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These comments published by the Huff post yesterday represent an exceedingly miserable failure of the Senate Majority Whip to understand the monetary system that we have, and what Social Security's actuaries have actually estimated in revenue shortfalls.
"Social Security is gonna run out of money in 20 years," Durbin said. "The Baby Boom generation is gonna blow away our future. We don't wanna see that happen."
It's one thing when mindless Tea Party people say stupid things like this. It's an entirely different matter when it's the Democratic
Senate Majority Whip.
As Alan Greenspan told Paul Ryan in open testimony before Congress: Social Security does not have a real financial solvency constraint
, in the sense that government is the issuer of the currency and can mark-up accounts in the banking system at will if it chooses. This is a 1st generation "objectivist" libertarian talking to the newest generation here. Probably the only redeeming moment from Greenspan's otherwise disastrous career. (1 minute Youtube video: here
So the limits are on the REAL side of the economy, not the financial bookkeeping side.
We can always create dollars to transfer to Seniors. The question is if we are going to have a large enough marketplace of real goods and services to meet that additional consumer demand.
So the only question of financial solvency comes from what Congress has imposed on Social Security (which they could change), other than that it's a price stability issue, and what matters with that is our productive capacity, not how many dollars we've taxed and stashed away.
Functionally, paying Social Security taxes is like involuntarily contributing to the purchase of gov't securities
by a collective administrator. Social Security Administration takes our payroll tax dollars and buys
gov't securities from the U.S. Treasury, and administers benefit payouts by swapping
those gov't securities with the U.S. Treasury for dollars then transferred to beneficiaries. Social Security surpluses have to be offset elsewhere in the economy by more gov't or private deficit spending, or that amount of output doesn't get sold and there's that much less in overall incomes to save, and therefore less overall savings. It's called the paradox of thrift
So it makes no sense to reduce productive capacity thru Austerity by letting the buffer stock of unemployed labor go bad and to restrict the number of consumer dollars in the economy needed to promote the competitive real expansion of the economy
. It's bad for the financial solvency constraints imposed by Congress on Social Security, and it's bad for the real constraints.
Does it make sense to anyone why we need to "fund" Social Security through regressive, punishing taxes capped at 113k?
Democrats wouldn't support rich Republicans paying FLAT TAXES, why in the hell would we support a FLAT TAX on the poor and middle class
? And remember removing the cap does not make it a progressive tax
. Eliminating payroll taxes would, in fact, make the tax structure more progressive. And provide immediate tax relief to working people.
Democrats could become the party of tax cuts by removing the payroll tax and putting the Full Faith and Credit of the United States government behind Social Security.