Why Republicans Are Willing to Attack Social Security

Paul Krugman asks why Republican candidates continue to oppose Social Security, despite the program’s popularity among most Americans.

“What’s puzzling about the renewed Republican assault on Social Security is that it looks like bad politics as well as bad policy. Americans love Social Security, so why aren’t the candidates at least pretending to share that sentiment? The answer, I’d suggest, is that it’s all about the big money.”

“Wealthy individuals have long played a disproportionate role in politics, but we’ve never seen anything like what’s happening now: domination of campaign finance, especially on the Republican side, by a tiny group of immensely wealthy donors. Indeed, more than half the funds raised by Republican candidates through June came from just 130 families.”

“By a very wide margin, ordinary Americans want to see Social Security expanded. But by an even wider margin, Americans in the top 1 percent want to see it cut. And guess whose preferences are prevailing among Republican candidates … Nowadays, at least on the Republican side, the invisible primary has been reduced to a stark competition for the affections and, of course, the money of a few dozen plutocrats.”

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  • embo66

    Assuming Krugman is correct here, what’s curiouser to me is WHY these “130 donor families” want to see Social Security cut.

    It’s true that nearly every scenario for keeping SS solvent into the future relies on raising either the SS tax or the current cap on taxable income; e.g., from the current $125K to, say, $200K. But what I find puzzling is why these millionaires and billionaires — whose income rarely comes from anything so prosaic as a paycheck — should even care.

    After all, if you’re a billionaire, what’s another $5K annually coming out of your pocket really mean? Most (at least 60+%) aren’t even employers who would have to cough up a matching hike in SS payments out of their overhead / profits.

    Is their greed truly that petty — nay, microscopic?

    • pisher

      It’s instinctive. In a world where a mere wage slave may hope to have a semi-comfortable retirement simply because he or she has Social Security and Medicare, combined with private investments (the last of which billionaires can hardly object to, and which will in most cases never be enough to keep someone out of poverty in old age), that wage slave may entertain thoughts of equality–of independence.

      Instinctively, they want us dependent on them, because if we’re not, we may feel like we can exert our greater numbers, our votes, to whittle away at their share of wealth and power, as has been done in the past. They want whatever we have to come from them, not from the government–which is to say, from our own efforts, our own foresight and enterprise.

      They want a return to feudalism, in somewhat altered form (like without the noblesse oblige part, or any guarantee of the peon’s security), and that means putting an end to any kind of guaranteed income.

      The very rich are very different from you and me. And we’d better not forget it. They are not thinking in strictly rational terms and this is particularly true of those that were born rich, and have no conception what it’s like to have to earn a living, and be vulnerable to the vagaries of fortune.

      If you’re a billionaire, you do not, by definition, have any ability to grasp the concept of too much money, or too much power.

      • embo66

        Nice to converse with you again, pisher!

        But I have to quibble with your explanation. I do get the general “instinctive” aspect — or perhaps knee-jerk is a better word for it. Certainly greed and finding value in wealth just for its own sake are indeed characteristics of many, many wealthy people — born into it or not. From my experience, there’s no one so miserly as a rich person.

        But we’re not talking giving retired workers generous, independence-inducing pensions here; we’re only talking sustaining a system that today pays on average just $1350 a month! To begrudge even this token — which, BTW, recipients also paid into across the course of an entire working lifetime — just seems to be the grossest sort of selfishness.

        And stupidity, since denying c. 70+ million retiring Boomers their fair share would 1) create new levels of poverty that the government would eventually have to raise taxes on the rich to cover, anyway; and 2) make 70+ million voters hopping mad at these rich assholes who blocked any move to salvage their tiny pensions.

        • pisher

          I’m not agreeing with it, I’m just looking for a rationale to explain it. To argue that they feel like everybody should earn their money ignores the fact that so many of them were born obscenely wealthy, without having had to lift a finger, even if they then chose to try and add to the family fortune–are they capable of that level of hypocrisy? Sure, but I don’t think that’s it. They’d have no problem with some other billionaire’s offspring doing as he or she pleased with the family fortune.

          They are not looking to abolish inheritance–au contraire, they want to abolish the inheritance tax. Make it easier to pass huge wealth on to the next generation, which I think it has been amply demonstrated is often really really bad for the next generation.

          So yes, I think it comes down to a feeling that all wealth must flow from their class down to the workers–to give the workers even the tiniest measure of independence–something they don’t owe the capitalist class for in any way–bothers them.

          Is this stupid? Yes. It’s not even in their own interest, not long-term. The ever-increasing concentration of wealth in one class leads, inevitably to class warfare, something the rise of the middle class made increasingly irrelevant, but now look at the way people are responding to Bernie Sanders–and even Donald Trump. He also has that populist streak in him, and is probably viewed with deep loathing by most fellow billionaires (the poor relation who never got properly indoctrinated, and can’t be relied upon).

          Anything that makes people think they know better than the billionaires, that they can exercise real control over their lives, is bad. They just reflexively want to eliminate any source of uppity behavior by the hoi polloi. We’ve seen this before in history, and it leads in one direction–social chaos, and then all the money in the world won’t buy you safety. But don’t look to these people for sage foresight. They can lead us into one financial meltdown after another, and still delude themselves into thinking they know the secrets of perpetual wealth, and the rest of us are clueless.

          And again, the worst of them are the ones that were born into tremendous inherited wealth–remember, Trump was just born into minor wealth (more than enough to give him a leg up in the world), and didn’t really inherit his money. He doesn’t really count as part of this class. Doesn’t mean we should trust him to lead us. But let’s remember that the real power-brokers don’t have any intention of doing anything so grubby and common as running for public office. They consider that beneath them–they want to gradually arrive at a point where even the President of the U.S. is just an errand boy, and they’re a lot closer than they’ve ever been before.

        • Thomas L Wilson

          the cuts to Social Security are supposed to affect those of age 55 and younger.

      • jf

        “The very rich are very different from you and me.” Exactly the theme of “The Great Gatsby.” Fitzgerald had it right.

      • easton

        I think it is worse than that, Amazon in their warehouses have wage slaves working in horrible conditions, however if they could they would get rid of them all for robots (but as of now robots lack effective hands to sort). Ultimately this will be resolved and Amazon can have automated warehouses, but this would lead to a consumer based society without consumers as consumers would not have any money to buy the products the robots make.
        We will either have a revolution or America will become a banana Republic, a very few rich enjoying high tech and great land holdings, and the rest poor living in a barter society.

    • Urbane_Gorilla

      Bottom line is what it’s all about. An inexpensive, throw away workforce. Donald Trump just let slip his answer to Detroit for example: Send all the work to Mexico. In short order the auto workers in Detroit would be willing to work for peanuts. It’s just like their fight against a $15 minimum wage, or Reagan’s shift of tax breaks from the middle class to the wealthy. Sadly what they don’t understand is that when the middle class was doing well, our country was doing well, and they were doing well. What goes around comes around.

    • Burr Deming

      One possible explanation: Employer contributions match what is put in from employee paychecks.

      • embo66

        But as I said, nearly 2/3 of folks in the 1% are NOT employers. So that wouldn’t be a concern for most of them.

        • Thomas L Wilson

          true, but they invest in corporations, so every penny for the workers is a penny lost.

    • easton

      yes, yes it is. History is replete with the total lack of awareness of basic self interest of the rich in revolution after revolution.

  • Thomas L Wilson

    I believe that the GOP/T plutocrat argument is “To bring jobs back to America, we must lower wages to the level of Chinese, Indian, Vietnamese, and Bangladeshi workers”.

  • AlfredRegius

    Sooner or later, members of the Republican base are going to figure out that GOP policies are not in their best interests!

    At least that’s my story, and I’m sticking with it!

  • ThomasCollins1

    “By a very wide margin, ordinary Americans want to see Social Security expanded.”

    “By a very wide margin, ordinary Americans want more money”. What they don’t understand, is that by continuing to pump demand dollars, from whatever source, into the economy, they are just putting back the day of reckoning. In a healthy economy, prices FALL. Cell phones and computers of the past 30 years have demonstrated this, as have food and energy production over the past 5000 years. But the federal reserve bank is intent on having prices rise to preserve the current monetary structure, which is the power source of your hated 1%. We created currency to facilitate trade, but now the currency itself has gained a life of its own, and we have sacrificed both trade and production to maintain a rotten price structure and currency, Anyone who thinks that paying people to NOT produce is a good thing doesn’t understand this, and just about every agricultural commodity has price supports of this kind.

    What retirees, and everyone else for that matter needs, is not money, but the things money can buy. And there would be a flood of these products if we shed the debt overhang that is strangling our currency and therefore our economy.

    • easton

      what??? As to total manufacturing output, this is not the only metric to use. In reality, the decline in U.S. manufacturing as a share of GDP is really a global phenomenon as the entire world becomes increasingly a services-intensive economy.

      As a share of GDP, manufacturing has declined in most countries since the 1970s. A few examples: Australia’s manufacturing/GDP ratio went from 21.3% in 1970 to 9% in 2009, Brazil’s ratio went from 24.6% to 13.3%, Canada’s from 21.7% to 11.3%, Germany’s from 35% to 19%, and Japan’s from 35% to 20% …Essentially we are making more and more with fewer and fewer workers. In addition, the added productivity of the average worker is not finding its way to their paycheck. More and more is going directly to the owners.
      I think you completely miss the point of very moderate inflation, deflation from productivity increases and technology increases is fine, deflation when demand collapses due to lack of liquidity in the marketplace is not. Don’t confuse the two. QE restores liquidity, it is not “flooding” the economy because if it were inflation would be much higher.
      There is a flood of products available. What can’t you buy right now? Tell me a single common item that is unavailable for people who have money?
      Prices do not fall in a healthy economy. This is just pure fantasy. Housing and land prices, due to increased demand from an ever increasing population have always trended higher. Being that a person’s home and the land it sits on is the cornerstone of the economy right off the bat you are wrong. When home prices fall it cripples the economy, mortgages go underwater, there would always be an incentive NOT to buy if prices always trend lower.
      I don’t know what to say but your post really is out there.

      • ThomasCollins1

        “In addition, the added productivity of the average worker is not finding its way to their paycheck. More and more is going directly to the owners.”

        The owners of debt. The people who charge us to use money. Many of these banking institutions buy government bonds, which pay them interest, with no more than a debit in their federal reserve accounts. That is, they are getting paid interest when they have not invested a cent. See A Primer On Money, issued by Wright Patman, chairman of the House subcommittee on money and banking. He suggested as a start that these institutions pay for the privilege of using government bonds as reserves on which they make loans at interest.

        “QE restores liquidity, it is not “flooding” the economy because if it were inflation would be much higher.”

        Say what you will, in 1982 the DJIA was about 1,000. In twenty years, it had cilmbed to 10,000. Do you think the economy grew one thousand percent in that period? Or is that inflation? As far as interest rates are concerned, they’ve been close to zero for almost a decade, and are even negative in Europe. Is this healthy, or a sign of something wrong?

        “There is a flood of products available. What can’t you buy right now? Tell me a single common item that is unavailable for people who have money?”

        This makes my point. A flood of commodities, but rising prices anyway (eggs, milk bread, meat, electricity.) Such a flood, that we continue to destroy product, or simply pay people not to produce. You have to admit there’s something wrong with that.

        “Prices do not fall in a healthy economy. This is just pure fantasy.”

        You’re ignoring 5000 years of history. There was a time when humans spent all their time looking for food.

        Housing and land prices, due to increased demand from an ever increasing population have always trended higher. Being that a person’s home and the land it sits on is the cornerstone of the economy right off the bat you are wrong.

        Many attempts have been made to issue currency based on land values, including Benjamin Franklin, who advocated for that here. None of them succeeded.

        When home prices fall it cripples the economy, mortgages go underwater, there would always be an incentive NOT to buy if prices always trend lower.

        It only cripples the economy when everything is stitched together. A computer company that went bust in 1982 did not stop that industry, it only hurt those who were invested with it. If regional banks and businesses were permitted to fail, we wouldn’t build up decades of bad paper which by then are “too big to fail”. And people buy hoses to live in, they should never view their house as an investment, unless they intend to rent it our.

        The Capitalist” class is made up of two distinguishable components. Those who build the things that make our lives better, and those who finance and insure them. The latter have convinced the poor that all evil comes from the former.

        • easton

          ok, there is a whole lot you got wrong. For starters the largest owner of US debt is the US government, fully 1/3rd of the debt is money the government owes itself for things like the Social Security Trust fund.

          Public Debt: $13,121,719,838,466.16
          Intragovernmental Holdings: $5,029,485,019,662.42
          Total U.S. National Debt: $18,151,204,858,128.58
          Question: Who owns the public debt?
          Answer: Mutual funds, pension funds, foreign governments, foreign investors, American investors, etc.
          Which Foreign governments own the most U.S. debt?
          Answer: Here is the Top 10 (as of Dec/2014)
          1. China, Mainland, $1270.3 billion dollars
          2. Japan, $1214.9 billion dollars
          3. Carib Bkg Ctrs, $311.5 billion dollars
          4. Oil Exporters*, $296.8 billion dollars
          5. Brazil, $258.5 billion dollars
          6. Switzerland, $222.7 billion dollars
          7. Ireland, $209.0 billion dollars
          8. Belgium, $202.8 billion dollars
          9. United Kingdom, $199.5 billion dollars
          10. All Other, $187.8 billion dollars

          So over 5.1 trillion is owed to foreign governments.

          So your “analysis” that banks own the debt or owners of businesses is flawed. mutual funds including money-market funds own 6 percent or a little over a trillion. State and local governments own about half a trillion. I can break down precisely who owns what but suffice to say you are mistaken in who owns the debt.

          I have no idea why you are talking about the market.

          QE is in response to the financial crisis. There was no QE in 1982. Look at the Price to earnings ratio. At the end of 2012, the DJIA P/E was close to the historical average of 15. The lowest ever P/E for the index occurred in June 1932, with a reading of 5.6. The low reading came near the bottom after the 1929
          market crash. At the top of the 1990s bull stock market and tech bubble, the DJIA reached a P/E of 44.2. The P/E peak occurred in December 1999.
          The tech bubble burst in 2000, and the markets declined significantly over the next two years.
          You arbitrarily chose 1982 ignoring the p/e from 1979 to 1982 was at a multi year LOW of around 8, with 1982 at 7.73. In fact the only time it was lower was way back in 1951 at the height of the Korean War at 7.47
          Historically it was twice that average.
          On December 31, 1982 the Dow was 1046.54
          20 years later on Dec. 31, 2002 it was 8341.63
          The P/E was 33.43, well above the average.
          Let me remind you that the Dow was 6,626.94 in March of 2009. Why did you not choose THAT date?

          that is 27 years, that is about a 600% increase. But the Dow was at 177.30 on Dec. 1948 but at 724.71 at the end of 1961. That is a mere 13 years and an increase of 400% in less than half the time.

          My point is I can choose arbitrary numbers to prove the exact same thing you did, which is nothing.

          Again, you don’t understand QE. you are saying oh my god the prime rate is low, but so is INFLATION. This is a GOOD THING. Healthcare inflation is at a 50 year low despite record number of millions of seniors retiring and getting medicare.

          the rest of your point I don’t get and don’t really care at this point. Low inflation is good, deflation is bad when it occurs because there at not enough dollars chasing too many goods. We don’t have deflation. High inflation is bad too. We have low inflation, a low prime rate, a P/E of 20.95, an unemployment rate of 5.3%, a deficit within normal range compared to GDP
          Of course you view your house as an investment, you don’t have to live there forever. Ever hear of selling your house, buying a two bedroom bungalow in Florida? I assure you, it is a thing.

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