December 2, 2013

Trickle Up Economics and expanding Social Security

December 2, 2013. After 30 years, it seems evident that the Republican Party’s favorite platform position of all time – Trickle Down Economics – has been a catastrophic failure and has been slowly destroying America’s economic viability. Now, Democrats like Senators Tom Harkin and Elizabeth Warren are coming forward, insisting it’s their turn. Their idea? Trickle Up Economics.

Economist Paul Krugman has called for expanding Social Security, not cutting it. Image courtesy of Salon.com.

Trickle Down Economics

There are two facts from America’s economy that are consistently censored by the country’s Wall Street owned media outlets. First, when welfare is given to the rich – like Warren Buffett, General Electric CEO Jeff Immelt, or even Goldman Sachs – the money never trickles down to the rest of society. Millionaires and billionaires simply add the welfare to their bank accounts or investments with the rest of their fortune. These are the people who have more money than they could ever spend. They don’t even know how much they have and their spending isn’t affected by an increase or decrease of government welfare.



The second fact is that welfare given to the poor, working poor and working class goes directly back into the US economy – every penny of it. The poor spend the money in their local neighborhood, unlike the wealthy who shop in Paris, London or Dubai. Those local mom and pop shops benefit and in turn purchase supplies from American distributors and manufacturers. Those companies hire more people and purchase more supplies to keep up with demand. It illustrates the undisputed fact that when welfare is cut, demand is cut. When welfare increases, demand increases.

Trickle Up Economics

One of the loudest cheerleaders for reversing the tide of America’s financial well being is famed economist Paul Krugman. In an editorial published in the New York Times a week ago, Krugman explained why he believes America is on the verge of a senior citizen catastrophe. He also believes that contrary to conventional wisdom, we shouldn’t be cutting Social Security, we should be increasing it.

‘A funny thing has happened in the past year or so,’ Krugman writes, ‘Suddenly, we’re hearing open discussion of the idea that Social Security should be expanded, not cut. Talk of Social Security expansion has even reached the Senate, with Tom Harkin introducing legislation that would increase benefits. A few days ago Senator Elizabeth Warren gave a stirring floor speech making the case for expanded benefits.’

He goes on to argue, ‘America’s overall retirement system is in big trouble. There’s just one part of that system that’s working well: Social Security. And this suggests that we should make that program stronger, not weaker.’

Shocking facts

Paul Krugman points out two misconceptions that austerity supporters repeatedly use to defend their agenda of cutting Social Security. Naming Rep. Paul Ryan (R-WI) by name for his outspoken efforts to eliminate America’s senior citizen safety net, Krugman points out that his favorite idea is to raise the retirement age from 66 and 67 to something even higher.

Government officials conveniently forget that government employees get to retire with multiple pensions as early as age 55. Instead, they insist that Americans are living longer and everyone but themselves must retire later in life. But Paul Krugman points out that only the rich and wealthy are living longer in America. The country’s poor now reflect a third world country and are actually seeing their life expectancy shortening.

The second misconception Krugman refers to is the mistaken notion that America’s senior citizens aren’t poor and are doing just fine. He insists the government uses a flawed measuring formula and the real number of seniors in poverty is the same as the rest of society. In fact, he warns that the coming years will see an explosion of homeless and poverty-stricken elderly. The reason? The Republicans’ push to cut Social Security in favor of privatized 401K plans was a dismal failure. It benefited the Wall Street investment firms to the tune of billions in additional profits. But it wiped out much of America’s retirement savings.



Support for expanding Social Security grows

Support for the unlikely idea of raising Social Security instead of lowering it is suddenly coming from all points of America’s political spectrum. The latest section of society to sign on is the Veterans community. Vets are homeless and poverty-stricken at a greater rate than any other in America and it probably shouldn’t be a surprise they would favor a shift in government assistance from Wall Street to Main Street.

An editorial in Veterans Today only four days ago removed any doubt, if there was any, that veterans support expanding Social Security. In fact, the editors come right out and accuse both Republicans and Democrats of trying to sell out the American people by converting the Social Security program to a Wall Street run 401K fund.

The article’s author, Dr. Stuart Jeanne Bramhall, begins by making one suggestion that would fund Social Security for another hundred years – forcing the wealthy to pay the same rate the rest of America pays. Bramhall is talking about two Senate Bills sponsored by Sen. Tom Harkin (D-IA) and Sen. Mark Begich (D-AK) respectively. Each would eliminate the cap that rich people pay in Social Security contributions. Under the current system, the more money wealthy Americans make, the lower the percentage of their contribution to the Social Security Trust Fund.

Deceiving the American people

Reflecting a trend across all of America lately, Veterans Today comes right out and points the finger at Wall Street owned Republicans and Democrats alike. ‘It has become virtually impossible for most Americans to find their way through the smoke and mirrors surrounding recent proposals to balance the federal budget by slashing Social Security benefits,’ the publication writes, ‘The entire Social Security debate is an exercise in deception. Nothing exemplifies more clearly that most lawmakers, irrespective of political party, see their primary purpose as deceiving and manipulating the American public.'

The veterans publication goes on to challenge two specific notions that are repeatedly parroted by America’s establishment politicians and news outlets - two groups literally funded and owned by Wall Street corporations. First, they remind vets that the Social Security Trust Fund isn’t on the verge of running out of money any time soon like it’s commonly portrayed on TV.



Second, the publication warns its readers not to be naïve. The author writes, ‘What we’re not being told is that most Washington lawmakers (with a few notable exceptions) are in the pocket of powerful Wall Street banks who seek to privatize Social Security for its profit potential.’

For two generations, society has prepared for retirement using the three-legged system. Those three legs have been Social Security, employer retirement plans, and personal savings. Most financial analysts readily admit that if you weren’t a corporate executive, union member, or government employee, Social Security is the only leg of that plan you probably have that hasn’t been a complete failure. The fact is, a full 50% of all Americans have less than zero saved up for retirement right now. And the next 20 percent of society has only six months worth of savings to retire on. If there was ever a good time to expand Social Security, now would definitely be a good time to do it, at least if you’re an average American.

 

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