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The real threat to Social Security

It’s the payroll tax, stupid:

At the end of August, Nebraska senator Ben Nelson, a Democrat up for reelection next year, told members of the Lincoln Rotary Club that it didn’t look like he would support an extension of the payroll tax holiday the president negotiated with Republicans last Christmas. “I wish I could (support it),” he said. “But all you’re doing is taking money that otherwise would help Medicare and Social Security.” There’s nothing remarkable about politicians talking to Rotarians, but it was remarkable for a conservative Democrat to say he didn’t think extending the Obama payroll tax cuts was such a hot idea. On Friday, Texas GOP congressman Pete Sessions, who chairs an organization to re-elect House Republicans, did likewise by calling the payroll tax cut “a horrible idea.” Instead of delving into why a conservative Democrat and a diehard Republican are pooh-pooing the president’s plan for bringing less revenue into the Social Security system, the media of late have fixated on the disparaging comments presidential candidates, in particular Rick Perry, have made about Social Security. At the Republican candidates’ debate last week, Perry once again called Social Security a Ponzi scheme and a monstrous lie. Said Perry:

I think the Republican candidates are talking about ways to transition this program. And it is a monstrous lie. It is a Ponzi scheme to tell our kids that are twenty-five or thirty years today: ‘You’re paying into a program that’s not going to be there.’ Anybody that’s for the status quo with Social Security today is involved with a monstrous lie to our kids, and it’s not right.

Perry was basically repeating what he had said before in Iowa, and it looks like he will stay on message as long as he remains a candidate. It will be up to the media to explain the difference between Social Security, which is social insurance where people pay taxes and accumulate credits and then receive a pension backed by substantial political commitment and trillions of dollars in financial reserves, and a Ponzi scheme, which is a criminal fraud backed by nothing, as Brookings Senior Fellow Henry Aaron puts it.

What’s missing are stories explaining, as Nelson tried to do, that there could be long-term consequences tied to reducing the payroll tax. “The Ponzi scheme is a sideshow. It’s an outrageous claim designed to undermine confidence in the program,” says Nancy Altman, co-director of Strengthen Social Security, a progressive group trying to save the program. Altman knows her onions when it comes to Social Security, having assisted Alan Greenspan, who headed a bipartisan commission in 1983 that put Social Security on a sound financing footing. Altman wasn’t keen on the payroll tax holiday agreed to last December, telling NPR that this “could eventually lead to the unraveling of Social Security.” If Republicans make this permanent, it could spell real trouble for Social Security, she said.
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Zygote personhood

Don’t kid yourself that this is “just” Mississippi. The Christian right is going after birth control in every state:

Mississippi voters will be allowed to decide on a ballot measure that defines “personhood” from the moment of fertilization, the Mississippi Supreme Court ruled last week. The measure could potentially outlaw abortions, birth control, in vitro fertilization and stem cell research across the state.

Measure 26, which will bypass the legislature and go straight to a popular ballot vote, redefines the term “person” as it appears throughout Mississippi’s Bill of Rights to include “all human beings from the moment of fertilization, cloning or the functional equivalent thereof.” The American Civil Liberties Union of Mississippi, Planned Parenthood and the Center for Reproductive Rights filed a lawsuit against the proposal earlier this year, not based on its content or constitutionality, but because Mississippi state law says a ballot initiative cannot be used to change the Bill of Rights.

The Mississippi Supreme Court rejected the lawsuit in a 7-2 ruling, saying that it had no power to review any ballot initiative before the actual vote takes place.

Let’s look at some of the interesting legal ramifications. If you go through in-vitro fertilization, and it doesn’t work, you’d have to report that as a death. (Same thing would go for very early miscarriages. How do we know you didn’t try to abort your pregnancy? Women would have to prove they didn’t murder their blastocyst/ zygote/ embryo/ fetus.)

Your blastocyst/ zygote/ embryo/ fetus would have the right to inherit, naturally, so if you have a miscarriage, that could certainly tie up some estates — not to mention that Social Security would be paying survivors benefit if you’re pregnant and your spouse dies. Could be a little more costly!

And if people get illegal abortions, as people will when you make them impossible to get, that means the woman and her doctor can be charged with homicide. Of course, having a drink or a smoke during pregnancy is contributing to the delinquency of a minor. (Geeze, I just thought of something else — if you have sex while you’re pregnant, is that child sexual abuse?)

The mind reels at the possibilities!

And remember, kids: It’s not about abortion, it’s about sex.

How to fix Europe’s economic crisis

Ian Welsh:

It’s not complicated. It’s just unthinkable.

1) Let the banks go under if they’re bankrupt. Make their private owners take the losses.

2) Refloat the banks, this will cost a TON less than having governments pay of private losses.

3) For countries with “unsustainable” debts after doing this, roll the debts over into 100 year bonds at 1% interest. If the bondholders don’t like that, that’s just too bad. No, they won’t “strike”, neither Iceland nor Argentina have any trouble getting loans.

There are other things which should be done, but that’s the basics. This is not complicated. It just requires being willing to stick the bill for the financial crisis with the people who caused it, financial elites.

That infrastructure privatization bank

Muniland is a Reuters blog that specializes in municipal bond-related issues, and this caught my eye. That infrastructure bank Obama proposed? The AIFA would require that funded projects generate revenues to repay the loan to the infrastructure bank. That is, charge tolls for bridges that used to be free — which to an extent, privatizes the public works:

The legislation seems to require public-private partnerships for funding. In the bill’s criteria for loan approval, there’s a preference for those projects which maximize private investment (page 41):

“the extent to which the provision of assistance by AIFA maximizes the level of private investment in the infrastructure project or supports a public-private partnership, while providing a significant public benefit”

Conceivably Warren Buffett’s Burlington Northern Santa Fe railroad could team up with a small municipality and receive below-market loans to fund improvement of their rail systems. There is a lot of gray area defining “public good” in the legislation and this makes way for many projects that might have a larger private component.

The legislation also requires that projects have dedicated repayment sources (page 43):

(3) DEDICATED REVENUE SOURCES.—The Federal credit instrument shall be repayable, in whole or in part, from tolls, user fees, or other dedicated revenue sources that also secure the infrastructure project obligations.

The essence of the American Infrastructure Financing Authority is to use the full faith and credit of the U.S. government to loan funds at below-market rates to public-private partnerships — in other words, to privatize the cash flows from public assets.

When you read the congressional testimony and materials about the proposed bank you always hear about the vast sums of private money waiting in the wings to be invested. When Robert Wolf, Chairman and CEO of UBS Americas and close confidant of President Obama, testified to the Senate Banking Committee last year he said:

Preqin, a private equity industry consultant, estimates that there is over $180 billion dollars of private equity and pension fund capital focused on infrastructure equity investments. This capital can play an important role in bridging state and local budget gaps.

There is no question that private money is interested in being used for loans to infrastructure projects and guaranteed by the federal government and taxpayers. It’s almost identical to senior bondholders who loaned money to too-big-to-fail banks. It’s the best setup for private money because there is no loss.

Although McClatchy is reporting that Rep. John Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee is unenthusiastic about plans for an infrastructure bank, it’s likely that the Senator Kerry’s legislation will be adopted since it has support from the administration, the AFL-CIO and the U.S. Chamber of Commerce.

But it’s a pity that a project dressed as job creator will really be a vehicle to create privatized public assets. Our nation was founded and grew strong on the basis of our shared public infrastructure. It’s a shame that the American Infrastructure Financing Authority will be the agency in which ownership of public assets becomes private.

Is this a free-market solution in search of a problem?

Currently almost all American infrastructure is funded either through municipal bonds or federal funding. Even as federal funding has been constrained, municipal bond issuance has been very low this year, running at about half of last year’s rate. There is plenty of capacity to fund infrastructure with municipal bonds. From a funding standpoint it’s not clear why we need an infrastructure bank, especially a paygo infrastructure bank.

Consider the source of this article, though. The pinstripe patronage pit of the municipal bond market is where politicians hide all kinds of payoffs (i.e. “fees” and kickbacks), so muni dealers complaining about this isn’t necessarily a bad thing. I just have to wonder if this private infrastructure bank isn’t just a way for rent-seeking investors to siphon off the value from public projects. Seems like it would be a good thing for someone to explain!

Morning reads

“People are close to revolt.” James Fallows.

“Republicanism as religion.” Scary stuff.

“Obama’s unhelpful advice.” The wingnuts are sending this one all over the place – and they’ve got a point, as anyone who’s ever done payroll taxes will tell you.

“Even Harvard couldn’t protect me.” The anxieties of an unemployed job hunter.


In the continuing saga of me trying to get a good night’s sleep in my bedroom, the air conditioner mold is really bad. (Did I mention I’m allergic to it?)

The whole room reeks of it. I’ve wiped and washed everything I can, but I feel it every morning when I wake up. Arghh.

Lower testosterone

This makes sense.

The revolving door

Maybe we should stop giving money to candidates and just hire our own lobbyists.

Breaking news

Iran president says he will pardon two American hikers held since 2009.

Two-tier wages

Seems like everything’s headed this way, thanks to the bankers and their greed.

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