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Sen. Dick Durbin (D-IL) has declared War on Social Security and our Seniors!

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  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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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."

    http://www.huffingtonpost.com/2013/10/20/democrats-social-security-cuts_n_4132087.html?utm_hp_ref=politics

    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.
  • Other Party
    Nebraska
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    Finally, FINALLY, a high ranking politician (Durbin) who is admitting the problem! Now if we could only get a few hundred more politicians to wake up and smell the reality!!!

    It's probably too late but maybe a few of these crooks are finally catching on.
  • Liberal
    Independent
    Durham, NH
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    What!Didn't you read or understand anything CBB posted?
  • Other Party
    Nebraska
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    pgr yes I know about MMT, and like many economists, I just don't agree with it.

    Some economists agree with it and some do not. It's a theory, that's all.

    You and others can agree with it and others of us do not agree with it, although I do agree with some parts of it.

    I am just glad that a high ranking politician like Durbin agrees and is brave enough to put his opinion out there. He knows we are going broke and is not afraid to say so. I only wish there were more who would agree with him on this issue.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    The theory part of MMT comes into the picture with the Job Guarantee and other prescriptions.

    That the gov't is the ISSUER of the currency is not theory. That the gov't as the ISSUER of the currency is not financially constrained is not theory.

    These are basic facts.

    If economists disagree with them, well that means they are not very good economists.
  • Other Party
    Nebraska
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    Not here to argue ..."basic facts"... with anyone just to offer some of my own.

    Some economists agree with MMT and some do not and it's easy to find names of those on both sides. We are all free to judge whether we consider those names to be ..."good economists"... or not.

    Paul Krugman is on record as a critic of MMT, disagreeing with at least some of it and he won the Nobel Prize in Economics in 2008 so that's a name that even non economists will recognize.

    MMT is just a theory and there are LOTS of theories out there. Did you hear the theory that JFK JR was killed by his political foes? That one surfaced on this DemocraticHub just a few days ago.

    This is the point: No matter what someone wants to believe, if you really, REALLY want to believe it bad enough, then there's plenty of web sites to give enough info to back up just about any theory. There may not be any real facts or evidence, but plenty of "information", a person just has to be willing to believe it.

    You choose to believe in MMT and I choose not to, no harm done.
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    jamesn --

    It took me a while to get on board with MMT. I have linked to this article before by Bill Mitchell:

    Harvard International Review: Debt, Deficits, and Modern Monetary Theory

    Here are a couple of extracts that helped me start understanding:

    "The most important misperception is that MMT is in some way outlining an ideal or a new regime that could be introduced. The reality is that MMT just describes the system that most countries in the world live under and have lived under since 1971, when the US president at the time, Richard Nixon, suspended the convertibility of the US dollar into gold. At that point, the system of fixed exchange rates—in which all countries agreed to fix their currencies against the US dollar, which was in turn benchmarked in price against gold—was abandoned. So since that day, most of us have been living in what we call a fiat currency system.

    "In a fiat currency system, the currency has legitimacy because of legislative fiat: the government tells us that’s the currency and then legislates it as such. The currency has no intrinsic value. What gives it value, what motivates us to use the currency that the government suggests, is the fact that all tax obligations are denominated in and have to be extinguished with that currency. We have no choice. If you live in America, for example, you have to pay American taxes to the IRS with American dollars. So demand for the currency, otherwise worthless bits of paper, is driven by the fact that all tax obligations have to be extinguished with that currency. Once you consider that, then you immediately realize that the national government is the monopoly issuer of that currency. That means that the national government in such a system can never be short of that currency; it can never run out of money. It doesn’t need you or I to lend it money or you and I to pay taxes to get more money. It can never run out of money. That’s the first basic insight of MMT: governments are not constrained in their spending by a need to raise revenue."


    CBB has covered this again and again, and of course there is much more, but this is the basic hurdle that everyone needs to get over before they can start comprehending the more nuanced aspects of the theory.
  • Other Party
    Nebraska
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    Schmidt yes America can never run out of money. But, our money can become worth less and less. Any currency is worth only what it can buy in goods and services. If a dollar buys a loaf of bread now, and then next month or next year it takes 100 dollars or 1000 dollars to buy a loaf of bread, then that would be a bad thing, don't you agree?

    This has happened and sometimes not so gradually, where government keeps issuing more and more currency until it is worthless.

    MMT is interesting and I don't disagree with all of it, but taken as a whole, I don't agree with it just like some economists don't either. Look at the countries in Europe where they kept borrowing and spending and eventually they ran out of other peoples money, and that is what is happening to us.

    A dollar is only worth what a dollar will buy.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Euro nations are like U.S. states. They are currency users.

    Even the original Euro planners now admit that MMT'ers warned them about a non-fiscal monetary union.

    Yes, inflation is the constraint and that's why we say the limits are on the real side of the economy.
  • Democrat
    Maryland
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    20 years is a long time, don't you think that's enough time to get rid of the crazy tea baggers in the republican party and get back to governing America? And why are there crazy republican bible thumpers on the Science Committee that say global warming is lies strait from the pits of hell. Please in gods name keep religion out of the Government and let the sane adult people run the Government so we can fix it and get s**t done !
  • Other Party
    Nebraska
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    ..."keep religion out of the Government"...

    Good luck with that, we can't even keep religion out of this DemocraticHub!
  • Independent
    Ft.myers, FL
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    "jamesn" you are right; however since our government gets more screwed up by the day, then in the end only prayer may help; thus then religion is involved. ( my note on this is ; good luck with the prayer, no one up there listens anyway!!)
  • Independent
    Michigan
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    "Q U E S T I O N S"

    1- "I F", i was in debt over my head & COULD NOT PAY IT OFF/DOWN?> I WOULD BE IN DEEP CRAP! > HOW-DOES-GOVERNMENT-GET-AWAY-WITH-NOT-PAYING????...................& "JUST~KEEPS~BORROWING~MORE"???????

    2- kindly explain to my understanding if you can/will!..... WHY IS IT THE 1ST CHOPS IN GOVERNMENT ARE TO (SS) & (DISABILITY) &
    (ANY & ALL PUBLIC BENEFITS)?????????


    3- WHEN DO OUR ELECTED POLITICANS > "TAKE~A~CHOP~ON~THEIR~WAGES~&~PERKS"????? ..... FYI, we are shown daily . . . . . . . . . . . . THEY DO NOTHING TO EARN THEIR KEEP AS IT IS!?!?! ............ EXCEPT TOLERATE SENIOR ABUSE BY OUR GOVERNMENT.

    4- WHY DO YOU CONTINUALLY WASTE MEGA BUX ON COUNTRIES OUTSIDE THIS USA???????

    5- WHY HAVE YOU ALLOWED BIG BUSSINESS TO MOVE JOBS TO FOREIGN COUNTRIES BUT STILL MAINTAIN HEADQUARTERS IN THIS USA??

    6- WHY ARE YOU ALLOWING FOREIGN BUSSINESS'S TO MOVE INTO THIS USA> AND NOT MEET OUR LIVING WAGE SCALE = 'JAPS'?????


    "M Y - A N S W E R"

    A- POLITICANS FOLLOW THE $$$$$ & POWER, yup.

    B- NO BRAINS & NO COMMON SENSE WITHIN, nope!

    C- "B E W A R E" A GOVERNMENT RUNNING SCARED, yup!

    D- (RIP) Uncle Sam: ................................................................. "AUNTIE ENEMA" RULES TODAY!?!?