Wednesday, October 23, 2013

Social Security Pumps $2 Into US Economy for Every Benefit Dollar Spent

Social Security Pumps $2 Into US Economy for Every Benefit Dollar Spent 


Just as Food Stamps stimulate the economy by creating about $1.80 of economic activity for every dollar of Food Stamps spent, Social Secuity pumps up job-generating and business activity by about $2 for every dollar recipients spend.  This is according to a new study by the AARP:

A new report by the AARP Public Policy Institute, "Social Security's Impact on the National Economy," found that Social Security adds more than $1 trillion to the U.S. economy each year. People who receive Social Security benefits are not saving that money for a rainy day. They're spending it on goods and services — pumping it back into the economy. We have to remember that the typical older American has an income of about $22,000 a year, and Social Security accounts for about half of a typical older family's income.
Businesses use the income to purchase more goods and services, to realize profits and to hire more employees. Those employees, in turn, spend their wages on more goods and services, which creates more spending and income for more people. This creates a powerful multiplier effect that benefits the economy, businesses and workers. In fact, our report found that every dollar in Social Security benefits paid out generates about $2 of total output for the U.S. economy.
In short, Social Security is a vital component of a vibrant economy.  Florida is just one example of a state that would be devastated without the delivery of monthly Social Security checks.  However, the entire United States economy would be seriously harmed.
With the hue and cry against Social Security benefits becoming too burdensome on the treasury (even though it is an earned benefit, not an entitlement -- if you don't pay in, you don't get Social Security, and your allotment is based on what you contributed over your lifetime), you would think taxpayers were being fleeced by the elderly.
William Pitt, indefatigable columnist for Truthout (and a BuzzFlash editor), writes about the despicably dishonest campaign waged against elderly Americans who earned their Social Security:
Here on the other side of the world in America, another sort of fire is threatening to burn out the futures of millions of people. A bunch of billionaires are working hammer and tong with their bottomless pockets, their hired Congressional stooges, their idolaters in the press, and all those useful idiots who hate government but love Medicare and always vote, to destroy Social Security and Medicare because government programs that actually work really well are the enemy, and must be scourged.
At the forefront of this crusade is the Peter G. Peterson Foundation, which has already spent a billion dollars trying to convince Congress to come together on a "Grand Bargain" that eviscerates the social safety net represented by Social Security and Medicare, which are only the two most successful and important government programs besides the GI Bill.
Peterson's wingman is billionaire Stanley Druckenmiller, formerly of Duquesne Capital, who is spending gobs of cash trying to convince young people that Social Security is the reason they're looking down the barrel at an increasingly grim economic future.
While billionaires who commit massive institutional financial fraud have an open door at the White House and Department of Justice, among other government offices, do you know what the average Social Security monthly check is?
According to the US Social Security Administration, "The average monthly Social Security benefit for a retired worker was about $1,230 at the beginning of 2012."  That comes out to $14,760 a year, which qualifies one for the cat food brigade.
Yet, even this meager earned benefit (remember Social Security is a mandated retirement savings plan, not an entitlement) pumps up the American economy.
Even Democrats who once were seen as moderately progressive have accepted the GOP 1% meme that Social Security needs to be cut back or else the US will be ruined.  (We won't even get into how the Social Security fund is used to finance other government programs -- remember Al Gore's idea of a lock box?)
But there are many alternatives to implementing a CPI or raising the retirement eligiblity age.  How about "raising employee and employer FICA taxes on wages above $106,800" (the income level where the payroll taxes currently stop increasing)? As a writer in comments:
According to a 2010 Lake Research Partners Poll 82 percent of Americans oppose cuts to Social Security to reduce the deficit. That breaks down by Party: Democrats — 83%; Republicans – 82%; Independents – 78%; and Tea Partiers – 74%. Those numbers are overwhelming, as polling data goes. It’s pretty clear that making cuts to Social Security would not be acceptable to the American people, generally, and probably even less acceptable to Senator Durbin’s heavily Democratic constituency in Illinois.
One wonders, what kind of Senator puts forth a proposal that more than 80% of his constituents oppose? It can only be one who has decided to fit himself for a duncecap; or one who’s convinced that “the banks run the place,” or one who doesn’t think that the rest of us have the intelligence to understand that there are other alternative to handling any such problem apart from “reforming,” meaning cutting entitlements. But it can’t be one who cares about whether his political party can hold the Senate after 2014.
But that’s not all, when asked about a proposal to require employee and employer FICA taxes on wages above $106,800 annually in order to make Social Security more solvent, 66% of Americans were in favor of that proposal. And that breaks down by Party: Democrats — 73%; Republicans — 59%; Independents — 66%; and Tea Partiers — 60%. That is very solid support for this proposal for solving any perceived Social Security solvency problem, particularly among the Democratic base. Also, the Tea Party support for raising the payroll tax cap is greater than the Republican Party’s for that, an indication that Tea Partiers, like the rest of us, value their Social Security highly.
So there's no real case for cutting Social Security benefits other than that many leading Democrats accept the GOP 1% notion that people who have labored a lifetime and made it into retirement don't have the financial clout in DC that the wealthiest Americans do.  It's really that simple.
Because if you want to keep the US economy strong, Social Security is a vital component.
That's not to mention that recipients of Social Security have earned their retirement checks.  Talk of the "Grand Bargain" that would see Social Security and Medicare cut is really talking about looting senior citizens who are on the economic margins as it is.

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