Showing posts with label Social Security. Show all posts

Thursday, July 7, 2011

Invoke the 14th — and End the Debt Standoff

On its current course, the United States is four weeks away from defaulting on its debt for the first time in its history. If that happens, businesses will fail. Financial institutions will fail. Home values will decline. Mortgage rates will skyrocket. Spending and investment will all but disappear. Social Security checks will stop being mailed. Everything from military pay to food inspection will be compromised, if not fully cut off. The millions upon millions of Americans who are unemployed or underemployed will be joined by millions more.

Across the world, America’s second financial collapse in three years will drag down already fragile economies in Europe, Latin America and Asia, potentially creating a “worldwide depression,” as Senate Majority Leader Harry Reid described it. In short, we would be thrown back deep into economic turmoil — only this time with even fewer tools to crawl our way out.

In theory, this is unthinkable, and it will be remedied by reasonable political parties making reasonable concessions across the negotiating table. But Republicans have been negotiating in bad faith, unwilling to compromise even an inch on their extremist and absolutist positions.Some are no longer willing to come to the table at all.

With that backdrop, President Obama may find that there is only one course left to avoid a global economic calamity: Invoke Section 4 of the 14th Amendment, which says that “the validity of the public debt of the United States … shall not be questioned.” This constitutional option is one that the president alone may exercise.

If the Aug. 2 deadline arrives and no deal has been made, Obama could use a plain reading of that text to conclude — statutory debt ceiling or not — that he is constitutionally required to order the Treasury to continue paying America’s bills. In that sense, this is not just a constitutional option, it is a constitutional obligation, one even the Tea Party will have trouble denying.

There are reasons why such a solution is less than ideal. There ought to be some concern about executive overreach; the very idea of the president deciding which laws are and are not constitutional has disturbing ramifications. And to the extent that the goal of the move is to prevent market panic, it remains an open question as to whether it would succeed. But market panic will surely come with the failure to reach a deal altogether. The consequences of default are simply too severe — and too long-lasting — to take this option off the table. It may not be ideal as an elective choice, but as an option of last resort, it is a necessity.

If Obama does choose to move forward, he will be doing so on strong legal footing. In Freytag v. Commissioner (1991), the Supreme Court held that the president has “the power to veto encroaching laws . . . or to disregard them when they are unconstitutional.” The final word still may lie with the Supreme Court, but in the interim, the president need not wait for its opinion. “As a simple matter of constitutional logic, the president can refuse to enforce a statute he believes violates the Constitution,” said Professor Barry Friedman of NYU Law School in a telephone interview with me. “In fact, he is sworn by oath not to enforce it,” added Friedman, author of the book “The Will of the People: How Public Opinion Has Influenced the Supreme Court and Shaped the Meaning of the Constitution.”

It is also unlikely that the action would be successfully challenged in court. Only Congress would have standing to sue, but doing so would require a joint resolution, something a Democratic-controlled Senate would almost certainly block.

President Obama should commit to exercising this obligation — as a last resort. And he should commit publicly, as soon as possible.

Doing so will give him the leverage he lacks in the debt-ceiling negotiations. Right now, Republicans’ willingness to let the economy default, consequences be damned, gives them enormous leverage. But presumably, if a deal is not reached by the deadline, and the president is forced to exercise his constitutional obligation, Republicans will get nothing at all. Not the trillion dollars in cuts already agreed to. Not the additional trillion in cuts they are seeking. The threat, alone, of invoking the 14th Amendment defuses the bomb Republicans have strapped to the hostage.

Most would agree that taking such a step would be out of character for a president who has avoided this brand of confrontation. But great leaders adapt to adverse circumstances, and this is no exception. The president doesn’t just have a political and legal obligation here; he has a moral one, too. A default would be wrenching for the poor and middle class, stripping families of their jobs, their homes and programs they depend on for survival. A debt deal, negotiated entirely on Republican terms, would be devastating too — for everyone who isn’t a hedge-fund manager or private jet owner.

That leaves the president with two choices: He can give in to unthinkable Republican demands or he can choose, instead, to exercise his constitutional authority, end the debt-ceiling standoff and craft a new budget deal, defined, finally, by shared sacrifice.

Thursday, February 10, 2011

Sanders Defends Middle Class, Calls For Help

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Published on Thursday, February 10, 2011 by In These Times

Organizing Help Wanted

We must defend America’s middle class before millionaires and billionaires own the entire country.

by Bernie Sanders

There is a war going on in this country and I am not referring to the wars in Iraq or Afghanistan. I am referring to the war waged by the wealthiest people in America on the disappearing and shrinking middle class of our country. The nation’s billionaires are on the warpath. They want more, more, more. Their greed has no end and they are apparently unconcerned for the future of this country if it gets in the way of their accumulation of power and wealth.
On the floor of the Senate, we discuss a lot of things. But one thing we fail to talk about is who is winning in this economy and who is losing, and what that means for parents struggling to survive while working longer hours with lower wages, and worrying about whether their children will have the same kind of standard of living they have.
Right now, the top 1 percent controls more than 23 percent of all income earned in America. The top 1 percent controls more than the bottom 50 percent. It’s not only that the rich are getting richer. The very, very rich are getting richer. In the last 25 years, we have seen 80 percent of all new income going to the top 1 percent.
On top of all this, while the millionaires get richer and there are more and more billionaires, as a result of the Citizens United decision, what we are beginning to see in elections is unbelievable—a group of billionaires getting together and deciding where they are going to spend their money. Billionaires are going to flood states with all kinds of negative, dishonest ads in an effort to defeat people defending the middle class and to elect people who will stand up for right-wing billionaires.
The Republicans’ goal—and to their credit, they have been pretty honest about it—is to bring this country back to where we were in the 1920s. All of the progressive legislation that started with FDR is on the chopping block. Despite the great successes of Social Security over the last 75 years, despite the fact that Social Security today has a $2.6 trillion surplus, they are targeting Social Security. They are targeting Medicare. In Arizona today, people on Medicaid who need transplants are no longer able to get them—that is a real death panel.
Right now, according to a number of studies, we are losing about $100 billion every year because corporate America and the very wealthy are stashing their money in tax havens like the Cayman Islands and Bermuda. We should be aware that in 2009, ExxonMobil made $19 billion in profits and not only did the company not pay anything in taxes, it got a $106 million refund from the IRS. We should also be aware that since 1997, we have almost tripled funding for the military. So if we are serious about reducing the deficit, those are things we need to look at—not at Social Security, not programs everyday Americans need.
Our job now is to rally Americans to put pressure on a handful of Republicans—to tell them, go into your hearts, talk to your constituents and tell me if it is appropriate to hold hostage the future of this country for an agenda that benefits only the very rich.
If we act, we can win this fight. It is crucial that we do, because if we don’t—if they roll over us now—there is no stopping them. It is time we organize.
Your help is wanted.

Bernie Sanders (I-Vt.) was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest serving independent member of Congress in American history. Elected Mayor of Burlington, Vt., by 10 votes in 1981, he served four terms. Before his 1990 election as Vermont's at-large member in Congress, Sanders lectured at the John F. Kennedy School of Government at Harvard and at Hamilton College in upstate New York. Read more at his website.

Tuesday, November 9, 2010

Commissions Composed Of Cretins?

Cover of "Plunder and Blunder: The Rise a...

Cover via Amazon

Published on Tuesday, November 9, 2010 by FireDogLake.com

The Deficit Commission Tsunami

by Dean Baker

During the mass unemployment of the Great Depression, Keynes once quipped that if we couldn't find any productive work that needed to be done, in order to reduce unemployment we could just pay workers to dig holes and fill them up again. Keynes was being sarcastic, but it seems that the Washington crew picked up on this suggestion. This is the only plausible explanation for the proliferation of deficit commissions in our nation's capital.There are three separate deficit commissions prepared to share their wisdom with the American people before the end of the year. These three commissions all have two important features in common: not one member of these commissions warned of the catastrophe that would be created by the collapse of the housing bubble, and they all think it is a good idea to cut Social Security.
The country is currently experiencing its worst economic downturn in 70 years with more than 25 million people unemployed, underemployed or having given up looking for work altogether. It might have been appropriate for a commission that purports to be giving advice on the future of the country's most important social programs, as well as the overall budget, to include at least one person who was awake enough to notice the $8 trillion housing bubble that wrecked the economy.
But these commissions that want to tell the public what is best for us don't feel that they need to bother with trivialities like the economic collapse. In fact, the commissions include many of the people who had helped guide our economy off the cliff. They see their credentials in this capacity as lending to their credibility. This is sort of like an officer from the Titanic using this experience as a basis for being appointed ship's captain.
In fact, these commissions don't have much other than their credentials to support their recommendations for cutting Social Security and Medicare. While the media have been hyperventilating at length to try to build fears about the budget deficits, it is easy to show that these fears are unwarranted.
In the short term, the United States has large budget deficits for the simple reason that private sector spending collapsed. The arithmetic is straightforward. The collapse of the bubbles in residential and nonresidential real estate led to a plunge in annual construction demand of more than $600 billion a year. The indirect effect of the loss of $6 trillion in housing bubble wealth was to reduce annual consumption by $600 billion a year.
With a total loss of $1.2 trillion in private sector demand, the choice for the government is either to boost the economy by running large deficits or allow the economy to contract further and let the unemployment rate rise even higher. If our deficit hawk commission members knew their economics, they would have been warning of the housing bubble in 2002-2006. Then, we could have avoided this economic collapse - and we would have had smaller deficits.
It is important to realize that the debt that we are incurring at present need pose zero burden on future generations. We are putting to use resources that would otherwise be idle, not pulling resources away from the private sector. While the deficit hawks eagerly threaten us with the prospect of our children paying interest on trillions of dollars of debt, the Federal Reserve Board could simply buy and hold this debt, leading to no net interest burden on future generations. (The Treasury pays interest on the debt to the Fed, which then refunds the interest payments to the Treasury at the end of the year, leaving no net interest burden.)
While the longer-term projections do show a serious deficit problem even after the economy has recovered, this is due to projections of exploding health care costs. Since more than half of our health care is paid by the public sector, if health costs really do grow out of control, then it will lead to very serious budget problems. Of course, if health care costs follow the projected path then they will also devastate the private sector.
The point is that we have a health care problem. If we don't fix our health care system, then our economy will be in serious trouble, with one problem being large budget deficits. If we do fix our health care system, then there is no long-term deficit problem.
The basic story is that, in the short term, there is no deficit problem; the problem is a plunge in private sector demand caused by the collapse of the housing bubble. In the longer term, the deficit problem is actually the problem of a broken health care system. The facts are as clear as can be.
So, why then do we have all these deficit commissions? It's simply modern Washington's way of digging holes and filling them up again. It gives these people something to do. Let's hope it ends up being harmless.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.

Thursday, September 30, 2010

.Hands Off Social Security

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Published on Thursday, September 30, 2010 by The Nation

Hands Off Social Security

by Bernie Sanders

A White House deficit commission is reportedly considering deep benefit cuts for Social Security, including a steep rise in the retirement age. We cannot let that happen. The deficit and our $13 trillion national debt are serious problems that must be addressed, but we can and must address them without punishing America’s workers, senior citizens, the disabled, widows and orphans.

First, let’s be clear: Despite all the right-wing rhetoric, Social Security is not going bankrupt. That’s a lie! The truth is that the Social Security Trust Fund has run surpluses for the last quarter century. Today’s $2.5 trillion cushion is projected to grow to $4 trillion in 2023. The non-partisan Congressional Budget Office, experts in this area, say Social Security will be able to pay every nickel owed to every eligible beneficiary until 2039. Got that? In case you don’t, let me repeat it. The people who have studied this issue most thoroughly and have no political bias report that Social Security will be able to pay out all benefits to ever eligible beneficiary for the next 29 years. It is true that by 2039, if nothing is changed, Social Security will be able to pay out only about 80 percent of benefits. That is why it is important that Congress act soon to make sure Social Security is as strong in the future as it is today.
The hatred of Social Security from the right-wing anti-government crowd is based on the fact that Social Security, a government program, has been enormously successful in accomplishing its mission. For 75 years, in good times and bad, Social Security has provided financial security for tens of millions of Americans.
Despite this outstanding record, Social Security has become a political football. For ideological reasons, some in Congress believe that government should not be in the business of providing benefits to seniors or the disabled. They want to privatize Social Security. Others say, incorrectly, that Social Security is going bankrupt, so benefits should be reduced and the retirement age set at 70. I strongly disagree with both assertions.
While the critics profess concern about Social Security’s financial future, their fuzzy math ignores the fact that this highly successful program has not added a dime to our deficit. From the day when the first check landed in the Ludlow, Vt., mailbox of retired legal secretary Ida May Fuller on Jan. 31, 1940, Social Security has more than paid for itself.
With regard to the future of Social Security, there are some really dangerous ideas out there, and one proposal that makes a lot of sense.
One of the worst ideas is to privatize Social Security. After the greed and recklessness of Wall Street caused markets to collapse in 2008, does anyone still seriously believe it would be a good idea to turn the retirement security of millions of Americans over to Wall Street CEOs whose dishonesty and irresponsibility have no end? Their administrative fees alone would take a 15 percent bite out of workers’ retirement investments, not to mention the real threat of another stock market collapse. In sharp contrast, administrative costs for Social Security are less than 1 percent of the program’s budget. Most importantly, despite economic conditions and the ups and downs of the stock market, Social Security has never failed to pay full benefits to every eligible beneficiary.
Another horrible idea is to move the retirement age up to 70. That would cheat today’s young workers out of about 15 percent of their retirement benefits over a lifetime. The proposal also ignores the reality that millions of workers in demanding professions simply cannot continue to work until they are 70. The upshot for them would be reduced lifetime benefits for retiring “early.” Lower-income workers, those less likely to have other savings, would be hurt the most.
In the midst of all of the destructive rhetoric and ideas out there with regard to Social Security, there is one proposal which is simple, sensible and would keep Social Security strong and solvent in a fair and just way. Under the law today, the Social Security payroll tax is levied only on earnings up to $106,800 a year. That means millionaires and billionaires get off scot free on all of their income above that amount. In other words, an individual who earns $106,800 pays the same Social Security tax as a multi-millionaire. That’s wrong. Applying the Social Security payroll tax on those with the most income, say over $250,000 a year, would correct this inequity. According to CBO, applying the tax to all income would provide all the revenue that Social Security needs for the foreseeable future – for our kids and grandchildren and great grandchildren.
As we mark the anniversary of Social Security, now is the time to pat ourselves on the back for a job well done. For 75 years, Social Security has lifted millions of people out of poverty and has provided stability and dignity for the elderly and for other vulnerable Americans. Our goal today must be to make sure that Social Security will be as strong and stable 75 years from now as it is today.

Bernie Sanders, a member of the Senate Democratic Caucus, is the longest-serving Independent in US Congressional history.

by Bernie Sanders

Bernie Sanders, a member of the Senate Democratic Caucus, is the longest-serving Independent in US Congressional history.

Monday, February 22, 2010

The Bankruptcy Boys

Cover of The Conscience of a Liberal

Published on Monday, February 22, 2010 by The New York Times
The Bankruptcy Boys

by Paul Krugman

O.K., the beast is starving. Now what? That’s the question confronting Republicans. But they’re refusing to answer, or even to engage in any serious discussion about what to do.

For readers who don’t know what I’m talking about: ever since Reagan, the G.O.P. has been run by people who want a much smaller government. In the famous words of the activist Grover Norquist, conservatives want to get the government “down to the size where we can drown it in the bathtub.”

But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?

The conservative answer, which evolved in the late 1970s, would be dubbed “starving the beast” during the Reagan years. The idea — propounded by many members of the conservative intelligentsia, from Alan Greenspan to Irving Kristol — was basically that sympathetic politicians should engage in a game of bait and switch. Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit.

And the deficit came. True, more than half of this year’s budget deficit is the result of the Great Recession, which has both depressed revenues and required a temporary surge in spending to contain the damage. But even when the crisis is over, the budget will remain deeply in the red, largely as a result of Bush-era tax cuts (and Bush-era unfunded wars). And the combination of an aging population and rising medical costs will, unless something is done, lead to explosive debt growth after 2020.

So the beast is starving, as planned. It should be time, then, for conservatives to explain which parts of the beast they want to cut. And President Obama has, in effect, invited them to do just that, by calling for a bipartisan deficit commission.

Many progressives were deeply worried by this proposal, fearing that it would turn into a kind of Trojan horse — in particular, that the commission would end up reviving the long-standing Republican goal of gutting Social Security. But they needn’t have worried: Senate Republicans overwhelmingly voted against legislation that would have created a commission with some actual power, and it is unlikely that anything meaningful will come from the much weaker commission Mr. Obama established by executive order.

Why are Republicans reluctant to sit down and talk? Because they would then be forced to put up or shut up. Since they’re adamantly opposed to reducing the deficit with tax increases, they would have to explain what spending they want to cut. And guess what? After three decades of preparing the ground for this moment, they’re still not willing to do that.

In fact, conservatives have backed away from spending cuts they themselves proposed in the past. In the 1990s, for example, Republicans in Congress tried to force through sharp cuts in Medicare. But now they have made opposition to any effort to spend Medicare funds more wisely the core of their campaign against health care reform (death panels!). And presidential hopefuls say things like this, from Gov. Tim Pawlenty of Minnesota: “I don’t think anybody’s gonna go back now and say, Let’s abolish, or reduce, Medicare and Medicaid.”

What about Social Security? Five years ago the Bush administration proposed limiting future payments to upper- and middle-income workers, in effect means-testing retirement benefits. But in December, The Wall Street Journal’s editorial page denounced any such means-testing, because “middle- and upper-middle-class (i.e., G.O.P.) voters would get less than they were promised in return for a lifetime of payroll taxes.” (Hmm. Since when do conservatives openly admit that the G.O.P. is the party of the affluent?)

At this point, then, Republicans insist that the deficit must be eliminated, but they’re not willing either to raise taxes or to support cuts in any major government programs. And they’re not willing to participate in serious bipartisan discussions, either, because that might force them to explain their plan — and there isn’t any plan, except to regain power.

But there is a kind of logic to the current Republican position: in effect, the party is doubling down on starve-the-beast. Depriving the government of revenue, it turns out, wasn’t enough to push politicians into dismantling the welfare state. So now the de facto strategy is to oppose any responsible action until we are in the midst of a fiscal catastrophe. You read it here first.
Copyright 2010 The New York Times Company

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics.

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Thursday, July 7, 2011

Invoke the 14th — and End the Debt Standoff

Invoke the 14th — and End the Debt Standoff

Thursday, February 10, 2011

Sanders Defends Middle Class, Calls For Help

Organizing Help Wanted

We must defend America’s middle class before millionaires and billionaires own the entire country.