Jobs, Not Cuts

Doing anything tomorrow afternoon?  Organizations have banded together to conduct Jobs Not Cuts rallies outside various Congressional offices to focus attention where it needs to be:  JOBS.  I was amused to receive an email from Sen. Casey touting the importance of jobs considering he had just voted to slash jobs by supporting the Budget Control Act.  Austerity kills jobs it doesn’t create them.  Move On has a webpage where you can go and find the rally nearest your home.  I like that this isn’t targeting only Republicans.  This was a bipartisan vote and everyone who voted to destroy the American Dream is culpable.  Progressive groups gain credibility when they are bipartisan.

America Gets Shock Doctrined

As I was riding along in our minivan on the way to Wellsboro last Tuesday I was on my iPhone in the back seat checking the vote on the Budget Control Plan and its progress tot he President’s desk.  Twitter was full of news reports and observations and I also was getting emails from Campaign For America’s Future where I also contribute now and then.  I was corresponding back and forth with Dave Johnson about an upcoming conference call (I wound up missing it because I was out of cell range) and I mentioned that we’d just gotten Shock Doctrined.

The Shock Doctrine is a book written by Naomi Klein of The Nation. If you haven’t read it you must.  It documents the horrid foreign policy of the U.S. towards third world nations, especially in Central and South America and how we toppled governments on behalf of our multi-national corporations then imposed severe austerity policies through the IMF and World Bank.  Labor leaders, liberals and progressives were routinely rounded up and executed in country after country.  Gradually as it became known what was happening these became fewer as more countries were subjected to these economic strangleholds.

What austerity does is shrink a country’s economy to repay debt.  Those who object to the poor and working classes being sacrificed for the rich simply disappeared.  Klein likened it to the shock therapy once used on the mentally ill.  The Budget Control Act is the Shock Doctrine come to America.  

Based on breakthrough historical research and four years of on-the-ground reporting in disaster zones, The Shock Doctrine vividly shows how disaster capitalism – the rapid-fire corporate reengineering of societies still reeling from shock – did not begin with September 11, 2001. The book traces its origins back fifty years, to the University of Chicago under Milton Friedman, which produced many of the leading neo-conservative and neo-liberal thinkers whose influence is still profound in Washington today. New, surprising connections are drawn between economic policy, “shock and awe” warfare and covert CIA-funded experiments in electroshock and sensory deprivation in the 1950s, research that helped write the torture manuals used today in Guantanamo Bay.

Dave Johnson wrote an article at CAF predicting this last November as the Simpson-Bowles Commission report was due.  Of course the catastrophic elements inside the Budget Control Act go farther than anything any of us predicted just last fall.

The Simpson/Bowles plan is part of a pre-arranged agenda to gut the middle class and further enrich the wealthy. The media machine is working to convince DC politicians that the public wants this done. They scare people with headlines about the terrifying things that will happen because of deficits. The only viewpoints you hear are the cutters and gutters. Those presenting the ideas the public favors – like the plan offered by Deficit Commission member Rep. Jan Schakowsky that cuts the deficit but actually strengthens Social Security — are not heard. And keep telling people how popular and necessary this is.

What can we do?  Plenty.  When organizations plan on protesting outside Republican Congressional offices convince them we also need to do outside the offices of the 95 Democratic Congress members and the Senators who voted for this stinking piece of a Satan Sandwich.  In Reading it isn’t good enough just to go to Jim Gerlach’s office you also need to go to Tim Holden’s.  In fact the Democrats should be more of a target because the impact will be greater when they see fellow Democrats protesting their vote.  In Pennsylvania every Member of Congress except for Mike Doyle voted for this bill.  Senator Casey was also a yes.  Pat Toomey voted no but only because he didn’t think it went far enough.  In Pennsylvania every federal legislator but Doyle should be a target for our dismay.

If that doesn’t work call their offices, email them, show up and voice your outrage.  If that doesn’t work take to the streets.  Keep it peaceful though, we saw how effective peaceful civil disobedience can be throughout the Arab world.  Stop giving any money to anyone who voted for the bill.  Stop giving money to your political party’s organizations.  If the DCCC or DSCC call for contributions give them an earful.  One thing politicians understand is when their sources of money dry up.   Want to get President Obama’s attention:  stop giving him money and stop volunteering for his campaign.  That’s something he’ll understand.

It is time we turned the shock around and showed them we aren’t going down with their ship.  We’re taking over the helm.

On Happy-ing Their Gilmores, Or, Will Body Bags Be The New Gold Watch?

We are continuing a recent theme here today in which two of my favorite topics are going to converge: Social Security and in-your-face political activism.

I have been encouraging folks to take advantage of the recent Congressional recess to have a few words with your CongressCritter about the proposed Death Of Medicare and all the proposed cuts to Social Security…and you have, as we’ll discuss…and now we have an opportunity to do something on a national scale, just as we did a few weeks ago in support of Social Security.

This time, we’re going to concentrate on fighting the idea that retirement ages should go up before we become eligible for Social Security and Medicare (and elements of Medicaid, as well), and that Americans should just keep right on working until the age of 67 or so-which isn’t going to be any big problem…really…trust us.

Now that just makes no sense, and to help make the point we have a really cool video that you can pass around to all your friends-and your enemies, for that matter, since they’ll also have to worry about what happens to them if they should ever make it to old age.  

“…Art can create a climate of sensitivity in which it is possible for change to occur…”

Shabana Azmi, on Riz Khan’s Al Jazeera program One on One

Members of Congress are at home this week, and they love to go out and meet the voters-but it hasn’t been as much fun all of a sudden for some of them, and there are several videos out on the Web right now where it looks like Members wish they hadn’t been hanging out where the public could see them so easily.

Now some of these videos are loud and boisterous-but the one that should really scare Republicans was Charlie Bass’ appearance in Hillsboro, NH on the 4/20 holiday.

If you look at the crowd, they’re older, for the most part-and for the most part they came to the meeting with their own information, meaning that they weren’t so much looking for the Congressman to tell them what was up as they were looking to tell Mr. Bass (who represents the State’s 2nd District) that they weren’t too happy with him about this “entitlements reform” deal.

Now they weren’t there with pitchforks and torches by any means, and a lot of them were supportive of many of the Congressman’s other positions-but they were extremely unhappy about the idea that Medicare would become a voucher system (just so you know, Bass would insist that it’s a “premium support system” whenever the word “voucher” came up), and they did not find the argument that “this won’t affect you” very convincing, either.

In addition to the obvious question (basically, “why would the plan be better if it only sticks it to our kids and grandkids?”), a woman from the crowd asked a question I don’t think Karl Rove ever thought would come up: you might not be sticking it to senior citizens today…but she wondered what’s to prevent conservatives from coming back in a few years and asking those under 65 why they should be supporting those old people and their “Cadillac plans”-at which point it will be “stick it to the old folks” season, and Medicare will officially die, along with a lot more old and disabled people, sooner than they should have.

And he wasn’t the only one to have a bit of a tough week at what used to be really friendly Town Halls: Pat Meehan (PA-07) got himself into a shouting match with his putative employers, so did Lou Barletta, he of Pennsylvania’s 11th…and so did Catfood 2.0’s architect, Paul Ryan, who had to face what he politely described as an “enthusiastic” crowd in Milton, Wisconsin.

“Happy learned how to putt! Uh-oh!”

–Adam Sandler, from the movie Happy Gilmore

To put it bluntly, the Members are hating it, big-time, as it appears that their 2009 “Town Hall Goose” has suddenly become just a little too good for the gander.

And if we’re already making life hot for these folks…why not just keep on pushing?

That’s the idea behind “Don’t Make Us Work ‘Til We Die“, which is an effort of the fine folks at Strengthen Social Security to highlight the fact that a lot of people right now are proposing to raise the retirement age; either to 67, or to something north of that…for the good of America, of course.

After all, if you’re a firefighter, or a nurse, or maybe you work in the trades, or a restaurant kitchen, or you drive a gasoline truck…or maybe you’re a smokejumper for the Forest Service…why would working until 67 be a problem for you?

Here’s a video that makes the point very nicely:

(By the way, they would love for you to spread this video far and wide; grab the embed code and just go nuts-or, if you prefer, email the link-and in the interests of Full Disclosure: I’m associated with the Campaign for America’s Future and they’re one of the members of the Strengthen Social Security coalition.)

.

On Wednesday and Thursday all of this goes outside and hits the streets all across the country, and to make it easy, the same website can help you find an event near you-or, if you live in Wyoming or something, you can attend the “virtual event”-either way, just visit the handy website and go from there.

So there you go: we have Republicans feeling mighty uncomfortable all of a sudden, we have a chance this week to get out in public and make the point in a bigger way-and now you even have the perfect video to send to that one relative who always forwards you Michael Savage’s latest missives.

Now get out and keep the momentum going forward-and don’t forget, it’s really easy to look at the person next to you in line at the grocery store and say: “Can you believe how they’re trying to screw us out of Social Security?”

That’s about all it takes to get a pretty good conversation going…and if you repeat that process, about a million times…well, that’s how politics gets done.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

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Social Security: Are You Ready For A Congressional “Video Staycation”?

Diligent reporter that I am, I got up Thursday morning to do a bit of fishing for a story, and as so often happens, I’ve caught something a bit unexpected.

Now what I have for you today starts out as a bit of insider information that came to me on background-but it turns into a chance for those of us who support Social Security to very much get in the faces of our members of Congress, for two whole weeks.

And to make it even better, I’m going to throw out a few direct action ideas “for your consideration” (as they say in Hollywood during Awards Season) that would absolutely make good street actions and YouTube videos, both at the same time…and even more importantly, we’ll absolutely make some great Spring Break fun.  

“I mean, just from the very notion that it said that 50 percent of beneficiaries under the Social Security program use those moneys as their sole source of income. So we’ve got to protect today’s seniors. But for the rest of us? For – you know, listen. We’re going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want America to be…

…We’re going to have to accept some changes as far as the rest of us. And what we’re saying is for those 55 and older do not have to worry about changes in benefits. But for the rest of us we will. We will have to do that.”

–House Majority Leader Eric Cantor, speaking at the Hoover Institution, March 21, 2011

OK, so like I said, I have bit of “inside baseball” that sets this whole thing up.

I got a piece of information “on background” yesterday from An Actual Well-Informed Source who seems to be about two or three “degrees of separation” away from actually being in the room while this news is occurring; because of that I’m willing to ascribe to it a reasonably good chance of proving to be entirely accurate.

What I was told was that Paul Ryan, who is the “manager” of the House Republicans’ budget-cutting effort, has decided not to push to include cuts in Social Security as part of the current fight over a Continuing Resolution…because Spring Break is coming up.

Check this out: according to the House Schedule, April 18-29 is Spring Recess, and I was told there’s a lot of concern on the Republican side about what would happen if anyone made any crazy Social Security proposals right now…when they have to go home and face you and me and the rest of the Angry Nation in just about two weeks.  

(There’s some evidence to back this up: it is now possible that Cantor “misspoke” in that quote a couple of paragraphs up the page; as of this moment I can’t confirm if a “full backpedal” is officially underway or not.)

We can discern two things from that little nugget: for starters, we are having an impact on this fight-but beyond that, we also now know that we have two weeks to publicly torment those Members of Congress who are looking to cut Social Security…and we have two weeks to get ready.

Since hunger strikes are already underway, here are a few other ideas you’re welcome to steal to make your statement:

Is your Member going to be appearing at a community center or a friendly church?

Well how about arriving a few hours early and setting up a cardboard “Social Security Tahrir Square”?

You could have a box that’s the local “Catfood Grocery”, you could paint one of the boxes to look like “Grandma’s Gingerbread Box”, and you could even have a “Long-Term Care Facility” and hand out fliers of your own-and make sure you catch the reaction of the Congressional Staff on video to set up the bigger video of you interacting with the crowd…or y’all being ejected by the suddenly fearful Representative…or y’all “making happy” with a supportive Member.

Now you’re going to love this one, and there are two ways you can make it work.

What we’ll be playing on are the proposals to increase the retirement age and how we’ll be asking old people to do jobs that, obviously, they just can’t; what I basically want you to do is either go to an event…or outside one of the Members’ District Offices…and create a “job training center” for senior citizens.

Get a wheelbarrow and load it with a nice load of bricks, maybe fill some oval trays with a mess of plates and beverageware (safety first on this one; beware of glass and ceramic-and don’t forget the jackstands), and then rustle up a transfer belt and a heavy volunteer and simulate what nurses and their aides do all day long, and all night, too: lifting and transferring those who can’t do it for themselves.

Take it all to the venue, and you can either “train” your own 70+ year-old students…who might not be old enough to retire, under the new proposals…on how to do these types of jobs while the crowd watches-or you can invite older members of the crowd to try their hand at moving the bricks, or lifting the tray. Bring a medical worker and you can show them what lifting looks like, too-although I would be unlikely to invite the crowd to do that one without some kind of training.

(Do I have to warn you that this could get someone hurt, and you’ll have to use a reasonable amount of caution when you do this? I didn’t think so.)

Again, get it all on video-and then get that video right up on the Web.

Our final idea for today might be my favorite-but that might be because I used to be a caterer, and this really fits my sense of humor.

You know those “Top Chef” and “Iron Chef” shows?

And you know how we refer to that Deficit Commission as the Catfood Commission?

Well…why not sponsor a “Catfood Contest” at your Congresscritter’s event?

Again, you could go two ways: invite “contestants” in chef’s whites to create delightful dishes with the Commission’s Catfood, or you could judge competing sculptures; they do both at the Spam Jam in Waikiki, and if it was me I’d steal the ambiance of this kind of an event from Hawai’i, especially since it’s Spring Break season anyway.

An alternative way to do this: performance art of an elderly couple having a Catfood Commission BBQ, cooking Catfood patties on portable grills to make a point.

So there you go:

We have two weeks to get ready to have two great weeks of fun just really tightening the screws on those Members of Congress who are looking to jack America out of Social Security, and we have ideas on the table that you are entirely welcome to borrow, or adapt, or outright steal-and with any luck, other readers will toss in some ideas of their own-so get your art on, gather your props, and bring extra video batteries and a blank tape to give the police…just in case.

And here’s one last thing to remember: this isn’t just about turning back a disastrous plan to break the backs of Americans for decades to come-it’s also about having a good time.

Well-executed comedy makes people agree with you, and to like your message, and that’s a powerful thing; the more fun you’re having, the better the whole thing is going to work.

Now go forth, make some mischief, and watch the magic happen.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

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Social Security: Get On The Phone Tuesday And Wednesday And Help Fight Cuts

So it’s been about three weeks since we last had this conversation, but once again we have to take action to try to keep Social Security from being the victim of “deficit fever”.

I know that doesn’t make a lot of sense, considering the disconnect between Social Security and the deficit-but once again it’s “Continuing Resolution” time on Capitol Hill, where some use the threat of an impending shutdown of the Federal Government to extract concessions from the other side…and some on the other side try to make points with the voters by out-conceding their opponents.

So Tuesday and Wednesday of next week, there’s a national push on to get voters to call their Senators and remind them to vote for an Amendment that is a big ol’ “I’m not willing to cut Social Security just because other people philosophically want to cut Government any way they can” kind of reassurance to the voters, and I’m here to encourage you, once again, to make a couple phone calls and do some pushing of your own.

I’ve also been storing up a couple somewhat facetious random thoughts which will be the “garnish” for today’s dish; you’ll see them pop up as we go along.

First, the I’m A Bit Confused Dept.: There’s an ad currently running on TV for a drug called Intuniv.  The drug is for children who are suffering from ADHD, and the visual image features a mother coming out the doors of the school with her “now-perfectly-behaved” 11- or 12-year-old child.

What comes next is the warning that the drug might-well, I’ll just quote the Intuniv website…

“Patients should not drive or operate heavy equipment until understanding how INTUNIV affects them”

…and every time I see the ad I think that if my 11-year-old could drive and operate heavy machinery I might suggest giving the other kids ADHD so they, too, could grow up and have a valuable skill of their own one day.

As we discussed “above the fold”, the Strengthen Social Security folks are doing a nationwide Senate call-in Tuesday and Wednesday to drum up support for passage of S.AMDT.207, the Sanders-Reid Social Security Protection Amendment, and they’ve created a process to painlessly put you directly in touch with both of your Senators, even if you have no idea who they might be.

I tried it out myself, just to see what would happen, and here’s how it works:

You call the phone number (1-866-251-4044) and the friendly automated phone voice automatically determines your location and then informs you that you “are represented by Senators [insert names here]”-and all of this without your having to navigate a menu or push a button.

The friendly phone voice then tells you to choose a Senator (“…push one or two…”), and you’re then directly connected to that office. Before you go, you’re encouraged to call back and leave a message with your other Senator as well…and you’re also offered “the commercial”: a fairly precise (roughly) 10-second script for a message that you might choose to leave, suggesting that your Senator vote for that Sanders-Reid Amendment.

I have a plan to make nuclear reactors in this country safer, and to do it fast: every Member of the Nuclear Regulatory Commission, everyone who votes on granting or renewing plant licenses, every nuclear power plant inspector, and the top executives of any nuclear licensee…should all be required to move into on-site housing at the nuclear power plants they’re in charge of within one year.

(This idea might also be adapted to improve the lives of nursing home residents, and it’s the same kind of “enforced safety” thinking that led to the old rule that Army paratroopers had to pack their own parachutes.)

We’ve made other calls like this recently, and just like before, the goal here is to keep the pressure on, and to remind all 100 Senators that they all have voters who absolutely do not want cuts in Social Security, and that this is not the time to be trying to sneak something in under cover of “Continuing Resolution” darkness.

So there you go: on Tuesday and Wednesday call the handy number (1-866-251-4044), let the automated voice guide you to your Senators, tell them you want them to vote for the Sanders-Reid Amendment…and while you have them on the phone, don’t be afraid to suggest that nuclear power plant on-site housing idea either.

Fighting for want you want is a process, not something that happens all in one day, and you should expect more messages like this one as we go along, asking you to make your voice heard-but you should also keep in mind that we’ve been doing pretty well so far, and when we speak, we’re being heard.

So make those calls, apply that pressure…and let’s win this thing.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

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Social Security: If You Can’t Kill The Program, Screw The People

There’s a lot of ways to be petty and cheap and stupid, and a lot of ways to stick it to a program you don’t like, and by extension, the clients of that program…and this week the House Republicans have embarked on an effort to combine the two into one petty, cheap, and stupid way to stick it to the clients of Social Security and the workers who administer the program.

They’re going to sell it to you, if they can, as a way to “lower the deficit”, or words similar…but what this is really about is making the actual Social Security program work less well-because, after all, if a program is popular today, the best way to make it less so is to apply a bit of “treat ’em like their cars were impounded” to every interaction customers have with the system.

And what better way to make sure that happens…then to aggressively demoralize everyone who works down at the ol’ Social Security office?

The foot less prompt to seek the morning dew,

The heart less bounding at emotion new,

And hope, once crushed, less quick to spring again.

–From Thyrsis, by Matthew Arnold

So here’s the deal, short and sweet: Social Security is amazingly efficient at running an annuity and income support program, both at the same time; in fact, in 2009 the Social Security Administration Old-Age and Survivors’ Benefit Program took in not quite $700 billion and disbursed $564 billion, writing checks to and serving millions of customers at the same time…and they did this with administrative expenses of about $3.4 billion-and that’s just about .6% of the distributions, all of this according to the Report of the Social Security Trustees for 2009.

In the private sector, companies who provide annuities have administrative costs that range from 50% to 500% higher. (Of course, Social Security doesn’t have to pay sales commissions.)

The Social Security folks are similarly frugal with the Disability Insurance Program (expenses run 2.3% of distributions), and if you combine the two the total is .9%.

Nonetheless, the plan from the House Republicans, who want to return to balanced budgets right now, if they are to be believed, is to cut $1.7 billion of those administrative costs from a budget of just under $12 billion in the remaining 7 months of the fiscal year, and, according to the involved union, that means in those next 7 months workers will have to take three weeks worth of furlough days to make that work.

If my quick math is correct it means they hope to close the office about 10% of the time while expecting the same amount of work to be done, which is probably not going to happen.

The likely end result will be callers who can’t get through without more of a struggle, checks that may or may not get out on time, an angry workforce, and a general result that equals more and more people saying “Social Security sucks”-and if you ask me, that’s the real goal of this effort: to make Social Security unpopular, thus setting the stage for more cuts to come later.

And just to put all this in perspective, we today give subsidies totaling about $4 billion a year to oil companies, apparently because gold-plated caviar is really, really, expensive, and the same budget-conscious House Republicans…every single one of ’em…voted to protect that subsidy just a couple of days ago.

Social Security workers were out yesterday handing out leaflets to describe what’s going on, although as far as I know the leaflets didn’t say that this is just one more part of a giant plan that’s already raising its ugly head in places like Wisconsin and Indiana and Ohio and New Jersey: start a war against one group of American workers by claiming they’re not “real” workers or that they’re “special, extra-privileged” workers…and try to drag down all workers in the process.

A cut like this is a shot at these workers, and, by extension, all workers who might, you know, like a raise some day-and it’s also a shot at you, or your parents, or your grandparents, who will eventually have to deal with the results of all the cutting.

But in the end, it’s important to look at the bright side: the gold-plated caviar market will still be protected, thanks to that $4 billion a year in cash we’re donating to oil companies-and if I had to guess, BP’s senior management will not be looking at longer wait times the next time they call Louie Gohmert or Joe Barton or any one of a few dozen other Members who evidently represent Big Oil first…and Americans last.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

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Social Security: If The Rich Paid Taxes Like You And Me…Problem Solved

( – promoted by John Morgan)

Over the course of the past couple of weeks we’ve been talking about how the War On Social Security was about to get under way and what happens when countries choose to privatize their systems.

Today we take on another bite-sized chunk of economic analysis: how can you get to a situation where Social Security is financially stable for the next 75 years?

We’ll describe some proposals that are out there-but the big focus of this conversation will be to look at one change that, all by itself, could not only solve the entire funding problem, but could actually allow us to lower the Social Security tax rate, immediately, and still achieve fiscal balance.

“Well, if that’s such a bright idea” you might ask, “why haven’t we adopted it already?”

That’s a great question-and after you hear the proposal, you may well have explanations of your own.

The possibility of victory can be a heavy millstone around the neck of any political candidate who might prefer, in his heart, to spend his main energies on a series of terrifying, whiplash assaults on everything the voters hold dear. There are harsh echoes of the Magic Christian in this technique: The candidate first creates an impossible psychic maze, then he drags the voters into it and flails them constantly with gibberish and rude shocks…

–From the Rolling Stone magazine article Freak Power in the Rockies: The Battle of Aspen, by Hunter S. Thompson

It was just this week that the Presidential Debt Commission (officially the National Commission on Fiscal Responsibility and Reform) “pre-released” some proposals for how they would resolve the various fiscal problems our country is facing these days, and among those were recommendations that the Social Security retirement age eventually be raised to 69 and that the amount paid in Social Security benefits should no longer increase as fast as inflation; both proposals, ultimately, represent cutting your benefits.

Far too many people are instinctively OK with these ideas because they assume they’ll never see a single dollar of the Social Security benefits they were promised anyway…which means far too many people believe in a giant urban legend.

Here’s the reality: no matter what, even if no financing changes are made, Social Security can pay 100% of anticipated benefits out through 2037. Even after that, if no changes are made, enough money will still be coming in to pay about 75% of anticipated benefits for roughly 50 more years after 2037. (We can’t speak to what will happen after that because the Social Security actuaries only look 75 years into the future when they make estimates.)

Here’s another reality: the total amount of wages that are subject to Social Security tax (also known as the “wage pool”) does not equal 100% of the total amount of wages paid to workers in the United States. That’s because income above a certain amount (at the moment, $106,800) is exempt from Social Security taxes.

During the 1980s and early 1990s, the wage pool represented about 90% of all wages…but because wage income has become more and more concentrated in the hands of the highest wage earners, 15 years later the wage pool now represents only about 83% of all wages.

In fact:

…due to high levels of earnings inequality, roughly 1% of the population earn 10% of all the earnings.

We know all this because of the fine work of Debra B. Whitman and Janemarie Mulvarney, both of the Congressional Research Service (CRS), who prepared the CRS report Social Security: Raising or Eliminating the Taxable Earnings Base, released in September of 2010. (Unless you see a link associated with a particular fact, from here on out what you’re reading is based on their work.)

So if we’re looking to achieve stability in Social Security financing, the question really becomes: how do we get back to a point where the size of the wage pool remains at least stable, or even grows larger over time?

In the 1980s, facing the same problem, the Reagan Administration negotiated an increase in the tax rate for taxable income, causing the wage pool to grow to that 90% number we talked about earlier…but today, we’re going to look in a different direction.

And that’s because, as it turns out, removing that $106,800 cap and making all wage income taxable for Social Security purposes, all by itself, will either solve the funding problem entirely or get you to 95% of where you need to be, depending on the choices you make.

Here’s how it works out:

Today, the amount of Social Security benefits you’ll collect depends on how much you pay into the system; the current maximum benefit is $2346.

What you could do is “break the link” between “paid in” and “paid out” by establishing a maximum benefit, no matter how much you pay in. If you kept the maximum where it is today, and that amount rose to equal inflation over time, the CRS tells us we would actually have 115% of the money we need to get to Social Security fiscal stability. As a result, we could afford to lower the payroll tax rate by .3% and we’d still be at fiscal stability.

Those who oppose this approach will tell you it will create political trouble for Social Security going forward because Americans will no longer see it as an investment program, but instead as a “welfare” program, which is presumably more politically vulnerable.

I would disagree, for a few reasons: for one, there’s the fact that Social Security is not, and has never been, an “investment” program, for another, not many people actually make more than the maximum, anyway (94% of workers earned less than the maximum in 2007). Beyond that, those that do make more than the maximum tend to be, shall we say, geographically concentrated, mostly in the suburbs of New York City and Washington, DC:

…focusing on the nationwide average hides the diversity among the states and the District of Columbia. The share of the population above the base ranges from a high in New Jersey where nearly 12% of covered workers earn above the base, to a low in South Dakota, where 2% of workers earn above this amount…

There’s another reason this kind of change wouldn’t be as politically problematic as some might think:  

CRS estimated the potential impact of eliminating the taxable wage base on future benefits and taxes. If the base were removed in 2013, CRS estimates that by 2035, 21% of beneficiaries would have paid some additional payroll taxes over the course of their lifetimes. However, the average change in taxes and benefits would be small. Looking only at individuals who would pay any additional taxes over the course of their lifetimes, at the median, total lifetime tax payments would rise by 3% and benefits would increase by 2% relative to current law. In general, those in the highest income groups would have the largest changes in both tax payments and in benefits relative to current law.  

(Emphasis is original)

You should also know that, in the 1990s, the income cap on the Medicare portion of payroll tax collections was lifted; this does not seem to have caused great damage to that program, politically speaking.

So the other way this change could be made would be to continue to base maximum benefits on what’s paid in, and still remove the cap on taxable earnings.

The Social Security Administration estimates that such an approach would raise 95% of the amount you need to achieve Social Security fiscal stability, so you’d still need to raise a bit of money, but you would be awfully close to fiscally stable, and far better off, financially, then we are today. (A payroll tax rate increase of .1% could raise the amount needed.)

That said, I think this approach actually creates more political vulnerability for the Social Security “concept” than uncapping taxes while capping benefits, and here’s why:

If you cap benefits, you immediately get to reduce the tax rate for everyone, which is going to be very popular; an unlimited benefit still requires you to raise taxes, even after the tax cap is lifted. One of those choices is going to be a lot better received than the other, I’m thinking, especially as “no new taxes” is such a popular political mantra these days.

However, it’s also true that a substantial number of beneficiaries would see benefit increases, even if the vast majority of those folks wouldn’t actually benefit all that much:

CRS estimates that 23% of beneficiaries in 2035 would have higher benefits than under current law. This share of beneficiaries who receive higher benefits is greater than the share of individuals who pay higher taxes because some low earners receive benefits based on their spouses’ higher earnings. Most of the affected beneficiaries (20%) would see their benefits increase by less than 10% relative to current law. Only 3% of beneficiaries would see their benefits increase by 10% or more.

But if you ask me (and if you’ve read this far, you are asking me) the real political problem from an approach that allows for unlimited benefits, is that it allows for…unlimited benefits:

Annual Social Security benefit payments would be much higher than today’s maximum of $25,440. A worker who paid taxes on earnings of $400,000 each year would get a benefit of approximately $6,000 a month or $72,000 a year…while someone with lifetime earnings of $1 million a year would get a monthly Social Security benefit of approximately $13,500 a month or $162,000 a year…

Imagine, if you will, just how easy it would be to launch a political attack on a government program that pays $162,000 a year to rich people…and if you can imagine that, you can probably imagine just how much political trouble this approach could cause.

Both options, just for the sake of the discussion, raise the wage base from today’s 83% to about 92%; a 2008 estimate suggested this would raise an additional $680 billion over 10 years. (An intermediate option, raising the tax cap to something like $190,000 of wage income, would have raised about $600 billion over the same period.)

So there you go: removing the cap on how much of your earnings are taxed for Social Security purposes, all by itself, could not only solve the funding problem faced by the system going forward, but you could even lower taxes slightly while doing it; another variation of the same approach would get you to 95% of where you need to be, but would still require a tax increase to get us to fiscal balance.

One approach keeps a lid on maximum benefits, the other doesn’t; in my opinion, the plan that keeps a cap on benefits is the one with less political peril going forward.

Either way, there would be no need to “adjust the inflation index downward”, which is a fancy way of saying “we’re cutting your benefits”, and you wouldn’t have to change the retirement age, either, which is a less fancy way of saying “we’re cutting your benefits”; both are among the Debt Commission’s “pre-release” proposals.

So what do you think, America? Given the choice, would you prefer that Social Security benefits be cut, now and in the future, or would you prefer to see the wealthiest among us pay their fair share of Social Security taxes, just as every other wage earner does-and cut the tax rate, both at the same time?

This would be exactly the time to make your feelings about that choice known, and if I were you I’d be on the phone to my member of Congress now, today-and when January comes around, and a new Congress begins…I’d be on the phone again.

It’s your Social Security, and if you want it funded in a more rational way this would be the time to say so…and if you’re reaching for the phone right about now, I’ve done my job.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

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