Los Angeles Times business columnist Michael Hiltzik has an essential piece today debunking what he calls “The Myth of the Social Security system’s financial shortfall.” It’s based on the newly-released 2010 report of the Social Security Trustees.
In fact, he argues, Social Security is doing fine, sort of. If there’s a problem, it’s the fact that it has been lending money to the general fund of the federal government for years to cover expenses that used to be covered by income taxes. The payroll tax has been steadily raised to keep Social Security solvent. The income taxes of the wealthiest Americans have been repeatedly, drastically lowered under Ronald Reagan and George W. Bush (Hiltzik leaves out Reagan, as I’ll show), leaving big holes in the general fund, which covers defense, national parks, highways, welfare and all the rest. The impoverished general fund has been borrowing from the flush Social Security trust fund to help cover the deficits.
Here’s the catch: The payroll tax is a regressive tax: the poorest Americans pay the same 7.65% as the richest Americans, and the rich don’t even pay a penny on earnings above $107,000 per year. Lowering income taxes on the rich, and then covering the shortfall by borrowing from a pot that’s mainly funded by the common folk (and mainly relied on by them) amounts to a massive redistribution of income from the poor to the rich. And that’s why the Social Security trust fund looks insolvent: It has been raided to cover money that used to be in the federal budget but is now in the pockets of the rich.
I know, I know: Letting the affluent keep their money (they’re basically the only ones who get to do that under these tax cuts) encourages investment and creates jobs. If anybody here still believes that, I’ve got a lovely oil well to sell you, conveniently located just south of historic New Orleans.
Here’s Hiltzik:
In recent years, during which conservatives have intensified their efforts to destroy one of the few U.S. government programs that actually works as intended, the report’s publication has become an occasion for hand-wringing and crocodile tears over the (supposedly) parlous state of the system’s finances.
This year’s report, which came out Thursday, is no exception. Within minutes of its release, some analysts were claiming that it projected a “shortfall” for Social Security this year of $41 billion.
Bibi Netanyahu’s visit to the Obama White House this week gives us an opportunity to watch history unfold. Or unravel. It’s hard to tell. Maybe it’s like that old Palmach song said, Rabotai, ha-historia hozeret (“Folks, history repeats itself”).
On the eve of the summit, the Jewish Institute for National Security Affairs is beating up on President Obama for failing to reaffirm George W. Bush’s April 2004 letter to Ariel Sharon. Bush had written that it was “unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949.” The president was endorsing Israel’s goal of keeping the major West Bank settlement blocs as part of the outcome of Israeli-Palestinian peace talks.
In reality, Bush wasn’t saying anything the Palestinians themselves hadn’t said. Palestinian Authority chief Mahmoud Abbas said as much just the other day in an on-the-record interview with Israeli reporters. As the Jerusalem Post put it in its version of the interview, “Abbas said that in principle, the Palestinians have agreed to alterations in the 1967 border, as long as it was done on a one-to-one ratio.” Incidentally, Abbas has embraced that position as far back as his 1995 talks with Israel’s then-deputy foreign minister Yossi Beilin.
Bush’s letter endorsed the idea of redrawing the border as a likely outcome of negotiations. The assumption was that the Palestinians could be expected to give Israel that reasonably desired outcome — as part of an agreement in which Israel gives the Palestinians an equally reasonably desired outcome.
So what’s JINSA’s beef?
In broad terms, JINSA is taking up a line that’s being touted by various voices on the Israeli right as the back-and-forth heats up: that Israel should receive its key demand on settlements before the actual negotiations begin. That way Israel can sit down and start negotiating from there. In other words, give me what I want in advance, and then we can sit down and discuss who’s willing to give up what.
In effect, the Israeli right doesn’t want Israel to have negotiate its relations with its neighbors on its own. It wants America to impose a solution. Of course JINSA wouldn’t put it that way.
It appears that my August 5-14 column about Roger Cohen has upset a few people, which is usually one of the perks of the job. But some of those who are upset with me are people I care about, and with them in mind I’d like to expand on my thoughts a bit, by way of explaining what I meant.
The column was originally meant to be a discussion of Cohen’s New York Times Magazine article from August 2, in which he attempted to explore the mechanics of American policy-making towards Iran. One of the framing elements of the piece was the role of Dennis Ross. I thought Cohen misfired badly in ways that seemed to me instructive, and even though I usually try to avoid personal attack pieces, I wanted to take apart that argument. However, as I re-read his Times columns since January, I found what struck me as a pattern of weak thinking, which seemed to shed light on the misjudgment I had found in the magazine piece. I started to flesh that out, and by the time I was done I didn’t have much room for the Dennis Ross argument and it was deadline time, so I rushed in a few more paragraphs and then I went with what I had, as they say. Now I see my original intention got lost.
So here is the original point: I don’t believe Dennis Ross is the problem in American Middle East policy. Just like I didn’t think Douglas Feith or Elliott Abrams were the problem with same in the Bush administration. Presidents (or, in rare cases, vice presidents) create their own teams, and they generally know perfectly well whom they are hiring. Certainly Obama knew what he was getting in Dennis Ross. He’s been an open book for years.
This is not to defend Ross’s views or his role in policy-making or execution. Certainly one can legitimately argue that Ross has had a negative role. Aaron Miller has pointed out ways in which he felt Ross’s role was negative. He was there and he has examples of things Ross did and said. I have a few stories of my own. The difference is that Miller’s claim is based on what Ross did, not who he is.
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