April 16, 2018 (Analysis) By now you have surely read a lot on this. Speaker Paul Ryan decided to go spend more time with the family. He did not want the job, but took it reluctantly when John Boehner left. He is probably telling like it is when he says that he wants to spend more time with his children, who are teenagers. For a change. a politician might be telling a version of the truth. He really wants to spend more time with the family.
But this is not about his family, though his family will be affected by the policies the speaker preferred. It is well known that Ryan is a follower of Ayn Rand and the objectivist philosophy. This places the individual at the center of all human interactions, and makes selfishness a virtue. We know he even makes his staff read Fountainhead. This badly written novel is at the heart of the philosophy and makes greed central to the human condition. It used to be a fringe ideology, but has become a central tenet of modern-day Republicanism.
Ryan counts the tax reform bill as his greatest achievement. Any objective person who cares for the health of the economy and understands that trickle down economics has never worked, knows. that this reform will blow up the deficit. This is something that fiscal hawks, such as Ryan before Trump, used to care about. Mostly because a Democrat was in the White House. Trump will sing anything put in front of him, and that is something that Ryan does not mind. However, there is a method to this seeming madness. The other objective is “entitlement reform.” Ryan has been clear. Since this bill was signed into law, his other goal was to change Social Security and Medicare as we know it, because we cannot afford it, they tell us. This has been in the works for some time. Ryan leaving does not mean this clear and present threat to the safety net is over. His gift, a tax law that guarantees the budget will blow up, is part of that plan.
They are trying to rid the country of Franklin Delano Roosevelt’s legacy, and Lyndon Baines Johnson while at it. This means either eliminating or privatizing both Social Security and Medicare. Why? If you blow the budget to kingdom come, sooner or later you will need to cut costs somewhere, and the Department of Defense will not be it.. Social Security, never mind it is not part of the same budget, has been a target of libertarian economists since at least the 1970s, if not earlier. Oh never mind that Ayn Rand cashed her Social Security checks when her time came. Hers was a classic attitude, of I got mine…
This tactic of creating a crisis to force changes that none wanted was first used in places like Augusto Pinochet’s Chile and yes, recently Greece. It is called disaster capitalism, and it needs a major crisis for the people to accept these changes. Incidentally, the tactic was recommended to the Chilean government, after the coup, by a group of American economists. All of them hailed from Chicago and all of them were Radical Free Marketers in outlook. Chile provided a good place to experiment in real world conditions. They were convinced the private market would be able to do a better job than the evil government.
One of the targets was the. Chilean social security system which. was privatized. It is run with private investment accounts, and has greatly reduced benefits. It is also mandatory for all employees, except the self employed and the armed forces.
This has led to protests, and this is why:
Recently, hundreds of thousands of Chileans have taken to the streets of Santiago to protest the failure of Chile’s privatized pension system. As the first generation of workers who participated in the system of private individual accounts begin to retire, they are realizing how little they have to retire on. The reformers who created Chile’s privatized pension system promised that everyone would achieve 70 percent income replacement in retirement; the reality has been closer to 38 percent. The average monthly retirement benefit is a meager $400, but many workers only have between $160 and $260 per month, hardly enough to sustain a dignified retirement.
Realize that this model is the one that both Wall Street, and people like Ryan favor. Corporate Democrats have moved away from that, and now want to expand the system and strengthen it. One way to do that is to raise the cap of income that needs to contribute to the system.
Increasing or eliminating Social Security’s cap on taxable wages, now $118,500 a year. Raising the cap would help mitigate the erosion of Social Security’s payroll tax base caused by rising wage inequality. Most workers’ taxes would not change, while the degree of increase in high earners’ taxes would depend on whether the cap were raised or eliminated. Raising the tax cap could increase higher earners’ benefits as well, depending on how policymakers treated newly taxed earnings. Changes to the tax cap could close roughly a quarter to nearly nine-tenths of Social Security’s solvency gap, depending on how they were structured.
There is something else. The Social Security Fund should not be counted in regular order budgeting decisions. It is a different, separate, should be protected trust fund. You pay for both programs every pay period with your FICA taxes. They go to fund both Medicare and Social Security.
Both are part of the federal budget, if you wish to be technical about it, but protected, from the rest of the regular spending. You should not use the trust fund for defense, for example. The fund needs this protection because current workers pay into the fund, which pays current. beneficiaries. Future workers will do the same, when current workers retire and draw from the program. It is the way these systems are designed, and they work.
Privatizing this trust fund would be a windfall for Wall Street, but those who benefit from the program now, and in the future, will lose. This has been a dream, a policy goal, for people like Ryan for decades. They have a problem with a system that essentially reduced old age poverty. This was one of the reasons for its passage during the Great Depression, and even then Republicans opposed it.
Oh and the final irony, Speaker Ryan benefited from Social Security as a young man. He lost his father when he was a teen ager. It was the program he seeks to eliminate that allowed him to go to college, and his mother to survive as a young widow. And there is more. He will get a secure retirement since he served 20 years in Congress. I have no problem with his retirement. But why should he be allowed to have that retirement, while working to deny that for other Americans?
This is at its core, Randian philosophy. This is why Objectivism is so toxic. Like Ayn Rand, the Speaker will take his, while seeking to deny the same to others.
As the deficit grows, remember this is part of the plan. They will try to convince you that we cannot afford these programs anymore. Knowledge will hopefully help you protect this trust fund, for you and your children. It is time to get involved, and it is time to fight this.