Mitchell’s laws: The more budgets are cut and taxes increased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
You’re over 50, so you joined AARP, partly to get discounts on hotel rooms, rental cars and other good stuff, and partly because you believe AARP represents your interests with Congress and the President. Well the discounts are real, but AARP does not, repeat NOT, represent your interests.
Quite the contrary, it represents its own interests in selling you insurance, and it represents the interests of those who wish to take dollars out of your pocket. Here is what AARP said in a recent post titled, The Future of Social Security: 12 Proposals You Should Know About
AARP: With more people living longer, Social Security faces increasing financial challenges. Estimates indicate the program will be able to pay full benefits for the next 20 years, but only 75 percent after that.
That comment is based on the gigantic lie that FICA pays for Social Security. When the U.S. government was monetarily non-sovereign, that was somewhat true. But on August 15, 1971, the U.S. became Monetarily Sovereign. No longer did taxes – any taxes – pay for government spending.
If FICA fell to $0 and Social Security benefits tripled, the federal government still could pay these benefits, not just for 20 years, but forever. That’s right. FICA could be eliminated, and that would not affect the federal governments ability to pay full Social Security benefits, by even one cent.
AARP never tells you that. No, AARP continues promoting the myth that Social Security will run short of dollars. Total nonsense. The federal government, being Monetarily Sovereign, creates dollars at will, merely by increasing the numbers in bank accounts.
So the question is: Are AARP leaders simply ignorant, or are they part of the big money effort to increase the income gap between the upper 1% and the lower 99%? You decide. Ignorance or conspiracy?
Anyway, while you’re deciding, here are the 12 proposed changes in Social Security listed by AARP, all of which will reduce benefits and/or increase taxes. In fairness, AARP does provide pros and cons for each proposal. But all the pros are the same. They save money for the government and take money from you and me. So, I’ll just mention the cons:
Proposed Changes in Social Security
1. Raise the Full Retirement Age ( Raising the full retirement age for everyone simply because well-off Americans are living longer is a stealth benefit cut that is unnecessary and unjust.)
2. Begin Longevity Indexing (Low-earning workers and other disadvantaged groups have seen little or no gains in longevity. Cutting benefits for everyone just because well-off Americans are living longer would be profoundly unjust. Moreover, this change would violate the purpose of Social Security, which is to ensure basic economic security.)
3. Recalculate the COLA (inflation) (The current COLA doesn’t keep up with the inflation that seniors face because they spend more than other Americans for out-of-pocket health care costs and those costs rise faster than average inflation. The chained consumer price index would make matters worse by reducing the COLA.)
4. Increase the Payroll Tax Cap ( This bad idea would cause a hefty tax increase for middle-income taxpayers while not affecting the rich. It would especially hurt the self-employed and certain smaller business owners.)
5. Eliminate the Payroll Tax Cap (If millionaires pay Social Security taxes on all of their salary income, their maximum annual benefit payment could reach over $150,000 a year. Social Security was not intended to provide such large benefits.)
6. Reduce Benefits for Higher Earners (These proposals would actually cut benefits for middle-class workers making as little as $35,000 a year. They are not “high earners.” Benefits are already modest.)
7. Increase the Payroll Tax Rate (Economists have known for decades that if the cost of employees gets too great, employers will start to replace them with machines)
8. Tax All Salary Reduction Plans (This would increase the cost of health care and other employee benefits because the tax savings help to offset the employer’s cost of operating the plans.)
9. Cover All Newly Hired State and Local Government Workers (Making newly hired workers join Social Security would increase revenue now, but eventually the program would have to pay these workers benefits. That would make Social Security’s financial problems even worse.)
10. Benefit Improvements (Although Social Security benefits for some groups are too low, they should only be improved as part of an overall reform. Otherwise, the added costs would only exhaust the trust fund faster.)
11. Increase Number of Years Used to Calculate Initial Benefits (This proposal would reduce benefits the most for people who need them most: women and lower-income, less-educated and minority retirees. It would reduce benefits not only for retired workers, but also for their dependents and survivors.)
12. Begin Means-Testing Social Security Benefits (Means testing would change Social Security from an earned right to welfare. It would penalize you if you saved or earned a pension because that income would reduce your Social Security. And it would cost more to administer. The government would have to routinely check your income and assets in order to adjust your benefit. )
Even some of the cons listed by AARP are based on the big lie, that FICA pays for Social Security benefits, and the federal government cannot afford to pay. The entire article is entwined with the same false idea.
Bottom line: Social Security benefits are too low and FICA should be eliminated. Period.
Meanwhile AARP continues to spread the big lie rather than spreading the truth. They tell you the that Social Security (and Medicare, for that matter) will run out of money unless taxes are increased and/or benefits decreased. That Simply Is Not So. It’s the biggest lie in all of economics.
Of course, you might try writing to AARP, and explaining the facts. But if that doesn’t work, go ahead and join AARP for the discounts. But don’t be fooled. They are no friend of yours.
And whatever you do, don’t buy their insurance. Selling you insurance is what they they were formed to do and what they really care about. You don’t want to reward them for helping the government take money out of your pocket.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports