Tuesday, February 17, 2004

Use of robust social security for a weakened economy Posted here Tuesday, February 17, 2004 at 12:08:20 PM     on social security. Note that it is fine, but Greenspan wants to cut benefits so more money is available for the general treasury. This, following on the previous article, suggests that folks like Greenspan and Bush will use all stops to keep the economy out of trouble, and that means using resources - like social security It is worth noting that Social Security is currently running a large surplus and is projected to continue to run annual surpluses for more than two decades into the future. The Social Security trustees projections show that the fund's trust will be able to support all scheduled benefit payments for nearly forty years into the future. If Social Security benefits are cut, without any corresponding reduction in the tax rate (which is exactly Mr. Greenspan's recommendation), then this would mean that Social Security taxes are being used to finance the general budget, not Social Security.This point is especially important in this context, since Mr. Greenspan had chaired the 1982 Commission that proposed a set of Social Security tax increases that were designed to build up a large surplus to help defray the costs of the baby boomers' retirement in later years. In other words, Mr. Greenspan's argument was that itwas desirable to raise Social Security taxes above the levels needed to support the program in the eighties, nineties, and zeros, so that the tax rate would be somewhat lower than would otherwise be necessary in the twenties and thirties. If benefits are now cut below the levels that had been scheduled, then it breaks the link between Social Security taxes and Social Security benefits. Social Security taxes were simply used to finance the general budget. The Social Security tax is highly regressive because it only applies to wage income and it is capped at approximately $85,000, so that wage income above this level is not subject to the tax. It is extremely unlikely Congress ever would have approved such a regressive tax to support the general budget. It would have been appropriate to note, in describing Mr. Greenspan's proposal, thatthe cumulative surplus in the trust fund is now approaching $2 trillion. This would give readers an idea of the extraordinary deception involved in proposing to cut Social Security benefits as a way of reducing the federal budget deficit. ********

Bush supports business, not broader social concerns (more..) Posted here Tuesday, February 17, 2004 at 11:25:34 AM     On jobs and Bush support of Business. For three years, President Bush has been willing to anger environmentalists, civil libertarians of the right and left, unions, trial lawyers and conservative advocates of free markets. But one group that almost always comes out a winner when Bush sets policy is the business community, from Fortune 500 corporations to small, family-run companies. Bush's recent immigration initiative is a prime example. While commentary and reaction focused largely on how it might affect foreign-born workers, the unquestioned beneficiaries are U.S. employers. If the proposal becomes law, they will have a vastly enlarged pool of prospective workers, many willing to perform the dirtiest and most dangerous tasks for low pay. The policy's likely impact on other constituent groups -- including some important to a Republican president -- is far less clear. Social conservatives, for example, were furious at Bush's plan to make it easier for undocumented workers to stay in this country. The response from leaders of the nation's most prominent Hispanic organizations -- a constituency heavily courted by Republicans and Democrats alike -- ranged from ambivalence to outright opposition because of the administration's failure to provide a direct avenue to citizenship. But a range of employers hungry for low-wage, low-skill workers hailed the proposal without hesitation. The Essential Worker Immigration Coalition -- an alliance of associations and lobbies representing nursing homes, hotels, road and building contractors, restaurants, landscape companies and meatpackers -- praised the Bush initiative. Nothing surprising here, just to see how the press is handling it. The narrow range of benefits is met on the other side by the braod range of those hurt by Bush policies. Also his approach does not fit a standard conservative agenda. ********