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SCIENCE-FOR-THE-PEOPLE  November 2012

SCIENCE-FOR-THE-PEOPLE November 2012

Subject:

Fwd: [toeslist] FDR's Second Bill of Rights vs Deficit Terrorism a'la Peter Peterson et al

From:

Tadit Anderson <[log in to unmask]>

Reply-To:

Science for the People Discussion List <[log in to unmask]>

Date:

Tue, 27 Nov 2012 18:01:16 -0500

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (103 lines)

If you don't understand the economics of this letter/article, ask me, and
I will explain any detail until you do. Please spread it around as you
can. Tadit



Let’s Defend Social Security and Other Entitlements With the Second Bill  
Of Rights
Posted on November 27, 2012

url:
http://neweconomicperspectives.org/2012/11/lets-defend-social-security-and-other-entitlements-with-the-second-bill-of-rights.html#comment-72015

By Joe Firestone

The favorite defense of Social Security by progressives harkens back to
Franklin Roosevelt who famously said:

”I guess you’re right on the economics. They are politics all the way
through. We put those pay roll contributions there so as to give the
contributors a legal, moral, and political right to collect their pensions
and their unemployment benefits. With those taxes in there, no damn
politician can ever scrap my social security program. Those taxes aren’t a
matter of economics, they’re straight politics.”

So, today progressives echo this even though the SS Tax is a regressive
tax, and anything but progressive in its impact on the economy. With the
development of the MMT approach to economics, and its emphasis on the
government’s ability to spend without a solvency constraint on the Federal
Budget, it’s now clear that SS doesn’t need to be funded by a regressive
payroll tax; but can be funded out of general revenues and also guaranteed
by a provision in law providing for automatic annual funding. Some
government “trust funds” are funded this way, including parts of Social
Security and Medicare, so there’s no economic reason why the primary
funding for both programs couldn’t be provided for these programs.

But a friend, in an echo of FDR’s view, recently said to me in
correspondence:

“It seems to me that it is a lot easier to make the case that people are
entitled to a government benefit if they have been paying a dedicated tax
for 45 years that is described as funding that benefit.”

And I replied in the following way.

It is easier; but it’s still not easy as we now see; and, on the downside,
to defend it that way we have to:

1) support the view that people are entitled to government payments only
when they pay for them;

2) then defend against the attack that the entitlement payout greatly
exceeds the amount paid in, and has no relationship to what is paid in;

3) accept the idea that SS and Medicare must be self-funding like any
business, while also ensuring that they are “solvent” as much as 50 years
out unlike any business (that is people are upset now because questionable
long term fiscal projections show that full coverage of SS spending can
only be projected out for 21 years to 2033, so they are calling for fixes
to extend that projected “full solvency” period out to 2075 or 2080);

4) always have a very hard time justifying any increases to entitlements
for current recipients, because those oppose entitlements always cry out
that the Government is running out of money, and would have to raise SS
taxes to pay for it;

5) never bring into the argument the fact that things are very different
now than they were when SS was first passed, because we now have a fiat
money system which makes many things possible now that weren’t possible
back then, because THERE IS NO SOLVENCY PROBLEM; and

6) ignore the great argument that our entitlements are the embodiment of
an economic bill of rights that ought to apply to all Americans which, of
course was outlined by the same FDR in 1944.

In my view, the protestant ethic defense that we’re entitled to SS,
because we worked for it isn’t worth the candle. It makes things easier in
the short-run, but it reinforces a skin-flintism which is wholly
inappropriate to our modern economy, with its monetarily sovereign fiat
currency system, and is largely responsible for the rapidly increasing
inequality we’ve been experiencing over the years,   which has now reached
a ridiculous and anti-democratic pass.

We can’t look at SS and our other entitlements in isolation. We have to
fight and win the battle for FDR’s economic bill of rights, and for an
expansion of all the entitlements in the American social safety net; now
the stingiest, most inadequate safety net among modern industrial nations!

FDR’s strategy for justifying SS was great for the 1930s, when we were
still on the gold standard. But nearly 80 years later it’s time to move on
to his economic bill of rights as our justification for entitlements, and
stop reinforcing the idea that it’s only an entitlement if one pays for
it. It’s time to stand on the over-riding moral argument! It’s time to say
that when a nation like the United States can afford to implement these
rights, as the United States has been able to do at least since 1971, they
then are human rights that must be implemented as part of the public
purpose. Let us have a Green New Deal with a much stronger social safety
net including greatly increased payments for SS and Medicare for All, and
a Federal Job Guarantee emphasizing Green Jobs!

Let’s fight for that and implement it economically using Modern Money
Theory (MMT)-based fiscal policies!

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