FacebookTwitterGoogle+RedditEmail

A New Social Security Snow Job

by DAVE LINDORFF

 

With Bush’s Social Security wrecking scheme on the ropes in the face of widespread public distrust of his intentions and his “facts,” the inevitable scare stories are now coming out of the politically manipulated Social Security Administration itself.

The latest ­the economic equivalent of those reports about mobile germ and chemical warfare factories in Iraq that surfaced in the drive toward an invasion of Iraq–is a new report from the Security Trust Fund Board of Trustees, claiming that things have somehow gotten worse and that the Fund will face “insolvency” in 2041, a year earlier than an earlier Social Security projection had claimed. As well, the date at which the Administration predicted that Social Security would have to start drawing down the accumulated Trust Fund would be moved forward a year to 2017.

This scare story comes, oddly, after predictions by the same agency’s actuaries only a few months ago that relatively robust economic performance had actually pushed those two dates back a few years.

The whole scare story, which was loudly trumpeted by the Associated Press with a misleading headline screaming “Social Security Set to Go Broke in 2041,” is a political scam. The Trust Fund Board is chaired by Bush Treasury Secretary John Snow, a political charlatan who immediately grabbed the opportunity to claim that the new projection meant that absent some major reform of the system, either payroll taxes would have to be raised 3.5 percent or benefits would have to be cut by 22 percent.

Left unsaid both by Snow and by the AP is that the latest prediction is based upon a wholly unreasonable forecast for U.S. economic growth over the next decade and the next four decades. In order to arrive at such a dire projection for the fund, Snow and the board assumed an average economic growth rate for the U.S. economy of just 1.8 percent, which would be almost half the economy’s average growth rate for most of this century and by far the lowest rate of growth in the nation’s history.

If the economy were to grow even marginally faster than that-at say 2 percent per year-over the next four decades, there would in fact be no shortfall in the fund.

Unfortunately, for the ratings-driven corporate media, reporting this kind of desperate scare story is like reporting on an approaching snow storm-the scarier they can make the news the better. Never mind that the storm will likely peter out in flurries or rain, never mind that the U.S. economy is much stronger than political hacks like Snow are pretending it is-the point is to get readers and viewers to hooked.

If it were true that the economy were going to grow that glacially-and if the administration really believed that prediction-it would have to concede that its four years of outrageous tax cuts and massive deficits, all of which they had claimed would stimulate the economy, have been a colossal failure. How to explain why record tax cuts will produce a record slow growth in the U.S. economy over the next two generations?

Put aside the question of whether tax cuts do or do not stimulate economic growth. The point is that if the U.S. economy is in for such a prolonged doldrums, which would inevitably be accompanied by massive unemployment, there are more pressing concerns than rescuing Security forty years from now. We’d better start doing something to prepare for a much earlier crisis.

But in fact, the projection is a lie. Just ask Alan Greenspan and the Federal Reserve, which just raised interest rates a quarter of a percent and warned of further rises-not the kind of economic braking action you’d expect if the nation were headed for a ditch.

Nobody in the economic forecasting business, and certainly nobody in the investment community, where people bet their fortunes on predicting the direction of the economy, anticipates such a prolonged slump in growth.

Nor should anyone who’s counting on Social Security for their retirement.

Besides, Snow is wrong even regarding his warnings about the implications of a slump. If it turns out that at some point there were going to be a shortfall in Social Security funding, there are other answers besides raising the payroll tax on workers or slashing benefits for retirees. The simplest is raising the payroll tax on the wealthy, who currently only pay it on the first $90,000 of income. The tax could also be applied to unearned investment income, which currently pays nothing into the Social Security fund. Best of all, there is another option that has never been discussed: changing the formula that has employer and employee each pay 50 percent of the tax. There is nothing magic about that ratio, after all; it was simply how the system started out in 1935. It could just as easily be shifted so that employers paid 70 percent and employees paid 30 percent, or even to a 90/10 formula, where employers would foot 90 percent of the bill.

Then we could raise the employer tax rate by a few percent without hurting workers’ paychecks at all. After all, over the last decade, corporate taxes have been slashed. They would hardly notice a rise of a few percent in their payroll tax bill, which would not even bring most companies back up to the corporate tax rate they were paying in 1990.

Snow’s new “wolf” cry notwithstanding, there is no worsening Social Security crisis. There is no crisis at all.

And it’s time that progressives in Congress, and journalists in the mainstream media, started pointing this out loudly and clearly.

Meanwhile, expect more scare stories from an increasingly desperate administration.

DAVE LINDORFF is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal. His new book of CounterPunch columns titled “This Can’t be Happening!” is published by Common Courage Press. Information about both books and other work by Lindorff can be found at www.thiscantbehappening.net.

He can be reached at: dlindorff@yahoo.com

 

 

 

 

 

 

Dave Lindorff is a founding member of ThisCantBeHappening!, an online newspaper collective, and is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

January 24, 2017
Anthony DiMaggio
Reflections on DC: Promises and Pitfalls in the Anti-Trump Uprising
Sharmini Peries - Michael Hudson
Developer Welfare: Trump’s Infrastructure Plan
Melvin Goodman
Trump at the CIA: the Orwellian World of Alternative Facts
Sam Mitrani – Chad Pearson
A Short History of Liberal Myths and Anti-Labor Politics
Kristine Mattis
Democracy is Not a Team Sport
Andrew Smolski
Third Coast Pillory: Mexico, Neo-Nationalism and the Capitalist World-System
Ted Rall
The Women’s March Was a Dismal Failure and a Hopeful Sign
Norman Pollack
Woman’s March: Halt at the Water’s Edge
Pepe Escobar
Will Trump Hop on an American Silk Road?
Franklin Lamb
Trump’s “Syria “Minus Iran” Overture to Putin and Assad May Restore Washington-Damascus Relations
Kenneth R. Culton
Violence By Any Other Name
David Swanson
Why Impeach Donald Trump
Christopher Brauchli
Trump’s Contempt
January 23, 2017
John Wight
Trump’s Inauguration: Hail Caesar!
Mark Schuller
So What am I Doing Here? Reflections on the Inauguration Day Protests
Patrick Cockburn
The Rise of Trump and Isis Have More in Common Than You Might Think
Binoy Kampmark
Ignored Ironies: Women, Protest and Donald Trump
Gregory Barrett
Flag, Cap and Screen: Hollywood’s Propaganda Machine
Gareth Porter
US Intervention in Syria? Not Under Trump
L. Ali Khan
Trump’s Holy War against Islam
Gary Leupp
An Al-Qaeda Attack in Mali:  Just Another Ripple of the Endless, Bogus “War on Terror”
Norman Pollack
America: Banana Republic? Far Worse
Bob Fitrakis - Harvey Wasserman
We Mourn, But We March!
Kim Nicolini
Trump Dump: One Woman March and Personal Shit as Political
William Hawes
We Are on Our Own Now
Martin Billheimer
Last Tango in Moscow
Colin Todhunter
Development and India: Why GM Mustard Really Matters
Mel Gurtov
Trump’s America—and Ours
David Mattson
Fog of Science II: Apples, Oranges and Grizzly Bear Numbers
Clancy Sigal
Who’s Up for This Long War?
Weekend Edition
January 20, 2017
Friday - Sunday
Paul Street
Divide and Rule: Class, Hate, and the 2016 Election
Andrew Levine
When Was America Great?
Jeffrey St. Clair
Roaming Charges: This Ain’t a Dream No More, It’s the Real Thing
Yoav Litvin
Making Israel Greater Again: Justice for Palestinians in the Age of Trump
Linda Pentz Gunter
Nuclear Fiddling While the Planet Burns
Ruth Fowler
Standing With Standing Rock: Of Pipelines and Protests
David Green
Why Trump Won: the 50 Percenters Have Spoken
Dave Lindorff
Imagining a Sanders Presidency Beginning on Jan. 20
Pete Dolack
Eight People Own as Much as Half the World
Roger Harris
Too Many People in the World: Names Named
Steve Horn
Under Tillerson, Exxon Maintained Ties with Saudi Arabia, Despite Dismal Human Rights Record
John Berger
The Nature of Mass Demonstrations
Stephen Zielinski
It’s the End of the World as We Know It
David Swanson
Six Things We Should Do Better As Everything Gets Worse
Alci Rengifo
Trump Rex: Ancient Rome’s Shadow Over the Oval Office
FacebookTwitterGoogle+RedditEmail