Saturday, January 29, 2011

TIME GOES BY | The State of the Union, Jobs and Social Security

by Ronni Bennett

President Barack Obama covered a lot of territory in his State of the Union address to Congress on Tuesday (transcript here). What was conspicuously missing, however, is the number one concern of the majority of Americans – jobs. The only reference he made - that the government would continue to fund infrastructure repair projects - contained no specifics.

Robert Reich, the former secretary of labor under President Clinton, had the most cogent response I read to this gaping hole in the speech:
”[T]he President’s failure to address the decoupling of American corporate profits from American jobs, and explain specifically what he’ll do to get jobs back...risks making his grand plans for reviving the nation’s 'competitiveness' seem somewhat beside the point...

“What the President should have done is talk frankly about the central structural flaw in the U.S. economy – the dwindling share of its gains going to the vast middle class, and the almost unprecedented concentration of income and wealth at top – in sharp contrast to the Eisenhower and Kennedy years.

“Importantly, it would give him a convincing counter-narrative to the Republican anti-government one. Government exists to protect and advance the interests of average working families. Without it, Americans have to rely mainly on big and increasingly global corporations, whose only interest is making money wherever it can be made.”
A large part of that "making money wherever" is making money from money instead of goods and services - Wall Street stock and bond fees, dividends, interest, etc. Taxes are much lower on those transactions than on income and there is no FICA tax on corporate revenue. Which brings me to this:

On the morning after the speech, the non-partisan Congressional Budget Office announced that without legislative changes, Social Security will post a $45 billion shortfall for fiscal year 2011, meaning it will pay out that much more than it takes in. Shortfalls, said the CBO, are expected to continue until 2021.

Oh, my. Would that two percent payroll tax holiday enacted by Congress with the extension of the Bush tax cuts for the wealthy have anything to do with this shortfall? After all, it does amount to 15 percent of Social Security revenue - money that is lost forever.

And it's going to be a pitched battle with the Republicans later this year not to extend the payroll holiday when it expires because it is the first successful inroad made against the program since it was created in 1935.

I think we can take a bit of credit, along with many progressives throughout the land, thanks to our letters to the White House and petitions, that the president did not continue the attack on Social Security Tuesday by endorsing deeper cuts suggested by the cat food commission and other Republicans.

Here is what he did say, buried in a section about the deficit:
“To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.

“And if we truly care about our deficit, we simply can’t afford a permanent extension of the tax cuts for the wealthiest two percent of Americans. Before we take money away from our schools or scholarships away from our students, we should ask millionaires to give up their tax break. It’s not a matter of punishing their success. It’s about promoting America’s success.”
Notably missing is a reference to not raising the age at which people are eligible for full Social Security benefits. I'm a little concerned, too, with that adjective, “slashing,” in the first paragraph which could imply cutting at a rate that is not viewed as extreme.

And, there was no mention of the cost-of-living (COLA) formula which some Republicans want to change that would result in smaller increases for current and future Social Security beneficiaries.

It is probably a poor idea to parse as minutely as this what the president said about Social Security (or anything else). Life moves on, politicians renege on promises every day and most people are already forgetting the SOTU now, three days later.

What is so disappointing about the president ignoring the subject of jobs on Tuesday is that full employment increases all taxes reducing or eliminating the need to cut funding for schools, fire, police and other public services, and keeping Social Security strong.

The two biggest moves that will revive the middle class and get our nation back on a sound economic footing are jobs and a tax structure in which the wealthy pay as big a share of their income as everyone else. For Social Security, removing the salary cap is a start.

Our fight to preserve and strengthen Social Security is not done just because the president sounded support in one speech. He already signed legislation that cut Social Security revenue by 15 percent.

TIME GOES BY | The State of the Union, Jobs and Social Security
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