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Politics : Moderate Forum

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To: Skywatcher who wrote (20746)1/21/2011 3:09:16 PM
From: TimF   of 20773
 
How Can the Richest 1 Percent Be Winning This Brutal Class War Against 99% of US

The question assumed something that isn't true. There is no general class war in the US, and particularly not from the richest one or ten percent, who generally create wealth rather than take it, and who also pay significantly more in taxes than their percentage of the national income. Some of them are of course rent-seekers, and I consider at least the more extreme cases of that to be reprehensible, but while rent-seeking is reasonably common it is not the prime factor in the wealth or income for most wealthy people.

George Bush’s biggest regret is that he didn’t privatize social security. Why so eager?

Another question that assumes a false premise. Privatization would be getting government out of it, essentially there would be no social security. Having privately owned accounts on the side, you don't really have privatization.

As to why he was so eager to have privately owned accounts on the side? Well they would allow a portion of social security to actually be invested and generate a return. Currently the "trust fund" (in quotes because it is no such thing) is "invested" in government bonds. Government bonds sounds like an investment and it would be for you or me, but not for the government itself. If you lend money to yourself you don't actually have an asset (and so there is and never was a trust fund). If I take $100 from my right pocket and put it in my left and writhe out a note "Right pocket, I owe you $100 and will pay 5 percent interest", and put that note in my right pocket, I don't actually have an asset.

If we assume that the government will pay out social security payments without severe cuts then the "trust fund" makes no difference in reality.

Lets say the government brings in $X with social security taxes, and it needs to spend $X+$100bil on social security payments. We'll assume it does actually make the payments.

If there is a "trust fund" of a hundred quadrillion dollars, what happens? The government takes $100bil in ordinary income taxes and uses them to pay for Social Security payments.

If there is a "balance of zero in the trust fund", what happens? The government takes $100bil in ordinary income taxes and uses them to pay for Social Security payments.

The "trust fund" has no effect whatsoever, its meaningless, if you assume the government is actually going to make the social security payments.

Under current law its not meaningless, in one way, and for one reason, only - That under current law if there is an insufficient "balance" in the nominal trust fund, to cover a shortfall of social security taxes, then the social security payments automatically get cut.

But that law might easily be changed considering the power of the senior voting block. And even if it isn't its a law that reduces payments based on an accounting entry that other than that specific point of the law has no real world significance.

His recent tax deal includes cuts on employee contributions to Social Security. Which means defunding, weakening, and setting a new precedent, that Social Security contributions can be cut to “stimulate” the economy.

Its a tax cut like any other tax cut. You can be for or against it for any number of reasons, but it hardly signifies any kind of ideological hatred, or hostility to Social Security.
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