Wednesday, January 05, 2005

War on the Impoverished

I have been taken to task by my fellow Christians for the admittedly cynical and strident tone of my Blog. Our pastor, a man I admire and respect, once stated that non-Christians are incredibly sensitive to hypocrisy. It is as if atheists and agnostics are waiting to pounce on us for any misstep. I think this is true but it is not the issue, the issue is why Christians aren’t sensitive to their own hypocrisy.

As an example I would note that in the 1960’s and 1970’s the United States declared a war on poverty. This is the type of war that our God called us to fight and yet it has become increasingly evident that Christians are not simply abandoning the war on poverty, we are changing sides. Social Security is a case in point. President Bush, the Evangelical President and the single most visible symbol of American Christianity has decided to hit the poor where they have already been hit the hardest, in their wallets. More disturbingly our President is doing this with the “Political Capital” he “earned” with the help of the Religious Right during the 2004 elections.

Harold Meyerson had this to sayin today’s Washington Post:

In 1960, when the Senate Subcommittee on the Problems of the Aged and Aging issued its report -- which is the source of the quotation in the first paragraph -- poverty among the elderly was pervasive. Two years earlier the Census Bureau had concluded that almost 60 percent of seniors had annual incomes under $1,000 a year, at a time when the government estimated an adequate yearly budget for a retired couple to be roughly $3,000. Family members and friends helped support seniors, of course, but the 1961 White House Conference on Aging concluded that that assistance amounted to just 10 percent of seniors' incomes -- and less than that, of course, among poorer families. The elderly received their Social Security checks, too, but they still amounted to chump change. In 1959 the average monthly check came to just $70.

I've culled these mournful numbers from Michael Harrington's 1962 classic exposé of destitution amid affluence, "The Other America," a book that dared to propose that the nation could eliminate the poverty in its midst. "The Other America" was one factor that led Kennedy and Lyndon Johnson to initiate a war on poverty -- a major component of which was a war on senior poverty that included the establishment of Medicare and a vast expansion of Social Security. Forty years later the war on senior poverty stands as a stunning success.

Today, however, the United States is governed by a president who is affronted by the very idea of a successful government program. According to a story in yesterday's Post, President Bush wants to change the Social Security indexing formula in a way that will reduce monthly payments by 32.5 percent by 2052 and 45.9 percent by 2075. Today a retiree receives a Social Security check that equals 42 percent of the average worker's wage; if Bush's plan is enacted, that check will shrink to just 20 percent of that wage.

Bush is proposing to cut benefits by 46% in by 2075 from what they would have been if the system were kept whole. If we do nothing the Social Security Administration estimates that benefits would be reduced by 33% by 2079 due to funding shortfalls. A modest increase in the level of income to which we apply social security taxes (but not an increase in the tax rate itself) would leave seniors whole.

I know that my linking of Republican Economic Policy to American Christian values may seem unfair to some. The fact remains however that Christians turned out in overwhelming numbers and with deliberate high visibility to support this President and his policies. Ironically, the Religious Right ushered in President Bush under the guise of a Culture War. However, the real Culture War appears to be against the poor. I pray that God has more mercy on us than we have on the poor.

Tuesday, January 04, 2005

Lies, Damned Lies, Conservative Media and Social Security

Repeat after me, “Liberal Media Bias.” Keep saying this two or three thousand times per day until your brain turns into red state mush and under no circumstances ever look into any factual information as this will undermine your mantra.

Now, repeat after me “Social Security is backed by worthless IOU’s.” Repeat this two or three thousand times per day out loud until your family, coworkers and fellow church members repeat it back to you. Once again, do look at any factual information and remember to physically assault anyone who dares question your mantra.

I like to review conservative web sites because they take their talking points straight from the Bush Administration just like talk radio. I was looking at NewsMax today and they referenced an article at is the ministry of propaganda for the Heritage Foundation which, in turn, acts a private ministry of propaganda for the Bush administration. That is an awful lot of propaganda. Here is a cute little whopper from the good people at Townhall about the solvency of the Social Security Trust fund:

Social Security is the national retirement plan. But, starting in 2018, there’s nothing there but I.O.U.s.
That’s probably not what you’ve heard. Various reports claim Social Security is safe and secure. In their annual report this year, the program’s trustees insisted it would be able to pay benefits through 2042. A recent Congressional Budget Office report is even more optimistic. It says Social Security is solid through 2052.

But these reports pretend there is money in the Social Security trust fund, which actually is all trust and no fund.

The fact is, Social Security is “pay as you go.” It always has been. That means it relies on today’s taxpayers to pay today’s benefits. Which works well as long as there are more taxpayers than beneficiaries. Indeed, for years we’ve been taking in more than we’ve been paying out. The extra money is supposed to go into that trust fund. It doesn’t.

Instead, the Treasury spends the difference on roads, sex-education programs, parks and whatever else the federal government buys. The trust fund gets an I.O.U., which is stored in a fireproof safe to be made good some day with future tax money.

The IOU’s that conservatives are belittling are US Treasury securities. These securities are what the Republicans have been borrowing against like drunken sailors on shore leave with a visa card. Treasury securities are also the basis upon which the return on all other securities, both debt and equity are based world wide. I don’t know about you, but I get a little nervous when the same people who borrow $2 trillion using US treasury securities in 4 years suddenly act like these same securities are just a bunch of worthless IOU’s. I get especially nervous when my retirement is at stake. The social security trust fund has $1.5 trillion in treasury securities that paid approximately $80 billion in interest in 2003. Not bad for an IOU. But reading what Townhall had to say, I get the impression that our conservative friends don’t plan on making good on their debts after 2018.

Perhaps the best way to reform Social Security is to get rid of conservatives.

Krugman takes on the myth of a Social Security Crisis

The New York Times’ Paul Krugman is taking on the Bush Administration’s distortions and outright falsehoods on Social Security. Here is today’s installment:

Today let's focus on one piece of those scare tactics: the claim that Social Security faces an imminent crisis.

That claim is simply false. Yet much of the press has reported the falsehood as a fact. For example, The Washington Post recently described 2018, when benefit payments are projected to exceed payroll tax revenues, as a "day of reckoning."
Here's the truth: by law, Social Security has a budget independent of the rest of the U.S. government. That budget is currently running a surplus, thanks to an increase in the payroll tax two decades ago. As a result, Social Security has a large and growing trust fund.

When benefit payments start to exceed payroll tax revenues, Social Security will be able to draw on that trust fund. And the trust fund will last for a long time: until 2042, says the Social Security Administration; until 2052, says the Congressional Budget Office; quite possibly forever, say many economists, who point out that these projections assume that the economy will grow much more slowly in the future than it has in the past.

Monday, January 03, 2005

Bush, Extortion and Social Security

"Pure and lasting religion in the sight of God our Father means that we must care for orphans and widows in their troubles, and refuse to let the world corrupt us." (James 1:27)

Like many Americans my employer cancelled our pension plan. They cashed me out and dumped the money into my 401K and the amount they cashed out seems rather meager after nearly 20 years on the job. So, like many Americans I decided that if individual retirement accounts were offered in lieu of a standard social security benefit I would take the benefit and opt out of the private accounts. Even though I am “highly compensated” social security is crucial to my total retirement portfolio. I have a number of friends who are in the same position and who have come to the same conclusion. We have IRA's, we have 401K's and are heavily in the market, we need security.

In short, as someone with nearly 20 years in corporate finance and a graduate degree in Economics I know financial cow flop when I smell it and our man from Texas does shovel it out in generous portions. It seems W caught wind that a bunch of us weren’t going to square dance in his fiscal cow pies voluntarily so it looks like we’ll be doing it looking down the barrel of George’s 12 gauge. In plain English, the latest plan on the table calls for what I and a number of other commentators have been warning about, the Republicans are about to put a bullet in the head of Social Security for the sin of having a broken toe nail. This is from MSNBC:

The change would save trillions of dollars in scheduled expenditures and solve Social Security's long-term deficit, but at a cost. According to the Social Security Administration's chief actuary, a middle-class worker retiring in 2022 would see guaranteed benefits cut by 9.9 percent. By 2042, average monthly benefits for middle- and high-income workers would fall by more than a quarter. A retiree in 2075 would receive 54 percent of the benefit now promised.

While no decision has been made, allies and opponents expressed little doubt about where the president is heading.

"No decision has been made, but the administration is clearly leaning in that direction," said Michael Tanner, director of the libertarian Cato Institute's Project on Social Security Choice. "I don't think anything else is seriously on the table."

A former senior administration official who recently discussed Social Security strategy with Bush aides said the change in the indexing formula "is assumed to be a part of any final solution."

"You've got the bitter medicine of changing the indexing, but to go along with that you've got the sweetener of the accounts," the former official said.

To set the record straight, Americans already have access to individual retirement accounts. We have 401K plans, Standard IRA's and Roth IRA's to name but three. To hear Bush tell it (or sell it like snake oil) we never had individual retirement accounts until he came along. The fact that diverting money out of the Social Security trust fund will only weaken the system not strengthen it as our President insists is further evidence of just how low this administration will sink. As for "market returns" enhancing our portfolios please look at the S&P 500 total return over the last five years, or the NASDAQ or the DOW or better yet, the Nikkei. W's goal is to destroy Social Security not save it.

Social Security is one of the most successful government programs in history. It has overhead of less than 1% while providing survivor benefits to widows and orphans. Social Security provides a very modest but guaranteed income to the elderly. In short, Social Security serves the most vulnerable elements in our society, and once again it is these people that our President and his allies in the religious right are attacking for their own petty personal gain. Where in the Bible did our good Christian President learn to threaten to cut off the funds to the poorest of the poor? Where in the Bible does it say to throw widows, orphans and the elderly to the money changers on Wall Street? Once again we see that the Republican Party and their leader George Bush act not in concert with their God, but in defiance of Him.