Let's Hope Krugman Is Right And That Zombies Really Can't Kill Social Security

Erskine Bowles, Alan Simpson & that guy on the right have a plan...

When the corporate plutocracy decided it was time for a slight tweaking to their "we've always been at war with eastasia" worldview, and that, in fact, it would prove profitable for them-- if devastating to American workers-- to embrace Red China, it was certainly not something some pinko Democrat could pull off for them. No, they had to find a good solid red-basher to fly over there and "open" China. Nixon was perfect. And that was the beginning of the end of the American middle class as cheap Chinese manufactured goods started flooding into the country, devastating entire industries and forcing middle class American workers to compete with Chinese workers making eighteen cents an hour-- with no overtime.

The 70 year top target-- well, maybe tied with abolishing the Estate Tax-- of our generationally greed-obsessed plutocrats has been the most popular entitlement program of all times-- Social Security. Conservatives have tried to kill it since before it was even enacted. But after Bush bungled it for them they decided to go the Nixon route-- find an unlikely politician, trusted as a champion of "the little people" and have him kill it. Enter-- Barack Obama and his deadly "deficit commission," to which has has appointed a "bipartisan" slew of committed foes of Social Security and social equality (after even the hidebound Senate rejected the notion), Among the two worst corporate shills are co-chairs Erskine Bowles of Morgan Stanley and senile reactionary Alan Simpson. Others ready to go even further than Reagan in destroying the safety net-- all in the name of preventing rich people from paying their fair share of taxes-- are ex-Honeywell CEO David Cote, ex-CEO of Young & Rubicam Ann Fudge, roadmap sociopath Paul Ryan, and Wall Street darling Jeb Hensarling, the recipient of $2,569,025 from the financial sector most eager for these changes.

This piece of shit is what Obama has working for him?



On his NY Times blog yesterday Paul Krugman made it clear that he thinks Simpson's outburst-- and the ideology and ignorance behind it-- has already killed Obama's chances to deliver for the plutocracy. That whole Serious People thing to tell working families they have to sacrifice for the good of the hardworking billionaires ain't gonna fly this time either.

[T]he commission is already dead-- and zombies did it.

OK, the immediate problem is the statements of Alan Simpson, the commission’s co-chairman. And what got reporters’ attention was the combination of incredible insensitivity-- the “lesser people”???-- and flat errors of fact.

But it’s actually much worse than that. On Social Security, Simpson is repeating a zombie lie-- that is, one of those misstatements that keeps being debunked, but keeps coming back.

Specifically, Simpson has resurrected the old nonsense about how Social Security will be bankrupt as soon as payroll tax revenues fall short of benefit payments, never mind the quarter century of surpluses that came first.

We went through all this at length back in 2005, but let me do this yet again.

Social Security is a government program funded by a dedicated tax. There are two ways to look at this. First, you can simply view the program as part of the general federal budget, with the the dedicated tax bit just a formality. And there’s a lot to be said for that point of view; if you take it, benefits are a federal cost, payroll taxes a source of revenue, and they don’t really have anything to do with each other.

Alternatively, you can look at Social Security on its own. And as a practical matter, this has considerable significance too; as long as Social Security still has funds in its trust fund, it doesn’t need new legislation to keep paying promised benefits.

OK, so two views, both of some use. But here’s what you can’t do: you can’t have it both ways. You can’t say that for the last 25 years, when Social Security ran surpluses, well, that didn’t mean anything, because it’s just part of the federal government-- but when payroll taxes fall short of benefits, even though there’s lots of money in the trust fund, Social Security is broke.

And bear in mind what happens when payroll receipts fall short of benefits: NOTHING. No new action is required; the checks just keep going out.

So what does it mean that the co-chair of the commission is resurrecting this zombie lie? It means that at even the most basic level of discussion, either (a) he isn’t willing to deal in good faith or (b) the zombies have eaten his brain. And in either case, there’s no point going on with this farce.

Maybe Obama can bring back Leona Helmsley for the next go-round-- or appoint Tony Hayward; he's going to be needing something to do soon. But if you want to ponder a bit further what Krugman was talking about above, re-read it in the context of his column of a few days earlier, "That '30s Feeling," in which he points out that "suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s."

Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.