It’s the End of the World As We Know It

[finehoe]

It’s the End of the World As We Know It
What are 308,367,109 Americans supposed to do?
First of all, despite clamping down on immigration, our population grew by 2.6M people last year.  Unfortunately, not only did we not create jobs for those 2.6M new people but we lost about 4M jobs so what are these new people going to do?  Not only that, but nobody is talking about the another major job issue: People aren’t retiring!  They can’t afford to because the economy is bad - that means there are even less job openings…   The pimply-faced kid can’t get a job delivering pizza because his grandpa’s doing it.
There are some brilliant pundits who believe cutting retirement benefits will fix our economy.  How will that work exactly?  Pay old people less money, don’t cover their medical care and what happens?  Then they need money.  If they need money, they need to work and if they need to work they increase the supply of labor, which reduces wages and leaves all 308,367,109 of us with less money.  Oh sorry, not ALL 308,367,109 - just 308,337,109 - the top 30,000 (0.01%) own the business the other 308,337,109 work at and they will be raking it in because labor is roughly 1/3 of the cost of doing business in America and our great and powerful capitalists have already cut their manufacturing costs by shipping all those jobs overseas, where they pay as little as $1 a day for a human life so now, in order to increase their profits (because profits MUST be increased) they have now turned inward to see what they can shave off in America.

How does one decrease the cost of labor in America?  Well first, you have to bust the unions.  Check. 
Then you have to create a pressing need for people to work - perhaps give them easy access to credit and then get them to go so deeply into debt that they will have to work until they die to pay them off.  Check. 
It also helps if you push up the cost of living by manipulating commodity prices.  Check. 
Then, take away people’s retirement savings.  Check. 
Lower interest rates to make savings futile and interest income inadequate.  Check. 
And finally, threaten to take away the 12% a year that people have been saving for retirement by labeling Social Security an "entitlement" program - as if it wasn’t money Americans worked their whole lives to save and gave to the government in good faith.  Check.

As Allen Smith says: "Ronald Reagan and Alan Greenspan pulled off one of the greatest frauds ever perpetrated against the American people in the history of this great nation, and the underlying scam is still alive and well, more than a quarter century later.  It represents the very foundation upon which the economic malpractice that led the nation to the great economic collapse of 2008 was built.  Essentially, Reagan switched the federal government from what he critically called, a “tax and spend” policy, to a “borrow and spend” policy, where the government continued its heavy spending, but used borrowed money instead of tax revenue to pay the bills.  The results were catastrophic.  Although it had taken the United States more than 200 years to accumulate the first $1 trillion of national debt, it took only five years under Reagan to add the second one trillion dollars to the debt.  By the end of the 12 years of the Reagan-Bush administrations, the national debt had quadrupled to $4 trillion!"
Both Reagan and Greenspan saw big government as an evil, and they saw big business as a virtue.  They both had despised the progressive policies of Roosevelt, Kennedy and Johnson, and they wanted to turn back the pages of time. They came up with the perfect strategy for the redistribution of income and wealth from the working class to the rich.  If Reagan had campaigned for the presidency by promising big tax cuts for the rich and pledging to make up for the lost revenue by imposing substantial tax increases on the working class, he would probably not have been elected.  But that is exactly what Reagan did, with the help of Alan Greenspan.  Consider the following sequence of events:   
1) President Reagan appointed Greenspan as chairman of the 1982 National Commission on Social Security Reform (aka The Greenspan Commission)
2) The Greenspan Commission recommended a major payroll tax hike to generate Social Security surpluses for the next 30 years, in order to build up a large reserve in the trust fund that could be drawn down during the years after Social Security began running deficits.
3) The 1983 Social Security amendments enacted hefty increases in the payroll tax in order to generate large future surpluses.
4) As soon as the first surpluses began to role in, in 1985, the money was put into the general revenue fund and spent on other government programs. None of the surplus was saved or invested in anything.  The surplus Social Security revenue, that was paid by working Americans, was used to replace the lost revenue from Reagan’s big income tax cuts that went primarily to the rich. 
5) In 1987, President Reagan nominated Greenspan as the successor to Paul Volker as chairman of the Federal Reserve Board.  Greenspan continued as Fed Chairman until January 31, 2006.  (One can only speculate on whether the coveted Fed Chairmanship represented, at least in part, a payback for Greenspan’s role in initiating the Social Security surplus  revenue.)
6) In 1990, Senator Daniel Patrick Moynihan of New York,  a member of the Greenspan Commission, and one of the strongest advocates the the 1983 legislation, became outraged when he learned that first Reagan, and then President George H.W. Bush used the surplus Social Security revenue to pay for other government programs instead of saving and investing it for the baby boomers.  Moynihan locked horns with President Bush and proposed repealing the 1983 payroll tax hike.  Moynihan’s view was that if the government could not keep its hands out of the Social Security cookie jar, the cookie jar should be emptied, so there would be no surplus Social Security revenue for the government to loot. President Bush would have no part of repealing the payroll tax hike.  The “read-my-lips-no-new-taxes” president was not about to give up his huge slush fund.
The practice of using every dollar of the surplus Social Security revenue for general government spending continues to this day.  The 1983 payroll tax hike has generated approximately $2.5 trillion in surplus Social Security revenue which is supposed to be in the trust fund for use in paying for the retirement benefits of the baby boomers.  But the trust fund is empty!  It contains no real assets.  As a result, the government will soon be unable to pay full benefits without a tax increase.  Money can be spent or it can be saved.  But you can’t do both. Absolutely none of the $2.5 trillion was saved or invested in anything.
That is how the largest theft in the history of the world was carried out.  300M people worked and saved their whole lives to set aside $2.5Tn into a retirement system that, if it were paying a fair compounding rate of 5% interest over 40 years of labor (assuming an even $62Bn a year was contributed), would be worth $8.4Tn today - enough money to give 100M workers $84,000 each in cash!  The looting of FICA hid the massive deficits of the last 30 years in the Unified Budget. Presidents and Congresses were able to reduce taxes on the wealthiest Americans without complaint from the deficit hawks, because they benefited. The money went directly from the pockets of average Americans into the pockets of the rich.
Now that it is time to repay those special bonds in the Trust Fund, we are inundated in opinion pieces in the leading newspapers and magazines complaining about Social Security and its horrible impact on the budget.  Government finances have been trashed by foolish tax cuts, unpaid wars, tax loopholes for corporations and the very wealthy, the failures of economists, the greedy search for greater returns in financial markets and the collapse of moral values in giant businesses but Social Security is supposed to be the problem that needs fixing…
Social Security is not "broken" the money is in the Trust Fund. But the people who manage the finances of the United States don’t want to repay the bonds held by the Trust Fund. They want to default selectively against average people, their fellow citizens, who paid their taxes expecting to be protected in their retirement.  Refusing to repay the $2.54 trillion dollars in bonds held by the Social Security Trust makes the US look like Greece, just another nation unable to govern itself coherently. The people who manage US finances come from the financial elites, the best that Wall Street and enormous corporations have to offer. Selective default exposes them as charlatans. The claims of the economics profession to expertise are puffery. Their theories about the benefits of tax cuts are proven false. Their mathematical proofs about free markets collapse in the real world.
So, what is this all about?  It’s about forcing 5M people a year who reach the age 65 to remain in the work-force.  The top 0.01% have already taken your money, they have already put you in debt, they have already bankrupted the government as well so it has no choice but to do their bidding.  Now the top 0.01% want to make even MORE profits by paying American workers even LESS money.  If they raise the retirement age to 70 to "balance" Social Security - that will guarantee that another 25M people remain in the workforce (less the ones that drop dead on the job - saving the bother of paying them severance).
What’s next?  Is it fair to say that children can’t work in a struggling family business?  Isn’t it to everybody’s benefit that kids should be allowed to help out at the family store?  That will be the next step towards turning America into a 3rd World country.  The seemingly innocent concept of "letting" kids work will deprive another 5M people of paying jobs - throwing them out into the labor force as well and driving labor costs down even further.
There’s an expression that goes "give them an inch and they’ll take a yard."  The top 0.01% of this country have taken their inches and they are foreclosing on the yards and they will come for the rest of your stuff next.  If you think you are "safe" from the looting of America, it is only because they haven’t gotten around to you yet.  As I explained in "America is 234 Years Old Today - Is It Finished?" - the game is rigged very much like a poker tournament.  The people at the top table don’t care how well you do wiping out your fellow players at the lower tables, they know they will get you eventually and your efforts to scoop up a pile of cash for yourself simply makes their job easier when they are ready to take it from you.
The average American is $634,000 in debt thanks to the efforts that Reagan and Greenspan put in motion 30 years ago and the richer you are, the more of that money is going to come out of your hide eventually and the more you lobby to make sure that the "rich" are not taxed unfairly, the less fair it will be to you because, no matter how rich you THINK you are, unless your income is measured in MILLIONS PER MONTH, you aren’t even close to the top 30,000.
No progressive tax?  That means that people and corporations who make $1M PER DAY should pay no more tax than a person making $1M per year, right?  Well that means that the $2.5M debt that your family of four owes will be paid by you over 2.5 years of labor while the $2.5M owed by your Billionaire competitor will be paid over a long weekend, after which he can turn his attention back to crushing your business by creating cheaper goods - maintaining profit margins by driving down local labor costs and outsourcing the rest.
It’s a new world, America, and you’d better get used to it - we were sold down the river on a slow boat to China long ago and we’re only just beginning to feel the first effects of waves that wash back to our own shores.  The people who own the media don’t want CHANGE.  That’s why you never hear this stuff in the MSM - things are going exactly according to plan and the old money crowd is playing a long, patient game and they already have most of the chips - the last thing they want is people questioning the system…

http://www.philstockworld.com/

[Jaxson]

I love you, finehoe.  You tell it like it is...

[Timkin]

Thats pretty powerful stuff , FH.  Sad that it is reality as well.

[Cricket]

Great article! While Greenspan is taking his lumps now in the media and deservedly so, I can never understand why Reagan is still the poster boy for the Republican Party. If you didn't know any better you would think that he was this great fiscal disciplinarian and that he singlehandedly defeated the Soviet Union. All smoking mirrors!
He was one of the worst presidents in recent history.

[Timkin]

And If I read this right, the Rich get richer while the poor suffer.....

[Jerry Moran]

All utter hogwash.

[Timkin]

Um .. okay Jerry

[Bostech]

So you are saying very same people who start wars around globe,ho brought us Iraq-Iran war,9-11,Gulf Wars and tons of "smaller" conflicts are ripping off Americans too thru government???

That can't be,must be a mistake.

[Timkin]

I think its entirely possible and even likely

[buckethead]

It's been great talking with you guys!

Now there is but to wait for the bitter end.

[Timkin]

Well heck.. lets have a party at least. The group here is pretty cool.

[finehoe]

[Bostech]

Thats what happens when people only discuss "current" events as Bridgetroll would suggest instead of looking at big picture even if it stretches decades.
Past 40 years same old company of ol' boys have been ruining both USA and world with their greed,criminal acts,theft and murder of innocent people.

But fault lies with Americans,you allowed people like this to do this,to run this country into debt and economic disaster while battling wars around globe to make even more money.

[Jaxson]

I remember when I had an argument with a co-worker about the importance of having a surplus.  She, an avowed fiscal conservative, claimed that the government running a surplus meant that they were taxing us too much.  She justified the growing deficit back then.  I have not seen her in ages, but I have a hunch that she is a deficit hawk now...

[NotNow]

It might be interesting to note that the largest raise in the FICA tax came during the Carter administration.  4% for both the employee and the employer.  The Reagan/Greenspan increase was 2%.  Per the following the is a small nod to the interesting fact that Greenspan tried to remove SS from the budget and have it stand alone but he was shot down by (a Democrat) Congress.  

Also, the SS trust fund was placed on the budget (FICA taxes went into general fund, while special "bonds" were placed into the trust fund) not during Reagan's watch but during the Johnson administration.

http://en.wikipedia.org/wiki/Social_Security_(United_States)



"The negative financial outlook
Throughout the 1950s and 1960s, during the phase-in period of Social Security, Congress was able to grant generous benefit increases because the system had perpetual short-run surpluses. Congressional amendments to Social Security took place in even numbered years (election years) because the bills were politically popular, but by the late 1970s, this era was over. For the next three decades, projections of Social Security's finances would show large, long-term deficits, and in the early 1980s, the program flirted with immediate insolvency. From this point on, amendments to Social Security would take place in odd numbered years (years that were not election years) because Social Security reform now meant tax increases and benefit reductions. Social Security became known as the "Third Rail of American Politics." Touching it meant political death.

Several effects came together in the years following the 1972 amendments which rapidly changed the outlook on Social Security's long-term financial picture from positive to problematic. By the 1970s, the phase-in period, during which workers were paying taxes but few were collecting benefits, was largely over, and the ratio of elderly population to the working population was increasing. These developments brought questions about the capacity of the long term financial structure based on a pay-as-you-go program.

During the Carter administration, the economy suffered double-digit inflation, coupled with very high interest rates, oil and energy crises, high unemployment and slow economic growth. Productivity growth in the United States had declined to an average annual rate of 1%, compared to 3.2% during the 1960s. There was also a growing federal budget deficit which increased to $66 billion. The 1970s are described as a period of stagflation, meaning economic stagnation coupled with price inflation, as well as higher interest rates. Price inflation (a rise in the general level of prices) creates uncertainty in budgeting and planning and makes labor strikes for pay raises more likely.

These underlying negative trends were exacerbated by a colossal mathematical error made in the 1972 amendments establishing the COLAs. The mathematical error which overcompensated for inflation was particularly detrimental given the double-digit inflation of this period, and the error led to benefit increases that were nowhere near financially sustainable.

The high inflation, double-indexing, and lower than expected wage growth was financial disaster for Social Security.

[edit] 1977 Amendments
To combat the declining financial outlook, in 1977 Congress passed and Carter signed legislation fixing the double-indexing mistake. This amendment also altered the tax formulas to raise more money,[47] increasing withholding from 2% to 6.15%.[48] With these changes, President Carter remarked, "Now this legislation will guarantee that from 1980 to the year 2030, the Social Security funds will be sound."[49] This turned out not to be the case. The financial picture declined almost immediately and by the early 1980s, the system was again in crisis.

[edit] Amendments of the 1980s
After the 1977 amendments, the economic assumptions surrounding Social Security projections continued to be overly optimistic as the program moved toward a crisis. For example, COLAs were attached to increases in the CPI. This meant that they changed with prices, instead of wages. Before the 1970s, wage measurements exceeded changes in price. In the 1970s, however, this reversed and real wages decreased. This meant that FICA revenues could not keep up with the increasing benefits that were being given out. Continued high unemployment levels also lowered the amount of Social Security tax that could be collected. These two developments were decreasing the Social Security Trust Fund reserves.[50] In 1982, projections indicated that the Social Security Trust Fund would run out of money by 1983, and there was talk of the system being unable to pay benefits.[51] The National Commission on Social Security Reform, chaired by Alan Greenspan, was created to address the crisis.

[edit] The 1983 Amendments
The National Commission on Social Security Reform (NCSSR), chaired by Alan Greenspan, was empaneled to investigate the long-run solvency of Social Security. The 1983 Amendments to the SSA were based on the NCSSR's Final Report."Report of the National Commission on Social Security Reform". http://www.ssa.gov/history/reports/gspan.html. Retrieved 2008-03-15.  The NCSSR recommended enacting a six-month delay in the COLA and changing the tax-rate schedules for the years between 1984 and 1990.[52] It also proposed an income tax on the Social Security benefits of higher-income individuals. This meant that benefits in excess of a household income threshold, generally $25,000 for singles and $32,000 for couples (the precise formula computes and compares three different measures) became taxable. These changes were important for generating revenue in the short term.

Also of concern was the long-term prospect for Social Security because of demographic considerations. Of particular concern was the issue of what would happen when people born during the post-World War II baby boom retired. The NCSSR made several recommendations for addressing the issue.[53] Under the 1983 amendments to Social Security, signed into law by President Ronald Reagan, a previously-enacted increase in the payroll tax rate was accelerated, additional employees were added to the system, the full-benefit retirement age was slowly increased, and up to one-half of the value of the Social Security benefit was made potentially taxable income.[54][55]

[edit] The 1983 Amendments and the Social Security Trust Fund
The 1983 Amendments also included a provision to exclude the Social Security Trust Fund from the unified budget (In political jargon, it was proposed to be taken “off-budget.”[citation needed] Yet today Social Security is treated like all the other trust funds of the Unified Budget.[citation needed] It is a political way[citation needed] of using a cash budget instead of the more appropriate[citation needed] accrual budget, for all the budgets in the U.S. government. It is a way of disguising total debt.[citation needed](Source: Webb, Roy, (1991). “The Stealth Budget: Unfunded Liabilities of the Federal Government,” Economic Review (Federal Reserve Bank of Richmond), 77,2 May/June.) This provision also provided for the exemption of Social Security and portions of the Medicare trust funds from any general budget cuts beginning in 1993.[45] This change was one way of trying to protect Social Security funds for the future.

As a result of these changes, particularly the tax increases, the Social Security system began to generate a large short-term surplus of funds, intended to cover the added retirement costs of the "baby boomers." Congress invested these surpluses into special series, non-marketable U.S. Treasury securities held by the Social Security Trust Fund. Under the law, the government bonds held by Social Security are backed by the full faith and credit of the U.S. government. Because the government had adopted the unified budget during the Johnson administration, this surplus offsets the total fiscal debt, making it look much smaller[citation needed]. There has been significant disagreement over whether the Social Security Trust Fund has been saved, or has been used to finance other government programs and other tax cuts.

[edit] The Supreme Court and the evolution of Social Security
The Supreme Court has established that no one has any legal right to Social Security benefits. The Court decided, in Flemming v. Nestor (1960), that "entitlement to Social Security benefits is not a contractual right". In that case, Ephram Nestor, a Bulgarian immigrant to the United States who made contributions for covered wages for the statutorily required "quarters of coverage" was nonetheless denied benefits after being deported in 1956 for being a member of the Communist party.

The case specifically held:

2. A person covered by the Social Security Act has not such a right in old-age benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment. Pp. 608-611. (a) The noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments. Pp. 608-610. (b) To engraft upon the Social Security System a concept of "accrued property rights" would deprive it of the flexibility and [363 U.S. 603, 604] boldness in adjustment to ever-changing conditions which it demands and which Congress probably had in mind when it expressly reserved the right to alter, amend or repeal any provision of the Act. Pp. 610-611. 3. Section 202 (n) of the Act cannot be condemned as so lacking in rational justification as to offend due process. Pp. 611-612. 4. Termination of appellee's benefits under 202 (n) does not amount to punishing him without a trial, in violation of Art. III, 2, cl. 3, of the Constitution or the Sixth Amendment; nor is 202 (n) a bill of attainder or ex post facto law, since its purpose is not punitive. Pp. 612-621.[65]

The Supreme Court was also responsible for major changes in Social Security. Many of these cases were pivotal in changing the assumptions about differences in wage earning among men and women in the Social Security system.[56]

Goldberg v. Kelly (1970): The Supreme Court ruled that the due process clause of the Fourteenth Amendment required there to be an evidentiary hearing before a recipient can be deprived of government benefits.[27]
Weinburger v. Wiesenfeld (1975): A widower claimed that he was entitled to his deceased wife’s benefit, even though he had not been dependent on his wife. The court upheld his claims, stating that automatically granting widows the benefits and denying them to widowers violated equal protection in the Fourteenth Amendment.[57] "


None of this should be construed as a defense of Republicans.  They have screwed the Citizen's of this country almost as much as the Democrats, only managing a bit less damage because they were not in power as much, I suspect.  Finehoe's source in inaccurate and obviously biased.  The truth is that our Federal government has not served the best interests of the country for a long time.

Finehoe's (quote?) on immigration points to what I see as a real problem.  All of those jobs should be available to Americans at a living wage.  If we still need foreign workers, then we should have an organized and ENFORCED guest worker program that protects the worker and ensures that the employment cost the employer just as much (if not more) than hiring an American.