Jack Lew on Social Security - Dump It!

Bruce Krasting's picture


Jack Lew


So we have a new Treasury Secretary. Jack Lew got by a Senate vote last night. I wish Mr. Lew well, he will need all the help he can get. He's taking charge at exactly the wrong right time. The country is about to jump off the sequester cliff and in less than a month there has to be either an approved budget, or a Continuing Resolution to keep the government running. We shall see if Mr. Lew is up to the job very soon.

There were many questions about Mr. Lew. His history (and huge bucks) from NYU should have been a question, but no one asked about that. And there was his time with Citi and Bob Rubin before the SHTF. Oh well, who cares about things in the past?


There is one aspect of JL's past that did not come up at all. I'm surprised that it didn't as it may prove to be a big deal. Way-way back in 1978, when JL was at Harvard, he wrote a paper about taxes and Social Security for his senior thesis. I found the details of JL's efforts 25 years ago in an article from Charles Johnson at the Blaze (Link). The paper had a catch title:


“The Ideology and Politics of Old Age Insurance in the United States.”


The young JL penned some things back in his Harvard days that would turn the blood cold of most SS lovers today. I suspect that some of his words would also tick off a few conservatives. If JL still believed what he wrote years ago, he would never have been considered as Obama's T-Sec. He certainly would not have been confirmed by the Senate.


JL was a big supporter of Social Security when he was a kid. He thought that retirement checks were a birthright:


“Old age and Medicare benefits are guaranteed as a matter of right even though many recipients draw more benefits than they have paid in contributions.”


This type of thinking does not sit well today. The government will have to cut the legs off the military, layoff air traffic controllers and meat inspectors (and all that other horrible stuff that is about to happen) yet JL thinks that the rest of the country should go to hell in a handbag so that seniors can get retirement checks that they did not pay for. It gets worse:


Congress was reluctant to abandon the principle of self-supporting old age insurance, because of a misguided focus on “financial solvency.”


Oh boy! Talk like that today, and you get shown the door. One has to wonder if JL is still of this mind. Does he still believe that a focus on "fiscal solvency" is a misguided policy? He better have changed his views - If he hasn't, then the USA is going to be a single A in four years.


In 1978 SS was headed into a wall. The problem was "fixed" in 1983 when Alan Greenspan pushed Congress for big increases in payroll taxes to shore up SS's finances. JL was in favor of a different approach than Greenspan. He recognized the major flaw in SS - payroll taxes are very regressive.


“Congress has denied progressive taxes for insurance benefits”


The logic of this course is difficult to understand but appears to represent a continuation of the deeply rooted belief in the tradition of self-support and individualism which for so long blocked passage of social insurance.”


JL is stepping on a cornerstone of SS. This program was supposed to be separate and apart from the government. The SS defenders are still crying, "SS does not add to the deficit - Leave it alone". But JL was spot on with his observation. SS payroll taxes are very regressive. For the progressives who support SS, the inconsistency of regressive taxes has always been an issue. One can't be a progressive, and also believe in regressive taxation.


In his paper, JL argued for "experimentation" to address the fundamental flaw of SS. He favored eliminating the regressive payroll tax and replacing the revenue with direct contributions from the Treasury. As income taxes are progressive; this resolves the regressive problem.


JL was right about the regressive aspect of SS. But what he did not take into consideration is the fact that if general income taxes are used to fund SS checks, then those checks would be an on budget expense. SS would become Paygo. It would take only a few years before the public turned on SS if this were to happen. The fact that SS can today claim, "We're off budget" would be lost if income taxes replaced payroll taxes. (Progressives supported the 2% increase in payroll taxes in 2013 in an effort maintain the "off budget" meme. Totally inconsistent logic.)


Jump to today. SS (especially the DI fund) is in need of a fix. Either benefits get cut, or SS revenues go up (some combo of the two are coming). Obama is not going to support more regressive payroll taxes to bailout SS. But Obama does not want to be the Prez that cuts SS benefits either. The only other option would be for general tax revenues to be diverted to SS. This is exactly what happened the last three years with the "temporary" 2% reduction in payroll taxes. And this is exactly what JL advocated in his thesis. Back to 1978, and the youthful JL:


Social Security is "only a beginning” in an “embattled struggle for social insurance.”


Yikes! Sounds like Marx? He goes on:


Meeting that obligation would require the government to guarantee retirees a fixed amount of money to live on.


That sounds "Commie" to me. JL agrees:


The specter of Communism, made that kind of solution (progressive taxation for SS) unlikely.


So as a kid, JL was writing like a Pinko, what was he thinking?


“Communism at home and abroad became the target of exaggerated fears”


This was 1978, the Cold War was on. Vietnam was over, but still a very raw wound. Not at all unusual for Harvard types to be leaning down the left fork of the road. JL concluded that the fear of Communism would not allow congress to achieve his dream:


Government had an obligation to guarantee, or share the cost of guaranteeing, a minimum income for any American.


How would you describe that philosophy? "Communism" does come to mind....


JL has been around the block a few times since he wrote his paper. But I wonder how much he has actually changed. If he does succeed in a plan to supplement SS with general tax dollars he will be the guy who goes down in history as having destroyed it. If SS gets socialized, it's dead in less than a decade. I hope JL pushes to where he wanted to go as a boy. To save SS, it has to be broken apart and put back together. JL's thinking from 1978 would achieve that.





Hat Tip for Charles Johnson for coming up with JL's old thesis.




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Grin Bagel's picture

I live on my $825/month SS benefit. I am not picking up on any light being shined upon the facts that there is no discussion of repudiating the debt to the Central Banksters, only on racist small mindedness and insensitivity to life and death for society's accumulated wisdoms.

Fuck you very much

steve from virginia's picture




The incrementalist Obama is unlikely to do anything rash with tens of millions of elderly American voters looking for Social to keep them out of the gutter.


The white shoe villains on Wall Street are dying to kill all government spending that doesn't flow to banks, whether Americans live and die in gutters is of no concern to them. This is evidence of how stupid Wall Street establishment is. It does not know how its own system works!


National governments can borrow unlimited amounts in their own currency. Governments are not firms,, they can perpetually lose money. When the government borrows and spends, it services private sector borrowing which is orders of magnitude greater. In other words, the public sector's 'irresponsibility' is necessary for the private sector to avoid deleveragiing and collapse.


If the private sector is to run a surplus, some other entity must run a deficit. Because the rest of the world is unwilling to subsidize the US private sector the only entity able to do so is the US government.


The world's other governments have been and are unable to finance the US private sector for longer than a very short period, the world's private sector is unable to finance the US private sector at all!


The Treasury could decide to extinguish the public debt tomorrow by issuing demand notes and retiring debts as they fall due, extinguishing both debt and note at the same time. The only reason the Treasury does not do so is because the bankers would object. The same bankers whose hands are up the ass of  officials like Jack Lew.


The BIS indicates obligations priced in dollars to be somewhere north of $640 trillion. Most of this money has been spent on automobilies and auto dependencies worldwide: fuel production and delivery systems, highways, factories, shipping, advertising, retail, finance, insurance real estate, military establishments and wars ... in order to keep selling and using cars the childrens futures have been stolen, all middle class wealth is stolen, the retirements of the elderly are stolen ... so that some might drive a little while longer.


The human race is simply too stupid to live. Please check the 'Extinction' box before handing in application.



Grin Bagel's picture

I live on my $825/month SS benefit. I am not picking up on any light being shined upon the facts that there is no discussion of repudiating the debt to the Central Banksters, only on racist small mindedness and insensitivity to life and death for society's accumulated wisdoms.

Fuck you very much

Zer0head's picture

This is Jacob's road map on budgets, medicare and social securty as discussed with Jim Lehrer in 1999



he is infinitely more dangerous than Timmay

pashley1411's picture

I missing what the outrage is about.   Lew is a political operative, full-stop.

The Obama Administration's positions and statements, both official and unofficial, are "^P".    Each and every political appointee is an unofficial minister of "^P".   

Taxes require the consent of Congress, revenue requires a functioning economy, they both constrain the Community-Organizer-in-Chief.   Instead, all "^P" requires is a vision, and no inkling of economic history. 

ebworthen's picture

Most progressives are communists, or socialists at heart.

But I hate to tell you that they have won.  Not that the crony capitalists haven't won either, but the progressives have.

The last election was the end for anyone who thinks we haven't crossed the Rubicon and can return to limited government and a non-entitlement society.  This is an observation, not advocacy.

The Republicrats completely fell on their faces, either intentionally or out of stupidity.  Twenty five years of "no new taxes" then taxes.  "Tough on immigration" then open borders and no enforcement.  "Rights of the individual and preserving the Constitution" then the Patriot Act and N.D.A.A.  The GOP is a hollow shell.

The true tragedy is that Demicans and Republicrats have colluded to further socialism and crony capitalism melded into our socio-fascist kleptoligarchy.

No doubt these harpies will collude to slowly kill Social Security, Medicare, and all other "entitlements" that were taxed for 30+ years on every hour of work done by the citizen and the money will be funneled to corporations, insurers, banks, and will line the pockets of the leeches, ticks, and fleas we call "Politicians".

lindaamick's picture

$2.4T (according to the CBO) was spent on wars in Iraq and Afghanistan. (Remind me, what did US citizens gain?)

The 2012 military budget was $664B.  The embassy build in Baghdad cost $750M.

I could go on for hours.

The idea that military adventures are warranted to "keep americans safe" is preposterous.  The idea that america keeps order globally is also preposterous. 

There is so much corporate welfare in all areas such as BigFin, BigAg, BigPharma, BigIns, and BigFossilFuel it is mind-boggling. 

Social Security was set up as a modest income for old people so that they do not have to die paupers with no dignity.   It might not have been designed perfectly but its purpose is honorable. 

When I think of all the predators who go after SS instead of the REAL WELFARE QUEENS, it makes me ashamed to be from such a ruthless, vile country.

ebworthen's picture


Blue bloods are still in love with the Norman Rockwell image of America rather than the reality of an utterly corrupt kleptoligarchy.

I heard this morning that Kerry is going send $60+ million to Syrian rebels; that's just fucking great - cash to the Islamic rebels to buy weapons that will be used against our troops at some point no doubt.

We can send millions, billions overseas but SS is "broke".  We can bail out banks, insurers, and corporations but there just isn't enough for S.S. after taxing my ass for over 30+ years.  $43 BILLION PER MONTH to buy Mortgage Backed Securities to benefit banks but not enough for "entitlements"?

Go ahead, cut S.S., cut other entitlements, and see what happens to the social fabric.  It will make the L.A. Riots and the Katrina aftermath look like a walk in the park.

NoTTD's picture

Once a commie, always a commie.  He'll fit in well at the WH.

WTFUD's picture

Jack( shit ) LooT he dont play da Flute
just Uncle O'bummeroo's Banjo.

H E D G E H O G's picture

JEWLEW. (Nothing against God's chosen people, it just had a nice ring to it.)

Edward Fiatski's picture

Amerikuh certainly doesn't Lack any Lews. :) If you've been underperforming lately, then it means you don't have enough Lew blood-DNA, peasant!

Winston Churchill's picture

An 'A" in four years ?

I suppose A is right after Z on my cellphone,so its quite possible.

sgorem's picture

what the fuck. when in the hell are WE going to stop arguing over this Social Security, Government induced "division of the people" bullshit, and get down to meat of the matter? just take the cap off of wages and the "Fund" will pay for itself and WE can move on.  The politicos have used SS since it was initiated to pander votes one way or another. The truth of the matter is that the cat is out of the bag, and any fucking around with it now is going to cause the Tiger to awaken with a full scale cleaning ( at the minium) of the elected elite in this country(a good thing, parenthesis #2). scenario 2 would more than likely push alot of our elders to commit to unthinkable "atrocities" like "gunning" for some of these government sleazebags,(see parenthesis #2). thirdly, if none of the above cannot be inacted, then just give me ALL the fucking money I've "donated" to the cause BACK! or let the REVOLUTION start, pronto!  FUCK YOU UNCLE SAMBO!

SokPOTUS's picture

You're not getting anything back.


ceilidh_trail's picture

The disability income portion of the ss program would be a good place to start. I know a woman that was in the middle of divorcing her husband when he croaked. Each of the 4 kids received a ss check from the .gov into their 20's. They each attended college where they majored in getting stoned and work avoidance. College let them extend and pretend a few more years for ss. Roughly $1000/month each, supposedly. None ever got a degree. How many times around the country every year is this the case? Throw on top of this the unemployed who's benefits run out and suddenly become disabled... Meanwhile, I have been forced to pay into this for 38 years and am told I can't retire with full benefits until age 67? Demographics has nailed me on the wrong end of the boomer bubble my whole life and it is patently unfair. Throw on top of this the takeover of my chosen field by the .gov leader who has never held a real job his whole life. I look at how much fairly normal people such as myself are unhappy with where these fools are taking this country. I wonder about the crazies out there...God help us the next four years. We'll need forty more to cleanup the mess.

rsnoble's picture

How deep can the shit get?  Shit submariens?

Tango in the Blight's picture

Jack Lew doesn't Lack Jew(ish genes)...

Divided States of America's picture

Maybe he should also forget that the holocaust even happened.

chubbar's picture

Well, wasn't the surplus from SS taxes shoved into the general revenue pile for the past century? Now that there is a deficit it's a big crime to pull from the general revenue?

Just heard the announcement that the U.S. is sending millions or billions in food over to Syrian rebels, but by all means, lets cut SS benefits and raise taxes.

Guess what? Nobody is going to support any fucking reduction in SS until the assholes stop the unnecessary spending on bullshit like foreign aid, drone warfare, f-35s, etc, etc. Yes, it is all related, sorry for not buying into the idiocy that states this is a separate problem and should be dealt with in a vacuum.

I don't give a rats ass that the fund is broke. Its broke because of financial malfeasance,mismanagement and lack of spending discipline, not because of anything the folks who pay into the system did. I could live without SS (I am not eligible for several more years) but when the gov't made it a point to interject themselves into my financial affairs and pull funds directly out of my paycheck, I'm going to insist they keep their end of the deal. I don't give a shit if someone is a billionaire or not, if the gov't took money from them for SS then they should collect the benefits. The gov't should either stay the fuck out of my affairs or lacking that, do what they said they would do. Everything else is just an excuse for their fuckups, including this article. I didn't get put in charge of organizing this program so I'm not going to be the one that pays for it to get unfucked. Let the whole system fail, I don't give a shit. I'm not going to be the enabler for continued theft by the gov't with no accountability.

odatruf's picture

chubbar - the issue isn't the general fund paying the SS fund the money that was borrowed plus the due interest. That's going to happen without question. The issue is that without changes, the benefit payout rate is blowing through that faster than those payments can ever come in. Even after the fund is fully paid back, plus interest, it will become insolvent in something like 2037.

All the general spending fuckups you talk about, I agree with, but those are separate issues.  Simply put: people get too much from SS relative to what they paid in.


greyghost's picture

that is why the u.s. treasury must create united states notes and spend them into circulation without debt being created...period. the only way out now.

11b40's picture

Amen to that.  There are so many ways to eliminte waste in both defense and finance.  The voting public will punish any politician screwing up SS....just watch.

Unlimited funds to bail out bankers.  Never ending wars (terrorism, drugs, peverty), against things that never have and never will be "defeated".  Bloated government and vast corporate welfare.

But we can't afford to feed, clothe, shelter, and provide adequate health care for the general population.

Most of us here know that the majority of folks simply don't pay much attention to the big picture and what's happening day to day in business, politcs, or finance.  That changes quickly when something suddenly affects them.  Few of us are not somehow touched by SS.  Even if you are a teenager, you likely have grandparents who you hear complain.

SS is truly too big to fail.  The banks could be fixed with a little will power.  Only a relatively small number of powerfull people would be crushed.  SS and Medicare will rile huge numbers of voters and stir them from their slumber.

Everwhere we look, there is another tinder box waiting to explode.

asteroids's picture

With the FED's 2% (er 6%) inflation rate SS is kind of meaningless. The odds are you'll be eating cat food when you are 80, which a LOT of people in developing countries will be doing in the next decade or so.

Bicycle Repairman's picture

Talk about a misleading headline.  You really are desperate, Brucie.  And a tad pathetic.

Bruce Krasting's picture

JL's words from back then do translate to "Dump It" today.

You don't find his thoughts interesting? Do you think it's okay if the Tsec thinks:

It's misguided to focus on “financial solvency.”


I am very worried about financial solvency. That the T.Sec once thought it was a non-issue is of signifcance/interest to me.


Tad Pathetic

Bicycle Repairman's picture

Tsec's come and go.  BFD.  Cheney said "deficits don't matter".  Did that keep you awake at night?

Fiscal solvency and a functioning economy go hand in hand.  There are many items in the budget that could be zeroed out and have less effect on the economy than cutting SSI.

When you threaten people, they tend to pull back.  Older Americans have much of the wealth that the 1% do not have.  Do you want them to sit on it or deploy it?

aka Gil's picture

I agree with much of what you say here. Having paid a percentage of my real wages into the SS system for for the past 40 years, I would be righteously pissed off if the program was snuffed. I would say that older Americans have much of the wealth that the 0.1% want for themselves. When you ask "Do you want them to sit on it or deploy it?", where the hell can an older American deploy his or her wealth without putting it at risk of loss to the 0.1%? I may never get a SS check in my life or, if I do, it might not buy me a pot to piss in. But I will resolutely continue to sit on what little wealth I have been able preserve until the fraud and malinvestment have been cleared from the system. And those greedy little 0.1% pricks will never get their dick-tongs on a single 90% silver dime of mine without killing me first.  

Bruce Krasting's picture

Cheney scared the shit out me everyday for eight years. I don't want to be afraid of the T.Sec. But I am.

aka Gil's picture

Thanks for posting this. I do find his college-boy thoughts interesting, especially compared to my own coarse and relatively simple mindset while attending a state university during the same years. I suppose that in today's world, if there actually was any discussion of the relevance of JL's thought process as a college student, he would have to be described as a young man ahead of his time, a true visionary with respect to the future of Amerikan finance. Good luck to us all.

Fishhawk's picture

Social Security retirement benefits were always designed to be a socialist program, and the SS tax has been confirmed by the Supremes as a valid income tax (but voluntary - you have to ask for the benefits, then you are locked into paying SS and other income taxes). The SS revenues go directly into general revenues, to be pissed away by venal politicians, who are happy to redistribute the wealth to their supporters (Solyndra, anyone?).  The program is not insurance, but was sold to the sheeple as such, so, like Fannie's not-govt-insured bonds, they de facto were govt insured, and SS is assumed to be 'insurance,' like a policy you paid 'premiums' for, so, 'we're entitled.'  The entitlement society is the definition of socialism, so Jack Lew would seem to be Obummer's ideal commie candidate for the job.  Since the Fed can print to infinity, there does not seem to be any real concern over whether SS is 'broke;' indeed, how could there be, when all other phases of govt are also broke.  So we are back to Greenspam's thesis: we can guarantee your SS payments, just not the buying power of same.  Thus, more cat food for granny (a new outlet for horsemeat).


suteibu's picture


Like pregnancy, there is no such thing as "socialism lite."  Bruce does not get a pass on promoting reform of this "much needed" program.  The bitch is still pregnant.

Rainman's picture

It's just a matter of time before brainiacs like Lew propose net worth means testing to set SS benefit payments on a sliding scale. I'm surprised the uber-broken state of Cali hasn't come up with this revolutionary scheme yet....taxing SS benefit payments against a NW means testing schedule. It fits perfectly with the tax-the-rich mantra embraced by Oblameo and Moonbeam. They must be slipping. 

Bob Sacamano's picture

As you suggest, Social Security will become WELFARE FOR THE ELDERLY.   But the recipients will say they are ENTITLED -- not willing to recognize their SS contributions came no where near covering their SS benefits.  Hence take benefits from others.  The leftist world we live in.

WillyGroper's picture

Rest assured it will be means tested just like the ACA: see Krugman's snarky death panel comments on utube.

SAT 800's picture

"Oblameo and Moonbeam"; LOL. thanks for the giggle.

Bob Sacamano's picture

To the extent SS taxes are "regressive," the benefits are more regressive.  Leftists only see one side of the equation.  There is no net regressiveness in SS. 

fonzannoon's picture

Bruce you care what this guy said in 1978 when he works for a guy who said...

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies… America has a debt problem and a failure of leadership. Americans deserve better."

a few years ago?

Orly's picture

Exactly.  And if he was anything like me, he was writing the piece keeping in mind who was going to read it and who was going to judge it.

Wouldn't be the first time a student regurgitated a professor's beliefs for a guaranteed pass.


slightlyskeptical's picture

Let Social Security fund the primary housing market in the US. There is no better collateral than future social security payments.

IamtheREALmario's picture

I agree that Social Security should be dumped AS SHOULD ALL GOVERNMENT PENSIONS. So, stop taxing people with social security and make all government employees work until 65 (or 67 ... or 70) and take away all of their pensions, including the pensions that are supposed to be paid to the occupant/president, Congress and Jack Lew.

I am not sure how this will work without starting to enforce "the rule of law", especially with regard to fraud, conspiracy and corruption ... but it is a start.

lakecity55's picture

another jew commie in govt.

Joe Davola's picture

How many Paygo programs has the public turned on?

11b40's picture

They were all turned off under the Bush/Cheney admisnitration soon after arriving.....cause defictis don't matter....cause we owe it to ourselves, don'tcha' know.

DOT's picture

Lews appointment makes sence to me. He has all the statist qualifications.

bank guy in Brussels's picture

Maybe there really is, and should be, nothing different than 'pay as you go'

For anything in government

All we really have are the current year's tax revenues, and a choice on how to spend them, wisely or not, justly or not

Whatever 'social insurance' or 'welfare' we provide, cannot be 'guaranteed' into the future, by the very nature both of population demographic changes and economic volatility

Pay as you go ... maybe it's really that simple

Alpha Monkey's picture

Yes this. 

The only problem is, it forces everyone in the arena and spectating to face reality and come out of delusion and denial.  If you've ever known someone who was in either of these states, you may realize how terribly difficult it is to bring them out of it.  Instead, it usually requires hitting rock bottom...

Bill Blackstone's picture

You're essentially advocating running Government finances like family finances.  This is a great idea, since constantly running a deficit is inherently unsustainable in both cases. 

If we implemented this idea, presuming the whole $y$tem didn't instantly collapse from having to live within its means, and that we eventually got to a point where inflows exceeded outflows (IOW, a surplus)  there'd have to be a provision for some kind of a national savings account, where that surplus could get parked and earn interest.  (Just like a family.)

So technically, the Government's balance sheet would look like this:

Let R = This year's tax revenues
Let S = Amount in savings account
Let E = Exependitures

( R + S ) must be greater than or equal to E , or the Government shuts down and all elected officials must commit seppuku.