Social Security should not be on the chopping block - Letter by Elizabeth Marum - comments

This is a letter to the editor recently published by the Bozeman Chronicle. Reproduced here for fair use and discussion purposes. My comments interspersed in bold. I have previously discussed SS here and here.

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Social Security has successfully lifted seniors out of destitute poverty for 77 years (This success of a program still leaves seniors having to choose between food and medicine {"In 2001, 8.4% of households with seniors were food insecure"}. Depending on the day and the political point being made, either seniors are being lifted out of poverty by this successful program, or they're starving to death because we are so stingy and greedy. Which is it?), 

and has allowed the most vulnerable — seniors, survivors and disabled persons — the dignity to manage a minimal lifestyle (Minimal lifestyle? Is that the goal of the left wing for our seniors? Is that what they think is fair and equitable? This is what they think is dignity, to be barely scraping by, depending on a small government check just to exist? Really?). 

Social Security is not part of the federal budget, and never has been. (This is a strange assertion. Why would the author be so concerned with whether or not SS is part of the federal budget? Is it because of the general {accurate} perception that government is corrupt and wasteful? Ms. Marum is correct, though. SS is indeed "off budget" in the sense that its income and payouts are not part of the general fund ledger. But that is hardly a plus, as we shall see.)  

It’s securely (Yes, securely. Not insecure at all...) 

placed in a trust fund, invested in 30 year treasury bonds, where it grows by 15 percent a year (The "assets" of the Trust Fund are indeed "invested in treasury bonds." However, this is really only an obfuscation. The Trust Fund dollars are removed from the Trust Fund when received and added to the General Fund where they are spent. The treasury issues bonds to the Trust Fund in the place of the cash, which, of course, are debt instruments. The "assets" of the Trust Fund, therefore, are IOUs. No cash, just bonds. The Trust fund is therefore a liability, not an asset. We will need trillions of dollars to pay back the bonds, which will come from us, the taxpayers. 

But what about that 15% growth she cites? A quick google search yielded no results. This must then be considered a fiction. Especially since according to the treasury, the actual 30 year bond yield is 2.94%. That yield, which of course itself is sourced from taxpayer money, is deposited into the Trust Fund, which then is immediately used to purchase more treasury bonds, the proceeds of which are deposited into the treasury to be spent. Are you catching on to this little shell game?). 

Treasury bonds are considered the safest investment in the world, and that’s why all kinds of investors buy them, including foreign governments (Whew, What a breathtaking misrepresentation. These treasury bonds are not marketable, by congressional decree. They are special treasury bonds that can only be bought by the Trust Fund. No investor or foreign government owns one. And as we have seen, they are not investments at all, for the "yield" is a shell game.). 

In addition, it’s an earned benefit, a public insurance plan (Well, no. It is certainly not an earned benefit or an insurance plan. Flemming Vs. Nestor established just the opposite, that there is no legal right to benefits. Indeed, the ruling specifically noted that congress can increase, decrease, or eliminate benefits as they see fit under Section 1104 of the 1935 SS Act.). 

Beneficiaries have paid into the system just like we’ve purchased car insurance, many of us for decades (Again, no. Beneficiaries have not paid into the system. This suggests a voluntary action. That money has been extracted by the government, without choice. And, Social Security definitely is not insurance, it is a tax with a promised future benefit for those who qualify. It does not follow insurance actuarial rules, it does not collect money or pay benefits according to sound financial insurance practices, and benefits are not tied to any known economic principle. There is no account with a stated dollar value for anyone, and those who receive benefits are not tapping into their own money, they are being funded with today's workers' taxes.) 

Current budget negotiations are more about ideology and less about how to trim the budget and solve the fiscal problems. It’s a cruelty test to see if we will tolerate it.

Why else would a $100M cut in cost of living adjustments be proposed when it will directly hurt 198,230 Montanans whose average benefit in 2011 was just $1,081 a month (Wait a second! Didn't Ms. Marum just write, "Social Security has successfully lifted seniors out of destitute poverty?" Now the average benefit is "just" $1,081 per month. So which is it, a glowing success or an inadequate benefit?)? 

Many seniors — women especially — make far less than that. The proposed cuts to the already bloated defense budget are $122M. 

It doesn’t just matter to recipients, either. Nationally, Social Security has a multiplying effect of 1.7 on each dollar as the modest monthly benefits are spent locally on housing, food, utilities and essentials (What? This is utter nonsense. Each dollar of SS paid out was first taken from the pocket of another person. Thus, that person does not get to spend this dollar for any multiplier effect, someone else does. There is only one multiplier effect. Once the person is denied it by forfeiting the dollar, another "inherits" the multiplier effect by him spending that dollar instead. This means the net benefit is, yes, zero. 

Further, I would contest that there even is a multiplier effect greater than the effect of the free market left to its own processes. But more to the point, the multiplier effect is simply another way of saying the effect "trickles down." Yes, once again the Left simultaneously approves of and despises something depending on political expediency.). 

For those not entirely dependent upon it (Why make this distinction? Is Ms. Marum making a tacit admission that SS does not, in fact, lift people out poverty?), 

it offers a quality of life and pays for a few extras growing local main street businesses ("A quality of life," not "a better quality of life," which is obtained by coercing people to part with their money so that retirees can receive benefits. Years ago, their money was taken from their own pockets in order to fund those who were on social security back at that time. Had we been able to be left to our own choices, we would be able to save, spend, or invest this money ourselves with much better results. Or lost it on the ponies or the stock market. But it is our own money after all, which we should be able to do with as we see fit. That is, until the government decided to lay claim on it "for our own good.").  

In 2011, Social Security paid $2.57 billion to Montanans. (And by extension, took $2.57 billion from others. )

Remember, it’s hard to drive income into rural areas where there are fewer opportunities for high-paying jobs and where our population is rapidly aging (More nonsense. There is no stated goal of SS to "drive income" into rural areas. There is no evidence that SS successfully does this. And finally, there is no demonstrable benefit for such a thing. But let's grant her the point for the moment. If indeed SS "drives" income into rural areas, Ms. Marum must now concede that SS is not a savings plan, it is a redistributive tax with an economic objective to allocate money according to geography as a social engineering mechanism. This has nothing at all to do with individual savings plans, insurance, or individual account accumulations. Ms. Marum has ceded her entire presentation up to this point; indeed, she must abandon it in favor of governmental micromanagement of the rural economy). Social Security works for Montana. Let’s keep it that way!

Elizabeth Marum

(Wow, this is truly an ignorant explanation of how SS functions. Not a single assertion made by the author has a factual basis. She so misunderstands the transactions taking place that one must consider the possibility she is deliberately misrepresenting the situation.)