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.
Republican Representative Patrick McHenry of North Carolina has stirred up a bit of a storm lately with his proposal that Ulysses S. Grant’s face be removed from the $50 bill and replaced with Ronald Reagan’s.
Leave aside the obvious implications of a Southern Republican maneuvering to demote the president best remembered for defeating the Confederacy. Overlook that fact that the new face on the $50 would be the president who restored the pride and honor of the Confederate flag. Stipulate that it’s unheard of for a president’s face to appear on currency less than half a century after he left office—indeed, less than a decade after his death.
The more charged question is who was the better president. Many of us tend to think of Grant, if at all, as a drunk and a failure whose one moment of glory was the Civil War. If you’ve dug a little deeper, you may be aware of him as the president who haplessly looked on while America entered the Gilded Age and fell into the clutches of greedy capitalists, railroad trusts and robber barons. (Come to think of it, you would expect today’s Republicans to celebrate him for that if nothing else.)
Jews have a special complaint. As alert readers recall, Grant was responsible for perhaps the most blatantly antisemitic federal government action in the history of the Republic. On December 17, 1862, at the height of the war, he issued the infamous General Order No. 11, instructing that “The Jews, as a class violating every regulation of trade established by the Treasury Department,” be expelled within 24 hours from the Department of Tennessee (a military zone including Tennessee and Kentucky). Jews throughout the country were thunderstruck. At least one Jewish officer under Grant’s command resigned in protest.
It took Representative McHenry to reopen the public debate on Grant, which has been simmering in the Academy for decades. It turns out that Grant has more defenders than detractors these days. Even the Jewish case against him — perhaps especially the Jewish case — is beginning to look a bit thin.
The eminent and staunchly progressive Princeton history Sean Wilentz laid out the basic argument for Grant as a great and underappreciated president in an Op-Ed essay in the New York Times this week. Another interesting piece on Grant’s merits is this blog post by Matt Yglesias of Think Progress. The reader responses are as interesting as Yglesias’s post itself.
What’s still largely unknown is Grant’s deep connections to the Jewish community of his day. Far from being an antisemite in the White House, he was probably the most actively friendly president the American Jewish community had had up to that time.
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