Contrary to Popular Belief: Inflation Hurts the Rich, Benefit the Debtor Middle Class, Retirees? Not So Much

Paul Krugman, as usual, has it right.

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... who stands to gain from deflation, and lose if inflation is, say, 4 percent over a period of 10 years? Is it little old ladies living on fixed incomes, and salt of the earth workers who have scrimped and saved?
Well, no. There are, of course, some ordinary people who would lose a bit from higher inflation. But Social Security — the bedrock of retirement for most Americans — is indexed to inflation, and retirement accounts invested in stocks wouldn’t be hurt.
... Since I’ve been arguing that some inflation would help the economy recover, what we’re seeing in practice is that defending the interests of a small wealthy slice of the population takes priority over a possible recovery strategy.

Obama's Progressive Stripes Are Skin Deep

It would appear that Obama isn't the man he's appeared to be. He's now using Republican talking points to attack his rivals.
Paul Krugman makes his point that Obama's health plan has a big problem. Now Obama has hit back in a Swift Boat type attack. DailyKos has the scoop on the Obama attack dog back lash. It would appear Obama's progressive stripes are skin deep.
New York Times

From the beginning, advocates of universal health care were troubled by the incompleteness of Barack Obama’s plan, which unlike those of his Democratic rivals wouldn’t cover everyone. But they were willing to cut Mr. Obama slack on the issue, assuming that in the end he would do the right thing.


Now, however, Mr. Obama is claiming that his plan’s weakness is actually a strength. What’s more, he’s doing the same thing in the health care debate he did when claiming that Social Security faces a “crisis” — attacking his rivals by echoing right-wing talking points.


The central question is whether there should be a health insurance “mandate” — a requirement that everyone sign up for health insurance, even if they don’t think they need it. The Edwards and Clinton plans have mandates; the Obama plan has one for children, but not for adults.


Why have a mandate? The whole point of a universal health insurance system is that everyone pays in, even if they’re currently healthy, and in return everyone has insurance coverage if and when they need it.


And it’s not just a matter of principle. As a practical matter, letting people opt out if they don’t feel like buying insurance would make insurance substantially more expensive for everyone else.


Here’s why: under the Obama plan, as it now stands, healthy people could choose not to buy insurance — then sign up for it if they developed health problems later. Insurance companies couldn’t turn them away, because Mr. Obama’s plan, like those of his rivals, requires that insurers offer the same policy to everyone.


As a result, people who did the right thing and bought insurance when they were healthy would end up subsidizing those who didn’t sign up for insurance until or unless they needed medical care.


[..]But now Mr. Obama, who just two weeks ago was telling audiences that his plan was essentially identical to the Edwards and Clinton plans, is attacking his rivals and claiming that his plan is superior. It isn’t — and his attacks amount to cheap shots.


First, Mr. Obama claims that his plan does much more to control costs than his rivals’ plans. In fact, all three plans include impressive cost control measures.


Second, Mr. Obama claims that mandates won’t work, pointing out that many people don’t have car insurance despite state requirements that all drivers be insured. Um, is he saying that states shouldn’t require that drivers have insurance? If not, what’s his point? Look, law enforcement is sometimes imperfect. That doesn’t mean we shouldn’t have laws.


Third, and most troubling, Mr. Obama accuses his rivals of not explaining how they would enforce mandates, and suggests that the mandate would require some kind of nasty, punitive enforcement: “Their essential argument,” he says, “is the only way to get everybody covered is if the government forces you to buy health insurance. If you don’t buy it, then you’ll be penalized in some way.”


Well, John Edwards has just called Mr. Obama’s bluff, by proposing that individuals be required to show proof of insurance when filing income taxes or receiving health care. If they don’t have insurance, they won’t be penalized — they’ll be automatically enrolled in an insurance plan.


[..]I recently castigated Mr. Obama for adopting right-wing talking points about a Social Security “crisis.” Now he’s echoing right-wing talking points on health care.

Disasters – natural & man-made

Editor's Note: This is the inagural post of a guest author rama from Calcutta, India, whose sensitivity to social justice issues and beautiful writing style inspired me to ask him to join Shining Light when the India government blocked access to Blogger. That problem has since been resolved, but I'm happy that rama has taken me up on my offer anyway! Welcome him warmly!
Natural disasters may strike a people, but its impact depends upon the existing situation within society. In that sense, the fundamental causes of the resultant devastation have to be found within the functioning of society, government and institutions, and in social relations. Undertaking a post-disaster rapid damage assessment mission enables such issues and factors to be highlighted. This note is based on such a study (undertaken by TARU) across the cyclone-affected region of Orissa in eastern India, three weeks after the cyclone disaster of 29 October 1999.
Rehabilitation is therefore essentially a process of awakening to the critical necessities for building a humane, just, and sustainable society. A natural disaster could serve to initiate a process to address long-neglected matters. Rehabilitation could act as a means for renewal of a moribund society. Pro-poor economic and social development in Orissa, has been at the best of times a significant challenge. These events could provide the impetus to accelerate this process.
The question of distributive justice
Unless there exists an independent mechanism of ensuring distributive justice and organising villagers at the grassroots-level, available resources would simply enrich and empower those already well-off and powerful.
Left to governments alone, the rehabilitation would be ineffective at best, and disastrous at worst. Given the inherent tendency towards self-interest in government and institutions, both the above aspects, i.e. the flow of resources from a civic response, and the empowerment of poor villagers to benefit from the rehabilitation process, should therefore be seen within an essentially civil society intervention. The challenge of rehabilitation is principally a challenge for the affected people, for the people of Orissa, and the people of India, rather than being a challenge only for the panchayats (village councils), the block development offices, the state government and the central government.
The survey of cyclone-affected villages only served to highlight the endemic nature of poverty, mal-utilisation of resources, environmental degradation, and social conflicts – even without any cyclone risk. That this is the situation in a region that is considerably better endowed, in socio-economic, infrastructural, communications, financial and institutional resources - than the interior, hilly areas of northern, western and southern Orissa, inhabited by indigenous peoples - is something meriting reflection. The coastal region, and in particular some of the affected areas like Jagatsinghpur, Erasama, Baleshwar, dominate and powerfully control social, economic and cultural life, decision-making and resource flows in Orissa. But as the survey reveals, this region is also with its deep stratifications, leaving large numbers of people at the margins of survival, with a precarious hold on the necessities for bare existence. Natural disasters may have devastating consequences. But even without them, a slow but nonetheless devastating process is at work.
The significance of these districts also means that, given that even the non-poor, reasonably well-to-do have been hit, e.g. by house, crop and livestock loss, there is likely to be a flow of resources for rehabilitation. Since such flows must ulimately also be formally governed by principles of just distribution, the potential exists of using the post-crisis situation to put in place forces enhancing distributive justice, and using the flow of resources to begin the process of long-term socio-economic empowerment of the hitherto marginalised. Such an opportunity would not be there in a pre-disaster situation.
Across the surveyed areas, it was found that access to institutional credit is virtually nil for the common villager, and there is continuing reliance on usurious money-lenders. With house rebuilding and restoration of livelihood (agriculture, fishing) being the crucial rehabilitation tasks, and both requiring credit, it is not realistic to expect that this credit flow will happen of itself.
Role of governmental institutions
The complete absence of any sanitation arrangements whatsoever in the Sandakut settlement in Paradip (which, had come up only about 30 years ago), which is after all a developed, important urban area, is a telling indicator of the state of affairs before any cyclone. This settlement is recognised, albeit informally, by the Notified Area Committee. Regularisation of the settlement, provision of basic civic amenities and facilitating improved house construction - are all tasks that could well have been taken up, without involving much resources. In fact, they could well have been taken up within the context of a larger commercially attractive and public revenue fetching self-financing scheme. But this is not within the set of priorities or capabilities of the authorities.
However, all these tasks require their involvement, and thus the formal power of the relevant institutions only serves to hold development hostage to an administration that is, quite typically, apathetic, incapable and corrupt.
The role of the state is not simply to secure the interests of the most needy and vulnerable. The state’s financial allocations should more realistically be seen in terms of enhancement of the overall economic development of a region. The nature of such economic development - the extent to which its benefits are concentrated in a few hands or is widely distributed – is the crucial issue. Principles of distributive justice demand that the state must not be a means for the enhancement of the stakes of one relatively secure section at the expense of another more vulnerable one. And, it is ultimately the rural poor who provide labour, the basic source of food and incomes creation in a capital-scarce rural environment. Their further immiserisation would only have serious long-term consequences on agriculture.
To assume that the inertia will be broken because of the cyclone disaster, and will be replaced by sustained dynamism, to address matters that were consistently neglected earlier, would be unrealistic.
But even if a committed, dynamic administration were to do its utmost, in terms of mobilising financial resources and initiating various measures, nevertheless, at the levels of the hamlet or village, the village council and the block, there are persons, functionaries, formal representatives, contractors, traders and businessmen, landowners, groups, families – who dominate and control decision-making and resource flows. In some places, and at times, their role in affecting the quality of living of the poor and vulnerable may even be quite positive.
On the whole, however, the situation is that the ordinary villagers, landless agricultural labourers, marginal farmers, fishermen, are completely immersed in simply struggling to eke out a marginal existence, often on a day-to-day basis. They do not possess the basic economic security, education, social exposure, awareness and confidence necessary to secure their just share of whatever rehabilitation assistance is forthcoming. Their typical attitude is to get whatever little they can, and since they have to continue living in that environment, and have a predominant focus on survival, rather than on rights, justice, ethics, governance, they would prefer to accept their lot. This might still result in some resources flowing towards them. Such people form the overwhelming majority of the affected population.
Since such people are already living on the margins of survival, and the cyclone has disrupted this very rudely and rendered their situation even more precarious. The issue here is of ensuring maximal flow, out of a limited fund. Unless an all-out effort is made to stand by this section, and work with them to draw maximal assistance from all quarters to ensure they gain a somewhat stable foothold - there is every likelihood of famine-like conditions visiting the affected areas in the coming months.
If this were to happen even as some relatively affluent, and considerably powerful people enhance their stakes further, quite apart from the ignominy of this, is the fact that their stranglehold over resources and their flow and utilisation would have become fiercer still – with severe and deeply negative socio-economic consequences. In that sense, the natural disaster could be seen as having been merely a detonator of even greater devastation.
The significance of the issue of transparency can be illustrated with reference to the survey finding that in all the affected villages visited, even a month after the disaster, most villagers were ignorant about the financial assistance to be paid. Some had heard that it would be between Rupees 500-2,000, elsewhere people mentioned figures of Rupees 20,000 – 30,000. In a post-disaster context, it is essential that steps are taken speedily, expeditiously, with certainty and transparency, so that basic objectives are not impeded or thwarted by vested interests.
If transparency can be ensured, the potential exists to mobilise a large quantity of voluntary labour – the ultimate source of wealth creation in a humble village – in a post-disaster scenario. Food-for-work or wage employment schemes could be used to leverage voluntary labour, for a transparently leakage-proof collective benefit. This can happen at the level of one labourer, and at the level of the village as a whole. Those workers will be chosen for a day’s job who will give half a day’s labour in the week, say, to build a cyclone shelter. This should not then mean that there can be an equivalent leakage from the financial allocation for the shelter, but that existing resources can go further. Similarly, a job can be allotted to that village which provides the largest volume of voluntary labour (relative to its population).
Stakeholders
The challenge is this: rehabilitation, and disaster preparedness or mitigation, ask for things to happen, which tended, by design, not to happen earlier. Things as they existed, worked to keep such people in their precarious situations. Is it reasonable to expect that the cyclone would have brought about a complete change of heart, all around? To the extent that this happens, it is a very positive factor for the rehabilitation. But more practically, it is necessary to bring in something that will work as a powerful means of introducing transparency into the rehabilitation process. This will be aided by new guidelines, procedures, mechanisms instituted by an administration committed to speedy rehabilitation of the vulnerable. But the fundamental need is for something more that just such measures. The villagers need an ally, against exploitation, beginning with their own selves first.
This cannot be a government functionary – since this role does not form the job description of anyone in the administration now. Also, government is seen by different people and groups in different ways, which may not coincide with the role needed.
In some of the affected villages there may be local youth associations, some of which may occasionally be active, for public purposes. Others may be largely of a cultural or recreational type. Typically, these are not well-resourced, active or presently capable for a major development and justice facilitating role. On the other hand, many of these organisations may provide the initial persons for organising villagers for rehabilitation.
The role of village council and ward members also differs, in terms of awareness, commitment, integrity, transparency, vested interests, conflict-generation or conflict-resolution, capability and effectiveness. But it can definitely be said that this level of governance is not managed by the vulnerable sections, in their interests. The functioning of the present structure, at best results in an indirect trickle-down of opportunties to such sections. Sometimes, they may represent a well-entrenched interest group unto themselves, not averse to intimidation and violence to secure their objectives.
Role of NGOs
There are people whose present role may seem to be quite close to the kind of grassroot level empowerment role that is needed. NGOs, for instance. They are therefore a valuable resource. However, the survey indicates that the presence of capable, empowered, committed NGOs at the village level across the cyclone and flood affected areas - is very marginal. The reasons for this have to be probed. Were not the conditions of the marginal people of coastal Orissa precarious enough, and their numbers large enough to merit intervention, in the pre-cyclone scenario? Would there be a change of heart, all of a sudden? If so, is this a positive factor for the rehabilitation? But it may also prompt some thought on whether there may be other, less noble objectives motivating the sudden intervention.
There is a need for an assessment of the actual capabilities, background, proven experience, skill-levels of NGOs, rather than merely assuming that anyone claiming to be an NGO has the wherewithal to do the requisite work. At a village level, NGO involvement ultimately involves their field staff. More often than not, this level is staffed by youths for whom this is a job, in the absence of any other. They may not necessarily have the motivation, aptitude or personal qualities appropriate to a grassroot development worker. At the very least, they may be a redundant; at worst, they may even create deep damage in the village community.
Where would the large number of requisite village-level staff come from, in the NGOs, who may get involved in the rehabilitation effort? NGOs are by and large supported by project-based grants, mostly foreign. Some of them may have a long-term programme focus based in a specific region. Some of these organisations may have the capability based on their action experience to play a valuable resource role, for instance in training and guiding village staff.
Across the affected region, the survey revealed that villages could benefit significantly with some fairly straightforward measures being taken – such as a small sluice on a water channel to control inflow of saline water. Many villagers know this, some have even gone so far as to have made some efforts to get this taken up, but to no avail. It is reported that there are over 27,000 registered voluntary organisations in Orissa. The state also features in the priority areas list of many international lending, aid and donor agencies. So why does the vacuum remain?
The need for an agency
So we arrive at the apparently absurd need for someone, present for a significant period of time, at the village level, who is more concerned about the vulnerable villagers’ survival and upliftment than they themselves are. And this someone has to be above any personal stake in the resource flow – since direct or indirect control over resources is what all the forms of power ultimately imply. In short, this person or group has to be trustee, of the power of the villagers’ own awareness, intelligence, unity, organisation, initiative and labour, which they can then use for their own betterment.
There is no agency, at present, that matches this description. But this is the most critical requirement, based upon whose presence everything else can happen, (provided resources are forthcoming). In this context, reference may be made to the Nehru Yuvak Kendras. Wherever they exist, in the affected zone, they could play the requisite grassroot-level facilitative role.
Essentially the necessary agency has now to be created - an independent, voluntary, civic movement, of grassroot workers, professionals, experts and specialists. Setting up the structure of such a movement, making the network linkages, and training and ongoing guidance for a cadre of village rehabilitation workers – emerges as the most crucial and strategic requirement for a just and effective rehabilitation programme.
A volunteer worker would be based in an affected village for a considerable period of time – at least one year. He or she would operate within a group of hamlets / villages. At one level this person would interact with the villagers and especially the vulnerable; at another level, with resource persons, experts, professionals. Such workers and specialists would be mobilised from across the country, as part of a special civic mission for rehabilitation and rural reconstruction, beginning in the affected coastal belt of Orissa.
The initial focus of this movement would be to begin the work, on a demonstrative and action-learning mode, in a number of selected villages. This approach would then be sought to be propagated across the entire affected zone.
Local factors
The survey also revealed that the plight of the Scheduled Castes sections in the affected villages was, almost uniformly, the worst. At the same time, it was also clear that a positive process of social integration has been taking place in rural society, with an erosion of prejudicial attitudes (e.g. regarding using common water sources).
Travelling within a short span of time, across a wide band, also enabled discernment of subtle differences and variations across regions. These differences could be related to environmental, economic, social, institutional and even circumstantial factors. Thus, there are regions that are relatively well-developed, in terms of irrigation facilities, commercial agricultural returns, off-farm diversification; there are regions which are significantly lower in social development terms, measured for instance by school attendance. There are places where after a modicum of economic development, a saturation point has been reached, and migration is growing.
Each place has to be understood in terms of its specific situation within an overall human development frame. A general prescription applied mechanically across the entire cyclone-affected region will mean that the potential is lost of utilising the rehabilitation process to begin addressing long-term issues of sustainable livelihood.
Resource flows
If available resources could flow to the vulnerable, the rehabilitation process could be a means for them to begin rising above their previous marginal existence. Conversely, in a limited resource scenario, the ‘law’ of self-interest pursuit, on the part of anyone other than the vulnerable, will work to push the vulnerable to starvation and destitution. And the ‘self-interest’ of the vulnerable, even as articulated by them, may not really be in their interest. For instance, a villager would not like to overtly offend a powerful man. Nor does he want to have to wait very long for getting something. He is completely outside the framework of seeking to obtain justice or redress through the formal channels. So he is quite willing to pay a commission to a sarpanch (council head) for some disbursement.
The amount in question may not make an immense difference to the villager. But the aggregate of such amounts, with that one person, and over all such persons across the entire affected region - would work out to quite a enormous sum, which, since it can apparently be spared by the villager, and of course, is in no way due to the people getting it, could instead have been invested in much-needed rural infrastructure, which would enhance the livelihood prospects of all.
But public works involve significant leakages, and result in shoddy constructions. And life goes on, notwithstanding this. A natural disaster visits and causes extreme devastation in such a scenario. So, by the same logic, one arrives at the need for ensuring flow of the maximal resources, to the absolutely vital investment areas, and through a mechanism involving the vulnerable beneficiaries themselves. The number of intermediaries, between the source of funds, and the beneficiaries, should be zero - except for entities that function like a dynamo-engine, enhancing the quality of the rehabilitation process, the rate of fund flow, distributive justice, attention to the specially vulnerable etc.
The specially vulnerable
The psychological impact, on those in the worst-affected areas, who have been witness to the harrowing drama of losing their kin, could be serious. Compounding this is the practical dimension, of bread-winners and able-bodied men having been killed. Thus, the final human impact has really to be sensitively assessed at a family-to-family level, and the rehabilitation process, at a village level, has to be dove-tailed with the family-level observation and remedial measures. For instance, priority would have to be given to families who have lost their able-bodied men – since they do not have the male member even to go out to find work, while in another family, whose men are alive, they can at least go out to find work even if they are deprived because of the special favour shown to the other. However, typically, far from receiving special attention, the more vulnerable family would be the one trampled in the rush of many, all needy in a broad sense, for limited resources.
No special attention is being given yet to the question of health conditions of women and children. Many children would be severely malnourished.
There are reports of young girls having been sold into prostitution. Similarly the issue of sexual abuse of young girls, who are exposed and vulnerable after their houses have been destroyed and men have gone out to get relief materials or for work.
Human nature would also reveal that the ones rendered most vulnerable, would show tendencies to prefer continuous patronage, rather than seeking to attain rapid security and stability through utilising the available benefits, their own intelligence and effort. This has to be dealt with, sensitively.
There would also be many whose situation simply calls for continued assistance, over a long-term, before they can attain some stability. A young widow, with infants. An elderly or infirm person, straddled with some of the surviving family children. The ways of sustaining this pose a tremendous challenge for micro-level intervention, in terms of resource identification, harnessing and multiplication.
The ultimate concern of the administration is to see that, in the records, tasks have been completed. Requirement was assessed, and communicated. Allotments were made. Disbursement was made. What actually happens to the villager, day by day, over the coming months and years – does not feature in this. The pain of her painful existence is not felt.
In any village, there exist structures of kinship, community, and compassion, which work to ameliorate poverty and resource scarcity. This would work to ensure that the most vulnerable, do also get attention. But these tendencies are severely strained in a post-disaster scenario, when everyone is quite badly affected. Also, this cannot be expected to be sustained, and that too at a higher level, over a long period.
Conflict, cooperation
It should be realised that the flow of resources occasioned by the rehabilitation effort will be accompanied by the emergence and growth of conflicts, as different interest groups seek to obtain a stake for themselves. This can have a deeply negative and long-term socio-economic and environmental effect.
It was found that people who have been badly affected seem to be in a state of shock, just trying to get from relief whatever they immediately need, while those less or not affected are busy obtaining as much as they can. Approach roads to some of the areas are lined with children, women and old women stretching out their hands to passing vehicles with distressing pleas. One can understand that the post-cyclone relief milieu is like a heaven-sent opportunity to extract as much as possible to improve their admittedly not so comfortable situation. Similarly, some of the affected villagers have also started exploiting the post-cyclone situation, e.g., selling vegetables at exorbitant prices. In some of the areas, looting and other serious anti-social activities took place, suggesting that besides some criminals, some of the local villagers may also have indulged in this.
Conflict and cooperation are both present at the village level, emerging at different times, under different circumstances. Thus, villagers across the surveyed villagers spoke of the spirit of cooperation, unity and selflessness that was exhibited in the midst of crisis. Limited foodstuffs were pooled and shared, with priority being given to small children, the aged and infirm. But the same villagers also speak of the exploitativeness of some now, for instance by charging exorbitant prices for vegetables. In Ganjam district, a few kms south of Gopalpur town, a rice mill owner reported that his badly damaged mill was looted by people from a nearby village.
Such acts of looting in the immediate aftermath of the disaster suggest the prior existence of serious conflict between the parties in question. Such currents will be operative during the rehabilitation process. Discerning such currents at a village level, resolving conflict and enhancing cooperation, is part of the rehabilitation challenge.

The Baby Boomer's Coming Retirement Crunch

Haven't you all wondered what the consequences are that we face with all this deficit spending and tax cuts? You all knew that there would be one didn't you? The Bush Administration had at least two targets for this strategy. The first one was to "starve the beast". By running up deficits and cutting taxes, attempts to balance the budget will be handicapped by payments on principle and interest. Paying for Social Security now competes with other entitlements and would require tax increases, something that will be increasingly difficult to do as the economy slows down the wages continue to be stagnant.
The other part of the plot was to effectively destroy Medicare and eventually Social Security. All that energy to save Social Security was in crisis was in fact a deception to turn attention away from the real basket case, Medicare. Cuts in payments for Medicare are making doctors refuse to take it. Medicare is not expected to survive much longer in it's current form. Also, pensions both private and public under funded. There will be no taxes available to bail these out for long. In the end, the baby boomers will be on there own. Our leaders have stabbed us in the back by ignoring the truth too long to allow us to head off a problem.
Business Week

Many baby boomers are facing retirement without adequate savings of their own. Together with Medicare trust funds that will be exhausted and inadequately funded corporate and government pensions, you have the makings of a potential crisis.


The problem for financial markets is twofold: First, the underfunding in corporate and other pension funds will cause individual firms great hardship, making those with high legacy costs uncompetitive. Second, the underfunding at the state and federal government levels will cause tax hikes, which will alter regional and international competitiveness. We currently estimate that U.S. corporate pensions are underfunded by about $140 billion. Add the cost of other postemployment benefits and the deficit doubles. State pensions are underfunded by $284 billion.


Disturbing as those numbers are, the federal underfunding situation dwarfs the state and private ones. Social Security has a $4.6 trillion shortfall (based on present discounted value of the next 75 years), and the federal civilian and military employee programs are underfunded by $4.5 trillion.


The underlying problem is demographics. The postwar baby boom was a phenomenon throughout the industrial world, and those babies born in the late 1940s and 1950s are approaching retirement. The leading edge of the baby boom is now turning 60, and we can expect the ratio of retirees to workers to rise. Those who are now paying into pensions will start collecting benefits, and there isn't enough money in the pot to pay the pensions promised. MORE

Doublethink Dubya's Greatest Gambit

Yes, my fellow Americans, George Dubya Bush is attempting his greatest doublethink gambit. Can he promise to save future cuts in Social Security benefits by ah... cutting benefits for Social Security in the future? Thats is folks, except he proposes to sweeten the deal by siphoning off some of the Social Security taxes into the stock market shares run by Bush's buddies to make sure the cuts come sooner and more deeply!
Will he do it? Will he fool America again? For the facts, stay tuned....
The Final Insult - New York Times

Let's consider the Bush tax cuts and the Bush benefit cuts as a package. Who gains? Who loses?


Suppose you're a full-time Wal-Mart employee, earning $17,000 a year. You probably didn't get any tax cut. But Mr. Bush says, generously, that he won't cut your Social Security benefits.


Suppose you're earning $60,000 a year. On average, Mr. Bush cut taxes for workers like you by about $1,000 per year. But by 2045 the Bush Social Security plan would cut benefits for workers like you by about $6,500 per year. Not a very good deal.


Suppose, finally, that you're making $1 million a year. You received a tax cut worth about $50,000 per year. By 2045 the Bush plan would reduce benefits for people like you by about $9,400 per year. We have a winner!


I'm not being unfair. In fact, I've weighted the scales heavily in Mr. Bush's favor, because the tax cuts will cost much more than the benefit cuts would save. Repealing Mr. Bush's tax cuts would yield enough revenue to call off his proposed benefit cuts, and still leave $8 trillion in change.


The point is that the privatizers consider four years of policies that relentlessly favored the wealthy a fait accompli, not subject to reconsideration. Now that tax cuts have busted the budget, they want us to accept large cuts in Social Security benefits as inevitable. But they demand that we praise Mr. Bush's sense of social justice, because he proposes bigger benefit cuts for the middle class than for the poor.


Sorry, but no. Mr. Bush likes to play dress-up, but his Robin Hood costume just doesn't fit.

The Real Reason Bush Wants to Overhaul Social Security

The reason the Bush Administration wants to overhaul Social Security has nothing to do with the survival of the program. Witness how they ignore Medicare while it teeters on the brink of insolvency. They want Medicare to fail. And they want Social Security to fail. This is more of the "starve the beast" tactic. Thanks to Josh for the link.

There's already talk of raising the $90,000 income cap on which Social Security taxes now are collected to restore fake "solvency" to the program. Nothing like a massive tax increase on the entrepreneurial class to "fix" things, eh?

They want to free the rich from paying for the solvency of Social Security. Why shouldn't people with $90,000 income pay a little more to help those who don't make enough to create a viable pension? Let them starve? The food shelves are empty quite often these days. Charitable giving is down. The Churches and private sector can't pick up the difference.

The only real way to fix Social Security is, over the long haul, to convert this socialist wealth-redistribution scheme into a free-market, wealth-creation program. And the best place to start is with the modest private accounts the Bush administration proposes.

This is about greed. The rich don't want to pay for the privilege of getting richer on the backs of the workers. They use catch words that raise people's ire like "socialism" to cover their real intent.

Even factoring normal market ups and downs, private accounts will -- conservatively invested and over the long term -- provide workers of every socioeconomic class with a better, and inheritable, retirement income.

What Bush doesn't want you to know is that a whole lot of people who rely on Social Security today will have NOTHING in the future, because they can't afford to self-pay for their pension. The private accounts will bring down Social Security decades earlier.

Swiftboat Vets Launch Their Attack on AARP With a Smear

Incredibly, US Next, from the same people who brought us the Swiftboat Vets who slandered Kerry, is now slandering AARP. How they can think its a believable argument that AARP is against war and in favor of gay rights I'll never know. I see now the image has been removed from the American Spectator site where kos found it. Mixed with some accurate news is a lot of hooey. The Swift Vets are offering a rich conservative's alternative to AARP. It will be interesting to see if the idiots will make any headway.

Republican Attack Dog Goes After AARP

Washington > A New Target for Advisers to Swift Vets" href="http://www.nytimes.com/2005/02/21/politics/21social.html?">The New York Times > Washington > A New Target for Advisers to Swift Vets

Taking its cues from the success of last year's Swift boat veterans' campaign in the presidential race, a conservative lobbying organization has hired some of the same consultants to orchestrate attacks on one of President Bush's toughest opponents in the battle to overhaul Social Security.


The lobbying group, USA Next, which has poured millions of dollars into Republican policy battles, now says it plans to spend as much as $10 million on commercials and other tactics assailing AARP, the powerhouse lobby opposing the private investment accounts at the center of Mr. Bush's plan.


"They are the boulder in the middle of the highway to personal savings accounts," said Charlie Jarvis, president of USA Next and former deputy under secretary of the interior in the Reagan and first Bush administrations. "We will be the dynamite that removes them."

The legacy of Karl Rove and Swift Boat Veterans may mark the beginning of a dark period for politics in America. Apathy already delineates nearly 50% of the electorate. Negative campaigning bring people out to vote for the wrong reasons.
The average voter doesn't have the depth of knowledge necessary to vote soley on the issues. So instead, they vote on the intangibles defined in the media created personality of the candidate carefully sculped by the campaign spin doctors.
People want a good candidate who will make the decisions they don't understand enough about. The trouble is, the intangibles of a media created personality is amenable to the manipulation of negative campaigning. A media based character is merely skin deep anyway. Throw some dirty on the candidates image and suddenly the character-based voter is swayed another direction.
People need to be educated by the candidates and the media about the issues involved. The voter has to take an active role in finding the facts. That is the way our system works, by "watchful vigilance". The facts will not come to them in the sound bite based television news.
I can only hope that the excessiveness of Rove and USA Next will educate the voter about the horrors of negative campaigns.

NAACP Fights Back Against Bush's Racist Policies

NAACP: News Release February 03, 2005

the NAACP opposes gambling Social Security benefits on the volatile stock market that has in recent years, left too many seniors with nothing but a government program to sustain them. There is a concern that privatization would result in all Social Security beneficiaries paying more for the administration of the program, and thus receiving less.


Moreover, Hayes said: “President Bush’s assertion that Social Security is a bad deal for African Americans because our life expectancy is shorter than whites is misleading because it assumes that blacks will forever die sooner than whites. Rather than privatize Social Security the administration should take steps to improve health care as a means to decrease the black mortality rate.

I couldn't believe Bush's racist statement about how Social Security doesn't help African Americans as well as Caucasions. As the NAACP points out, all that assumes the life expectancy doesn't change for African Americans. Of course, Bush is all about dismantling healthcare for the poor, a disproportiate number are African American. It's an incredibly weak argument that clearly relies on a racist assumption that most African Americans lack the intelligence to see through it. It is typical of Bush's incredibly stupid moves. He and his cronies clearly have no clue who the average American is and how the most of America lives.

The Inside Story on Greenspan's Comments on Social Security

There is another story about Greenspan's visit to Congress about Social Security. There is some history about Greenspan and Social Security. It is particularly eye opening. Clearly he is in the pocket of the supplysiders. Thanks to Tapped for the lead.
The Washington Monthly

Greenspan was part of the 1983 Social Security commission that raised payroll taxes. (It's one of several Ronald Reagan tax increases that his fans conveniently forget about when they're extolling the virtues of supply side economics.) Here's the Greenspan timeline:

* 1983: Recommended raising payroll taxes far above the amount required to fund Social Security. Since payroll taxes are capped (at $87,000 currently), this was, by definition, an increase that primarily hit the poor and middle class.


* 2001: Enthusiastically endorsed a tax cut aimed primarily at people who earn over $200,000.


* 2003: Ditto.


* 2004: Told Congress that due to persistent deficits Social Security benefits need to be cut.

So: raise payroll taxes on the middle class to create a surplus, then cut taxes on the rich to wipe out the surplus and create a deficit, and then sorrowfully announce that the resulting deficits mean that the Social Security benefits already paid for by the middle class need to be cut.

From Lou Dobbs CNN transcript:

DOBBS: And the solution is there, the fact that Alan Greenspan, the Fed chairman would raise the issue, I think, is commendable. The suggestion in my opinion that the first solution should be sought is to cut the benefits of future retirees is reprehensible. What is your reaction?


JOHNSTON: Well, we can choose in America, if you want, to have a system in which the middle class and the upper middle class, people making $30,000 to $500,000 a year subsidize people who make millions of dollars. And if Americans want to vote for that they should do it.


I just don't think, Lou, that Americans would have gone for this if they had known what is happening. And since it was Mr. Greenspan who said pay your tax in advance and now he says, no, we're not going to give you the benefits, but we can't raise taxes on the rich. That seems to me morally troubling.

Basically, Greenspan says whatever is politically expedient and serves his masters, the super rich.

Social Security not in 'crisis'

News has become selective these days. Conservatives have intimidated the main media outlets into squelching unfavorable news. Here is a good example. Today USA Today published this story:
USATODAY.com - Greenspan: Social Security not in 'crisis'

Federal Reserve Chairman Alan Greenspan said Thursday that Social Security is not in "crisis" as President Bush has declared, but emphasized that Congress must quickly address future funding problems in the program and far larger shortfalls in Medicare.


In remarks to a House committee, the central bank chief offered a sunny, short-term economic outlook with expanding business activity and low inflation. But he said the long-term picture was clouded by an aging population that will strain Social Security and Medicare and slow economic growth.

However, all over the news yesterday was this story:
ABC News: Greenspan: Social Security Funding Hard Under Current System

"The reason essentially is, … pay-as-you creates no savings when (there are) transfers from taxpayers in any particular period to beneficiaries," Greenspan said.


As a result, fully funding Social Security "would require more than tinkering," Greenspan said. "We are very far short and we would have very great difficulty in fully funding the existing system."


Greenspan told the panel he supported the creation of private Social Security accounts, but the transition should be done in a cautious, gradual way.

Greenspan made both statements to Congress yesterdsay. Yet the mainstream press only reports the one favorable to Bush. The one disfavorable to him shows up only at USA Today.
Whatever happened to freedom of the press?

How Much Will You Lose Under the Bush Plan?

Cheney Sees More U.S. Borrowing for Pension Accounts

Cheney Sees More U.S. Borrowing for Pension Accounts

Under Bush's plan, Cheney said, the administration would borrow roughly $754 billion over the next 10 years to set up the private accounts.


"We think that's a manageable amount," he told "Fox News Sunday."


Cheney said in the interview that "it is important to manage the fiscal impact of these transitions in an intelligent fashion, and we're well aware of that."


Asked about estimates that trillions of dollars in additional borrowing would be needed in subsequent decades, Cheney said: "That's right. Trillions more after that."

There is not a word in this article about the consequences of running up the National Debt. I don't recall the Bush Administration making any statements about mortgaging our children's future. The Republicans are like people who have no means to delay gratification with a credit card. If they run up the debt far enough, they can just declare bankruptsy. These guys are just totally irresponsible with an extremist agenda with no clear decernable outcome in sight. Whatever they have in mind, I guarentee you will benefit the rich.

The Social Security Debate

Looking for details on the Social Security debate? Go here:
Social Security: There Is No Crisis -

Email your Congressional Representatives

Bush Plays the Race Card Assuming African Americans Can't Understand

I've often wondered if Dubya was stupid. But until now, I had seen his political advisors are pretty savvy. But this move looks like one that could lable the Republican Party as racist for the next generation. Now we await the parade of African American political leaders decrying the President.
Boston.com / News / Nation / Washington / Bush argues his Social Security plan aids blacks

As President Bush prepares to accelerate his sales pitch for overhauling Social Security, he is increasingly wrapping his rhetoric in racial terms. The system, he argues, is ''inherently unfair" to many blacks. The solution, Bush says, is to embrace his plan for private accounts, details of which he may provide in his annual State of the Union address Wednesday. Under a system based on wages, the average monthly Social Security retirement benefit received by African-Americans is $775, compared with $912 for whites. In addition, many blacks never receive the benefits because a disproportionate number die before they are eligible. On average, black males die six years sooner than white males. But some groups representing African-Americans say that Bush's logic is faulty and that creating private accounts would hurt blacks rather than help them. They maintain that Bush is playing a race card to boost his plan.

Update: Have doubts Bush is a racist? Check out this post from Political Strategy.

BUSH USING TRUST FUND TO PUSH ATTACK ON SOCIAL SECURITY

Bush had a great idea. Pay a blog pundit $250,000 to publicize his "No Child Left Behind" program. When that worked well, he's now decided to order the staff of the Social Security Administration to spend its funds which come from the trust to defend his plan to privatize Social Security. Those of us that understand government or trust funds have to be spent to benefit the purpose of the funds. Lobbying is not allowed and is punishable by mis-use of funds laws.
But then again, we all know the President is above the law, right? But perhaps Bush didn't expect the employee's union to speak up.
Washington > Social Security Agency Is Enlisted to Push Its Own Revision" href="http://www.nytimes.com/2005/01/16/politics/16benefit.html?ei=5065&en=8fc5397cab02d3e0&ex=1106456400&partner=MYWAY&pagewanted=print&position=">The New York Times > Washington > Social Security Agency Is Enlisted to Push Its Own Revision

Agency employees have complained to Social Security officials that they are being conscripted into a political battle over the future of the program. They question the accuracy of recent statements by the agency, and they say that money from the Social Security trust fund should not be used for such advocacy.

[UNDERNEWS]

One man's retirement math: Social Security wins

 [The Agonist]

One man's retirement math: Social Security wins - David R. Francis | December 27 - Christian Science Monitor - For 45 years, (Stanley Logue, a defense-industry analyst) paid into the system until his retirement in 1994. But with all the recent hoopla over reform, Mr. Logue, a Massachusetts Institute of Technology graduate, decided to go back and check his own records. Would he have done better investing his money than the bureaucrats at the Social Security Administration? He recorded all the payroll taxes he paid into the system (including the matching amount from his employer), tracked down the return the Social Security Trust Fund earned for each of the 45 years, and then compared the result with what he would have gotten had he been able to invest the same amount of payroll tax money over the same period in the Dow Jones Industrial Average (including dividends). To his surprise, the Social Security investment won out: $261,372 versus $255,499, a difference of $5,873.

 

What the Bush Administration is not telling you is that the real reason he wants to privatize Social Security is to give his constituency, the rich, the option out of funding the middle class Social Security benefit. They can well afford their own. And so should the middle-class according to the Bush line of reasoning. Can you afford to fund your own retirement plan? Most of us would expect poverty in retirement if we did.

The Reality of Social Security: There is No Crisis

There is no crisis in Social Security. Past and current presidents have spent huge surpluses on wars and weapons. If they had let it alone, Social Security as it was during the Reagan Administration would have been solvent for the foreseeable future... well into the 22nd Century. Now as Krugman points out below, even with the surpluses gone, Social Security can be repaired, with roughly 1/4 of the tax cuts that overwhelmingly went to the rich.

The New York Times > Opinion > Op-Ed Columnist: Inventing a Crisis

The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem.

But it's a problem of modest size. The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That's less than 3 percent of federal spending - less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts - roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year.