Social Security: Broke at the Beginning

It is an axiom in the insurance business that insurance is not bought but sold. In 1935 Franklin Roosevelt sold Congress and Congress sold the U. S. the Social Security Act, the biggest, most comprehensive, most expensive mass insurance policy ever written. Since then its purchasers, the nation's taxpayers, have had occasion to read their policy carefully and, if they have detected no outright jokers, their reaction has been such that practically every politician in the U. S. from Franklin Roosevelt down has put revision of Social Security at the top of his must list.-  "Pie from the Sky" Time Magazine, Feb. 13, 1939

 “It takes a great deal of history to produce a little literature,” said American-born writer Henry James. While generally James has been proved correct, in the case of Social Security, the literature, at least by volume, has swamped the history.

One of the earliest pieces of literature that contributes to the history of Social Security is Time Magazine’s Pie from The Sky, an account of a House Committee hearing called to deal with “reforming” Social Security. The hearing was held four years after passage of the Act and before even a single check was written to old age beneficiaries. The Time article is stunning not because it gives us a quaint, sun-dappled and leaded window into the Norman Rockwell past, but because it provided a pinpoint, spotlight prediction of the acrimonious future of a failed federal program.

It predicted, amongst other things, that by 1980 the “the bond interest” on Social Security “will in turn have to be met by the Treasury, through other taxes.” That is, that the insurance “scheme” was really just a Ponzi scheme that would collapse in time if other taxes to fund it weren’t raised in the future. In fact, the prediction was off by just three years. The solvency of the program was addressed in landmark legislation pushed through by President Ronald Reagan and Speaker Tip O’Neil in 1983. That legislation though only amounted to a twenty-year truce in the Social Security war. The truce ended at the turn of this century.

"Some of the proposals were less than ideal," writes US News, "one that was ultimately enacted into law raised the regressive payroll tax, which hit working- and middle-class Americans harder than wealthier citizens. Nonetheless, the 1983 agreement did succeed in extending the trust fund's solvency for a couple of generations by raising the retirement age to 67 from 65 (to be phased in by 2027); imposing a six-month delay in the cost-of-living adjustment; and requiring government employees to pay into Social Security for the first time."

The Time article also said that the federal government would borrow the money accumulated from the Social Security “reserve” to finance deficit spending and ultimately the public would have to pay the bill:http://finance.townhall.com/columnists/johnransom/2011/07/23/social_security_broke_at_the_beginning

Angry Obama Demands Tax Increases or No Deal

WASHINGTON - U.S. House Speaker John Boehner broke off talks with President Barack Obama on Friday on a deficit-reduction deal to prevent a devastating default and said he would try to hammer out an agreement through the Senate.
In a dramatic turn of events with the deadline to raise the U.S. debt ceiling just 11 days away, a stern-faced Obama expressed frustration at the Republican leader's move, saying it was "hard to understand why Speaker Boehner would walk away from this kind of deal."
Boehner, in a letter to fellow lawmakers, said he and Obama were unable to reach agreement on a broad deficit reduction package they had been negotiating and that the two "had different visions for our country."
A deep divide over tax revenue was at the heart of the collapse in negotiations, which derailed an effort to craft a sweeping $3 trillion deficit-cutting plan that now seems beyond reach. Both sides blamed the other for the impasse.
With the Aug. 2 deadline fast approaching for Congress to increase the $14.3 trillion debt ceiling, Boehner said he would begin talks with Senate leaders to "in an effort to find a path forward." An aide said a deal needs to be set by Monday.



Read more on Newsmax.com: Angry Obama Demands Tax Increases or No Deal
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Boehner: House Will Compromise on Debt Limit Despite Tea Party

House Speaker John Boehner predicted Thursday that a majority of House Republicans will end up supporting some kind of compromise as the Senate began debating a House-passed effort to tie an increase in the debt ceiling to conservative demands for a balanced budget amendment to the Constitution.

Majority Leader Harry Reid, D-Nev., called up the measure to placate Republicans demanding a vote. But he said it "doesn't have one chance in a million of passing the Senate."

At a news conference, Boehner told reporters, "Frankly, I think it would be irresponsible on behalf of the Congress and the president not to be looking at back-up strategies for how to solve this problem."

"At the end of the day, we have a responsibility to act," the Ohio Republican said.

Asked whether GOP lawmakers supporting the House "cut, cap and balance" debt limit measure would be unwilling to ultimately compromise, Boehner said, "I'm sure we've got some members who believe that, but I do not believe that would be anywhere close to the majority."
Bailey Comment: Does this really surprise anyone? Birds of a feather flock together.
Read more: Boehner: House Will Compromise on Debt Limit Despite Tea Party
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House Votes 234-190 to Pass 'Cap, Cut and Balance'

WASHINGTON (AP) — The House has passed legislation conditioning a $2.4 trillion increase in the nation's borrowing cap on a tea party-backed plan to require immediate spending cuts and a constitutional amendment requiring a balanced budget.

The 234-190 vote sends the "cut, cap and balance" plan to the Democratic-controlled Senate, where it has virtually no chance of passing.

With the House tally cast, attention is returning to efforts in the Senate to provide President Barack Obama authority to impose an increase in the debt limit without approval by Congress and on a new Senate "Gang of Six" proposal to cut the deficit by almost $4 trillion over the coming decade.

Read more on Newsmax.com: House Votes 234-190 to Pass 'Cap, Cut and Balance'
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