Dubya and his band of thieves:

Let us be clear and plain. There is no problem with Social Security. Social Security will be there for us and for our children if we have the guts to stand up and fight a gang of thieves and ideologues who mean to take it from us.

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A version of this article was originally published in New Ground 77, July — August, 2001

by Bob Roman

By the time you read this, Dubya’s marvelously bipartisan commission on Social Security will have recommended diverse and devious ways of “strengthening” a system in “crisis”. This is rhetoric from George Orwell’s 1984, where peace means war, where words in political discourse mean whatever is presently advantageous.

Of course, the conservative side of the debate has no monopoly on misdirection. Social Security was promoted in Congress and to the public as something analogous to a private pension plan. It was financed as a payroll deduction, split equally between the employee and employer, just like something from a collective bargaining agreement. The benefits were based in large part on the monies earned. Surplus revenues were placed in a “trust fund”. It all sounds so very fiduciary, something so very familiar to people accustomed to receiving their benefits as a condition of their employment. In fact, Social Security is and has been a “pay as you go” government program that provides disability and survivor benefits as well as old age pensions out of current revenues. The surplus gathered by the payroll taxes is not entirely irrelevant but it is primarily a matter of bookkeeping by the government. And, it might be added, not entirely honest bookkeeping.

If you need an example of why the expedient argument is not always the best argument in the long run, Social Security is it. The same arguments used to sell the system to a wary public, particularly a wary business class, turn out to be the same arguments to use in destroying it. Because as a financial trust, Social Security can be portrayed as vulnerable to changes in the economy and to demographics.

Draw the trend lines. At some point they’ll intersect; sound the alarm. You’ve got a great story: the monumental crash of a program that will send millions of soon to be elderly into poverty. It is a story that will guarantee a multitude of eyeballs and thus advertising revenue, one that is sufficiently complicated to deter any reporter or editor from explanatory reporting that would spoil the fun, one that nicely serves the needs of all levels of the media enterprises from reporter to editor to publisher to owner.

The moderately obvious problem with trend lines is… that they are trend lines, a static representation of a dynamic system, subject to change without notice. For a long while, the left attempted to use a variation, a subset of this argument. The left pointed out that projections calculated by the Social Security Advisory Board, and used as ammunition against the program, assumed a rate of economic growth that was historically conservative. Use a different but plausible number, and your lines intersect at a point so far in the future as to be no longer very interesting.

There are many problems with this argument, including the fact that higher levels of economic growth ultimately result in higher benefit levels and that given the vagaries of history the Board’s economic growth projections could have just as easily been optimistic. More to the point, it maintains the myth of Social Security as Trust Fund.

Happily, this debate happened during sustained period of economic expansion. The crisis point kept receding into the future. The news media were confronted with what should have been obvious: this story has no clothes.

What to do?

Because we live in a 1984 political world, where past political news dims into irrelevance within a span of months, it’s easy enough for the opponents of Social Security to at last admit the obvious. The draft report of Dubya’s Commission clearly describes Social Security as a pay as you go government program. But now, it is that very nature of Social Security as a government program that is identified as a problem.

The Commission’s report states:

“Many working adults do not believe that they will ever collect retirement benefits from Social Security. Such a failure has never once happened in a program that dates well back into the last century.” (Page 2)

” workers and retirees have no legal ownership over their Social Security benefits. Instead, what they have is a political promise that can be changed at any time, by any amount, for any reason. In any retirement system a lack of legal ownership is a source of insecurity.” (Page 3)

Later, the report continues:

“Today’s beneficiaries are not living off financial assets accumulated in the past. Today’s workers are not accumulating financial assets for the future. Workers ‘invest’ their payroll taxes not in financial assets but in the willingness of future politicians to tax future workers to pay future benefits.” (Page 10)

Is this a problem? Just who are these politicians who are unwilling to fulfill this promise to the working people of our country? In fact, they are the President’s cronies and allies. They are the people who, year after year, have been insisting that the system is in crisis, that something needs be done now. They are the usual suspects: that vast right wing conspiracy of money, foundations, mouth pieces and tame elected officials.SSA - socialism

The AFL-CIO has identified some of the principal players in the campaign to destroy Social Security. The libertarian Cato Institute has made Social Security a major priority. They have an ideological agenda and this is a major motivation for the much of attack on the program, although for cynics and Marxists it is enough to point out that much of the Cato Institute’s funding comes from Wall Street firms and banks that would directly benefit from a privatized “social security”. Another player is The National Development Council/Economic Security 2000, which plays a role on the right similar to that of the Campaign for America’s Future on the left. The National Center for Policy Analysis is another major player. This organization was one of the top backers of California’s Proposition 226, and it has promoted privatized Social Security for the past 10 years. It also supports school vouchers, massive tax cuts for the wealthy, privatized prison labor, paycheck deception legislation and funds bills opposing patients’ rights. And finally it should be no surprise that the Investment Company Institute, the lobbying arm of the mutual fund industry, has made trashing Social Security a top legislative priority.

Let us be clear and plain. There is no problem with Social Security. Social Security will be there for us and for our children if we have the guts to stand up and fight a gang of thieves and ideologues who mean to take it from us.Medicare - socialism

The problem is not programmatic. It is political.

What of those intersecting trend lines? The average age of our population is increasing, and if we hope to limit the number of humans on our planet, let us hope this trend continues. As it continues, Social Security will become more expensive. If one insists on financing the program strictly out of payroll taxes, which are limited to the first 80,000 dollars of income, the payroll tax would increase from the present 12.4 percent to, at worst, 15.4 percent, split equally between employer and employee. This is according to the Social Security Advisory Board. To whom is this a problem?

And there are other possibilities regarding payroll taxes:

“Making all earnings covered by Social Security subject to the payroll tax beginning in 2002, but retaining the current law limit for benefit computations (in effect removing the link between earnings and benefits) would eliminate the deficit. If benefits were to be paid on the additional earnings, 88 percent of the deficit would be eliminated.” (Social Security: Why Action Should Be Taken Soon. Social Security Advisory Board, July, 2001. Page 27)

And finally, why should Social Security be restricted to the payroll tax? If providing for the elderly, the bereaved, the disabled is a priority then partially financing it out of general revenues should not seem unreasonable. But it does mean, perhaps, that we will need to decide which is more important: Social Security or Star Wars? Social Security or another carrier battle group? Social Security or a tax cut for the wealthy?

The last resort of the enemies of Social Security is an appeal to greed. Heaven knows, we are a people well trained to gluttony, so this argument should have some affect. Beyond tedious explanations of the difficulty in making comparisons between private investment and the benefits of the Social Security program, it should be enough to simply note that for the rich and the reasonably well off, we already have a privatized supplement to the Social Security program in the form of the various Individual Retirement Accounts and 401(k) plans. These subsidized forms of retirement savings only sometimes provide enough to actually support retirement; the less well off end up raiding or borrowing against them for immediate needs. But more to the point, as the New York Times recently reported, the average 401(k) plan actually lost money last year. And while it’s probably too complicated for a mass audience, it wouldn’t hurt to point out the uncertain record and uncertain health of our nation’s private pension plans.

Dubya’s tame Commission argues that there is no guarantee in the promises of politicians: of course not. It’s not entirely up to politicians to keep promises; it’s our responsibility as well. But neither is there a guarantee in the value of financial assets, as the stock markets have so well demonstrated recently.

The drive to privatize Social Security is not an isolated issue. It is part of an ideological attack on the working people of this country. It is nefarious plot by Dubya and his band of thieves to carve the U.S. government as if it were a Christmas turkey, and sell it, piece by piece at bargain prices to the wealthy.

Are you going to let them get away with this?

How Robin Hood Helped Save New York

Originally published in New Ground 167, July — August, 2016.

by Bob Roman

“Ford to City: Drop Dead,” the New York Daily News headline famously proclaimed when President Gerald Ford, in October of 1975, promised to veto any legislation intended to prevent New York City’s impending bankruptcy. The New York City fiscal crisis lit the bonfire of the middle class in America and its consequences lead directly to atrocities like the poisoning of the Flint, Michigan, water supply. It was an experiment, now a fashionable practice, in putting local government under the control of an appointed board that preempts the authority of elected officials.

There are differences from then and now. For one thing, neither the organization of the Municipal Assistance Corporation to manage municipal debt nor the Emergency Financial Control Board that intervened more directly in management and policy assumed New York City’s problem was entirely the result of local incompetence. (One is tempted to ponder racism at this point, but let us continue.) New revenue was part of the solution then, unlike today when it is popular to assert that deficits can be resolved by eliminating waste and fraud. And maybe cutting taxes as well.

It’s here that Robin Hood makes his appearance. New York State has something resembling a Robin Hood Tax on the books, the Stock Transfer Tax, and it’s been on the books since 1905. There are differences in this law from contemporary Robin Hood Tax proposals. The New York tax is a stamp tax (think of the revenue stamp on a cigarette pack as an example) and the rate is tiered by price. There is a ceiling on the number of shares in a trade that it applies to and it is limited in applicability by the location of the trade. The legislation was written for the time when nearly everything went through brokers. The tax was phased out by 1981; it is now rebated immediately to the tax payer. According to New Yorkers for Fiscal Fairness, the state currently rebates something like $12 billion dollars in annual revenue from the tax.New York Tobin Tax

In 1975, the Stock Transfer Tax was very much a going revenue stream, and it was one of the taxes New York State diverted to pay New York City’s bondholders. In 1976, New York collected $287.6 million in revenue from the tax, roughly $1.2 billion in 2015 money. This amount was no where near a majority of the monies required by the Municipal Assistance Corporation that year, maybe 10 to 15 percent, the rest being conventional sales taxes generated within New York City and portions of state per capita aid.

Okay. It wasn’t New York that Robin Hood helped save. It was the bondholders. It is interesting that the only time Robin is allowed on stage, even in a supporting role, is when it’s Capital’s ass in peril. But that’s capitalism. The rich get the gold. We get the pee.

 

Chicago Afire?

Originally published in New Ground 163, November — December, 2015.

by Bob Roman

Dry tinder, high wind, and a persistent spark is all you need for one hell of a fire. Ask any Chicagoan, where the Great Fire seems to have epigenetically impressed itself on the heredity of the natives. And in 2015 we have Bruce Rauner, a fanatically right-wing plutocrat Governor plus the huffing and puffing of a mostly cynical Democratic legislative leadership, and the dry tinder of a state in fiscal paralysis. With distress rising from the downtrodden into the business class, all it would take tonight is a pissed off cow. Two demonstrations this month suggest fire and smoke.

On November 2, Moral Monday Illinois held the latest and possibly the largest of its Moral Monday protests. Well over 500 people gathered at the Thompson Center in the Loop and marched to the Chicago Board of Trade. They shut it down. Several dozen people were arrested. Some went with the police cooperatively. Others were carried. This was not the scripted kabuki performance typical of many labor demonstrations of late. Those arrested do face charges, not a ticket, and Moral Monday Illinois was collecting for a bail fund.

The militancy was impressive and calculated to get the attention of the business class, media, and politicians, but the primary demand was more important: It was for a “LaSalle Street Tax”. Also known as a Robin Hood Tax or a Tobin Tax, it amounts to a small sales tax on trades done on the exchanges. It is something that Chicago DSA and our friends at the Chicago Political Economy Group have been promoting for years, and it’s an example of how this idea is making its way into political discussion, even legislation. Representative Flowers has a bill before the Illinois House and plans are afoot for a Senate bill in next session.

On November 10, Fight for 15 called a nationwide strike of fast food workers and others for a $15 an hour minimum wage and, for many, a union. I have no idea how many such workers walked out on Tuesday, but that is a close second in significance to the noise and visibility generated by demonstrations in 270 cities across the nation.

November 10 demonstration
Peg Strobel, Alec Hudson, and Bill Barclay were among the many DSA members at the November 10 demonstration

In Chicago, we had several actions. Two in the morning on the south and west sides were directed at workplaces. The grand finale was a very large, media oriented demonstration at the Thompson Center. It filled the plaza. These demonstrations are akin to high school pep rallies, but they do have a cumulative affect. It was not so long ago that a demand for a $10 an hour minimum was considered the radical edge of the possible. And by repetition, working conditions and collective bargaining may soon be placed on the agenda, too.

Arise Chicago organized a bus to the demonstration from Oak Park that Greater Oak Park DSA, several west suburban congregations, and fast food workers helped fill. Chicago DSA mailed a few hundred postcards that promoted the bus and the demonstration to the usual suspects in the greater Oak Park area. We also did a similar mailing to people and organizations in downtown Chicago. And we promoted the event using the web, including Facebook, and with emails.

Where does that leave us? In mid-air with a dozen plates in play. This is a work in progress, and we invite your incendiary participation.

 

Illinois Budget Crisis

the past isn’t even past

Originally published in New Ground 128.2, email edition 02.15.2010.

by Bob Roman

New Ground has been among those predicting disaster because of the ongoing failure of responsible political leadership in Illinois. (There’s more, but most recently New Ground 127 and New Ground 126.2.) Illinois is not unique, of course. The Center on Budget and Policy Priorities (CBPP) has issued a report that most states are suffering a shortfall in revenues. Even accounting for efforts to close the gap, CBPP anticipates the shortfall for 2010 and 2011 to total something on the order of $350,000,000,000 nation-wide.

Illinois’ $14.3 billion deficit is not the worst. In absolute terms California, Arizona, and New York are larger. Expressed as a percentage of the state’s general fund, Illinois is still in the runner-up position, Nevada rising to #3, but the deficit for Illinois still amounts to 40.9% of the general fund budget. If you need any indication that “cutting waste” and promoting “efficiency” are nothing more than weasel words for doing nothing, these facts should be that.

In a recession or depression, deficit spending is not a bad thing. But Illinois and the other states can’t print money, and like most states Illinois is required have a balanced budget, or at least something it can pretend is balanced. Thus the deficit is paid for by simply not paying outstanding bills, looting special funds, and other such accounting tricks. The tricks work for a while, too. Then you cut services and lay off workers. None of these are good policy, especially in a recession or depression.

The Progressive States Network is circulating a sign-on letter for state legislators to urge the President and Congress to move swiftly on job creation and state fiscal relief. There’s also a tool citizens can use to urge their state legislators to sign on. While Federal assistance is needed in the short term, the Progressive States Network argues that the fiscal crisis is in large part a result of a failure of politics, that the crisis can be solved and the anti-tax movement is mostly a failure. (Indeed, Arizona is #2 on the fiscal failure list in large part because, unlike most other states, the conservatives have had their way with the state’s finances.)

Debt and Taxes

a subtle mix of malice and incompetence…

This was originally published in New Ground 99, March — April, 2005.

by Bob Roman

Some Kill With Guns, Others With Pens
As New Ground goes to press, the House and the Senate Budget Committees were in the process of marking up their budget resolutions. By the time you read this, it is possible that one or both houses will have passed resolutions. Both proposed budgets reflect priorities starkly out of touch with the lives of ordinary Americans. Overall, the proposed budgets would deeply cut critical public investments at the same time as they give more tax breaks to the wealthy and swell federal deficits.

The House committee-passed budget would cut domestic discretionary spending by $216,000,000,000 over the next five years, and the Senate committee-passed budget would cut domestic discretionary spending by $207,000,000,000 over the same period. This would amount to average cuts in public services such as education, community development, veterans’ benefits, and environmental protection of 13 to 14 percent in 2010. The House resolution does not include multi-year caps on discretionary spending, but the Senate resolution does include 3-year caps.

Both the House and Senate budget resolutions would deeply cut entitlement programs: by $67,000,000,000 and $38,000,000,000, respectively. Medicaid, food stamps, the Earned Income Tax Credit and other low-income programs would likely face the deepest cuts. Moreover, both budgets include reconciliation instructions for a portion of these cuts. These reconciliation instructions would facilitate passage of the cuts by preventing them from being filibustered in the Senate, thus allowing them to pass with only 51 votes.

The Senate budget also includes a new budget rule that could harm entitlement programs beyond the cuts called for in the resolution. This rule would require any legislation that increased entitlement spending by more than $5,000,000,000 over any 10-year period between 2015 and 2055 to overcome a 60-vote point of order in the Senate. This new budget process rule would not in any way restrict enactment of new tax cuts that increase the deficit. This is a prescription for permanent irresponsible, unresponsive government. California has similar “super majority” rules written into aspects of its budgeting process; consider the state of their finances today.

While using the massive federal deficits largely caused by the reckless tax cuts of the last four years to justify the above-mentioned deep cuts in public investments, the Bush Administration and its allies are continuing to push for even more unpaid-for tax cuts. Indeed, both the House and Senate budget resolutions call for more tax cuts: $106,000,000,000 and $71,000,000,000, respectively. Moreover, the budgets include separate reconciliation instructions for a portion of these tax cuts ($45,000,000,000 in the House resolution and $70,000,000,000 in the Senate resolution), which would protect these tax cuts from filibuster and non-germane amendments and would allow them to pass the Senate with a simple 51-vote majority. This would not be the first time that reconciliation, a process designed for deficit reduction, would be exploited to pass unpaid-for tax cuts.

The cornerstone of these tax cuts is the extension of the 2003 dividends and capital gains tax cuts, which are set to expire in 2008. At a cost of $23,000,000,000 between 2006 and 2010, nearly one-half of these tax cuts would go to millionaires and nearly three-quarters would go to the top 3.1 percent of households making more than $200,000 annually. Both resolutions also include a one-year Alternative Minimum Tax fix but exclude the virtually guaranteed costs of a similar fix in subsequent years.

Reforms in Illinois?
While Blagojevich cowers at the word “taxes”, finances have hit the fan all across the state, especially in public education and public transit. This has inspired Senators James T. Meeks, Miguel del Valle, and Kwame Raoul and Representatives David E. Miller, John A. Fritchey, and William Davis to introduce SB/HB 750. This bill is primarily intended to provide property tax relief and to provide adequate funding for education on a sustainable basis. It would increase the state income tax rate to 5% and the corporate income tax rate to 8% while providing deductions so that the bottom 60% of individual income tax payers would pay no additional income tax and sometimes less. It would expand the sales tax to cover some services not presently covered, and close some corporate tax loopholes. All this would generate an estimated $7,200,000,000. Of that gross, $2,400,000,000 would be used for property tax relief. Another $1,500,000,000 would be used to eliminate the State’s ongoing budget deficit that the Governor has been filling by juggling books. However, the bill’s primary focus is education. SB/HB 750 would increase the state’s “Foundation level” per pupil support from $4964 to $6092 and is some additional money available for higher education. It also reforms the way education expenses are appropriated so that the State’s habitual under funding of mandated services would cease.

SB/HB 750 has inspired considerable grassroots support. SEIU in particular has made it a legislative priority.

Illinois’ fiscal condition is so bad that the Republicans have actually come up with a counter offer, SB 1484, introduced by Senator Rick Winkel, Jr. The bill is a stripped down version of SB/HB 750, sans tax relief for lower income taxpayers and without reforms in how education funds are appropriated, among other things.

This has not stopped the libertarian right from foaming at the mouth at the prospect of either bill. To these ideologues, there is no funding crisis in public education that increased “accountability” and “efficiency” wouldn’t solve. They make such a noise, like a pack of nasty little dogs, that one can almost forgive Blagojevich his shyness.