Kiplinger’s is supposed to know what they are writing about.
Here is an article that appeared in today’s Chicago Tribune. You decide whether Kiplinger’s Managing Editor knows what she is writing about.
Biden’s plan to strengthen Social Security
By Catherine Siskos, managing editor at Kiplinger’s Retirement Report
In 2021, Social Security is expected to begin drawing down its trust fund to cover benefits instead of tapping only the interest.
Right away, we are greeted with the Big Lie that federal taxes fund federal spending.
While, state and local government taxes fund state and local government spending, federal taxes do not fund federal spending. That is a major difference most people do not understand.
Because the U.S. federal government uniquely is Monetarily Sovereign, it has the unlimited ability to create its own sovereign currency. The U.S. government never can run short of U.S. dollars.
Even if payroll tax collections fell to $0, the federal government could continue to fund Social Security, forever.
Why can the U.S. government never run short of dollars? Because it pays creditors with instructions, not with dollars.
It never can run short of instructions, which it creates from thin air, simply by voting.
To pay for its spending, the federal government creates new dollars, ad hoc, by creating and sending instructions to each creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.
The instructions are in the form of a paper check or more commonly a wire, both of which begin with the instructions, “Pay to the order of __________.”
When the creditor’s bank does as instructed (by pressing a computer key), new dollars instantly are created and are added to the M1 money supply. It is the bank that does the actual money creation.
The creditor’s bank then balances its books by getting approval from (i.e. “clearing” the government’s instructions through) the Federal Reserve Bank, and the money-creation cycle is complete.
What then becomes of the tax dollars sent to the U.S. Treasury? They are destroyed. They cease to exist in any money supply measure.
That is why no one on earth can answer the question, “How much money does the U.S. federal government have?”
Depending on your perspective, the answer either is “$0” or “infinite.”
Personally, I prefer “infinite,” because the Treasury does carry a comparatively small account with the Federal Reserve Bank.
And by the way, remember that bolded phrase above, “instead of tapping only the interest?” Guess where the interest comes from.
It comes from the fake “trust fund’s” investment in Treasury Securities.
The U.S. Treasury creates dollars from thin air to pay interest to a non-existent U.S. federal “trust fund.” The U.S. Treasury instead simply could create dollars to fund Social Security, and do away with the bookkeeping mumbo-jumbo.
Unless Congress acts, benefits will be cut at least 20% when the trust fund runs out of money in 2033 — two years sooner than previously projected, according to the Center for Retirement Research at Boston College.
At that point, the program will rely entirely on payroll taxes, which currently aren’t enough to fully fund Social Security.
Unless Congress acts, your benefits will be cut, but not because the fake “trust fund” runs out of money. Benefits will be cut because Congress created the fake “trust fund” as a device to limit your benefits.
Medicare Part A has a similar fake “trust fund,” which also is running short of money, while Medicare Part B has no trust fund that can run short of money.
Why? Because by law, the federal government will add dollars to this mythical “trust fund” as needed. Thus, in reality, the federal government pays for Medicare Part B, without the flim-flam tax pretense of Part A.
Hmmm . . . Does that give you any ideas? How about using the Medicare Part B system for Medicare Part A and for Social Security?
That way, we never would have to hear false warnings about running short of money, and we could dispense with deceptive articles like this one from Kiplingers.
President Joe Biden wants to expand Social Security in two ways. He would raise benefits for the people most in need: low-wage workers, surviving spouses of dual-earner couples, caregivers, government workers and those who have been collecting Social Security the longest. (The rationale for that last group? Seniors have higher medical and long-term care expenses later in life.)
Everyone else’s benefits would remain the same, but their Social Security cost-of-living adjustments would increase because Biden supports switching to the Consumer Price Index for the Elderly.
The CPI-E is considered a better measure of inflation for older adults because it weights senior citizens’ biggest expenses, such as health care and housing, more heavily.
The Social Security Administration estimates that switching to the CPI-E from the current wage earners index will raise annual COLAs 0.2 percentage points, on average.
To pay for these changes, Biden wants to increase Social Security payroll taxes on people earning more than $400,000 a year, a short-term fix that would also shore up the program for only another five years, Melissa M. Favreault predicts in an analysis for the Urban-Brookings Tax Policy Center.
She is a senior fellow in the Income and Benefits Policy Center at the Urban Institute.
Does the “senior fellow in the Tax Policy Center at the Urban-Brookings Institute really believe that Social Security taxes fund Social Security benefits?
Or is she merely parroting the Big Lie for political reasons?
Proposed legislation from Rep. John Larson, a Democrat, would secure the program’s funding for 75 years.
Along with the increase on those earning more than $400,000 that Biden has proposed, the bill calls for raising the payroll tax for everyone, with employees and employers each contributing an additional 1.2%, or roughly 50 cents more per week, estimates Social Security in an independent analysis of the bill. The increase would be phased in between now and 2043.
In a divided Congress, Democrats and Republicans could find common ground with smaller bills, such as one to reinflate Social Security benefits for people born in 1960 or 1961, says Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.
Their benefits will be cut unintentionally by a formula glitch and the 2020 recession.
Isn’t it pitiful that even the president and CEO of the National Committee to Preserve Social Security and Medicare is, or pretends to be, so clueless about how federal finances really are handled?
Do you wonder why there has to be a “National Committee to Preserve Social Security and Medicare” when there is no such committee to “preserve” the military, or to “preserve” the Congress, or to “preserve” the Supreme Court?
They all are federal agencies, but somehow, they don’t need fake “trust funds” or financial “preservation.”
The federal government just pays the bills, as it does for every other agency of the federal government.
Do you know why Social Security and Medicare (Part A only) have fake trust funds?
The reason is “Gap Psychology.” You can Google it or click the link for a description, but the short meaning is the human desire to widen the income/wealth/power Gaps below you on any economic or social measure, and to narrow the Gaps above you.
If there were no Gaps, no one would be rich or powerful. We all would be the same. And the wider the Gaps, the richer and more powerful some people would be.
Widening the Gaps makes the rich richer and the powerful more powerful. A good way to widen the Gaps is to cut benefits for the non-rich.
Rodger Malcolm Mitchell
Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:
Ten Steps To Prosperity:
- Eliminate FICA
- Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
- Social Security for all or a reverse income tax
- Free education (including post-grad) for everyone
- Salary for attending school
- Eliminate federal taxes on business
- Increase the standard income tax deduction, annually.
- Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
- Federal ownership of all banks
- Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.
2 thoughts on “The fake fight over your Social Security benefits”
Yes, widening the Gap makes the rich richer and the powerful more powerful. But this is at the expense of everyone else. I don’t forsee how civil unrest will ever go away. It can only get worse. Despite all the economics mumbo jumbo, the answer is in convincing the Rich to somehow realize they’ll have to “let go” or the system crumbles. The transition can be made peacefully by
farsightedness and wisdom.
thats the thing – industrial military complex.. (see Samantha Power’s Desert Island Discs contribution (listen carefully).
Best to offer something bit by bit. As Rodger has said – they could haver accepted the lower amount anmd then voted thru the larger later. Why argue?
same with the proposed 20-year money at 1.0 % mark-up and 0.5% slice to public purse helping to stabilise interest rates and bond prices. Do we want them stable or reflated?