Month: March 2013

Get ready to push back

by digby

I don’t often ask people to sign petitions, but this one’s important.

Momentum is building! Close to 250,000 people have signed a petition in support of a bill by our colleague, Rep. John Conyers, called the “Cancel the Sequester Act of 2013.” You can guess what it does. 

This Thursday we are going to join with signers in Washington, DC before they go and deliver the petition directly to Speaker John Boehner. 

We need to stop this sequester to remove the pressure it creates to strike a “Grand Betrayal” that would cut Social Security, Medicare and Medicaid benefits. 

Help us get to 300,000 by Thursday: sign the petition to stop this false choice between cuts and more cuts. 

The sequester is just a series of cruel and irrational budget cuts that will eliminate over 750,000 jobs this year—including air traffic controllers, food safety inspectors, police officers and teachers. But it can be written out of existence as easily as it was created. All it takes is one sentence: 

“Section 251 A of the Balanced Budget and Emergency Deficit Control Act of 1985 is repealed.” 

That’s it. That’s all it takes. And that’s what the Cancel the Sequester Act of 2013 says. 

Help us get to 300,000 by Thursday: sign the petition, and be a part of this growing movement to cancel the sequester. 

That’s not all—Social Security Works will be livestreaming the petition delivery, so the whole country can watch the Speaker’s office react to the power of hundreds of thousands of people speaking with one voice. 

Thank you for lending your voices, 

Raul Grijalva and Keith Ellison
Co-Chairs, Congressional Progressive Caucus

If you read what Bernie Sanders told Greg Sargent, you’ll see that it’s vitally important for every person to at least do this if we want to preserve Social Security and Medicare:

In an interview with me today, Senator Bernie Sanders said that progressive Democratic Senators should be prepared to band together to block any “grand bargain” that includes cuts to entitlement benefits — and even hinted that he and others might filibuster such a deal, if necessary.

As talk increases of White House outreach to Republicans in search of a big deal to replace the sequester, a question has presented itself. Is there any other realistic endgame in this battle, aside from either continued sequestration or a deal to avert it, in which Republicans agree to new revenues in exchange for entitlement cuts, including Chained CPI for Social Security and Medicare means testing? Republicans will never agree to repeal the sequester. So realistically, isn’t the choice between a deal or sequestration limbo, with future budgets configured around lower spending levels, damaging the economy?

Sanders insists to me that this framing — which I had adopted — is the wrong way to look at this fight. Instead, he says Dems must build a coalition to leverage public opinion to force Republicans to accept a resolution that combines judicious spending cuts with new revenues from the rich and corporations — while preserving entitlement benefits.

“It’s a question of making Republicans an offer they can’t refuse,” Sanders tells me. “Their position is no more revenues. You and I know that is not the position of the American people. One in four corporations doesn’t pay any taxes. What Democrats and progressives should say is, `Sorry, we’re not going to balance the budget on the backs of the vulnerable.’” Sanders described the idea of cutting education, Social Security, Medicare and veterans’ benefits as an “obscenity.”

But Republicans don’t care about national public opinion on these matters, I pointed out to Sanders. What if they just say, “we’re sticking with the sequester”? I pressed Sanders on what should happen then. He reiterated that Democrats must not get drawn into this framing, that they should build a coalition — of seniors’ groups, veterans’ groups, progressive groups, etc. — to force the Republicans’ hand, and that they should “go around the country talking about this issue.”

“The alternative is not to go into a back room and negotiate with Boehner; it’s to make our case to the American people,” Sanders said. “I don’t believe there’s a red state in America where people believe you should cut Medicare, Social Security and veterans’ benefits rather than doing away with corporate tax loopholes.”

I asked Sanders if he would filibuster any grand bargain that cuts entitlement benefits. “It’s more than just the filibuster,” he said. “That’s a one day tactic. This is about rallying the American people and winning.” He predicted liberals in the Senate (Jeff Merkley, Sherrod Brown, and Elizabeth Warren come to mind) would likely band together to adopt a range of tactics to block such a grand bargain. “Filibustering may be part of it,” he said.

There’s an inside game and an outside game and you have to be part of the outside game. And signing petitions isn’t the only thing you may be required to do:

It’s a real shame that the White House has been willing to put these programs on the table in pursuit of temporary deficit reduction despite the fact that they are vital necessities for millions of Americans. But it is what it is and Bernie Sanders is right.

Sign that petition at least. Call your congressional rep and let them know how you feel about it — especially if your rep is a Republican. They are nuts, but they’re the first line of defense against this thing. Maybe, in the meantime, we can stiffen the Democrats’ resolve. After all, they have to run for office again — the president doesn’t.

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Drone manufacturers are makers not takers

by digby

Well isn’t this special?

Commercial drones, which are expected to be approved for use in the US in 2015, will create 100,000 jobs in 10 years, adding $13.7 billion to the American economy, according to a new study (pdf).

The study was published by the Association for Unmanned Vehicle Systems International, a trade association with an interest in promoting the benefits of unmanned aircraft—the industry does not like the word “drone”—but its assumptions offer an interesting assessment of the sector’s opportunities.

Howie did some interesting digging last week on the Senators who c stepped up to join Rand Paul’s filibuster and what do you know, with the exception of Paul, they’re all taking big bucks from the industry that makes the drones:

The biggest drone makers are General Atomic Aeronautical, Northrop Grumman, BAE Systems, Honeywell International, Lockheed Martin, and Raytheon. They’ve been handing out the checks across the aisle big time and almost all of the filibusterers other than Rand took exceedingly large amounts of money from these drone makers. Just a quick glance coughed up these big donations to some of today’s filibsterers last year. Kelly Ayotte was certainly the hypocrite of the day, but she didn’t want for company:

• General Atomic- Saxby Chambliss (R-GA), Kelly Ayotte (R-NH), Miss McConnell (R-KY)
• Northrop Grumman- Kelly Ayotte (R-NH), Saxby Chambliss (R-GA), Jerry Moran (R-KS), Marco Rubio (R-FL), Pat Toomey (R-PA). Miss McConnell (R-KY)
• BAE Systems- Kelly Ayotte (R-NH), Marco Rubio (R-FL)
• Honeywell International- Kelly Ayotte (R-NH), Ted Cruz (R-TX), Marco Rubio (R-FL), Pat Toomey (R-PA), Ron Wyden (D-OR), Miss McConnell (R-KY)
• Lockheed Martin- Kelly Ayotte (R-NH) , Saxby Chambliss (R-GA), Ted Cruz (R-TX), Miss McConnell (R-KY)
• Raytheon- Kelly Ayotte (R-NH), Saxby Chambliss (R-GA), Ted Cruz (R-TX), Mike Lee (R-UT), Jerry Moran (R-KS), Pat Toomey (R-PA), Miss McConnell (R-KY)

I suppose we could all assume they are men and women of integrity who stood up to some of their largest donors, but we don’t really believe that do we?

By the way, the drone manufacturers don’t want them called drones. They want them called UAV’s (unmanned aerial vehicles)

There’s a reason this trade association is releasing a jobs forecast that includes a state-by-state breakdown: The Obama administration’s use of military drones has become a political touchpoint in the on-going debate about privacy, America’s military entanglements, and just how far the executive branch can bend protections on civil liberties. But UAV companies and their allies desperately need government help to get drones into the skies, financed and insured, and that won’t happen if they are the target of public ire.

People are nervous about this technology because it presents a threat to privacy and safety at the hands of a government agency (or private corporation for that matter) that decides not to honor normal constitutional processes. And that’s because of what’s happening with their use by the military.

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Is it time to get rid of the automatic filibuster yet?

by David Atkins

Shocking. Positively shocking.

On Tuesday, Democrats will use what would normally be a straightforward exercise of the Senate’s advise and consent powers to begin a political campaign aimed at preserving one of the party’s signature Obama-era accomplishments.

At 10:00 a.m., in the Dirksen Senate office building, the Senate Banking Committee will convene a hearing to advance the nomination of Richard Cordray to head the Consumer Financial Protection Bureau.

If you recognize Cordray as the current director of the CFPB, you’ll wonder why the Senate has anything left to say about his role as one of the top cops on Wall Street. But its involvement is a direct consequence of a GOP effort to combine the Senate’s filibuster rules with its advise-and-consent powers to gut the agency. And unless the Democrats can force an end to that effort, the CFPB will lose its director — and many of its existing powers at the end of the year.

Color me unsympathetic. Senate Democrats knew what they had to do in order to put a stop to this sort of gamesmanship. Most of them were on board with doing it. But there weren’t enough of them.

It’s true that Democrats may lose in the Senate in 2014. That’s all the likelier if the country is dysfunctional. But it’s also true that President Obama holds the veto pen in a potential Congress wholly controlled by Republicans–and the Senate should remain or be back in Democratic hands in 2016 The only reason for good Democrats to avoid fixing the filibuster is if they don’t trust the President to hold the line against a rabidly austerity-mad Republican Congress.

Oh….wait.

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QOTD: Bob Woodward

Howard Kurtz:

I was working at The Washington Post at the time, and I took it upon myself to examine the paper’s performance in the run-up to war. It was not a pretty picture. …

Len Downie, then the executive editor, told me that in retrospect, “we were so focused on trying to figure out what the administration was doing that we were not giving the same play to people who said it wouldn’t be a good idea to go to war and were questioning the administration’s rationale. Not enough of those stories were put on the front page. That was a mistake on my part.”

Bob Woodward told me that “we did our job, but we didn’t do enough, and I blame myself mightily for not pushing harder.” There was a “groupthink” among intelligence officials, he said, and “I think I was part of the groupthink.”

Tom Ricks, who was the paper’s top military reporter, turned in a piece in the fall of 2002 that he titled “Doubts,” saying that senior Pentagon officials were resigned to an invasion but were reluctant and worried that the risks were being underestimated. An editor killed the story, saying it relied too heavily on retired military officials and outside experts — in other words, those with sufficient independence to question the rationale for war.

“There was an attitude among editors: Look, we’re going to war, why do we even worry about all this contrary stuff?” Ricks said.

I think that’s just swell, don’t you?

On the other hand you didn’t have to be getting private briefings from Pentagon officials to know the whole thing stunk to high heaven. I’ve never experienced such dissonance in my life as I did during that period. The officials and the media sounded like a bunch of smarmy carnival barkers but there was this sense that we were going down the rabbit hole no matter what.

I feel that way today about austerity. And there’s clueless old Bob Woodward, once again part of the groupthink, doing his best to cheer on the madness.

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Pareene takes on the Grand Bargain

by digby

Alex Pareene at Salon has written a great piece about the revival of the Grand Bargain in his inimitable style that’s well-worth reading. I just want to pull out on little piece that I don’t think many people really understand:

Here’s a fun secret: Tax reform (in this case referring to eliminating or scaling back “tax expenditures”) is technically a conservative policy priority, even if elected Republicans refuse to ever support it for real. This is a compromise in which conservative policy is being offered in exchange for conservative support for a conservative policy. The sequester and Obama’s Bargain quest mean that Republicans can choose between allowing a Democrat to “take credit” for cutting the two most popular programs in the country or they can just live with the already-passed government spending cut that they are also able to blame on the president. 

Also keep in mind that tax reform has been one of the pillars of the Grand Bargain since President Obama first proposed it in 2009. It’s pretty much guaranteed to be, at best, some sort of symbolic loophole closing while at the same time “broadening the base and lowering the rates.” It’s a “reform” only a tax lawyer could love.

Pareene makes many points that are tiresomly familiar to anyone who reads this blog. But you should rad it anyway because he’s such an aggressive SOB and really tells it like it is. This for instance:

There are two important things to remember about “entitlements”: They are hugely popular programs for a very good reason, and actual sensible “reform” would mean improving them, not sacrificing them at the altar of “fiscal responsibility.” A “grand bargain” that was done with the intention of creating the best possible outcome for the most Americans, instead of with the intention of purposefully doing unpopular things because doing unpopular things denotes “seriousness,” would lower the Medicare eligibility age and expand Social Security. That the opposite approach is effectively the bipartisan consensus approach is the special sort of Beltway madness that makes sensible people wish for either a proper parliamentary system or at the very least for an EMP to take out Georgetown and much of Washington’s surrounding suburbs.

Heh.

And for those who think the president doesn’t really want to cut SS and Medicare and that he’s being forced into it by the Republican obstructionism, I’d just remind them of this, from the Washington Post in January 2009, before he was inaugurated:

President-elect Barack Obama will convene a “fiscal responsibility summit” in February designed to bring together a variety of voices on solving the long term problems with the economy and with a special focus on entitlements, he said during an interview with Washington Post reporters and editors this afternoon.

“We need to send a signal that we are serious,” said Obama of the summit.

Those invited to attend will include Senate Budget Chairman Kent Conrad (N.D.), ranking minority member Judd Gregg (N.H.), the conservative Democratic Blue Dog coalition and a host of outside groups with ideas on the matter, said the president-elect.

Obama’s comments came in a wide-ranging, hour-long interview that came just five days before he will be inaugurated as the 44th president of the United States and become the first African American to hold that title.

Obama said that he has made clear to his advisers that some of the difficult choices–particularly in regards to entitlement programs like Social Security and Medicare – should be made on his watch. “We’ve kicked this can down the road and now we are at the end of the road,” he said.

To now say that they have no choice but to cut entitlements because of the sequester (which they agreed to) is just too clever by half.

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There are Democrats who’d like answers on assassinations too

by digby

Since the participation of Rand Paul in the civil liberties debate seems to make it doubly controversial and more difficult than it already is, perhaps the liberal base, at least, will be persuaded by the stalwart progressive House Democrats who sent this letter to President Obama today.

Here’s the crux of their issue:

Unlike everyone else they seem to have managed to see the forest for the trees on this and aren’t obsessing of the use of drones, as if that’s the real problem* with all this. They are asking about the authorities under which the president has granted himself the power to secretly target Americans for assassination.

It’s signed by Lee, Ellison, Conyers, Grijalva, Edwards and Honda. Not a libertarian or right winger anywhere to be found. And as Emptywheel points out there are others as well, like Dianne Feinstein and Susan Collins, Jerry Nadler and Pat Leahy among others. This is beyond ideology or partisanship. Or at least it should be.

*Yes, drones present problems for modern warfare for a number of reasons, which we’ve discussed before. But this is about something more than the technological capability. It’s about whether the president has the constitutional or statutory authority to carry out a covert assassination program against American citizens on the new “global battlefield.” (And again, that’s not to say that carrying out such a program against non-citizens is moral or legal either, but it’s a different set of rules and norms.)

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Right-winger Joe Lieberman finds his natural resting place at AEI

by David Atkins

Every Democrat who ever supported this jerk beyond his role as Al Gore’s campaign footstool needs to be roundly mocked today.

Former Sen. Joe Lieberman is joining the conservative think tank American Enterprise Institute, the organization announced Monday.

Lieberman — Al Gore’s vice presidential running mate in 2000 and a Democratic presidential candidate in 2004 — will co-chair AEI’s American Internationalism Project, an effort to rebuild a bipartisan consensus about big foreign policy questions.

This is a common project of the Right these days. They know that no one likes their ideas. Scarred by the experience in Iraq, few want to do it again in Iran. Few want to eliminate Social Security, give tax breaks to rich, loosen gun laws, or do any of the other things on the Right’s agenda.

So one of the Right’s strategies is to go trolling for morally deficient, easily corrupted neoliberal “Democrats” to assist their efforts at creating a “bipartisan consensus” to override popular will and common sense in the service of the conservative agenda.

Fifty years ago, Joe Lieberman would have been seen for exactly what he is: a hardline rightwing conservative. That any decent Democrat would have supported him would have been considered laughable. But then, we’re not the same country we were fifty years ago. We’re still battling the deep, horrific wounds caused by the Southern Strategy and the Powell Memo.

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Right wing mojo


by digby

Seeing that CPAC is having its annual confab, let’s recall that four years ago at this time much of the country and the punditocracy was still aghast that Rush Limbaugh said he wanted the president to fail. Conservatives were still reeling a bit and liberals still had visions of hope and change in their heads.  And then Rush showed up at CPAC and CNN carried it live and suddenly … everything changed:

At his closing speech at the CPAC conference, conservative talk radio host Rush Limbaugh doubled down on his widely-controversial claim that he wanted President Barack Obama to fail, insisting that he meant what he said, and chastising those who were critical of him.

“This notion that I want the president to fail, this shows you the problem we’ve got. This is nothing more than common sense and to not be able to say it? Why in the world would I want what we just described: rampant government growth, wealth that is not being created yet is being spent? What is in this, what is possibly in this that any of us want to succeed? Did the Democrats want the war of Iraq to fail? They certainly did. And they not only wanted the war in Iraq to fail they proclaimed it a failure…. They hoped George Bush failed. So what is so strange about being honest and saying I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation?”

The crowd, watching in three individual ballrooms because of overcrowding, went absolutely wild.

Granted Rick Santelli had done his thing and the stimulus had barely passed and there was plenty of reason to believe that the conservatives would be anything but cooperative on health care reform. But I think old Rush gave the signal that they could be the jackasses they truly wanted to be. And they haven’t looked back.

This time, I don’t think it’s anything specific. Rush has been doing his usual ranting. But as Ed Kilgore points out , they’ve found their mojo once again:

President Obama, having “shifted to the left” since winning re-election, is in a popularity free fall because of his harsh partisan treatment of Republicans and his false prophecies of the negative impact of the taste of austerity offered by an appropriations sequester his staff invented in the first place. Moderate Democrats are fleeing him in hordes, and/or preparing to triangulate against his old-school liberalism. 

Republicans, meanwhile, having “rebranded” themselves and shown they are willing to adjust to defeat by bravely attacking the memory of Todd Akin and considering a change in their posture on immigration that’s half-way down the path back to that of George W. Bush, have at the same time held fast on making “runaway spending” their obsession. And they have a new hero: Rand Paul, whose 13-hour filibuster last week showed that principle-based confrontation is the best, the only, the eternal way to secure conservative victory. 

If you’ve watched all this and gotten a distinct whiff of 2009, you’re not the only one. The arrival this week of a new and more radical Ryan Budget will spread this impression more widely.

The truth is that they never really lose their mojo.  They might lie back for a little while and catch their breath.  But I’m fairly sure that even during the depression they were as hardcore as ever. They were just weaker. And the question we really need to ask ourselves is how they are able to dominate our politics even when they are in the minority.

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American In-justice: a hanging judge who enjoys her work

by digby

Shouldn’t this judge be removed from the bench and disbarred? This isn’t any normal case: a man’s life was a stake and she put her thumb on the scales of justice so that she could ensure he was executed.

The ugly story is familiar to those of you who have been reading along with me through the years. Richard was scheduled to die in Texas by lethal injection on Sept. 25, 2007, but on the morning of his execution the U.S. Supreme Court accepted a case involving lethal injection procedures. A stay of execution for Richard should have been almost ministerial in nature — and, indeed, scheduled executions via lethal injection were halted all over the country pending the court’s resolution of the case we now know as Baze v. Rees. Except in Judge Keller’s court.

Keller didn’t assist Richard’s lawyers in getting that appeal filed. In fact, she actively worked against those lawyers to ensure that their appeal would not be filed in time. She didn’t tell her fellow judges to expect a Richards filing — they didn’t find out until the next morning that Keller had blocked the attempt to file. Knowing that she alone had determined Richard’s fate that day, Keller went home to meet a repairman at her house. Richard was executed that night, his final appeal never heard by the courts. This from a jurist who was known before the incident as “Killer” Keller for her views on the death penalty.

What Keller did (and did not do) that day, the commission declared on Friday, “constitutes willful or persistent conduct” that “is clearly inconsistent with the proper performance of her duties as a judge” and “casts public discredit on the judiciary and the administration of justice” in Texas. And certainly it is this language — and not the “public warning,” whatever that means — that has Keller fired up. After getting the verdict, the judge and her attorney turned upon the commission in a decidedly unjudicious manner. “It is perhaps not surprising that the same commission that made the charges finds them now to be valid despite overwhelming evidence to the contrary,” Keller’s lawyer said. “Judge Keller looks forward to challenging this decision.”

I’m being very generous when I only prescribe removal and disbarment. If it were up to me she’d be jailed.

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Let’s start a chain email, shall we?

by digby

Here’s Krugman with dumb-as-a-post Senator Ron Johnson, who I’m sure believes every stupid word he says:

“Unless we do something, these programs are going broke,” Johnson opined during a panel on ABC News. “When I hear people saying Social Security is solvent to the year 2035, it’s not.” “In a [sic] entitlement reform package, actually bringing in revenue for those entitlement reforms, I might look at that,” he added. “But the fact of the matter is that we’re already having a trillion dollars in tax increases hitting us in Obamacare. They’re hidden, but it’s middle class… As well as the $600 billion [in a January deal to increase taxes on wealthy Americans]. That’s $1.6 trillion in tax increases hitting us in the next 10 years.” 

“We’ve just run aground right there,” Krugman noted. “Your facts are false. The Social Security thing — Social Security, it has a dedicated revenue base, it has a trust fund based on that dedicated revenue base. You can’t change the rules midstream and say, ‘Oh well, suddenly the trust fund doesn’t count.'” 

Johnson interrupted with the claim that “the trust fund is a fiction, it has no value in the federal government.” “It important to realize that the facts that are being brought out here are, in fact, non-facts,” Krugman pointed out. 

“They’re absolute facts,” the Wisconsin Republican shot back.

No, they’re bullshit. Luckily hardly anyone in the country watches that show so it probably doesn’t matter, but this fiction is believed among the cognoscenti and therefore extremely destructive. Dean Baker suggested via twitter that you send this fact-filled post called Trusting The Fund: A Citizen’s Guide To Social Security’s Trust Fund to everyone you know so they can understand reality. (Not that it will do them much good because you’ll never get the gasbags and the politicians to understand it, but still … it’s our duty to try.)

It starts off by explaining the very important and significant distinction between deficits and debt — and why you should be very skeptical of people who mix them up. Then it breaks down all the misconceptions about Social Security. This is just one piece of the puzzle to give you an idea of just how confused people really are:

Social Security has always had its critics, but now they’ve been empowered in a particularly significant way. A lot depends on the citizenry understanding who is telling the truth. It wouldn’t hurt if the man on the street understood a bit about how the system works. To that end, a few basics. 

Social Security was originally constituted as a “pay-as-you-go” program, where current workers, through dedicated payroll taxes, pay for the benefits of current retirees. In some sense you’re paying for your parents’ retirement, and your kids will pay for yours. This works well enough if the ratio of workers to retirees is sufficiently large—that is, if there are many workers paying into the system for every retiree collecting benefits—but demographic changes have been long underway which, if not addressed, make this arrangement increasingly untenable. 

Fortunately, those changes have been addressed, as we will see. Like the income tax, Social Security’s dedicated funding stream, the payroll tax, is automatically withheld from most peoples’ paychecks. But is it large enough? Way back in the 1980s, it was apparent that it was not. Actuaries back then realized that, some decades in the future, the pay-as-you-go system as then constituted would collapse with the retirement of the baby boomers. Once the baby boom wave swept into the system, there would be too many retirees and not enough workers paying taxes to support them. What to do? 

President Reagan convened a commission, chaired by none other than Alan Greenspan, to study the problem and recommend a solution. This so-called Greenspan Commission proposed increasing the payroll tax, in order to build up a large nest-egg that could be drawn upon decades later to help pay for benefits for baby boom retirees. The proposal was adopted. From that point on, the Social Security system ran large surpluses year after year, above and beyond what was necessary to pay for current retirees, and those excess funds were set aside in what is known as the Social Security Trust Fund. 

The Trust Fund buildup was an example of eminent good sense and laudable foresight, but it soon enough became the subject of unwarranted controversy and gross misunderstanding. It’s a fascinating story. The controversy mostly derives from the fact that the Trust Fund invests its funds by loaning them to the government. This isn’t as odd as you might think. If fact, it’s quite a reasonable thing to do. After all, the Trust Fund has to do something with its money. And the government, running perennial budget deficits, needs to borrow from someone; why not borrow from the Trust Fund? Don’t worry for the moment that the Trust Fund is itself part of the government; you’ll see how this all ends up making sense. 

What happens is this. Payroll taxes, like all taxes, go directly into the government’s “checking account,” which is formally known as the general fund. The Treasury then issues to the Trust Fund special interest bearing government bonds in the amount of any payroll taxes in excess of what is required to pay current retiree benefits. In so doing the Trust Fund effectively purchases bonds from, and loans money to, the government. Is this so strange? It is not. After all, foreign governments, businesses, and private investors all loan money to the U.S. government through the purchase of its bonds. 

And why not? U.S. government debt is the gold standard for safety and liquidity. It is considered to be the safest investment on the planet. Furthermore, the system is completely transparent and above board. You may be surprised to learn that bonds held by the Trust Fund are officially reported as part of the national debt. That sixteen trillion dollar debt you keep hearing about? About two and a half trillion of it is held by the Social Security Trust Fund. 

Now it is certainly true that the government’s debt to the Trust Fund will have to be repaid. But then, all of the national debt will have to be repaid—mostly by further borrowing, issuing new debt as old debt is retired. That’s just a consequence of deficit spending; it has nothing to do with where you borrow. If the government didn’t borrow from the Trust Fund to finance its deficit spending, it would have borrowed that same amount from the financial markets. Either way, both the solvency of Social Security and the indebtedness of the country would be the same. 

Some persons, unfortunately including a fair number of politicians, say that we’ve been hoodwinked. The Trust Fund, they say, doesn’t contain real assets; it has been “looted;” all its money has been spent on other things; and the bonds it holds are just “worthless IOUs” from the government to itself. The first question one might ask is whether the government of China thinks that its U.S. government bonds are also worthless, or whether you think the government bonds in your own private investment portfolio are worthless. After all, the Trust Fund’s bonds have no lesser or greater standing than U.S. government bonds that are traded on the world’s financial markets. Fine. 

But perhaps you still can’t shake the feeling that something fishy is going on. Hold that thought: later on we’ll show how those “worthless” Trust Fund assets can nevertheless be used to pay actual Social Security benefits. Which, after all, is what they’re for. In the meantime, let’s explore a bit deeper why some misinformed persons might think that Social Security’s assets have been misappropriated[…]

He shares a little parable to illustrate how the trust fund works in practice:

Our story begins with the Treasury collecting payroll taxes and paying Social Security benefits, but now payroll taxes are insufficient to completely cover those payments. So the Treasury turns to the Trust Fund to withdraw additional money to make up the difference. What does that mean? 

Let’s picture an exchange between an imaginary bureaucrat at Treasury—let’s call him “Ted”—and an imaginary bureaucrat at the Trust Fund—we’ll call him “Fred.” Ted gets Fred on the horn. 

“Fred, I need to make a withdrawal.” Fred has been waiting these past few decades for just this moment. 

“Um, Ted, you know all I have is these lousy bonds you sold me. If you want me to satisfy your request, I’ll need to sell some of them back to you.” 

“Oh, yeah,” says Ted. “Ok, let me see what I can do.” Ted hangs up and has the Treasury issue some new bonds, selling them to the public in the financial markets. This raises the necessary funds to buy back some of the Trust Fund’s bonds. 

“Oops,” you might suddenly be thinking. But don’t worry; this all works out. Ted calls Fred again. “Fred, I have your money.” 

“Ok, Ted, here are your bonds.” The Trust Fund has just redeemed some of its “worthless IOUs” for cold hard cash. 

“Uh, Fred, can I make a withdrawal now?” asks Ted. “Sure,” says Fred, “here you go, buddy.” 

Fred sends the money back to Ted. Ted goes away and uses the money to cut Social Security checks. 

But, you object, Treasury ultimately had to borrow more money to pay benefits. So much for the Trust Fund having real assets. But not so fast. Remember: what matters is the debt, and it’s easy to see that the debt remains unchanged. How so? Well, those bonds that Fred sold back to Ted were part of the national debt, an obligation from the Treasury to the Trust Fund. Those bonds have now been retired, which reduces the national debt. But the bonds that Ted sold to the financial markets represent new debt, so they increase the national debt. And, wonder of wonders, the two offset exactly: the indebtedness of the country remains unchanged! Isn’t accounting great? One obligation is extinguished when a new one is created, and it’s a wash. Meanwhile, the checks go out, and the balance in the Trust Fund is reduced accordingly. Exactly what we wanted to happen.

This is what the 1983 deal was designed to do! There’s nothing unanticipated about the boomer retiring — surprisingly, they’ve known about it since we were born, back in the dark ages. That’s why they raised our contribution and delayed our retirement age in the first place. Now we see this bait and switch in which we’re told the trust fund has been looted and we just don’t have the money to pay Social Security anymore — at least not enough to pay full benefits.

And yet with all this lying and misinformation, we’re supposed to trust that the Democrats will ensure that the poor people won’t be too hurt in any deal. Why? Clearly, they aren’t going to stop attacking the program and inch by inch the Democrats are giving them what they want, all the while proclaiming that they just didn’t have a choice. This is a scam, ladies and gentlemen. They do have a choice.

Anyway, the author of this great piece points out that even some professionals don’t seem to understand how this whole thing works. He cites eventhelibrul Pete Peterson ally, Alice Rivlin:

Recently, former Clinton administration OMB director Alice Rivlin made a similar booboo (that’s a technical term). Writing in The New York Times, Rivlin advanced the startling (to her admirers, and to any reader who has gotten this far) claim that

Social Security currently adds to debt, because it pays out more benefits than it receives in taxes. While it accumulated credits when the higher ratio of workers to retirees was bringing in excess funds, Treasury has to borrow to redeem these credits.

And indeed it does. But as we have seen, such borrowing has no effect at all on the debt. Ms. Rivlin inexplicably seems to have a problem with the Trust Fund working as designed. It was, in truth, a rookie mistake, so elementary that one can’t help but wonder whether it was accidental or intentional. If accidental, could she have meant “deficit” instead of “debt?” Of course, even if she did, we’ve seen that the government’s reporting of the deficit isn’t a good gauge of what’s going on. And if intentional? Let’s not go there.

It stretches credulity to think that Alice Rivlin doesn’t understand this.

Until recently, I did not understand the extent to which economists and other financial “experts” tailor their allegedly unbiased opinions to fit an agenda. I’m going to guess that Rivlin really does believe that deficits are bad, that social security is unsustainable and/or that the political realities of the day require “liberals” of good faith to do the hard work of cutting to keep the big bad conservatives from doing it for us. This seems to be a typical belief among many of the Very Serious Centrists. But it’s complicated and so she has resorted to using misinformation to sell her solutions. The politicians who understand this (not all of them do) are also lying.

Please take the time to read this whole piece if you have even the tiniest bit of confusion about the debt, the deficit, the Social Security Trust Fund. And then send it to other progressives so they will be able to argue effectively when people say “the trust fund has been looted” or talk about how the country is “going bankrupt.” It’s vastly important that people understand this so that when we see the politicians using Social Security as a bargaining chip in hostage negotiations, they’ll understand who the looters really are.

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