It has been suggested to me that cramming down social security would be a way of letting the bond markets know that the US is capable of making “difficult decisions”.
A politically difficult decision would be, say, raising taxes on the rich. Cramming down SS is just standard soak the middle class neoliberal claptrap. It is totally unecessary. Current projections show a problem 32 years in the future. Any projection out 30+ years is essentially a guess. Add 1% to productivity increases and the entire SS “problem” goes away.
The US may have real spending problems, but they aren’t concentrated in social security.
However those actions which would really reduce those spending problems, like single payer (save 1/3rd per capita costs on health care), or slashing the military (there is no rational justification for spending 50% of the world’s military budget), or moving back to heavy progressive taxation, or increasing the estate tax, are on the table. The only things on the table are actions which hurt the poor and middle class.
There is no crisis with social security. If there is a deficit crisis (due to hot money’s desire for better returns than they deserve) it is because we refuse to do the things which would actually solve the problem. Because anything that impacts the rich or the military or pharma is off the table, apparently all that’s on the table is making ordinary Americans take it in the neck.
So, just no to cramming down Social Security: no increase in the retirement age, no decrease in benefits. If you must make changes, just uncap the FICA tax. There, “problem” solved.
anonymous
However those actions which would really reduce those spending problems, like single payer (save 1/3rd per capita costs on health care), or slashing the military (there is no rational justification for spending 50% of the world’s military budget), or moving back to heavy progressive taxation, or increasing the estate tax, are on the table.
(I’m pretty sure that you meant to say that the above listed items “are not on the table.”)
An item which is rarely considered as a cause of resource mis-allocation is the way in which schools are funded in the U.S. There was a book written a few years about bankruptcy in the U.S., and its findings were that the two principal causes of bankruptcy were medical bills and housing costs (buying a house that you could barely afford, then losing employment). And the reason that people were paying too much for housing is that parents would pay the maximum that they could possibly afford in order to get the kids into the best school that they could find. This meant moving into wealthier school districts, because school districts are funded by property taxes.
As Dean Baker has pointed out, people lost a lot of money in the bursting of the housing bubble because most people have most of their assets in the form of their house. If we had a better way of funding schools than “let’s let the richest buy the best schools and the kids of poor parents go to awful schools”, then parents wouldn’t feel compelled to move to neighborhoods where they have to cling on by their fingertips. In turn, they would have more money to put into non-housing costs, such as saving for retirement.
David H.
anonymous: Hear hear!
However, as I’m sure you’re aware, the concept of the richest parents = the best schools is a feature of the US school system rather than a bug. Wouldn’t want the simian lower classes getting ideas above their station.
b.
The two issues are connected: a Social Security cramdown is necessary to increase the trust fund “surplus”, otherwise taxes would have to be raised – ultimately, on the rich – to pay back all the money diverted from the trust fund surplus so far (anhd the money that will be diverted over the next few years, until Social Security has to begin drawing from the trust fund).
Obama does not want to pay back a single dollar into the trust fund. It needs to be in “surplus” in perpetuity.