Saturday, July 23, 2011

The US Ideological Battle

The political right in the US is using the "debt ceiling" as a cudgel to beat up Obama and the Democrats and extort what they want out of the system.

Here is an excellent post by Robert Reich that focuses on Social Security:
The Only Social Security Reform Worth Considering: Raising the Ceiling on Income Subject to It

The very idea that Social Security might be on the chopping block in order to pay the ransom Republicans are demanding reveals both the cravenness of their demands and the callowness of the opposition to those demands.

In a former life I was a trustee of the Social Security trust fund. So let me set the record straight.

Social Security isn’t responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.

Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.

But why should there even be a problem 26 years from now? Back in 1983, Alan Greenspan’s Social Security commission was supposed to have fixed the system for good – by gradually increasing payroll taxes and raising the retirement age. (Early boomers like me can start collecting full benefits at age 66; late boomers born after 1960 will have to wait until they’re 67.)

Greenspan’s commission must have failed to predict something. What?

Inequality.

Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation.

Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission’s fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.

It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved.

So there’s no reason even to consider reducing Social Security benefits or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling.
What bothers me is that the major media completely fails to cover the real story: the agenda driving the Republicans to refuse to simply vote on a debt ceiling increase and instead tie it to spending cuts that their their ideological agenda.

The sad truth is that the US is rife with fanatics on the right who wave flags and profess political fealty but in reality they want to tear down the country as it exists and recreate it as a "God-fearing individualistic confederation of states-rights believers all armed to the teeth and unwilling to allow government to have any real powers". It is really scary to think what the Tea Party political agenda truly is. Worse, it is really, really scary to think of what the Wall Street agenda truly is. And even worse than that, it is absolutely scary to think of what the agenda of right wing crazies like the Koch brothers truly is.

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