Last week I wrote about a proposal in Congress to change indexing Social Security benefit increases from the CPI-W to the C-CPI-U (Chained). Click here to read it for reference.
I made a statement to the effect that Congress was not proposing to cut absolute benefit amounts, but rather decrease annual percentage increases in benefit amounts going forward. As well, I stated that the country has to do something to strengthen program solvency.
I also criticized the proposal based on some conversations with a few congressional types, particularly my own delegation, with specific reference to U. S. Senator Thomas Carper (D) DE.
The savings estimates over a ten year period varied wildly (anywhere from the White House’s $120-BILLION estimate to Carper’s $300-BILLION estimate).
So did the estimated decrease in the percentage cost of living increases. It ranged anywhere from a full 1% to as low as Carper’s 0.25% (one quarter of one percent).
People may argue all they want to about this. But the mathematical fact of the matter is simple.
If you tell me that we’re going to decrease a cost of living increase by 0.25% and save $300-BILLION over ten years, you’re also telling me what the original expenditure over the same period would have been without the savings. In this case it comes to a whopping $120-TRILLION!
Anyway we look at it, the numbers are absurd; politicians rectum-generated them. It’s the same old crap (pun intended) coming from the United States Congress.
I’m still getting emails from the enraged, not because of the absurdity of the savings amount, but rather because they took exception with me NOT calling it a CUT in benefits.
So I’m taking this week to concede a point and to lay out some real savings without touching Social Security.
First, here’s the concession. Switching to a Chained-CPI calculation IS a cut in benefits. If we’re going to be receiving less of something in the future it’s a reduction… as in a CUT. And as well, there will be a resultant tax impact.
But here are some other things that I will NOT concede, the most important of which is that Social Security does NOT affect the deficit; it doesn’t reduce it at all because it doesn’t contribute to it.
Social Security is funded separately and is, in fact, forbidden by law from contributing to the deficit. And no matter what Paul Ryan and his horde of idiots say, it doesn’t even belong in these negotiations.
But here are some things we can do to greatly reduce the deficit. Of course Congress never mentions these because their opponents always poo-poo them as ineffective.
And I agree with this. None of these proposals taken in isolation will do a thing to reduce the deficit in any meaningful way. But taken in combination, they’ll knock the hell out of it in short order.
First, close capital gains loopholes and gain about $174-BILLION. Next, end the Bush tax cuts starting at the $250,000 level and gain another $183-BILLION. Next we could easily cut military overseas locations by between 15 and 20% for an additional savings of about $175-BILLION.
This country has never forced negotiations with pharmaceutical companies. Why? The rest of the world does it and they save boatloads of money. We could save about $200-BILLION without as much as denting the quality and quantity of research and development.
And the pharmaceutical companies would more than make up for their decreased margins in pure increases in sales volume. McDonalds has been doing it for decades!
The Pentagon itself has proposed cuts totaling around $500-BILLION. And these are NOT defense-adverse cuts, either. These are cuts in programs and equipment the GENERALS themselves say we DON’T need.
And finally, by doing two additional things, we could nail this budget deficit matter significantly.
First, unless corporate tax breaks are revenue neutral, END them! It will save us around $1.2-TRILLION.
Second, and I admit this is my favorite one. Nail the Barons of Wall Street who’s greed did some serious damage to this nation by nearly killing our economy. Hit them with a major transaction fee to the tune of about $1.5-TRILLION!
There’s not an economist on either side that disagrees with the fact that the deficit is not the most pressing problem we face at this point. In fact, most of them see it as already shrinking.
But all of them concede that we desperately need JOBS, REAL wage growth, CONSUMER confidence, and at a minimum, REAL financial security for the elderly and disabled, which does not happen by cutting Social Security.
Another factor with which economists of both political persuasions agree is that SENIORS, as a social group, have remained relatively stable in terms of solvency. And this has been BECAUSE of Social Security and Medicare, NOT in spite of those programs.
We work on deficits when the economy is strong, not when it’s teetering on the brink of disaster. If we do it the other way, hide and watch how much worse that deficit will get.
But rest assured that the current iteration of the United States Congress will screw it up even more.
While it’s true that special interests have always driven the political process; up until about the past 25-years of so, it’s always been with a modicum of a social conscience.
But thanks to a combination of Wall Street greed, a voter-level Tea Party that’s completely clueless, the gutlessness of a federal legislative body that is now COMPLETELY reactionary, and a voter stupidity factor that seems to be growing exponentially, we may well be approaching an irreversible circling of the sovereign drain.
We’ll see, though. Personally, I’m almost dead, so it won’t happen in my remaining lifetime. But I wouldn’t want to be a 20-something looking at the current prospects.