Mountain Views News          Saturday, September 24, 2011

11

LEFT TURN/RIGHT TURN

 Mountain Views News Saturday, September 24, 2011 

HOWARD Hays As I See It

GREG Welborn

SOCIAL SECURITY PREVARICATIONS

 
“Clearly, this is a job-killer . 
. . The impact on job creation 
is going to be devastating.”

- Rep. Dick Armey (R-TX)

 

 “The tax increase will . . 
. lead to a recession . . . and 
will actually increase the 
deficit.”

- Rep. Newt Gingrich (R-
GA)

 “I feel bad for . . . the 
working people in this country . . . who are going 
to get the penalties from people who don’t want 
to invest more, take any more risks.”

- Rep. John Kasich (R-OH)

 “Never in the history of the world has any 
measure been brought here so insidiously 
designed as to prevent business recovery, to 
enslave workers and to prevent any possibility of 
the employers providing any work for the people 
. . .”

- Rep. John Taber (R-NY)

 

 “ . . . one of these days you and I are going 
to spend our sunset years telling our children 
and our children’s children what it was like in 
America when men were free.”

- Ronald Reagan

 

 The top three quotes aren’t reactions to 
President Obama’s proposal to raise taxes on 
the richest Americans. Those noticing the 
attributions might wonder about the “Rep.” 
designations, since neither Armey, Gingrich 
nor Kasich are in congress. (Kasich is Governor 
of Ohio, Gingrich is a candidate for president, 
and Armey runs an outfit funneling corporate 
money to the Tea Party.)

 

 They were congressmen, though, in 1993 when 
they offered those views of President Clinton’s 
proposal to raise taxes on the wealthiest to 
clean up the mess left by Reaganomics. (Those 
last two quotes are there for good measure; 
Rep. Taber offered his remarks in 1935 in 
reaction to President Roosevelt’s proposal for 
Social Security; Reagan in 1965 told us what to 
expect should congress pass Medicare.)

 

 Then, as now, Republicans were in lockstep 
opposition to a Democratic president’s plan to 
restore prosperity. Then, as now, Republicans 
unanimously predicted economic devastation 
should the rich be asked to share in the sacrifice. 
Then, as now, Republicans were shown to be 
consistently, predictably, and utterly wrong.

 

 President Clinton’s budget passed with 
no Republican support; it got through the 
House on a 218-216 vote, and in the Senate a 
50-50 tie was broken by Vice President Gore. 
The plan Republicans told us would tank 
the economy instead provided the longest 
economic expansion of post-war America. 
Unemployment dropped from 7% to less than 
4% by 1998, a year which brought our first 
budget surplus after three decades of deficits 
(and a $400 billion hole left by President 
Reagan). The plan Republicans called “job-
killing” helped add 20 million new jobs.

 

 Those same voices who were wrong in 1993, 
and whose support for President Bush’s policies 
brought the worst economic meltdown since 
the Great Depression, now presume credibility 
as they pass judgment on President Obama’s 
plan to cut the deficit and speed the recovery. 

 

 With so many Americans still out of work, 
though, and with responsibility for adding tens 
of thousands of public workers to the ranks of 
the unemployed, Republicans aren’t using the 
“job-killing” line as much as they did in 1993. 
Now, the pitch phrase they recite in unison and 
repeat endlessly is “class warfare”.

 

 I see a battle between those who have a clue, 
and those who don’t. An example of the latter 
is Rep. John Fleming (R-LA), who asked to be 
spared further taxes on MSNBC. His chain of 
Subway and UPS stores bring in $6.3 million a 
year, of which he gets about $600,000, “and so 
by the time I feed my family, I have, you know, 
maybe $400,000 left over . . .” Interviewer Chris 
Jansing observed, “to the average person out 
there making $40-50-60 thousand a year, when 
they hear that you have only $400,000 left over, 
it’s not exactly a sympathetic position.” Rep. 
Fleming then brought up “class warfare”.

 

 (The minimum wage in Louisiana is $7.25 
an hour, about $15,000 a year. For a teenager 
preparing a Subway, there’s a “training wage” of 
$4.25 an hour.)

 

 As for economic classes, it’s getting simple. 
A 2005 report prepared for Citigroup saw 
only two classes; “the rich and the rest”, 
and suggests understanding the future is 
understanding there’s “no such animal as the 
U.S. consumer”. Where the top 1% earn as 
much as the bottom 60%, and have as much 
wealth as the bottom 90%, “economic growth 
is powered by and largely consumed by the 
wealthy few”. The “rest” don’t matter.

 

 Aside from purchasing Congress, one of 
the ways that top 1% ensures favored policies 
is to maintain the myth of upward mobility; 
that through hard work the rest of us might 
someday benefit from those same policies 
ourselves. According to a Brookings Institute 
study, over 60% of Americans believe in it, 
though in America we’re near the bottom 
of developed countries in achieving it. In 
Germany, you’re 1.5 times as likely to move up 
through your own efforts than in America, 2.5 
times in Canada, and 3 times more likely in 
Denmark.

 

 While promoting the myth, there are 
simultaneous efforts to make sure we stay 
in our place. One is the demonization and 
destruction of unions, lessening opportunities 
for working men and women to improve 
their situations through collective bargaining. 
Another is to ensure we remain the only 
developed nation where healthcare means 
corporate profit, not public responsibility, and 
where there’s no direct federal involvement in 
higher education.

 

 There’s a reason education is a favorite target: 
If there were an understanding of history, 
more would recognize discrediting similarities 
between policy arguments today and those of 
the past. Students of economics might learn 
that since 1950, the years with the highest 
GDP growth were the years with the highest 
marginal tax rates. They’d better understand as 
President Obama explains, “The money has to 
come from someplace”, if we choose not to “put 
the entire burden on the middle class and the 
poor . . . This is not class warfare - it’s math.” 

A lot of hash was made over 
Social Security at last night’s 
Republican debate with 
the two leading candidates 
trading jabs about their 
respective past statements on 
the issue. Perhaps it would 
do us all some good to take 
a serious look at what Social 
Security is and what it was.

Social Security today is a 
ponzi scheme. If you think 
I’m being unduly biased and 
partisan, reflect on the words 
of notables from both sides 
of the political spectrum. 
Dr. Milton Friedman (on the 
right) said it was “the biggest 
ponzi scheme on earth”. Dr. 
Paul Samuelson (on the left) 
said it was “greatest ponzi 
scheme on earth”. Dr. Paul 
Krugman (further on the 
left) said that “the ponzi 
game will soon be over”. 
Three Nobel Prize winners in 
economics have all testified 
that Social Security is a ponzi 
scheme. In terms of hard 
evidence, murderers have 
been convicted on less.

What exactly is a ponzi 
scheme? It is defined as an 
operation that pays returns to 
its investors from the money 
paid by subsequent investors, 
rather than from any actual 
profit.. That is exactly what 
Social Security does. The 
system does not take your 
money, invest it or save it 
for your future use. It does 
not try to grow your money. 
The money does not go into a 
separate lockbox. The system 
takes your money and then 
immediately pays it out to a 
current retiree recipient.

The retiree’s ability to collect 
his or her social security is 
dependent on you making 
your payments into the 
system. On a larger scale, 
the ability of all current 
recipients to collect their 
social security payments is 
dependent on there being 
enough workers paying into 
the system. Since we can 
predict demographics fairly 
well and have a pretty good 
idea of what the long-term 
historical inflation rate is 
(benefit payments increase 
with inflation), we can 
predict fairly accurately how 
many retirees, how many 
workers and how much 
money will flow through the 
system at any given point 
in the future. All those 
predictions show that there 
won’t be enough money from 
workers to pay retirees in the 
future. The only debate is 
about what year the system 
will actually crash. 

In private affairs, the date 
the system crashes is usually 
the date someone goes to 
jail. The market downturn 
doomed Madoff’s ponzi 
operation, and he saw the 
proverbial writing on the 
wall. He went to jail, but 
thousands of other people 
suffered worse fates: they 
lost their retirement savings 
with little hope of recouping 
their losses. 

The only difference between 
Social Security and a 
ponzi scheme is that Social 
Security is legal and actually 
sanctioned by Congress. 
Unfortunately, unless the 
system is changed, thousands 
will suffer in the same way 
Madoff’s victims suffered: 
they will lose what they 
thought was a substantial 
part of their retirement 
savings. 

The reason most people 
believe that their payments 
into Social Security are part 
of their retirement savings 
is because that’s what they 
have been lead to believe 
by politicians. Every time 
a politician refers to “your 
social security benefit” he’s 
reinforcing this false notion 
that is at the heart of the 
ponzi scheme.

So if today, the system is a 
ponzi scheme, what was it 
before? It was a massive lie. 
To prove this, let’s rely on 
some of the research work 
of Walter Williams, who 
dug up the old pamphlets 
and reviewed the various 
court cases. The 1936 
pamphlet said “the United 
States government will set 
up a Social Security account 
for you. The checks will 
come to you as a right”. 
Unfortunately, within a 
year of that false promise, 
the government argued the 
opposite before the Supreme 
Court and won. In the 1937 
Helvering case decision, the 
court held that “the proceeds 
of both (employee and 
employer) are to be paid into 
the Treasury like internal 
revenue taxes generally and 
are not earmarked in any 
way”. A later case – 1960’s 
Flemming V. Nestor – 
allowed the court to firmly 
state that “to engraft upon 
the Social Security system a 
concept of accrued property 
rights would deprive it of the 
flexibility… it demands”. 

A ponzi scheme, a lie, and 
a massive fraud are all 
legitimate descriptions of the 
Social Security system. We 
ought not get angry when a 
candidate has the integrity to 
point this out. He’s not being 
naïve; he’s not trying to throw 
granny off the train; he’s 
not exaggerating for cheap 
political gain. The candidate 
who tells us that the system 
is terminally sick, doesn’t 
work, was always a lie and is 
a ponzi scheme is telling us 
the truth. Even the Social 
Security Administration 
is finally owning up to the 
truth. Their website now 
says that the benefits are not 
a contractual right.

The simple truth is that not all 
promises to all beneficiaries 
can be honored. The next 
presidential election will 
decide who we entrust to fix 
this system. It can be fixed, 
but it can also be destroyed. 
My vote is for someone from 
the outside who is honest 
enough to tell us that and 
courageous enough to fix it. 

About the author: Gregory J. 
Welborn is a freelance writer 
and has spoken to several civic 
and religious organizations on 
cultural and moral issues. He 
lives in Arcadia with his wife 
and 3 children and is active 
in the community. He can 
be reached at gregwelborn@
earthlink.net.


WHY THE MIDDLE CLASS FEARS 

TAX INCREASES ON THE RICH

TINA Dupuy


Yesterday, I was idling behind 
a seven-year-old Saturn 
sedan with an anti-Obama 
bumper sticker reading: 
“Because everyone deserves 
some of what you’ve worked 
hard for.”

 There’s a knee-jerk response to dismiss the 
driver as being some dupe naively parroting 
slogans not meaningful in his tax bracket. (You’d 
never see that sticker on a Rolls-Royce.) It’s not 
just the success of Republican “messaging” – 
there’s more to it than that.

 According to the CafePress page selling these 
bumper stickers, the $5 decal was created on 
December 4, 2008. For all you history geeks, 
that was before the Obama presidency. This 
sentiment even existed before the bank bailout. It 
was also weeks before reputed capitalist, George 
W. Bush, approved the $17.4 billion American 
auto industry bailout. Specifically, for GM, the 
parent company of Saturn.

 “If we were to allow the free market to take its 
course now, it would almost certainly lead to 
disorderly bankruptcy and liquidation for the 
automakers,” said Bush in the Roosevelt Room 
on December 19, 2008.

 After GM took government money – taxpayer 
money – as an emergency loan to save their 
company suffering from a disturbing combo of 
willful blindness and ignorance of the market 
– the first thing the automaker had to do 
was downsize. They shut down factories and 
dealerships, shedding jobs. They even eradicated 
some brands. One of those was Saturn.

 Now this driver can look forward to higher 
prices for parts and repairs for a vehicle that’s 
essentially worthless since it was discontinued. 
The Bush bailout of GM was paid for by this 
driver at least twice. So the trade-in value losses 
for putting a sticker on that car? No longer an 
issue.

 Why does this anti-wealth distribution 
sentiment resonate with him? Why doesn’t he 
want banksters and CEOs to pay up?

“Because everyone deserves some of what you’ve 
worked hard for.”

This message was written and uploaded before 
the tea party, when the economy was still in free 
fall. And even though “thinkers” like Samuel 
R. Staley, a fellow at the Reason Institute, wrote 
the unintentionally hilarious talking point now 
being repeated by GOP lawmakers: “It appears 
we are two years into a ‘lost decade,’” the fact of 
the matter is the middle-class has already had a 
lost decade – the ‘00s.

 In the middle-class wages are flat. The three 
million jobs Bush created in his eight years in 
office were moot since the population grew by 22 
million. Prices have gone up, salaries have not. 
Home values have fallen, retirement plans are 
gone, savings are drained. Not since the 1930s 
has a generation been less prosperous than the 
one before. In 2008, the economy for the middle-
class went from long-term stagnation to suddenly 
much worse. 

 And this reasonably caused a fear reaction in 
this Saturn driver. What is he concerned about? 
Wealth distribution. Why?

 It’s usually assumed that the reason Americans 
specifically don’t want to see taxes raised on the 
rich is because, in spite of driving a defunct GM 
brand four-door, they think of themselves as the 
“soon-to-be rich.” But a paper published in the 
National Journal of Economic Research in July 
suggests otherwise. They offer that it’s not hoping 
to be on top that makes us not want the wealthier 
to be taxed more – it’s the fear of being at the 
bottom. It’s referred to as “last-place aversion.”

 The Economist wrote, “In keeping with the 
notion of ‘last-place aversion,’ the people who 
were a spot away from the bottom were the most 
likely to give the money to the person above them: 
rewarding the ‘rich’ but ensuring that someone 
remained poorer than themselves.”

 So taxing the rich isn’t about the fantasy that 
we’re going to someday be rich – it’s about the 
very real visceral fear of being, well, the poorest. 
If the government helps those below you, then 
they’ll be at your level – that’s the unfairness 
they’re afraid of.

 Named one of the worst CEOs of 2008, GM 
head Rick Wagoner received a $20 million dollar 
retirement package, yet an owner of one of his 
beaters has a bumper sticker decrying higher 
taxes for him.

 The driver isn’t fantasizing about being 
Wagoner – he’s terrified of being driven even 
lower in the middle-class. And the GOP has 
successfully exploited that fear. Because 
when people are afraid, they do all kinds 
of irrational things…like vote Republican.


Tina Dupuy is an award-winning writer and the 
managing editor of Crooks and Liars. Tina can be 
reached at tinadupuy@yahoo.com.

 This column has been edited by the author. 
Representations of fact and opinions are solely 
those of the author.


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