Why is Wall Street Trying to Starve Retired MiddleClass and 150 Million Americans Not Making Enough Money to Save for Retirement?
One of the reasons I don’t believe in term limits is that it is too easy for well trained and experienced lobbyists to get their ways as it was for Clinton as President who most don’t know had very little executive training. After Bill failed with Harvard advisors and lost his reelection bid, Hillary ran both the campaign and governed for the next four terms.
The Wall Street Journal very conservative editors praised Bill Clinton a lot before he vetoed the financial bill, at the behest of Hillary, that gave banks complete freedom to rape and pillage credit card holders and cannot declare bankruptcy easily if they can’t pay their bills. Bill followed Hillary’s advice and vetoed the bill.
Then the rage of Wall Street and the New York Times reported scandals that had little basis for truth on the front page and tried to impeach him for sexual dalliance while many Republicans were left alone for much worse offenses such as Newt Gingrich leaving his wife when she was dying of cancer in the hospital! She lived!
Dean Baker, economist heading the well respected Center for Economic and Policy Research think tank, talks with Amy Goodman, a rare Truth-teller in the world of journalism. When I went to see Amy Goodman at a dinner in Los Angeles, I talked to a school teacher and asked him why he likes and respects Amy. He simply said, “She Tells Us the Truth.” Dean Baker does too!
Alan Greenspan who was one of the main participants in the change in Social Security to save it by doubling the payments of the middleclass and limiting payments to it to income below $100,000, but did not adjust it for inflation to raise the income limit. So the middleclass is paying much more of the Social Security verses their income than the top 5-10 percent.
Because Reagan had a massive tax cut for the rich, he had to make up for the lost income by taking money out of the Social Security Fund, an Alan Greenspan suggestion. So all we have are IOUs of government bonds at half the going rate of interest. So all Social Security Payments are made by current workers and the government spends all the excess money paid by Americans to spend for military excursions and entitlements.
President Clinton did not have a true surplus because he still spent the excess Social Security money and left an IOU in the one drawer in a file cabinet at the Social Security Agency. By sending this excess money to Wall Street, our government will have to go to China and borrow even more money increasing our debt.
The best way to examine laws passed by congress whether corporate Democrats or Republicans, is to Follow the Money!
I prefer watching the video over reading the transcripts because you can see and hear the emotional content to determine what is being emphasized. You can click the link to get the whole transcript. That is the main advantage of talking to people rather than getting news reports about them. I try to do that every time I go to restaurants and stores. At least in Oregon most of the people seem to have common sense and know more at least in Eugene.
The rural Republicans seem to know the least.
Jim Kawakami, August 4, 2010, http://jimboguy.blogspot.com
Social Security Under Attack: Cuts Proposed, Higher Retirement Age Suggested
… Currently (Social Security Benefits) it’s tied to the Consumer Price Index; there are proposals actively being debated that would reduce that by about three- or four-tenths of a percentage point a year. Not too long ago, they were talking about doing it by one percent a year. Now, all of these would lead to substantial cuts in benefits, and the point we make in this report is not just that they cut benefits, but it’s a very large cut in retirement income. …
So, again, I find it very worrisome that—you know, you’re looking at his deficit commission, he appoints his two top appointees, the Republican and Democrat co-chair, who he picked. Both were quite explicit: they want to cut Social Security. So I do think we have to be very worried about cuts to the program under—during the Obama administration. …
AMY GOODMAN: We’re joined by Dean Baker, economist and co-director of the Center for Economic and Policy Research. The big buzz is privatizing Social Security, that Social Security is what’s breaking us, it’s not affordable.
Dean Baker, I’d like to ask you what I asked you during the broadcast, that it’s not affordable. Explain your response to this.
DEAN BAKER: Well, it’s really absurd on the face of it. I mean, the program has a separate stream of financing. We all pay a Social Security tax when we work, 6.2 percent of our wages, and employers contribute 6.2 percent on behalf of workers. And that actually has been running a surplus. We’ve been paying more into the program than benefits have been paid out. This was a design that was put in place by the '83 Greenspan Commission.
They raised taxes. They also raised the retirement age. It is going up to sixty-seven, now sixty-six. And the result of that is that there's been this huge surplus run, over two-and-a-half trillion, over the last roughly twenty-five years. And the program is supposed to continue to run a surplus for a bit more than a decade, at which point we’re supposed start drawing down on the money in the trust fund, the money that we’ve accumulated.
So this idea that somehow we can’t afford this, we’ve actually been paying more than was need for benefits, and according to the Congressional Budget Office, the program, as it currently stands, could pay all scheduled benefits through the year 2039 with no changes. …
AMY GOODMAN: You’ve just put out a report on Social Security. You look at the impact of the three common proposals for cutting Social Security and the impact they’ll have on retirees. Tell us.
DEAN BAKER: Yeah, well, we looked at three things that are often suggested: one, raising the retirement age—and this is an accelerated increase, because, as I said, it’s already scheduled to go up to sixty-seven for workers who hit age sixty-two after 2022, so it is already going up, but they propose to accelerate that and push it up to seventy.
Secondly, a change in the benefit formula so that workers will be getting less who retire, say, three, five, ten years out, than they otherwise would have; and the third one is a change in the annual cost of living adjustment.
Currently it’s tied to the Consumer Price Index; there are proposals actively being debated that would reduce that by about three- or four-tenths of a percentage point a year. Not too long ago, they were talking about doing it by one percent a year. Now, all of these would lead to substantial cuts in benefits, and the point we make in this report is not just that they cut benefits, but it’s a very large cut in retirement income.
The big issue here is that most middle-class workers have taken a very big hit to their retirement income as a result of the collapse of the housing bubble. For most middle-income workers, most of their wealth was the equity in their home, which in many cases got wiped out with the plunge in house prices.
In addition, they lost money in their 401(k)s, as well, if they had any. And remarkably, when people talk about cutting Social Security down here, almost no one seems to have noticed that we had this huge collapse of the housing bubble that’s destroyed much of the wealth of these near retirees who they want to cut benefits for.
So if you want to talk about cutting benefits, you know, thirty, forty years out—and we could have that discussion—I still wouldn’t be terribly anxious to do it. But we could see these people. We know that someone who’s fifty-two, fifty-three, and basically has almost nothing, the typical wealth of someone in their—between forty-five and fifty-four is about $80,000, counting the equity in their home. That’s a middle-income household.
They’re not going to have much for retirement. We know that. They don’t have many more years in the work force. They’re not going to be able to have huge savings. So when you talk about cutting their Social Security, in many cases, that’s almost one-to-one a cut in their income. If you cut their Social Security five percent, you’re cutting their income five percent. That’s a very big hit. …
AMY GOODMAN: Do you see a different trend under President Obama than under President Bush in terms of what will happen to Social Security? Ultimately, President Bush didn’t succeed in cutting it.
DEAN BAKER: Well, I worry about what will happen under President Obama. You go back to when President Clinton was in the White House, President Clinton proposed cuts to Social Security. He was recently on a panel here at a program put on by the Peterson Foundation, and he just got right up, and he said, "I wanted to cut Social Security, but, you know, they wouldn’t let me."
Dick Gephardt, you know, at that time the leader of the Democrats in the House, and he said Dick Armey also opposed it. He goes, "They wouldn’t let me, but I wanted to do it." You know, he just said that in very open terms, which is something we knew back in the '90s, those of us who were fighting against it. But it was just quite striking that this was one of the regrets of his presidency, that he wasn't able to cut Social Security.
And you have a lot of the same people that were in the Clinton administration who are back working with President Obama, and I do worry very much that many of them want to cut Social Security. One of the things that I—you know, I’m not longing for President Bush to be back in the White House, but, you know, there was a relatively unified stand among Democrats against President Bush’s plan to cut Social Security. And that made it more difficult for him to get very far, and of course he never actually introduced a plan. Nothing ever got voted on by Congress. It didn’t come that close to being done.
When you have a Democrat in the White House and he says he wants to cut Social Security, or at least people close to him say that, then it becomes much more difficult, because it’s not clear how you organize against that, because certainly you will have Democrats who want to support their president.
So, again, I find it very worrisome that—you know, you’re looking at his deficit commission, he appoints his two top appointees, the Republican and Democrat co-chair, who he picked. Both were quite explicit: they want to cut Social Security. So I do think we have to be very worried about cuts to the program under—during the Obama administration.
AMY GOODMAN: Dean Baker, economist and co-director of the Center for Economic and Policy Research, thanks very much.
Filed under Web Exclusive