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Jack Lew on Social Security - Dump It!
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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Getting rid of the bulk of the federal government and bringing it back to the local level where people can have a say in its implementation is the right direction IMO. Currently:
a) the federal government is too powerful
b) the fedreal government is too corrupt and does not serve the will of the people
c) a small handful of people control the government's actions through corrupt money dealings
If we cannot get rid of the fiat money power that enslaves and corrupts this and most nations, maybe we can limit the power of their implementation (by force) arm. The US government rules by force and nothing else. It does not have the concent of the governed, even with its massive propagandist spending.
***nothing different than 'pay as you go' For anything in government***
Maybe we should have all our wars on a "pay as you go" basis. You know, everybody has an across the board 20% WAR TAX added to their income tax for every year of the war. It puts Iraq and Afghanistan wars in a whole new light.
Exactly why we have a central bank...
Guns OR Butter.
My, what a primitive notion. When you have a high speed printing press, modern 21st Century economics has proven we can have Guns AND Butter!
Shock & Awe, bitchez!
Now, let's all go shopping.......
JL is just another crony jew [put there to work on the mezzanine level]... What difference does it make what he said or wrote in the past?
~~~
Go ahead & junk me all you want on an internet blog ~ it doesn't hide the TRUTH...
There is no truth there.
I don't believe being jew has very much to do with being crony. I'd be interested in seeing a full demographic breakdown of politicans and corporate "leaders" by race. I would be willing to wager that we will find a good mix of many races/ethnicities/religions who all worship at the alter of power and greed. Even before we fold in the rest of the world.
After reading the ZH comments for a few years now I have come to the conclusion that Jews are supermen. They control the entire world from the price of your toothpaste to the gilded halls of power. Everyone who is anyone is a Jew or is controlled by a Jew.
No non-Jew has ever actually committed a crime of any kind of their own free will. They were forced to do it by the mind control powers of the Jew.
Come on, a post like that proves you're a Jew just trying to cast blame elsewhere!
No if that were the case my powers of persuasion would have ensorceled your mind.
Dude...
That's deep.
They're just letting you think that.
.
But even you said that SS was "much needed." The problem for these government-run social programs will always be how to pay for them. Regressive taxes or progressive taxes is a distinction without a difference in judging this system to be socialist, Marxist, communist or whatever. The end result will always be the same. Government has no business being involved.
Yes, "What's needed" is the right answer.
I'm not sure what "needed" means, but I am very sure that it is not the $680B of retirement benefits that will be paid out in 2013.
Meaningless number without telling what will be paid in, what has been paid in, and what happened to the paid in funds.
You claimed in your last article on SS that it was "needed." You mix government bureaucrats and politicians in with a wealth redistribution scheme and it will always end up the same. Your solution is to reform it as if this time will be different.
bullshit......all you have to do is declare that all soc. sec. payments from the u.s. treasury are u.s. states notes and not federal reserve notes....problem solved. yes, that is correct, instead of the federal reserve creating money out of thin air for the bankers to pay themselves bonuses, the treasury dept can do the exact same thing except for millions on soc. sec. what problem?
Didn't JFK try to introduce 'US Notes'?
I think they responded by blowing his brains out of his head...
This only satisfies your Fed-hate. It doesn't address the moral, social, and economic hazards of wealth redistribution.
"WEALTH REDISTRIBUTION"????? what the hell are you talking about? "moral"-your answer is let the elderly starve? really? "social"-yep cut off all those welfare payments and you see just how quickly the hungry and cold kick your door in for food and warmth. and i don't know whether to laugh or cry about "economic hazards?". since the u.s. treasury will be creating "UNITED STATES NOTES" free of charge, just like the federal reserve creates "federal reserves notes" free of charge, how is one an economic hazard and the other isn't??? which one of the two has a greater economic benefit with less taxes? which one has the most benefits for the least amount of society? which has the greater moral good? which has the greater benefits for society? how is a club of a few people creating their own personal monies for their own personal benefit, good for anyone but themselves? how does that club benefit society as a whole? how have they done after creating aprox. 23 trillion dollars for themselves and their businesses? how has the american society done after that feast of $23 trillion? do the special ones not have a moral obligation to society also? what would have been the moral, social and economic hazards been had they chosen to...lets say pay off the $16 trillion u.s. debt? inquiring minds want to know...suteibu?
This is a thread about SS. I can agree with you about the Fed but eliminating the Fed will not solve the SS issue. As for those poor grandmas, they used to have a family to take care of them but now its the government who is failing. In fact, since the great social experiment "THE War on Poverty," poverty has risen (not unlike rising terrorists since government declared "War on Terror"), another failure of this caring government.
Wealth redistribution is what it is, whether you care for the term or not. Tax money was taken from those who earned it, and given to those who did not. Vast amounts of it are wasted, squandered and given as bribes every year. Letting the elderly starve is undesireable; other solutions may be found, but we'll have to hurry.
But what we have isn't working well, and won't work at all soon. The hungry and cold will largely die, because of the way we have set these systems up over generations. You cannot correct overnight what two dozen Congresses and Presidencies have built crookedly, poorly and unsustainably.
It really doesn't matter much what I want, need, or feel; it matters a little what I think, and more what I DO. Inasmuch as I can find a way to keep myself alive (hopefully without endangering others) I have solved part of the problem. To the extent the government deprives me of resources, savings and efforts to "help" others, they deprive me and my family of means to survive. And that's what we are really talking about here, long-term survival in the face of massive, incompetent bungling.
I do generally give to charity. I do generally help out people around me with information, effort and sometimes resources, when I can spare them. But those are my choices, and I will put them where I think they will do the most good. Government CANNOT be expected to make such choices well, they are too subject to influences, cronyism, corruption, and every other perversion of responsibility that exists.
You cannot lecture me about moral obligation when my government considers me a "domestic terrorist" first, a taxpayer second, and above all a fool. Solyndra, GM, AIG, etc. all show thay have no morality, no grasp of moral hazard, and no conscience or shame.
Trying to process what should be charity through the agency of government removes any shred of efficiency, respect or accountability from it. Get the government out of the charity, insurance, finance and propaganda businesses, and cut it back to something lean, functional and restrained. Or watch it all collapse when the "confidence" disappears, which it appears to be doing now.