Friday, July 22, 2011

Social Security and the debt limit

Ida May Fuller (Public Domain)
President Obama’s warning that a failure to increase the debt limit may mean that there is not enough money in the federal treasury to send out Social Security checks should put a stake through the heart of the myth that there is a Social Security trust fund. In an interview with CBS News, President Obama said, “I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it.”

For decades now, Social Security has been sold to the American public as a retirement plan. Many Americans believe that their Social Security taxes go into an account that is held for them until they retire. In reality, Social Security is a pay-as-you-go program in which current tax receipts are used to pay the benefits for current retirees.

Social Security was enacted into law in 1935. According to the Social Security Administration, the first Social Security beneficiary was Ida May Fuller of Ludlow, Vt. Fuller began collecting benefits in 1939 after paying into Social Security for less than three years. Her contributions (taxes) totaled $24.75. Fuller lived until 1975 and collected a total of $22,888.92 in Social Security benefits. This is equivalent to a return on her “investment” of over 900 percent. Current Social Security returns are approximately two percent.

If Social Security were a true retirement plan, Fuller’s benefits would never have lasted for 36 years. Fuller’s benefits were being paid by the Social Security taxes of current workers rather than Fuller’s own contributions and interest.

According to the Social Security Administration’s website, the 1935 Social Security Act established a trust fund for Social Security benefits. On one part of its website, the SSA calls it a myth that the Social Security funds have been placed into the general fund of the federal government. However, on another page, the SSA admits that Social Security taxes are invested in securities and that “the cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.”

In other words, money in the Social Security Trust Fund is given to the general fund of the federal government in exchange for “special-issue” securities. The trust fund is filled only with s to repay the funds borrowed by the federal government. Thus far, the federal government has always repaid the funds with interest, but if the federal government is in default then it might not be able to do so.

The AARP notes that fourteen percent of Georgians, primarily seniors, receive Social Security benefits. For more than thirty percent of these seniors, Social Security is the only source of income.

If the Social Security Trust Fund were a true retirement plan in the form of a privately administered investment plan, it would be required to maintain a certain ratio of liquidity to invested assets. Instead, Social Security relies on current tax receipts and the repayment of funds borrowed from the trust fund by the federal government. Since current taxes cannot pay current benefits, if the government cannot repay its borrowed funds (with more borrowing), then it might well not be able to pay benefits to current retirees.

It is likely that Congress and the president will come to an agreement that will continue to fund the federal government, but taxpayers should remember the summer of 2011 as the time when the myth of the financial security of Social Security was deflated.

Continue reading on Social Security and the Debt Limit - Atlanta Conservative

Tuesday, July 12, 2011

Lessons from 1938

An abandoned stimulus sign is symbolic of the failure of Obama's economic agenda.

While the storm clouds gather far across the sea,
Let us swear allegiance to a land that's free,
Let us all be grateful for a land so fair,
As we raise our voices in a solemn prayer.
-Irving Berlin, introduction to “God Bless America”

Composer Irving Berlin penned those words as an introduction to the patriotic song “God Bless America” in 1938.  In that year, Americans surely felt the need for God’s blessings. 

As Berlin noted, war clouds were gathering across both oceans that lapped at America’s shores.  Beyond the Atlantic, Adolf Hitler has assumed power in Nazi Germany and began to rebuild the German military in violation of the Treaty of Versailles.  That year Germany annexed Austria and Czechoslovakia’s Sudetenland as other European leaders followed a policy of appeasement.  Kristallnacht, a night of coordinated attacks and pogroms against German Jews also took place in 1938.

To the west, across the Pacific, Japan was also violating the London Naval Treaty which restricted the number of warships in its Navy.  Japan had already captured Manchuria and Shanghai in China and was attempting to conquer the rest of the country.  In 1938, Japan announced its intention to form a New Order for East Asia and to dominate the region.

By 1938, Josef Stalin had turned the Soviet Union into a police state.  In power since the death of Lenin in 1922, Stalin had already purged the Soviet Union not only of his enemies and foreign immigrants (including thousands of Americans who had fled the Great Depression), but many of his allies and innocent people as well.  Stalin’s policies also led to massive crop failures and famines that killed hundreds of thousands more.

In 1938, the situation at home was not well for the United States either.  The Great Depression had begun in 1929 and had worsened under the watch of President Franklin Roosevelt.  By 1938, Roosevelt’s policies of tax increases, high levels of government spending, and more regulation on business had turned a slow recovery into a second recession within the depression.  The country’s economic difficulties spurred strict immigration laws and an isolationist foreign policy.

In many ways, the world and America of 2011 strongly resembles the world and America of 1938.  Hostile dictatorships are rising around the world as our federal government attempts to legislate its way out of an economic crisis that was caused in part by reckless legislation in the first place. 

The most obvious threats are in the Middle East.  President Ahmadinejad of Iran is nearing the end of a nearly decade long push to develop nuclear weapons.  Iran recently unveiled underground missile silos that reportedly accommodate medium- and long-range nuclear missiles that could possibly reach Israel or beyond to Europe… or possibly even the United States.

There is little doubt of Iran’s hostility to the United States.  In June 2011, Defense Secretary Robert Gates announced that Iran is renewing arms shipments to Shiite terror groups in Iraq as American soldiers prepare to withdraw.  Gates attributes forty percent of U.S. troop deaths over the past ten months to the Iranian arms shipments. 

After the breakup of the Soviet Union twenty years ago, the Russian Empire is now resurgent under Vladimir Putin.  Putin has reversed many of Russia’s democratic reforms and killed and imprisoned dissidents and journalists, both at home and abroad.  In a case worthy of a James Bond film, Alexander Litvinenko, a former Russian agent living in exile in the U.K., was poisoned with a radioactive substance.  It is widely suspected that Litvinenko was murdered on Putin’s orders.

Putin and Ahmadinejad (
Putin has also leaned on other countries.  He has attempted to strong-arm the Ukraine and has cut off the flow of gas through pipelines from Russia.  Putin’s Russia is also suspected of using poison to try to assassinate Viktor Yushchenko, then a Ukrainian presidential candidate.  The poison left Yushchenko’s face scarred, but he survived and is president of the Ukraine today. 

More overtly, Putin’s Russia invaded the central Asian country of Georgia in 2008.  Russia captured two disputed areas in Georgia, South Ossetia and Abkhazia, and occupies them to this day.  Putin, who was director of the Federal Security Bureau, the successor agency to the K.G.B., is also widely considered to be largely responsible for the brutal Second Chechen War.  Under Putin, Russia has also been beaming slickly produced propaganda to the U.S. via the RT television network.

Like the Americans of 1938, the Americans of 2011 have become increasingly isolationist.  The Americans of the 1930s had not been at war for the past decade, but they had witnessed a twenty-five year occupation of Haiti, a twenty-one year occupation of Nicaragua, a sixteen year occupation of Cuba, and numerous other interventions in Central America as well as having troops in harm’s way in China.

As in our own age, war weariness likely combined with poor economic conditions to cause many Americans to embrace and isolationist view.  The America First Committee was made up of many prominent Americans who believed that the U.S. should stay out of foreign wars.  The isolationists opposed even sending military aid to the countries fighting Hitler, believing that America was safe from foreign attack.  The America First Committee was disbanded four days after the Japanese bombed Pearl Harbor, but their actions left the U.S. military woefully unprepared for war and emboldened aggressor nations.

Today, the wars in Iraq and Afghanistan have sapped much of America’s strength.  After 9/11, most Americans supported a broad war against the terrorists and believed that failure to take military action was a bigger risk than doing nothing.  Now, after the death of Osama bin Laden, almost three-quarters of Americans support President Obama’s plan to withdraw from Afghanistan, leaving the country ripe for a Taliban resurgence.  Americans now oppose the war in Iraq by a two-to-one margin, even though leaving might mean that Iran could gain control of a large portion of Persian Gulf oil fields.

Like the isolationism of yesteryear, today’s antiwar sentiment is largely because of the poor economy.  Although the current recession is not as bad as the Great Depression, it is one of the worst recessions of the last half-century.  Like the Great Depression, it is likely that the strong and swift government action taken to prop up the economy has made matters worse.  Henry Morgenthau, FDR’s treasury secretary and trusted advisor, told Congress in 1939 that “after eight years of this [Roosevelt] Administration we have just as much unemployment as when we started….  And an enormous debt to boot!”

Even though President Obama and the Democrats promised that the stimulus and a myriad of other government programs would cure the economy, the recovery has been slow.  Even worse, recent economic indicators show that a double-dip recession is becoming more likely.  For many Americans, the best that can be expected is “the new normal:” high unemployment, lower wages, and economic stagnation.   

In Georgia, the unemployment rate has been consistently above the national average during the economic crisis.  That remains true, even though Georgia unemployment has declined slightly over the last few months while national unemployment rose.

There are two lessons to learn from the America of 1938.  The first is that, as President Reagan put it, when it comes to the economy, “Government is not a solution to our problem, government is the problem.”  The attempts to control the economy by President Obama, and earlier by President Roosevelt, create uncertainty and discourage businesses from growing and investing.  Increased regulation limits the ability of businesses to grow and become profitable.  Higher taxes mean that businesses have less money with which to grow and invest.  All of this means fewer jobs and economic stagnation. 

Second, America should learn that it is a force for good in the world.  In fact, it is one of the only, and certainly the largest, such force in the world.  When America focuses its attention inward, dictators and despots rise up and take control of their nations or assault their neighbors.  Appeasement works for no one except the aggressor.  As Edmund Burke said, “All that's necessary for the forces of evil to win in the world is for enough good men [or a good nation] to do nothing.

Monday, July 11, 2011

Support for same-sex marriage may be overstated

(Wing/Wikimedia Commons)
Over the past year, defenders of traditional marriage have suffered a series of setbacks.  In August 2010, a federal judge struck down California’s definition of marriage amendment as had happened in a handful of other states.  Just before Christmas, Congress voted to repeal the “Don’t Ask-Don’t Tell” policy and allow gays to serve openly in the military.  In February 2011, Attorney General Holder announced that the Obama Administration would not defend the federal Defense of Marriage Act against challenges in federal court.  King and Spalding, the Atlanta law firm selected by Congress to defend the law, withdrew from the case in April under pressure from gay rights activist groups.

The trend led Jim Daly, the head of Focus on the Family, to tell “World Magazine” in early June that “We're losing on that one [gay marriage], especially among the 20- and 30-somethings….”  Daly went on to say, “We've probably lost that. I don't want to be extremist here, but I think we need to start calculating where we are in the culture.”

Daly’s words were prescient.  A few weeks later, New York became the third state to enact gay marriage legislatively, rather than by judicial fiat (after Vermont and New Hampshire).  The law was primarily supported by Democrats although four Republicans crossed the aisle to allow it to pass.

The trend was seemingly supported by a Gallup poll in May 2011 that indicated that, for the first time, a majority of Americans supported gay marriage.  The Gallup poll asked the question, “Do you think marriages between same-sex couples should or should not be recognized by the law as valid, with the same rights as traditional marriages?”  By a margin of 53-45 percent, respondents said that they believed that same-sex marriages should be recognized.  In the previous poll taken in May 2010, respondents opposed recognizing same-sex marriage by 53-44 percent.

In June 2011, however, a new survey was released that contrasted sharply with Gallup’s findings.  The new poll asked respondents to agree or disagree with the following statement:  “I believe marriage should be defined ONLY as a union between one man and one woman.”  Sixty-two percent of respondents agreed with the statement, including 53 percent who strongly agreed.  Only thirty-five percent disagreed.

The new survey was commissioned by the Alliance Defense Fund, a Christian legal group, and carried out by Public Opinion Strategies.  The ADF-POS poll has a larger sample size (1,500 vs. 1,018 for Gallup) and a smaller margin of error (2.53 percent vs. four percent for Gallup) than May’s Gallup poll.  The question in the ADF-POS poll is also arguably much more simple and straightforward than Gallup’s question.

In a press release, ADF Senior Counsel Brian Raum said, “Americans recognize that marriage provides a strong foundation for a thriving society.  The union between husband and wife benefits society--especially children--in unique ways that cannot be duplicated by any other relationship. Throughout history, diverse cultures and faiths have recognized this universally defined ideal as the best way to promote healthy, natural families for the good of future generations.”

Gene Ulm, a partner at Public Opinion Strategies and director of the survey, noted, “These numbers are not surprising.  More than 63 million Americans in 31 state elections have voted on constitutional marriage amendments. Forty million Americans in all—63 percent of total voters--have voted to affirm marriage as a union between a man and a woman.”

Ironically, the 63 percent margin in the poll is almost exactly the same as the percentage of Americans who have cast ballots in favor of traditional marriage over the years.  It also represents an almost two-to-one preference for traditional marriage.  When Georgia voters considered a defense of marriage amendment in 2004, it passed with 76 percent voting in favor.

At present, only six states (Massachusetts, Connecticut, Iowa, Vermont, New Hampshire and New York) and the District of Columbia issue marriage licenses to same-sex couples according to the National Conference of State Legislatures.  California’s defense of marriage amendment was overturned, but same-sex marriage is not legal pending the appeal.  Additionally, Rhode Island and Maryland recognize same-sex marriages performed in other states and Delaware, Hawaii, Illinois and New Jersey allow same-sex civil unions.  Most of the remaining states either have laws or constitutional amendments that define marriage as between a man and a woman.