Saturday, February 28, 2004

Concentrating wealth by cutting social security benefits

Title: Greenspan Urges Cuts to Social Security to Rein In Deficit
Source: The NY Times
Date: February 25, 2004

From the article:
    Alan Greenspan, the Federal Reserve's chairman, called on Congress and the Bush administration today to cut spending and rein in Social Security programs to narrow the record budget deficit and protect the "vigorous expansion" now under way in the American economy.
    The White House anticipates a shortfall of $521 billion this year, and the administration contends that it can reduce the deficit by half over the next five years by cutting back on domestic spending not related to the military.
This is a fascinating development -- a systematic concentration of wealth for a small minority of citizens supported by the government.

Here is the progression of steps that got us here:
  • In 1998 and 1999 there were budget surpluses
  • Clearly there was nothing "wrong" with the tax system at that time -- the tax system in place in the late 1990s brought us a booming economy and record investment. Unemployment was low, the mood was optimistic.
  • A new president was elected in 2000.
  • The new president ordered large tax cuts, with the money from those tax cuts flowing primarily to the rich
  • There were more tax cuts with even more money flowing to the rich.
  • A half-trillion dollar deficit materialized very quickly.
Now, to decrease the deficit, Alan Greenspan recommends that social security benefits be cut. In this way, the rich get much richer (fewer taxes) while the majority of ordinary citizens (particularly the elderly) get poorer.

What is especially interesting about this development is the fact that social security spending and the deficit are not correlated. Social security taxes support social security benefits, not the general operating budget of the government. Social security taxes are generating a surplus of revenue right now, which is supposed to be creating a fund that will cover the baby boomers in their retirement. Unfortunately, that surplus revenue is being spent instead of saved. Since the contribution of the wealthy to social security is zero once their income exceeds the cap, they are contributing nothing to the system.

Instead of government by the people for the people, we have government by the wealthy for the wealthy. The concentration of wealth accelerates with the government leading the way.

[See also - The Unlocked Box - How Bush is plundering Social Security to close the deficit]


Post a Comment

<< Home