/author James Petras who sets the record straight.

The “entitlement” rhetoric claims that the lifetime contributions are insufficient and that several regressive ‘reforms’ are necessary to “save the systems” – at the expense of the beneficiaries. The so-called “Grand Compromise” proposed by President Obama and the “Fiscal Reforms” proposed by the Congressional Republicans are all aimed at robbing working class contributors of their pension savings through various specific regressive changes.

 ...only a small fraction of Social Security contributions are used to pay recipients, the bulk is transferred into the general treasury to pay for current expenditures – mostly hundreds of billions of dollars in war spending, payments on bonds and T-notes; subsidies to agro-business, bailouts to Wall Street speculative investment banks and other elite economic interests. Over the decades the Treasury robbed several trillions in SS funds, exchanging them for IOUs (never reimbursed) in order to provide a kind of “social insurance” for the military-industrial-Wall Street-police state power elite. If the accumulated payments to SS had remained in a special account instead of being siphoned off to cover the deficits incurred by military spending and overseas wars, SS finance would be in sound condition at least till the end of the 21st century. The Social Security Administration (SSA) would be able to adjust payments upward to real rates of inflation (about double the rate of adjustment now jiggered by the Government). The SSA could begin full payments at age 62 for most and at a lower age for those citizens working in hazardous occupations.

Even if we take account of the past Treasury heist, the SS fund could be fully replenished if the cap was eliminated on incomes above $110,000 and if the SS tax was made progressive. As is well known, self-employed billionaires and millionaires pay an average of $11,450 a year to the SS fund. If the cap was lifted, those earning a billion would pay a minimum of $100 million a year at the current rate, the millionaires $100 thousand a year. If a moderately progressive rate was in place, payments would double, pretty much ending the threat to SS.

There is no “entitlement crises” today. There is a crisis in the regressive payments and tax systems which finance the social insurance programs. The problem is elite tax evasion not the ‘aging of the population’. The problem is the use of SS payments to fund the power elite-robbing Peter (SS) to pay Paul (imperial wars).

Imagine what might follow if America's working classes started thinking, like Petras, that they have been cheated by Washington out of the security benefits they paid for and deserved, their money stolen and squandered on misadventures and those who they serve?

Recall when George W. Bush tried to privatize Social Security, telling the American public that their contributions had been turned into a filing cabinet full of IOU's, hinting they were essentially worthless.   He lied.  The United States government could no more default on those debts than it could the bonds held by its major foreign creditors without disastrously shattering its credit rating at home and abroad.   And some noticed when Bush went from peddling that horrible lie to appear at a white tie and tails affair where he greeted the attendees as "my base - the haves and the have mores."

That Obama has chosen to perpetuate this situation rather than addressing it head-on is perplexing.   Is he a sell-out?   Is he as bad as the guy he succeeded?   Or does he believe the situation has gone so far that to redress it would be to risk anarchy or at least shatter the confidence of America's essential lenders without whom the country could not function?

Yet the idea itself lives on.   It is grounded in fact.  It is fueled by public discontent.   The Great Lie that Washington clings to is by no means certain to hold.   If it fails it could trigger revolutionary change.   The American people have been cheated out of what is theirs and those who have done it need to fear them.


Owen Gray said...

If they can afford to bail out the banks, Mound, they can afford social security.

Ditto for the Canada Pension Plan.

Anonymous said...

The conventional political structures have failed ordinary people. Real change can only take place through a popular movement. Hopefully, this movement will be a progressive one.

Anyong said...

Republicans believe in the Friedman Chicago Group of economics which means naked capitalism, free to do what it wants in the name of freedom and devoid of any kind of regulation. It is shocking how Friedman was able to push for chartered schools in the aftermath of Katrina and New Orleans. It was done within a very short period of time after the floods when the wealthy rushed in there to establish these schools and imagine, get away with it. There are more chartered schools there now than public. How is that for controlling education. If people don't have the money to pay chartered schools they do without.

Anyong said...

Oh..forgot....any thoughts as to whether the Canadian government is putting into practice this kind of economics? It sure seems like it.

The Mound of Sound said...

@ Owen. If the U.S. reinstated pre-Reagan tax levels and cut military spending by half (still far more than its nearest rival) they could solve their supposed SS problem and their deficit, perhaps even begin to restore their once mighty middle class.

@ Anon. I'm not sure whether it is the institutions that have failed so much as the manner in which they have been manipulated or "captured" and put into service of narrow and privileged groups instead of the public.

@ Anyong. Yes, the Harper government is ideologically bent to favour privatization over the public sector in most things. Fortunately they've been restrained by an understanding of the risks they run if they go too far. In principle they would support two-tier health care and everything else that fits into radical social conservatism.

Among other things Harper transferred health inspection powers to the packing industries and we know just how well that worked. I think he's looking at establishing one or more private-sector run prisons too.

Fortunately our Social Insurance programme has never been pillaged as has the Americans' Social Security. There was a brief interval, many years back, when Parliament itself sought to "borrow" from the Social Insurance fund but conscience prevailed, the borrowings returned, and the fund restored. They haven't dared touch it since and even Harper knows Canadians would take to the streets with pitchforks and torches if he tried.