- Hardcover: 199 pages
- Publisher: University Of Chicago Press; 1 edition (January 3, 2000)
- Language: English
- ISBN-10: 0226035441
- ISBN-13: 978-0226035444
- Product Dimensions: 6 x 0.8 x 9 inches
- Shipping Weight: 1 pounds (View shipping rates and policies)
- Average Customer Review: 18 customer reviews
- Amazon Best Sellers Rank: #3,090,145 in Books (See Top 100 in Books)
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Social Security: The Phony Crisis 1st Edition
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The sky isn't falling on Social Security, say economists Dean Baker and Mark Weisbrot in this readable but sophisticated defense of America's popular government-run retirement program. The public suspects Social Security won't be solvent in the 21st century, they continue, because of "an avalanche of misinformation, disinformation, and powerful political and financial interests." The authors are both liberal economists, and they believe that the privatization of Social Security favored by many libertarians and younger Americans would involve great risk and possibly destroy a system of entitlements that has rescued millions of retirees from spending their golden years in poverty. Although they admit the stock market has averaged a 7 percent rate of return over the last 75 years--much higher than anything Social Security can claim--there is no way to predict what will happen in the future; mandatory private investment programs favored by many free-market reformers therefore offer false promises. Only Social Security, say Baker and Weisbrot, provides a guarantee of income for the elderly. Along the way, Social Security: The Phony Crisis discusses the history of Social Security and evaluates several of the reform proposals now on the table in Washington. A constant drumbeat in favor of the status quo will guarantee this book's popularity among liberals. --John J. Miller
Baker and Weisbrot take issue with widespread dire predictions that the 64-year-old Social Security system will not be able to provide financial security for the aged and disabled in the future. Baker, a senior research fellow at the Century Foundation and the Preamble Center, and Weisbrot, a research director at the Preamble Center, project that Social Security will remain viable for at least 30 more years--longer if the U.S. economy continues to grow at its current pace. Concerns about a shortfall that will transform economic class warfare into "intergenerational conflict" are outright lies, according to the authors. Doomsayers have misinterpreted demographic trends and mistakenly lumped together Medicare and Social Security when estimating the financial burden on the government, the authors claim. Baker and Weisbrot offer an interesting viewpoint in the controversial debate about Social Security--one that is certainly more welcome than the typical predictions of a shortfall. Vanessa Bush
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As far as calling the authors left wing or crackpots. I can tell you the work done by Dean Baker and by the Center for Economic and Policy reseach is some of the best economics done in the country. They are one of the few economic institutes of note who have not sold out to large power interests. If you sit in the top 2% of wealth in the country, go ahead and call them names. You need to, because their facts can not be argued away so easily. However, the rest need to wake up. If you are part of the rest of population (the other 98%) of the country in income and agree with Social Security "reform" you either don't know what is intended for Social Security (i.e. handing it over to wall street) or did not understand the arguments expressed in this book.
The 1935 Social Security Act created a special payroll tax to be used exclusively for funding Social Security. General revenue funds were not to be used to pay Social Security benefits, and Social Security tax receipts were not to be used for any purpose other than Social Security. Payments into the Social Security system were to be kept separate from general revenue funds and credited to the individual accounts of those who made the contributions. The Budget Enforcement Act of 1990 re-enforced this.
(my own understanding of events is that during the Viet Nam war, Congress enacted a new law that lumped Social Security funds in with the general income. Then they could legally raid Social Security "surplus" because they just made it legal to do so. But, since I don't have specific data, I'm putting this in as an aside.)
In 1983, Congress enacted a Social Security tax increase to cover the ballooning benefit payments that would result from the retirement of the "baby boomers" beginning in 2010. The increase began generating large Social Security surpluses that didn't go unnoticed by the Reagan and Bush administrations which began "dipping" into Social Security revenues and using them for non-Social Security purposes. President Clinton followed suit, and every administration since Clinton. (I don't know why everyone blames the president when Congress is in charge of spending).
In his February 27, 2001 State of the Union speech, George W. Bush promised "to pay down 2 trillion in debt over the next 10 years,... "fund the nations priorities with money left over" and protect "all $2.6 trillion of the Social Security surplus for Social Security and for Social Security alone..." Within five months, Social Security surpluses were already being used to replace lost revenues created by huge tax cuts.
Approximately $1.5 trillion of our hard-earned Social Security Trust Fund dollars, legally set aside for our retirement, have been "borrowed" and spent without our knowledge or permission. The resulting I.O.U's represent 21.3% of our National Debt and have no value unless the government at some point decides to repay the money. President Bush admitted the iou's were "worthless".
Former Congressional Budget Office Director June O'Neill indicated that the trust fund "holds no real assets." "These so-called trust fund 'assets' simply reflect the accumulated sum of funds transferred from Social Security over the years to finance other government operations."
For additional information, try "The Looting of Social Security" by economist Allen W. Smith, Ph.D.
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Social Security is an intergenerational welfare program.Read more