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alan greenspan
Bernie Sanders Wants to Expand Social Security
Social Security is critical for massive numbers of Americans, yet many Republicans and Democrats have wanted to destroy it. Today, Bernie Sanders introduced new legislation to strengthen the program by taxing the rich
Feb 13, 2019
Social Security was signed into law by Franklin Roosevelt in the 1930s to guarantee workers and their families an income if they retire, become disabled, or if a breadwinner dies. At the time, Republicans and conservative Democratic lawmakers disparaged the legislation as "socialist," and the American Bar Association and US Chamber of Commerce decried it as an attempt to "Sovietize the country."
Today, Social Security plays a major role in safeguarding tens of millions of people from destitution--not just people over the age of sixty-five, but millions of children too. It is by far the most significant anti-poverty program in the country. Which is why Vermont senator Bernie Sanders has introduced the "Social Security Expansion Act" to expand Social Security by requiring the wealthy to contribute more equitably to our public retirement system and preventing them from exploiting it for personal gain.
Over the last thirty years, skyrocketing inequality has threatened Social Security's survival. The wealthiest have captured an increasing share of income gains above the taxable earnings cap, while workers' wages have flat-lined. This trend has shrunk the share of national wages being taxed to fund Social Security. That's why the program's "total cost is projected to exceed its total income (including interest) in 2018 for the first time since 1982," according to Social Security's Board of Trustees.
For decades, conservatives on both sides of the aisle have tried to raid Social Security to bankroll corporate tax cuts and/or turn it into a profitable industry. Sanders's legislation pushes back on this agenda.
Social Security Under Attack
In 1976, Ronald Reagan ran for the GOP nomination on a program of "voluntary Social Security" in which workers could choose to make their own retirement investments. The proposal was essentially a privatization scheme that sought to end the universal character of Social Security by allowing the rich to opt out and starving the system of critical revenue.
As president, Reagan appointed a blue-ribbon commission headed by Alan Greenspan to address the program's future solvency. The Greenspan Commission recommended payroll tax increases, which were passed in 1983 in bipartisan fashion. The tax was particularly regressive, however, as earners in middle brackets paid a much larger share of their income than those at the top due to a low income ceiling. In a particularly audacious show of state-facilitated wealth transfer, the surplus revenue generated by Reagan's tax on working people was used to offset the costs of his extensive tax cuts for corporations and the wealthy.
Democrats followed suit. During the 1984 election, the Democratic Party strategized running against Reagan on a program of "fiscal responsibility," including Senator Paul Tsongas' A Call to Economic Arms, which painted a doomsday picture of "crushing and unsustainable debt" that, he argued, required entitlement reform and a cut in the capital gains tax to encourage long-term investment. After resigning from the primary, Tsongas joined billionaire deficit hawk Pete Peterson under the Durst debt clock in New York City to cofound a bipartisan "entitlement reform" group called the Concord Coalition.
In 1992, billionaire presidential candidate Ross Perot advocated means-testing programs like Social Security and Medicare, claiming that he could save tens of billions by cutting benefits. Bill Clinton called Perot's plan "a full-scale assault on the Social Security system, undermining the universality of the program."
But Clinton, too, had run on a program of "leaner, not meaner" government and "no more something for nothing." Clinton's acceptance speech for the Democratic Party nomination telegraphed how his "new covenant" would cut entitlements, facilitate school choice, and promote "a new approach to government...that understands that jobs must come from growth in a vibrant and vital system of free enterprise."
According to conservative economist Martin Feldstein, Clinton effectively "moved the discussion of investment-based Social Security reform away from an ideological debate about the merits of government versus private systems to the more technical issues of how to design a mixed system that includes both pay-as-you go benefits and investment-based defined contribution annuities."
The "post-partisan" austerity politics of the 1990s inside the Beltway was bolstered in supposedly grassroots groups. Pete Peterson played a leading role in founding and bankrolling youth-led astroturf groups that mixed deficit fear-mongering with downright ageism against seniors to propagandize cuts to Social Security, Medicare, and Medicaid, and ultimately, privatization.
One such group, "Lead... or Leave," put an ultimatum to lawmakers: cut the federal deficit in half over the next four years, or leave office. This gang of Wall Street youth scapegoated elderly people, claiming that when baby boomers start "gobbling up pensions and health care benefits, a shock wave will blast people from their homes, rapidly plummet millions into poverty, and threaten the economic security and financial stability of our entire nation." A torrent of conservative Gen X groups echoed this view, backed by far-right foundations, Wall Street banks, and major multinational corporations -- all of which stood to gain big from privatizing Social Security.
After George W. Bush's failed attempt to privatize Social Security in the mid 2000s, Barack Obama ran on a program to strengthen it. Two years into his presidency, however, he charged the National Commission on Fiscal Responsibility and Reform (the "Simpson-Bowles" commission) with finding ways to reduce the federal deficit and balance the budget. The commission failed to reach consensus, but its recommendations included a steep rise in the retirement age and decreased cost-of-living adjustments (COLA) -- both major pillars of austerity-minded, deficit hawk orthodoxy.
In one of the more blatant shows of the Clinton Democrats' neoliberal agenda, the Clinton Global Initiative University partnered with the Peterson Foundation in 2010 to launch a student campaign called "Up to Us," a year-long competition, judged by Simpson, Bowles, and Chelsea Clinton (!), in which students from major universities ran campaigns to "raise awareness about fiscal sustainability."
The campaign's name was derived from the neoliberal mantra of "choice" and "personal responsibility" embedded in Obama's 2009 D-Day speech: "Our history has always been the sum total of the choices made and the actions taken by each individual man and woman. It has always been up to us." In 2012, Up to Us was launched at ten major universities, but grew to include over one hundred in 2018.
Despite the failure of Simpson-Bowles, Obama used his 2014 budget to lure Republicans into a deficit reduction deal with a proposal to institute "chained-CPI," a COLA calculation that would reduce Social Security benefits. I was working for Bernie Sanders at the time when he rallied with Social Security Works and other groups outside the White House and helped deliver a petition to expand Social Security (and oppose chained-CPI) signed by some 2.5 million people. Sanders also led a coalition in Congress to pressure Obama to abandon chained-CPI, which he eventually did.
A few years later, when Donald Trump ran for president, he said that he would "do everything within my power not to touch Social Security, to leave it the way it is; to make this country rich again" (a far cry from his likening Social Security to a Ponzi scheme in 2000 and claim that "privatization would be good for all of us").
Instead of strengthening Social Security, as Trump promised, the GOP passed a $1.5 trillion tax cut for the country's wealthiest, thereby swelling the federal deficit. Senate majority leader Mitch McConnell blamed the deficit rise on "a bipartisan reluctance to tackle entitlement changes because of the popularity of those programs," openly naming Social Security, Medicare, and Medicaid.
Trump advisor Sam Clovis expressed passive support for McConnell's view at the Pete Peterson Fiscal Summit that year, saying that the administration was open to cuts in Social Security and Medicare. Koch Brother acolyte Paul Ryan, for his part, introduced a Balanced Budget Amendment in the House. And at a 2018 event sponsored by the American Legislative Exchange Council (ALEC), then-Office of Management and Budget director Mick Mulvaney indicated that Social Security cuts are going to be necessary.
Against false claims by austerity-minded Republicans and Democrats, Social Security does not add one penny to the deficit. It is self-financing by design. Roosevelt made that clear when he was devising the program: "We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program."
It is true that Social Security's tax base has eroded, in part because of increased income inequality and the high costs of health insurance, but also because each year the US Treasury borrows Social Security surplus revenue and spends it on other things.
Therein lies the redistributive aspect of austerity politics today: cut taxes for the rich, offset the loss in revenue by raising taxes on working families, and assure them that their tax money is being set aside for retirement. After that money is eaten up through tax cuts, defense spending, and other forms of corporate welfare, people who have worked their whole lives and want to retire with dignity are told "we can't afford it."
The Expand Social Security Act
The legislation that Bernie Sanders proposed today goes in the opposite direction of austerity politics by strengthening and expanding Social Security.
On the revenue side, it lifts the cap on payroll taxes so that the wealthy pay a more equitable share. Part of the reason why Social Security is now spending more than it takes in is because extreme income growth at the top, and stagnation at the middle and bottom, has created a situation in which the share of earnings above Social Security's tax cap has nearly doubled, from 10 percent in the late 1970s to 18 percent today.
That means that a billionaire pays the same amount into Social Security as someone who makes $132,900 a year. While people like me and most people I know pay payroll taxes on 100 percent of our incomes, ultra-wealthy figures like Jeff Bezos, who make most of their money on investments, pay only a minuscule proportion -- as little as .00028 percent -- for the same maximum benefits.
By mandating that people who make over $250,000 a year pay full Social Security taxes, including taxes on unearned income, Sanders projects that Social Security would be solvent for the next fifty years and raise enough revenue to increase benefits across the board, along with expanding them for survivors, low-income seniors, and children of people with disabilities.
It would also allow the Social Security Administration to use a more accurate cost-of-living adjustment formula, CPI-E, that factors in the spending habits specific to seniors.
Right now, more than three in five seniors depend on Social Security for most of their income. One-third rely on it for nearly all (90 percent or more) of it. Without Social Security, the poverty rate among seniors would be nearly 41 percent instead of just under 9 percent now.
"Scrapping the cap" is not a radical idea: lawmakers have raised the cap several times over the years and in 1994 eliminated it entirely for Medicare. Plus, it would only affect a small portion of the population. The Center for Economic and Policy Research has estimated that taxing income over $250,000 would only impact the top 1.5 percent of wage earners.
Sanders' legislation comes after another Social Security expansion bill introduced recently in the House by Democratic representatives John Larson, Conor Lamb, and Jahana Hayes, though their bill increases benefits by scrapping the cap a bit higher, above $400,000.
That legislation has 203 cosponsors and counting, so it has a very good chance of passing. Sanders's bill is supported by many of the presidential hopefuls in the Senate, including Cory Booker, Kirsten Gillibrand, and Elizabeth Warren.
What this means for 2020 is that the Clinton-Obama austerity politics of the not-so-distant past may have finally reached their limit. Americans are sick of having to do more with less. Billionaires and millionaires are going to have to pay up.
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The Party of Ideas
A pity they're all crackpot ideas.
Dec 26, 2018
I recently attended a conference at the Niskanen Center. It was a think tank gabfest at which the participants were disillusioned conservatives hoping to chart a course toward a saner political center-right. Jonathan Chait did a near-ecstatic write-up of the meeting and its promise of a conservative movement with fewer XYY chromosomes. Jeet Heer was less optimistic.
"These are but a few of the crackpot nostrums peddled by conservatives in their supposed intellectual golden age."
What impressed me, however, was the elegiac note struck even by those thoroughly disenchanted participants who believed that American conservatism had not been hijacked by know-nothings, but contained the seeds of its own perversion.
They were almost uniformly nostalgic about the early 1980s, when most of them turned to the Republican Party. "Bliss it was in that dawn to be alive. But to be young was very heaven," or so it once seemed to these conservative apostates looking to the past. Back then, there was intellectual ferment on the Right, and the GOP was the party of ideas. But what were those ideas when considered in the cold light of empirical reality rather than soft-focus nostalgia?
Thirty-five years have given us plenty of time to test the truth of the main tenets of the Republican coalition when applied across economics, national security, social policy, and governance. Several of the most significant ideas follow:
Starve the beast. This was a popular rationale for tax cuts (beyond the real, tacit one of further enriching political donors) offered by reigning conservative demigod Milton Friedman. If you reduce revenue, it will force hated Big Government to shrink accordingly. Not only has this scheme never worked out, Republican administrations have expanded the national debt significantly more than Democratic ones.
Tax cuts pay for themselves (or even increase revenue). This absurd myth is still being mouthed by true believers like Paul Ryan, even as he leaves the speakership with an unprecedented record of fiscal failure at a time of a generally good economy.
The crazy implication of this tax-cut theology ought to be that if you cut taxes to zero, revenues will be infinite. This theory and "starve the beast" also achieve the difficult feat of each being completely wrong while flatly contradicting one another. It's like believing simultaneously in the Young Earth Creation and Steady State models of the universe - two contradictory and demonstrably false hypotheses.
Efficient markets hypothesis. Wall Street must, by a Newtonian law of nature, allocate capital and risk in the most efficient manner possible. Therefore, who needs regulations? A glance at the numerous financial panics throughout history ought to have disproved this idea, but Federal Reserve board chairman Alan Greenspan embraced it along with Ayn Rand's other crank notions. In 1999, Brooksley Born, chair of the Commodity Futures Trading Commission, attempted to argue that the near total deregulation of the futures market was a bad idea. Greenspan and the rest of the free-market establishment mowed her down, and so one more cause of the 2008 financial meltdown was set in concrete.
Government is the problem. Uttered by no less than Saint Ronnie, this sentiment is the leitmotiv of conservative thought. Funny, though, it somehow excludes the Pentagon, which consumes more than half the discretionary budget. And it's rarely practiced by those who preach it (many of whom have spent entire careers on the federal payroll). The disproportionately Republican voters of the hurricane belt expect FEMA (an agency that some conservatives otherwise believe exists to put them in concentration camps) to promptly write a check for damage caused by choosing to build in a flood zone. (Personal story: as a budget committee staffer, I got considerable phone traffic from the office of Mississippi Senator Trent Lott about expediting relief when Katrina wiped out the senator's house in Pascagoula). This reflex has become so Pavlovian that residents of Harlan County, KY, severely dependent on federal aid to prevent brute starvation, bitterly denounce government.
The gold standard. What John Maynard Keynes called the barbarous metal is an object of totemic worship by conservatives. Beginning with the Reagan candidacy, it has been a hardy quadrennial in GOP platforms. It is a product of the fallacy of misplaced concreteness: because you can see and touch gold, it represents for some deluded souls an avatar of value more lustrous than real wealth produced by labor.
In reality, the gold standard was only common from the mid-1870s until 1914 (a period characterized by many international panics), and was promptly suspended during World War I, when countries fighting for their lives could no longer afford the luxury of gold theology. Great Britain's postwar attempt to restore the gold standard was a failure, and virtually all countries abandoned the classic gold standard during the Depression, opting for a hybrid gold-exchange standard which itself collapsed in 1971.
Look at any conservative website, though, and advertisers are usually hawking overpriced gold coins; half-baked schemes to reinstate the gold standard frequently appear even in "respectable" conservative publications. President Trump has advocated the gold standard. Given his recent reverse-Midas touch with the stock market, be very afraid.
Run government like a business. This chestnut is rarely questioned, although a moment's thought proves it fallacious. Businesses sell products to customers for profitable revenue. Government is a citizens' compact to provide a gamut of services from policing to disease research to protecting land held in common to national defense, all financed by taxes. Government officials must obey governmental and constitutional rules; they are not autocratic CEOs who run their firms as they see fit.
The analogy is even more strained given that Republicans often seem to choose Enron as their governance model. In line with its mantra that government doesn't work, the GOP sets out to make it a self-fulfilling prophecy by adopting an exploitative rather than public service model. The merger of government with predatory business practices has now reached a culmination in the Trump administration, where everything from the location of the FBI headquarters to the security of the Middle East hinges on the private and opaque financial interests of the Trump Organization.
Law and order/personal responsibility. In the 1980s and 1990s, the GOP styled itself the Party of Personal Responsibility: "no defining deviancy down!" as scolds like Bill Bennett incessantly reminded us. Republican amendments to crime bills competed to be the toughest on crime, with capital punishment preferred. Many liberals called it coded racism, but it ultimately became something even worse: more like the Leninist who-whom principle whereby something is only a crime depending on the political status of the perpetrator.
Sexual harassment ceases to be heinous when potentially committed by a GOP aspirant to office, and we hear a lot these days about how campaign finance violations or even conspiring with an adversarial foreign power are mere "process crimes" if they're even illegal. Once upon a time, crack cocaine abusers deserved life imprisonment and traffickers death; now that opioid abuse is literally destroying a state that Trump carried by 42 percent, the GOP is suddenly all about compassion and the need for treatment.
Authoritarianism good/totalitarianism bad. Back in the early 80s, right-wing talking head Jeane Kirkpatrick caused a stir when she theorized that authoritarian regimes were to be tolerated, even indulged, because somehow they would evolve into democracies. But totalitarian regimes, meaning communist ones, were incapable of spontaneously democratizing and had to be resisted tooth and nail. This notion was prompted by the need to explain U.S. support for regimes like Chile or South Africa, while we opposed ones like Nicaragua. Rather than analysis, it was basically arbitrary labeling: four legs, good, two legs bad.
The fall of the Berlin Wall was massive disproof of the theory, but so are subsequent events: there is no consistent pattern to the transformation of either so-called authoritarian regimes or totalitarian states into democracies - or to the now-frequent backsliding of democracies into despotism.
There have never been rational criteria for U.S. obsequiousness toward feudal tyrannies like Saudi Arabia while we remain unremittingly hostile to Iran, which at least has something resembling a parliament. Trump, as usual, has carried Kirkpatrick's scheme to a bizarrely ironic conclusion: he prefers authoritarian rulers like Recep Erdogan or Mohammed bin Salman to democratic leaders responsible to their legislatures.
Blame America First/liberals hate America. This dogma got its legs when - again - Jeane Kirkpatrick pontificated that those critical of US foreign policy just wanted to "blame America first." It culminated in the common post-9/11 belief that anyone skeptical of the existence of WMD in Iraq hated America. But like many beliefs (voter fraud, "class warfare," etc.), it contains a massive dose of psychological projection. American conservatism is steeped in a cultural pessimism that sees our best days behind us, with America forever ruined by minorities, foreigners, and socialists (and sometimes uppity women).
Likewise, conservative economists like James M. Buchanan were never comfortable with American democracy, and felt the need to ring-fence billionaires' property rights against it. Fundamentalists see secular society as irredeemably sinful; those who are Christian reconstructionists want to overturn the Constitution in favor of theocracy. NRA-style gun nuts posit a sacred right to armed insurrection and overthrow.
Examples of this mentality include Jerry Falwell saying America got what it deserved on 9/11 (because: gays) and a legion of Trump apologists rationalizing that collusion with a hostile foreign power is harmless - or maybe, by means of Republican alchemy, even a higher act of patriotism.
These are but a few of the crackpot nostrums peddled by conservatives in their supposed intellectual golden age. While movement eggheads like Milton Friedman seem like hopelessly unworldly lunatics (he once posited that we didn't need a Food and Drug Administration because manufacturers would ensure safe products out of market efficiency and the goodness of their hearts - yeah, sure they would), they prevailed over time.
The infiltration and dominance of the Republican base by religious fundamentalists, whose creed is magic thinking reinforced by unwavering obedience to accepted authority, helped metastasize this syndrome of dogmatic illogic. It was also boosted by the rise of an integrated, conservative media-entertainment complex, whose non-stop, nation-blanketing repetition of falsehoods assisted their popular acceptance.
The conservative mainstreaming of pernicious ideas gradually overcame a more cautious postwar American pragmatism, dearly won after the misery of the Great Depression and the horror of World War II. The political movement that started as what Keynes described as the "frenzy [of] some academic scribbler of a few years back" has now, under Donald Trump, become like the children gone savage in Lord of the Flies, heeding not reason but the rattle of bones and the beat of tom-toms.
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The Future of Social Security, Medicare and Medicaid Is on the Ballot This November
Right-wing extremists have never been subtle about their goal to eliminate all three programs
Oct 17, 2018
Everyone who cares about their Social Security, Medicare or Medicaid needs to vote on November 6. If Republican politicians and the donors who own them retain full control of Congress, they are determined to finally succeed in their longstanding goal of ending all three programs.
Right-wing extremists have never been subtle about that goal. As the fight over President George W. Bush's 2005 proposal to privatize Social Security was heating up, a leaked memorandum from Bush's director of strategic initiatives, dated January 3, 2005, and marked "not for attribution," put the fight over the program in context: "this will be one of the most important conservative undertakings of modern times." If that weren't clear enough, the memorandum concluded with a startling and refreshingly frank assessment: "For the first time in six decades, the Social Security battle is one we can win."
Speaker of the House Paul Ryan has bragged that he has been thinking about cutting these programs since his frat days. He literally claimed that he was "dreaming" of ending Medicaid when he was "drinking at a keg," adding, "I've been thinking about this stuff for a long time."
Right-wingers have opposed Social Security and Medicare ever since they were first created.
Republican leaders are so eager to cut benefits that they seem incapable of hiding their plans to go after Social Security, Medicare and Medicaid. The latest person to let the veil slip is none other than powerful Senate Republican Leader Mitch McConnell (R-KY).
He just stated that spending on so-called "entitlement programs" must be "addressed." That is Washington insider code for ending Social Security, Medicare and Medicaid.
The shocking part of McConnell's statement, and those made by other powerful Republicans, is not the content, but the timing. Right-wingers have opposed Social Security and Medicare ever since they were first created. But because these programs enjoy overwhelming support from the American people, including voters of all political affiliations, they do not normally talk about their plans for benefit cuts three weeks before an election. If this is how they are talking now, imagine how emboldened they will be if they ride out the blue wave and keep control of Congress!
Since losing the Bush privatization fight, these Republicans have worked hard to avoid political accountability, through using fast-tracked, unaccountable supercommittees, commissions or other forms of bipartisan cover. But with Democrats now in favor of expanding not cutting these vital programs, Republican elites may see their latest chance slipping away. And they are determined not to let that happen. Like the proverbial child who murders his parents and then pleads for leniency because he is an orphan, today's Republicans are planning to use the cost of their tax giveaway to the wealthy as the excuse to do what they have wanted to do for so long.
Time and time again, McConnell has shown that the only thing he truly cares about is power. And he has been rewarded for his ruthlessness. He was able to steal a Supreme Court appointment in 2016. If Congress remains in Republican control, he will do anything he has to do to ensure that he destroys Social Security, Medicare and Medicaid. On November 7, 2018, he will be as far from the next election as you can get. And he and the other Republicans will have no guarantee that they will keep control of the White House and Congress after 2020.
Donald Trump understands the politics better than the rest of his cronies. In his typical effort to project his true views onto his political opponents, he signed an op-ed claiming that Democrats are the ones who want to destroy Medicare. He has also made the equally absurd claim that Democrats are out to destroy Social Security. (Thinking about this transparent projection brings to mind his retort, when Hillary Clinton accused him of being a Russian puppet: "No puppet; you're the puppet!")
Notwithstanding Trump's efforts, the other Republicans just cannot control themselves. By being undisciplined enough to announce, immediately before an election, their plans for Social Security, Medicare and Medicaid cuts, McConnell and the others have made the choice for voters crystal clear.
It is a cliche to say whatever election is coming up is the most important in our lifetimes. But this time, it is no hyperbole.
It is a cliche to say whatever election is coming up is the most important in our lifetimes. But this time, it is no hyperbole. There are many, many reasons to make sure you vote. A principal reason is to protect Social Security, Medicare and Medicaid.
If Democrats take back the House of Representatives, they can block McConnell's plans for cuts. If they take back the Senate, McConnell will lose his control--and Democrats can hold floor votes on expanding Social Security and Medicare, forcing every single senator and House member to go on the record for or against these programs.
Please understand that I am not a knee-jerk Democrat. In the 1970s, I worked for a Republican senator, and in the early 1980s, I was the top assistant to conservative economist Alan Greenspan in his position as chair of the bipartisan Social Security reform commission. Mainstream Republican presidents, from Dwight D. Eisenhower to George H.W. Bush, have supported Social Security, Medicare and Medicaid. But no more.
Right-wing extremists, who hate all government programs that improve people's lives, are currently in charge of the Republican Party. They are extreme in their views. They are extreme in their tactics. And they are extreme in their efforts to thwart our system of checks and balances.
So, I implore all supporters of Social Security, Medicare and Medicaid: Vote this November.
This article was produced by the Independent Media Institute.
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