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Obama: Gut Social Security Now, Don't Wait Till The Election
Incredible that a Democrat would propose loud and clear that our Social Security system should be gutted starting immediately to get an up-tick, illusory as it may turn out to be, in GDP just before the next election. But President Obama's proposal to cut the employee portion of our payroll taxes in half and also cut payroll-taxes for small businesses will do just that.
The two measures would remove $240 billion from our Social Security system during 2012 and hand it over to consumers and businesses so that they can do some magic with it.
Will that nudge up GDP? Not by much. The problem is that the money we consumers spend goes into products that are to a great extent imported. Hence, our trade deficit will rise. This has already happened with the current payroll-tax cut. Since January, it has given consumers about $80 billion in additional spending money. And true: It nudged up consumer spending.
At the same time, our trade deficit, particularly with China, skyrocketed. YTD through July, it hit $433 billion. Same period last year: $330 billion. The $103 billion increase is largely attributable to rising consumer spending (including the impact of higher prices). A humongous trade deficit like this, aside from being a terrible drag our economy, is also subtracted from GDP (GDP = Consumption + Investment + Government Spending + Exports – Imports). And true again: GDP so far this year has barely budged though consumer spending is up.
Will it create jobs? Well, let's look at our current payroll-tax cut. And we see that a few jobs are being created in the U.S., but not many, and none last month. Meanwhile, lots of jobs are being created in China. Coincidence? Maybe not. This is the result of many years of corporate efforts to offshore production and services to countries where labor is cheaper (15.4 Million Missing Jobs). So the impact on job creation, thanks again to our trade deficit problem, will be minor.
So, what does cutting payroll taxes accomplish? It reduces the flow of money into the Social Security system by $240 billion a year.
And no one can ever let a payroll-tax cut of this magnitude expire. It would be perceived as a huge tax increase. It's already happening. The current one is supposed to expire by the end of December. But heck no! Instead, an even bigger one is being proposed to take its place. So this won't be a "temporary" cut. It'll be permanent. At least until the money is gone—maybe in a decade or so if disbursements stay at current levels.
Presidential candidate Rick Perry, who called Social Security a Ponzi scheme and monstrous lie, and who wants to unwind it, couldn't have come up with a more effective plan to put his campaign rhetoric into action.
Meanwhile, in another corner of Washington, a bipartisan group of lawmakers is hunkering down, trying to figure our how to make politically feasible and perhaps sensible adjustments to our entitlement programs, including Social Security, ironically, to keep them functional for a few more decades. Makes you wonder if these people ever talk to each other.
For some people, the $2.6 trillion Trust Fund doesn't exist, and thus the whole issue would be moot. Well, for Wall Street bankers it existed enough to where they were dying to get their hands on it when President Bush wanted to privatize it. Remember? At the time, I had dinner with some of them, and so giddy were they about the prospects of all this money flowing their way that they were barely able to eat. In fact, the Trust Fund is loaded with treasuries, like any wealthy and conservative investor. Whether or not these treasuries will be worth anything in the future is another question, but not just for the Trust Fund.
Wolf Richter - www.testosteronepit.com
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I'm amazed we are still having an argument over the definition of a Ponzi Scheme. In it's current form, Social Security is epitome of a Ponzi scheme. It wasn't always like this, but it is now.
If Social Security recipients are getting their information from clowns like this, they may as well reserve a spot under the overpass.
==> It wasn't always like this, but it is now.
No. It's been like this since the inception of the program.
Keep repeating 'ponzi' over and over. I know you'll get some sheep to chant it.
It's a ponzi scheme you dumbass. The trust fund is empty, just like Madoff emptied his dupes' accounts
So's the the rest of the system you dumbass. The Treasury is empty of real wealth. They fucking spent it on a lot of real important shit like invading Iraq and Afghanistan and paying generals' pensions. They need to (and definitely will) print more money! They can do the same for their SS obligations and their China obligations and their xxx obligations.
Or they can tax the fuck out of you. Which solution do you want?
The Bigger Picture: Western Civilization As We Know It is a Ponzi scheme. SS is just a cog in the much bigger Ponzi scheme that is America which itself is just a cog, (but a pretty big cog).
It's just printed money, not real wealth. So get over it already. Very few people need to work anymore anyway thanks to machines and automation. Most that do have paying "jobs" are essentially part of the real unemployed just passing pieces of paper and bits of useless information back and forth.
The trust fund is just a small part of SS. The system is still largely pay as you go. So most of the funds are in your pockets right now. If you had any freaking pockets.
...So most of the funds are in your pockets right now.
Are you counting uncollected tax as an asset? If so, it can't go broke! we can always just raise the "contribution rate". to cover any shortfalls in assets in the "trust".
Libtard?
I think maybe
LongBallsShortBrains. You picked the name. I think I hear Rush's mama calling you.
I would bet this person is either a trust fund baby or a paid troll by the Cock Brothers! Thanks for calling the troll out!
I see many first time, "drive by" posters commenting on this issue. I expect more than a few of them are operatives of one kind or another.
I suspect you are a paid troll for Soros or Obunghole
No I'm not and BTW your avatar sucks.
I am guessing that does not bode well for a cost of living increase for our seniors next year.
You are guessing correctly. Nothing ever bodes well for the cost of living increase for seniors. They're going to die soon, especially with all the government programs to speed up the process so what the fuck?
Balanced trade and Glass-Steagall - there is no other alternative, this is the starting point.
If you haven't yet figured out the two-headed-one-party game, Perry is the man tasked with shoving the Social Security reductions down the collective throat of the electorate. Obama-the-chosen will pretend to be "forced" by the Republicans. It's been scripted by professionals.
Obama said it yesterday - it's a race to the bottom. Actually he said it wasn't, but we live in an inverted world. War is peace and all that...
Peace
Nice to say balanced trade, but how do you accomplish that? Protectionism? Import duties on foreign goods? Even if you managed to slap import fees on China, what's to keep manufacturers from moving their production to Vietnam or Thailand or, eventually, to Africa, where the labor is cheaper than China and certainly cheaper than the US? And how do you think China would respond to such protectionism? Wars.....real shooting wars.....start as a result of protectionism. You're correct in that balanced trade is part of the answer, but how to get to balanced trade is where the problems crop up.
Describe the conditions resulting in country A shooting at country B when country B owes country A several trillion $?
A believe it can collect on the debt immediately because of oil, gold, etc in the possesion of B.
A realise that the money owed is worthless and/or will never be repaid, decides to make B pay in kind.
The economy of A collapse, A demands re-payment from B, B does not have the readies.
The economy of B collapse, A demands re-payment from B, hardline nationalists rise to power in both places, blaming the other for the miseries.
Perhaps balance of trade is a problem that will take care of itself once oil supplies become scarcer and shipping costs rise accordingly. It really makes no sense to be shipping raw materials from all over the world to the country with the cheapest labor, and then shipping all this (mostly) junk around the world, where it quickly finds its way to landfills. America's need for cheap toxic plastic crap from China surely must be sated by now? Food can be produced locally, as can all of the other things we really need. Water not so much, and water availability will be driving a lot of human migrations in the near future.
It seems to me that the distortion in the balance of trade is directly due to the fact that capital can freely cross borders, while labor cannot easily pick up and move, and certainly not very easily between countries (in search of working opportunities). One thing is for sure: these so-called free-trade agreements are high-speed taxpayer-subsidized expressways to off-shoring. I have no confidence whatsoever in the politicians to come up with a fair solution, but I am quite confident that rising energy cost and declining availability will permanently change the economic assumptions of globalization, and that in the end, globalization has no future.
No.
The balance of trade is conform to Smithian economics standards.
Workers free to move wont change a thing.
Globalization has no future just as humanity has no future.
What is going to happen is that people who used to be unilaterally on the right side of globalization for now 400 years are slipping on the wrong side, because they have become too numerous to be supported by globalization benefits.
Taxing to influence behavior is bullshit. BULLSHIT.
Please no thinking outside the box allowed. Particularly if that thinking disturbs the status quo in favor of the average person.
It's more about exporting pollution than jobs, although that is a portion of it.
Import certificates can achieve balance without tariffs.
Then there is this cute tariff - proportional to the trade deficit with the respective country. No deficit - no tariff, that's the real free trade
In other words, the Germans will have to import their Beemers from Tonga instead of Germany?
Careful citizen, it looks like you are trying to think for yourself.
That's so brilliant I never heard it before! Kudos!
I'm no expert but it is to my understanding that a stable currency would balance trade. Under a gold standard for example China would not be able to manipulate its currency (beggar thy neighbor) and the USA would not be able to run massive trade deficits by doing the same.
China would still have comparative advantage producing nearly every non-food item sold at Walmart ... There would still be a huge trade deficit as long as the average citizen continues to be plundered by the ruling class and therefore needs to stretch his dollar, debased or gold-backed.
More fucking hopy and changy thing.
Charge HFTs 5% on every trade and SS would be fixed in a NY minute.
Is this MF kidding. What happen to concern about this country? These democrats are sickening.
Yep! Almost as sickening as those fucking republicans! Remember when Reagan doubled the SS tax to "fix the system forever"? And then proceeded to spend all those new found dollars on the military-industrial complex so now there isn't any money in the system to pay out its contracted obligations?
The money's already been stolen, so get over it, all you whining old fuckers! I can't help but wonder why some of those doomed old fuckers haven't become suicide bombers. They haven't got much to live for and even if they did they aren't going to live very long anyway.
mfl8240 is sickening.
fixed for ya!
weinerdog43 has his head up 0bunghole's ass
fixed for ya!
How can you tell from rick perry's bunghole fuckwad?
The amount of contributions is capped as a percentage of income. The limit currently is little over 100k, just make all earned income subject to the same percentage and in few decades the fund would be big enough to stop contributions. SS is owed trillions that were already plundered. The temporary reduced income will likely pay for itself if people can keep their homes.
If you uncap the tax, you must uncap the benefit. Otherwise, you are nothing more than a common thief.
uncap the tax and everyone's going under the table -- goodbye "economy"
I wish that would be true, however, I think O'Bummer will use this as a tool to say Oh, S.S. is now in deficit we must cut the program. These cuts will never end, only S.S. will end now. I don't trust O'Bummer with my part of the trust fund. It isn't his or Congress to give away.
The amount of benefit payments are in relation to what is paid in. In other words, if you paid in on 100K worth of income you will only get benefits based on that. Going the other way, if you tax Warren Buffet on his income without limit then you are paying him 100s of thousands in benefits each year. Unless of course you are not just talking about lifting the cap on the income but also placing a cap on the payout?
Also, SS HAS been plundered. I don't see a way to get those funds back during a long depression. The fuckers ought to be hung!
" SS HAS been plundered. I don't see a way to get those funds back. . ."
News item: New invention!
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In 1438, Gutenberg began a business arrangement with Andreas Dritzehn, who funded his experiments in printing. In 1450, Gutenberg began a second arrangement with German businessman Johannes Fust. Fust lent Gutenberg the money to start a printing business and build a large Gutenberg Press, their printing projects included the now famous Gutenberg Bible. On September 30, 1452, Johann Guttenberg's Bible was published becoming the first book to be published in volume."
chubbar,
Not QUITE true.
The amount of benefit payments are in relation to what is paid in. In other words, if you paid in on 100K worth of income you will only get benefits based on that.
The more you made, the more you paid in, the LESS you get back.
It's geared to give more to those who earned less.
They need it more, make sense.
( one more Ponzi pie).
http://www.slate.com/id/2303391/
Oh, come on. You are messing with the great Republic Party goal of sponsoring pointless wars and tax cuts on the back of our Social Security payments. Faux News will have to tell their paid shills to yell louder.
"Faux News will have to tell their paid shills to yell louder."
And get more blondes with shorter skirts and bigger boobs.
Keep your head up 0bunghole's ass. Don't forget who started the Bosnia War and the bombing of Libya for oil...I mean freedom. Who was it that bankrupted America with the Korea and Vietnam Wars? Your lovely democrap potty. I hope soros is paying you trolls well for staying in on a Friday night to spam the boards with your stupid posts
Get a clue... Bosnia and Libya were like children's sandbox tiffs compared to Iraq and Afghanistan. We've already spent more on the latter two wars than the entire Vietnam war.
Oh, come on now. These wars aren't anything like Vietnam Nam... We lost that one, i.e. at least we ended that one.