In an attempt to make the problems surrounding Social Security understandable to his coffee-shop associates, this week Lucius Flatley reminisced about his childhood savings bank.
Rather than a bank insured by the FDIC, the Flatley program was chartered and controlled by his mother. Operating under the name Piggy, it was kept on a shelf in the kitchen pantry. Like insurance, it meant future security when income shrunk or fled the scene. In principle, it was the same as the U.S. government fund known as Social Security. Funds in the Flatley Piggy were deposited on a regular basis – weekly, as he remembered – from a stated fraction of the family budget. Everyone in the family, from the oldest to the youngest, had to set aside a percentage for Piggy regardless of income level. His mother insisted that a fair percentage for the goose is fair for the gander.
While Piggy was meant to be primarily for future use, it was possible to draw from it for temporary or emergency need. If a vital family investment such as a broken plow on the farm presented itself, funds could be withdrawn from the pig – just as World War II monies were borrowed from the Social Security fund by Congress. There was another similarity: Both banks demanded security for such loans; the Flatley bank required an IOU in the form of a paper left in Piggy, while Social Security funds were replaced with U.S. Treasury notes. Both funds expected such loans to be repaid – but their success rates were totally different.
In the first case, the rate was 100 percent. In the second case it was a big fat goose egg. There was always the mother to enforce repayment of Flatley funds, but there has never been a Mother Flatley in Washington. Just Democrats and Republicans.
For the last 75 years, the Social Security fund, regularly extracted from the incomes of working Americans – call it taxes – have been regularly vacuumed up by successive Congresses, not only for emergencies such as World War II, but routinely and regularly for everyday spending. Think: prisons for marijuana users, corn in Iowa, bridges to nowhere in Alaska, another aircraft carrier, blood money for Pakistan, CIA subversion in places like Iran and Chile, walls along the Texas border and, worst of all in recent years, to replace funds lost through tax breaks for corporations and tax cuts for the affluent. For those 75 years, these withdrawals have never been repaid. The IOUs are soon to be Smithsonian curiosities, like Lincoln’s original Gettysburg notes written on the back of an envelope.
During that 75 years, the fund income equaled or exceeded payments, so the fund managed to stay afloat, much like a Ponzi – or Bernie Madoff – scheme. However, a day of reckoning is close. Owing to changing demographics and the recession, Social Security’s current income will shortly not be enough to meet demands, and it will be time to cash in some of those IOUs. Insurance actuaries affirm the bank should carry the fund for 20 or 30 years – even without current deposits.
However, the national Piggy is empty. It’s been borrowed and spent.
It’s true if these funds had been invested in the stock market, Piggy income might also be hurting due to the current recession, but at least there would be 80 years of savings to tide the fund over. Instead, there is a great hole.
With that yawning pit before it, Congress has a problem. Hoping to destroy Mr. Obama, who has proposed a tax on the super rich to help repay the IOUs, the dominating element within the GOP think they can fasten the blame on him, and traditional Republicans like Maine’s two senators get along by going along. Republicans refuse to raise the taxes necessary for repayment of IOUs; instead, they propose to reduce benefits.
The options presented on Social Security are as clear as any choice voters can make. Other issues, such as gun control or right to life, may influence voters regardless of party, but the question of how the two parties intend to treat Piggy is crystal clear: Republican – stiff the fund; Democrat – tax to repay the fund.
Devil’s Dictionary quote
The Ten Commandments: Fundamental moral precepts, which for 2,000 years have permitted slavery, torture, cruelty, and economic exploitation – while forbidding obscene books, dirty pictures and the sexual practices of neighbors.
Rodney Quinn, a former Maine secretary of state, lives in Westbrook. He can be reached at rquinn@maine.rr.com.
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