Secretary of Treasury O'Neill Makes Push to Raid Social Security Fund for Own Gaingreenspun.com : LUSENET : Unk's Wild Wild West : One Thread |
Secretary of Treasury O'Neill Makes Push to Raid Social Security Fund for Own Gain Sunday July 1 , 2001 Featured Views
Published on Friday, June 29, 2001 Pocketing the Trust Fund
by Dean BakerLast week Treasury Secretary Paul O’Neill made the news by publicly announcing that the Social Security trust fund did not have any assets. This statement was newsworthy because the Social Security trustees report shows that the fund will have close to $1.2 trillion in government bonds at the end of the year. $1.2 trillion of government bonds would qualify as assets in most people’s books. Mr. O’Neill’s statement was especially strange since, as Treasury Secretary, he was one of the trustees who signed this year’s report showing the $1.2 trillion in bonds as assets.
Mr. O’Neill is claiming that the bonds held by the trust fund are not real, and therefore don’t need to be paid off like other bonds. It’s clear who would lose in this story – the 150 million workers who pay Social Security taxes every year. The trust fund has accumulated its bonds from the Social Security taxes paid by these workers. When the fund collected more taxes than it needed to pay benefits, it bought government bonds.
Now O’Neill is telling us that those bonds are fake, effectively taking $8,000 from every worker contributing to Social Security. If O’Neill has his way, the money that we paid into Social Security to support our retirement will never be paid back by the government.
If the losers from Mr. O’Neill’s plan are obvious, who are the winners? Fortunately, we don’t have to look far. It turns out that the winners are the exact same people who got the most money out of the President’s tax cuts – including people like Mr. O’Neill. Defaulting on the trust fund’s bonds will place hundreds of billions of dollars into these folks’ pockets.
The way it works is fairly simple. While Social Security and Medicare are financed by designated taxes that come out of workers’ paychecks, the rest of the government is financed primarily by the corporate and personal income taxes. As President Bush repeatedly told us, when he wanted to explain why the rich got most of his tax cut – rich people pay most of these taxes.
This means that if we don’t make the government pay off the bonds held by Social Security, we are effectively giving another tax break to these same rich people. We can even get a rough idea of how much of a break we’re giving them. The $1.2 trillion held by the trust fund is approximately equal to how much the government is currently collecting each year in non Social Security and Medicare taxes. While the bonds would, in principle, be paid off over several decades, if the government just defaults on them, it is effectively giving people a tax break equal to their current income tax bill.
Last year Mr. O’Neill had an income of over $50 million. If he were to continue to do so well in subsequent years, his share of the windfall could easily exceed $10 million. Some other Bush Administration officials would also come out quite well from a default on the trust fund. For example, based on his 2000 returns, Vice-President Cheney would get back another $14,300,000 in taxes.
Some of the members of the President’s Social Security Commission, which apparently also advocates default on the government’s debt to Social Security, might also be able put a few dollars in their pocket if they have their way. Richard Parsons, the Commission’s co-chair and a top executive at AOL Time-Warner, would surely be able to add a few hundred thousand dollars to his bank account if the government defaulted on its debt to Social Security. Even former Senator Daniel Patrick Moynihan, the other co-chair, would be able to pocket a lot more than the average Social Security check if the government defaulted on the trust fund.
In short, most of the people who advocate defaulting on the Social Security trust fund stand to get a substantial tax break if the government actually defaults on these bonds. Certainly they have other motivations, but it's comforting to know that someone would benefit from defaulting on the government's obligation to 150 million workers.
Dean Baker is Co-Director of the Center for Economic and Policy Research in Washington, DC. His email address is d_baker@cepr.net.
Ummm, I didn't read the "I Love" instructions until just now, so I will repost htis.
I love everyone, even my those who feel themselves my enemy.
-- Cherri (jessam6@home.com), July 02, 2001
Cherri,He would not be able to raid your social security funds, (your words) if you did not send that money to the Federal Government in the first place! Would it not be better if everyone just invested their own funds - and does not mean it would have to be 'risky' stocks, but rather Treasuries, or Money Market funds, or municipal bonds, whatever.
-- libs are idiots (moreinterpretation@ugly.com), July 02, 2001.
Goddamn it, that's heresy Libs! Think about what your saying! What about the street repairs!BTW, Porter, have you found that mandatory statute yet? I haven't either. And I do love you though. You're like a used car salesman to me.....
-- KoFE (your@town.USSA), July 02, 2001.
He would not be able to raid your social security funds, (your words) if you did not send that money to the Federal Government in the first place!Just curious, LAI, but does this mean that you join Kofe in his battle to declare ALL taxes illegal or something?
-- Anita (Anita_S3@hotmail.com), July 02, 2001.
"Just curious, LAI, but does this mean that you join Kofe in his battle to declare ALL taxes illegal or something?"Nah, that would be pushing things too far, but I would replace what we've got with a national sales tax - less cheating, get's rid of useless tax lawyers and accountants, the rich pay for what they buy and the poor get exemptions for life's necessities, and the power of the politicos to manipulate the tax code with breaks for their donors is seriously scaled back. Besides it must be a good idea since both the dems and republicans hate it.
-- libs are idiots (moreinterpretation@ugly.com), July 02, 2001.
LAI:That's a fair response regarding INCOME tax, but this thread is addressing the PAYROLL taxes that many of us have paid for umpteen years now. I seem to remember you being in favor of the tax cut [so you could get the money you paid in back]. Are you now suggesting that those of us who paid FICA and SS taxes all these years [I might add with the expectation of getting that money back someday] should start anew?
Just to make things fair, [and understanding that SOME old folks receive far more in benefits than they put in], would you be opposed to folks receiving ONLY the equivalent of what they put in?
-- Anita (Anita_S3@hotmail.com), July 02, 2001.
Anita, I thought you had been paying attention, and that was the reason you hadn't said much. I have never said to ban all taxes.
-- KoFE (your@town.USSA), July 02, 2001.
This fat whore has not worked a day in her life. What " social security funds" has this slut rang up? Get real ya dont get SS for being on welfate.And yes.. Cherri I was sent here by someone who knows you and you are on welfare.
-- You gotta be kidding (come@on.com), July 02, 2001.
When you bring up the point of someone stating that taxes are illegal, they are generally referring to income taxes, hence my response. In terms of receiving ONLY what people put into FICA as a return - I think it is soemone based on that concept now, although there are some fairly convoluted formulas based on life expectancy, etc. My issue is with paying the FICA into a pool into which the Congress or administration can "dip". It would be preferable to mandate the set-aside out of people's income into funds or investments meeting a set of standards for acceptability (based primarily on survivability).
-- libs are idiots (moreinterpretation@ugly.com), July 03, 2001.
Sorry, KoFE. I added the or something as a sortof disclaimer on your opinion."My issue is with paying the FICA into a pool into which the Congress or administration can "dip". It would be preferable to mandate the set-aside out of people's income into funds or investments meeting a set of standards for acceptability (based primarily on survivability)."
I think most folks would agree that "dipping" is undesirable. SS, since its conception, has been a game played by moving money. The money I put in, you put in, and KoFE put in was never SAVED. It was spent on previous generations who in turn paid to return monies to the generations before them.
It's been quite a while now that the IRA has been popular. I have one, and I'm sure that MANY Americans have them. Certainly, an IRA is one method of investing in the future, and it's up to us to decide how we choose to invest. But, what about the money we already put in to SS? Simply defaulting on the trust fund would result in a situation wherein WE paid to return monies to those who paid before us, yet no one will pay to return monies to us. How do we go from one money game to another without an entire generation [and a portion of a second] being ripped off? You suggested to Cherri that her money was given willingly. Do you believe that?
-- Anita (Anita_S3@hotmail.com), July 03, 2001.