The National Catholic Review

This isn’t from a secret video, it's from the untranscribed portion of Ryan’s 2005 speech at the Atlas Society’s “Celebration of Ayn Rand.”  It fits well with the Romney video because it makes clear that middle class entitlements, “so called defined benefit programs” such as Social Security and Medicare ARE an explicit strategic target because they are collectivistic, socialistic and foster dependency.

This is the event where Ryan stated that Rand was the “one thinker” who is the “reason I got involved in public service;” and that Atlas Shrugged and The Fountainhead are “required reading in my office for all my interns and my staff.”  Statements he would latter dismiss as “urban legends.”

The speech has been hidden in plain sight on the Atlas Society website, which offers only a partial transcript.  This omits several revealing passages that illuminate Ryan’s philosophy as it relates to policy priorities. 

It is impossible to summarize these statements without sounding like a breathless conspiracy theorist.  Here’s what Ryan says.  Don’t trust my bullets.  Read the transcript.  Don’t trust my transcript, listen to the audio on the Atlas Society site.

  • Ryan describes Social Security and Medicare as “collectivist” and “socialistic.” 
  • Ryan’s strategic plan:  privatize Social Security and Medicare in order to convert people from “collectivism” to believers in a “individualist capitalist” philosophy.  So that there will be “more people on our team” who “won’t listen to” Democrats. 
  • Ryan’s acceptance of Pinochet’s Secretary of Social Security José Piñera’s similar program of Social Security privatization as a “moral revolution” that made Marxists into capitalists who started to read the Chilean equivalent of the Wall Street Journal.  Ryan is overheard, “Yeah”  “That’s right.”

For Ryan “defined benefit” programs such as Social Security and Medicare are problems in themselves.  This isn’t something he saves for gatherings of the Ayn Rand Society, such concerns about “dependency” are scattered throughout his Path to Prosperity—again hidden in plain sight.  This transcript doesn’t so much reveal a secret, as highlight a clear theme in his policy rationale that is always present, but in more public settings subordinated to his prophecies of fiscal apocalypse.  Thus, it is no surprise his budget cuts the safety net and radically reshapes Medicare first and addresses the deficit later. 

In the published transcript Ryan states that like Rand, he views all political and policy questions as battle between individualism and collectivism.

(2:38) In almost every fight we are involved in here, on Capitol Hill, whether it’s an amendment vote that I’ll take later on this afternoon, or a big piece of policy we’re putting through our Ways and Means Committee, it is a fight that usually comes down to one conflict: individualism vs. collectivism.

This philosophy leaves no room for Catholic notions of Government in service to the common good, there is no room for a social conception of the human person.  Rejection of Rand’s atheism notwithstanding, Ryan’s policies are based on a political philosophy completely at odds with the principles of Catholic Social Doctrine.  “Prudence” is an insufficient measure of his proposals and the threat this philosophy poses to the Catholic faithful.

 

Transcription of portions of talk not transcribed on site taken from audio link provided on site.  These are a good faith effort to transcribe the speech.  http://www.atlassociety.org/ele/blog/2012/04/30/paul-ryan-and-ayn-rands-ideas-hot-seat-again 

 

(:00) Introduction by Ed Hudgins, director of advocacy for The Atlas Society

Congressman Ryan was born in the community of Janesville, Wisconsin. He is a fourth– fifth generation native of Wisconsin. And he is currently serving his fourth term as a member of the U.S. Congress.  He is best known, I’m happy to say, as one of the leaders in the fight to reform Social Security by allowing for the expanded use of individual retirement accounts.  Now I don't know whether you use the privatization word.  We here have no problem with that, but sometimes you have to do a bit of a soft sell up there because many members of congress are not quite as far thinking as Congressman Ryan.

 

Ryan Speech:

(3:53) But when you look at the fight that we’re in here in Capital Hill, it’s a tough fight. It’s a very important fight. But we need more people on our side to fight this fight. That is why there is no more fight that is more obvious between the differences of these two conflicts than Social Security.  Social Security right now is a collectivist system, it’s a welfare transfer system…..

And what’s important is if we actually accomplish this goal of personalizing social security … [Ryan laughs. Ed Hudgins overheard “personalizing”] personalizing social security … [laughter, applause] think of what we will accomplish. Every worker, every laborer in America will not only be a laborer but a capitalist. They will be an owner of society, they will be an owner and a participant of our free enterprise system, of our capitalist system. I would like to have more people on our team who are owners and believers in the individualist capitalist system than on the other side, and if every worker in this country becomes an owner of real wealth, of seeing the fruits of their labor come and materialize for their benefit, then that’s that many more people in America who are not going to listen to likes of Dick Gephardt and Nancy Pelosi, Ted Kennedy, the collectivist, class warfare-breathing demagogues.

And so what we have coming now in the beginning of this century is a fight. If you take a look at if we ran government on autopilot—and CBO just came out with a really good report on this—and do nothing, Medicare, Medicaid and Social Security will grow so fast and consume so much that the government will consume twenty-six percent of our national economy, twenty-six percent of our GDP. Historically speak government in this country runs at about eighteen percent of GDP. We will consume twenty-six percent of GDP if we do nothing.

So you have to understand that all they have to do is stop us from succeeding.  Autopilot will get them where they want to go. Autopilot will bring more government, more collectivism, more centralized government.  If we do not succeed in switching these programs, in reforming these programs from what some people call a defined benefit system, to a defined contribution system– from switching these programs—and this is where I’m talking about health care, as well—from a third party or socialist based system to an individually owned, individually prefunded, individually directed system.

We can do this. We are on offence on a lot of these ideas.  I was the principle author of the Health Savings Account law, which was an amendment I brought to the floor and passed in the Medicare bill in the last session of congress. Health Savings Accounts, personal accounts for Social Securities, these are the things that put us on offence, that get the– the individual back in the game and break the back of this collectivist philosophy that really pervades, you know, ninety percent of the thinking around here in this town.

 

(7:32) I think if we win a few of these right now—moving health care to a consumer based, individualist system, moving Social Security to an individually preowned, prefunded retirement system—just those two right there will do so much to change the dynamics in this society– will do so much to bring more people onto the side of demanding for accountability and individualism and transparency in government than anything else we can do. So we’re trying to focus on big-ticket items to win these things.

 

Q&A session, observation by Ed Hudgins:

 

(15:05) By the way, I just want to add real quickly, and I know the Congressman has I’m sure said this.  [General Augusto Pinochet’s Secretary of Labor and Social Security] José Piñera, who helped privatize Social Security in Chile, who also was by the way an Ayn Rand fan. José points out the moral revolution that occurs with privatization, that is, people in Chile, you know, who thought of themselves as Marxist suddenly feel that they are owners of property [Ryan “Yeah”] and, you know, they literally get up and they start reading the Chilean equivalent of the Wall Street Journal [Ryan overheard “That’s right”].  I saw this in my own father, who was a teamster, a truck driver, and close to his retirement he started putting money into individual retirement accounts.  And so whenever I’d go over and visit him, he’d basically be saying, “Ed, look how my stocks are doing” [Ryan overheard laughing, “That’s great”].  I’d say, “Dad I can’t believe it, you sound like more of a capitalist than I do.” It creates a moral revolution of people who actually own property. And Congressman Ryan knows that.  And I think that’s one of the importance of this kind of movement is that we really change not only the economic dynamics but the moral dynamics.

 

*corrected typo in bullet points

Comments

N Carnevale | 10/5/2012 - 10:04pm
Lainie,

If you're going to quote Ayn Rand, the least you could do is quote her directly and not cut and paste someone else who is paraphrasing, selectively at best, libelous at worst.  Instead of relying on someone else's interpretation, maybe you should work on developing your own.  I would start with reading the published journal in which she discusses the serial killer referenced in your quote, William Edward Hickman.  You might be interested to discover that she refers to him as a degenerate:

''My hero is very far from him, of course.  The outside of Hickman, but not the inside.  Much deeper and much more.  A Hickman with a purpose.  And without the degeneracy.  It is more exact to say that the model is not Hickman, but what Hickman suggests to me.'' (Journals of Ayn Rand: Ayn Rand, Leonard Peikoff, David Harriman; New York, Penguin, 1999).

Rand viewed Hickman as a perversion and blamed society for his degeneracy, but that's not the point.  The point is that the author of the piece you quoted clearly hasn't gone to the source of his material either, and neither has the author he is relying on.  If he did, he would know that ''where Rand picked up her silly superman blather'' was from Nietzsche, and that she didn't plagiarize it from a newspaper, but rather it was a direct reference to Nietzsche's Übermensch. (If you have no idea what I'm talking about, then you haven't put the slightest bit of effort into following the citations back to their original sources).

If you want to critique Rand's views on altruism and charity, it would be better to quote her rather than to quote a journalist who is quoting another journalist who is paraphrasing Rand's remarks out of context.  Here's what Rand herself had to say:

''My views on charity are very simple. I do not consider it a major virtue and, above all, I do not consider it a moral duty. There is nothing wrong in helping other people, if and when they are worthy of the help and you can afford to help them. I regard charity as a marginal issue. What I am fighting is the idea that charity is a moral duty and a primary virtue,'' 

I will point out that my source here is not the primary source; it is the Ayn Rand Institute (http://www.aynrand.org/site/PageServer?pagename=faq_index#obj_q7).  Their source is a 1964 interview Rand did for Playboy magazine.  My source may only be a secondary source, but at least the quote is something Rand herself said and not something someone else said about what she said.

Lastly, I love how the theme of the day seems to be pointing out how folks like Rand and Mitt Romney's father received assistance from a system they railed against or merely sought to change or improve as some sort of evidence of hypocrisy.  This is kind of like calling someone who lived in the former USSR but believed in and fought for capitalism a hypocrite for accepting food rations.  At least the examples that are being thrown around here are examples of people who are taking only what they needed to survive, only for as long as they needed it to survive, rather than examples of, say, socialist thinkers who seem to have no problem not only surviving off the system that they too seek to change, but thriving beyond imagination and the need of a thousand men (Soros and Buffet come to mind, but I hardly see anyone pointing out their extravagant wealth as evidence they don't really stand behind what they profess in the name of the poor and underprivileged).

 
 
David Rivera | 9/22/2012 - 11:07am
Yes, privatizing retirement plans is such a great idea.  My IRA lost 2/3 of its value in the first crash in 2001-2002.  It regained some and lost 50% of its value in the crash of 2007.  It's a good thing I wasn't ready to retire, or I'd be living in a cardboard box and eating cat food. 

There have been a couple of editorials flatly stating the 401K idea has failed, because it expects the average person to have the same investment skill as someone who does it for a living.  And God help all of us when our retirement plans are all subject to the whims of the people on Wall Street who gamble with Other People's Money.

The bigger problem is we have far more retirees:working people than we did 50 years ago.  Social Security contributions max out at $106,000.  I've made far more than that and could easily have continued to contribute as I do with Medicare, which could make up a substantial portion of the shortfall.

Do you really think someone making $20,000-$30,000 a year and barely surviving can see himself/herself as a "capitalist"?  Those who do see themselves as successful capitalists got there through a combination of genetics (intelligence), luck, being born into the right family/socioeconomic strata and having opportunities others never get.
Tom Maher | 9/20/2012 - 10:16pm
Trivializing the problem with Social Security and Medicare funding by claiming that there is a quick and easy fix does not agree with conclusions of the Board of Trustee of Social Security and Medicare in their  2012 Annual Reports.  

The easy fix proposal  of Mr. Tubino and Mr. Blackburn that taxing all income without a cap would provide all the revenues needed to keep Social Secuirty forever solvent is not  being proposed or consider by anyone for legiislation.. The reason this is not being considered is this is a job distroying proposal that would greatly incresing the cost of empoyiing high skilled people earning incomes beyond the income cap.  People wonder why are job going abroad? Well here it is.  People disregard payroll tax cost on employers who of cousrse pay half of the Social Security and Medicare tax.  This huge tax increase which would be permannet is a barrier to job creation and continued employment.  Do we want to lay off more people when times are not good becasue the toal cost of payroll taxes to empoyers are so high?  Raising payroll taxes decreses i job creation and the number of jobs.  

Here is the conclusion from the 2012 Annual Social Security Report which urges drastic action to keep Social Secuirty solvent: 

The Trustees estimate that the 75-year actuarial deficit for the combined trust funds is 2.67 percent of taxable payroll—0.44 percentage point larger than the 2.22 percent deficit in last year’s report. For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period, lawmakers could: (1) increase the combined payroll tax rate during the period in a manner equivalent to an immediate and permanent increase of 2.61 percentage points
(from its current level of 12.40 percent to 15.01 percent); (2) reduce scheduled benefits during the period in a manner equivalent to an immediate and permanent reduction of 16.2 percent; (3) draw on alternative sources of revenue; or (4) adopt some combination of these approaches.
Monica Showalter | 9/20/2012 - 7:15pm
This passage here:

 This philosophy leaves no room for Catholic notions of Government in service to the common good, there is no room for a social conception of the human person.  Rejection of Rand’s atheism notwithstanding, Ryan’s policies are based on a political philosophy completely at odds with the principles of Catholic Social Doctrine.  “Prudence” is an insufficient measure of his proposals and the threat this philosophy poses to the Catholic faithful.


is at odds with the facts. One of the most important things you can do is get the facts on what The Chilean Model is and what it does for millions of people who have been brought up from poverty. The system of private accounts that was put in place in Chile on the highly symbolic May Day in 1981 was designed precisely to be of service to the common good. First, everyone who is able bodied is treated like a sentient being who can make his own decisions about how to invest his retirement earnings. Second, those who aren't in a position to look out for themselves are exempt from the system and either draw a subsidized pension or else become beneficiaries of the social safety net that was built right into the system. Nobody gets left behind, there is no Darwinian survival of the fittest, and none of the harsh edges of Randian philosophy in the Chilean Model. In reality, it was influenced by Catholic social teachings, particularly those of Archbishop Bernardino Pinera, the prelate of Santiago, who was Pinera's uncle - and a Pinochet opponent. There is nothing inhuman about the Chilean Model and nothing at odds with the Catholic Church's teachings - it was in fact highly consistent with Church teachings in its very design.

And the results speak for themselves, check out where incomes are going in Chile - they've just surpassed socialist Portugal's for one, and GDP growth is around 5%. Development is first-world - owing in no small part to the vast capital pool that has accumulated as a result of individuals saving for their retirement instead of relying on the state, Chile tops America for good government and economic freedom, and investment is soaring.

A good place to find more information about this incredibly efficient and human system is at www.josepinera.com - which has long collections of articles in English and Spanish. 
Amy Ho-Ohn | 9/19/2012 - 10:19am
The alternative to restructuring Medicare and Social Security is not to continue doing what we're doing now. The alternative is a fiscal cataclysm, which will leave millions of senior citizens with no pensions and no medical care at all.

When you're falling off a cliff, telling yourself, "I think I'll just keep falling and maybe everything will be fine," is not a prudent plan.
C Walter Mattingly | 9/20/2012 - 7:59am
Vincent Miller's headline for this article, "Secret Ryan Transcript: Social Security and Medicare are the Target," while partially accurate, is neither totally accurate nor adequate. 
In the first instance, there has been comparatively complete candor on the part of Ryan's target, the reform of social security and Medicare, especially compared to his liberal opposition which seems to prefer continuing to ignore the reality the finances and demographics portend for both programs. Especially when compared to the Obama administration, Ryan is amazingly forthright and outfront. He simply lacks the duplicity and ease of violation of his word for which the president has provided various examples.
In any case, we can improve upon Mr Miller's title here.
"Another Ryan Transcript: Social Security and Medicare are the Target of Ryan's Reforms to Avoid Their Future Insolvency." 
A word here and there can make a significant difference. 
C Walter Mattingly | 9/20/2012 - 7:45am
Ed (#6),
I don't think very many conservatives here, certainly not myself, are opposed to welfare as a temporary aid. We are opposed to it becoming a career choice and the damage such an outlook causes not only to the US economy, but as Daniel Moynihan noted years ago in his seminal work under Johnson, the segments of society that so turn to them.
That was what President Clinton addressed when he campaigned to "end welfare as we know it," accompanied by his statement, "the era of Big Government is over."  
President Obama was wise in the convention to campaign as President Clinton, who had a degree of economic success pursuing those policies that Obama dearly covets. Problem is, Obama is moving in the opposite direction, with the predictable results of bad turning to worse. 
President Clinton, the good party partisan who knows should he not tow the line there will be no chance for Hillary's future presidential aspirations, was only too happy to overlook the fundamental differences between his conservative approach to government and Obama's expansionist one and their divergent results.
Hopefully, the public is better informed. 
Tom Maher | 9/20/2012 - 12:51am
Oh please. What complete nonsense.  There is nothing secret about the fact that Social Security and Medicare have been going bankrupt for years and in a major way.  This has been known projected since the 1980s when the last Social Security and Medicare financign was done. But today major funding changes are urgenty required to keep Social Security and Medicare programs solvent.  Legaialative reform actions that Ryan was involved with to reform Social Security and Medicare funding were attempted in the last ten or twenty years but were not successful. 

The real moral issue here is that legislative reform to prevent these programs from going bankrup as they will under current law must be done.  But the present and future costs of these programs are enormous and not easy to agree on a resolution that will work.  These programs will go bankrupt within the next in the next ten years.  Bancruptcy means these programs will no longer payout most if nt all of their  scheduled benefits.  For example Disability Insurance funding under current law will be totally exhaused by 2016 and Social Security and Medicare funding will allow only partial payments of benfits in the next ten year. 

The source to verify the huge magnitude of the funding problems is the Summary if the Annual Reports of the Social Security and Medicare Trustees.  The following is an sample warning from the report:

"Social Security and Medicare are the two largest federal programs, accounting for 36 percent of federal expenditures in fiscal year 2011. Both programs will experience cost growth substantially in excess of GDP growth in the coming decades due to aging of the population and, in the case of Medicare, growth in expenditures per beneficiary exceeding growth in per capita GDP".
Marie Rehbein | 9/19/2012 - 7:53pm
Jill (#5):

I was using Romney's depiction of those who need help as being moochers.  That is why I used quotation marks.  The Ryan health savings account thing works for some people, but so would a lot of other plans.  The people who are being neglected are those who need help the most. 
joseph o'leary | 9/19/2012 - 4:45pm
So I'm wondering what the Atlas Society's (and the late Ayn Rand's) position is on abortion, gay marriage/rights, and religious freedom, and how Mr. Ryan squares that with his party's position, as well as his church's teaching?



T BLACKBURN | 9/19/2012 - 3:18pm
Social Security appeared in the United States about 40 years after Bismark started such a system in Germany. (Note to the youngsters: Otto von Bismark, a/k/a the Iron Chancellor, was not a socialist. Not by a long shot.) It was and is still a defined benefit system there. It faced no difficulties here until too much income, by becoming concentrated in the same few places, became exempt from Sopcial Security tax. If the tax applied to all income, Social Security could continue as a defined-benefit system until a month after Doomsday. Maybe longer.

Changes in compensation over the past 20 years (Josh #2) were accompanied by the above-mentioned concentration of compensation. You can track the constricting compensation of employees and the expanding compensation of executives and directors and find amazing correlations. Can't figure out how that might happen. The private sector wouldn't be having so much trouble with its plans if its planners didn't worry more about their personal plans than they do about their employees. That really shouldn't be a model for government.

Republican interest in preventing bankruptcy (#3) began with the Obama presidency and will end next January if there is a Romney presidency. How do I know? The W. Bush administration tells me so.
Jill Bradley-Levine | 9/19/2012 - 2:08pm
I am troubled by the labeling of those born with disabilities or health issues as "moochers." Perhaps Marie did not mean for it to sound callous, and if given the opportunity would rephrase. For families whose children were born with various mental and physical disabilities, a system that provides support when needed is valuable and just. Many families also experience disease and accident at various points in their lives, and providing a system that serves their needs is also just. Disability and disease are not something that people choose, and none of us is protected from these no matter how well we plan financially for our future. I understand the need to be personally responsible in our policies, but let us not condemn those who have not been blessed with our good health.

Marie Rehbein | 9/19/2012 - 11:19am
We have a Health Savings Account. It is tied to a required high deductible health insurance plan (for which we pay premiums less than typical insurance).  When we have spent a certain amount out of our account, insurance kicks in at 80%, and when we have spent to another higher level, insurance kicks in at 100% coverage.

The main thing about this plan is that yearly contributions into the HSA are limited, but the highest level of expenditure each year before insurance kicks in at 100% is about the same as the yearly contribution.  So, for healthy people what really happens with this account is that it is a tax shelter, since the money put into it accumulates year after year and is never taxed so long as it is spent on government approved health expenditures like bandages.

Money left in the account when we die can be inherited without taxation so long as it goes into a health savings account.  If someone were to be unhealthy and require years of medical care beginning when they first set up the account, they would have to turn to personal savings and get no tax benefit.  It may not be for everyone, especially the "moochers" who were born with medical problems and have limited employment options.
james belna | 9/19/2012 - 11:07am
SECRET OBAMA ADMINISTRATION TRANSCRIPT: WE DON'T HAVE ANY PLAN TO STOP THE US FROM GOING BANKRUPT IN THE NEXT TWENTY YEARS

On February 16, 2012, Treasury Secretary Timothy Geithner testified before the House Budget Committee, chaired by Congressman Paul Ryan. Ryan repeatedly confronted Geithner with the Obama administration's budget plan, which - unlike Ryan's - made no provision to control the federal deficit, and which by its own admission would result in a complete fiscal collapse within twenty years. In other words, it is identical to the ''Vincent Miller Budget Plan''. Here is the SECRET TRANSCRIPT of  Geithner's remarks:

''You are right to say we are not coming before you today to say 'we have a definitive solution to that long term problem'. What we do know is, we don't like yours.''

http://youtu.be/h_f20ZDBj5k
Tom Maher | 9/22/2012 - 9:39pm
GrumpyBear # 27, 29
Donlevit # 28

This is an excellant exchange of concerns and ideas.

I do wish that GrumpyBear would iproperly identify himself/herself with a real name as is the policy in America magazine.  Real name add authenticity and I like to know I'm dealing with a real person not some ficitonized or composite person with ficitonal opinions and concerns. 

Plan to reform Soial Security well understood that not everyone has the ability or desire for whatever reason to personally invest the funds in their  personal  401k and IRA accounts as they are allowed to do let alone potentially manage and invest Social Security funds allocated to their own personal Social Security account if such a personal investment scheme was allowed by law in the future.  All Social Security Reforms plans  allow individuals to automatically continue the in the same Social Security programs that now exist where beneficiaries receive fixed benefits form the U.S. governement. 

Managing personal retirement investments ia just not for eveyone even if others if  allowed to by law in the future to would likely receive much larger  Social Security benefits from investment they made over forty or fifty years.  Investment amounts grow significantly over time.  Private investment works very well over many decades and funds invested can grow very significantly by the time a person retires. With their own private funds people do this all the time.  The trick is to invest modest amounts consistantly over time and build a ever more diversified  portfolio of holding over time.  This is what people did very successfully before  there was Social Security, 401Ks and IRAs programs.  Investments work to  finance retirements if started when people first begin to work and contiuously through their working life.

David Rivera | 9/22/2012 - 4:09pm
A small portion of my IRA is in gold.  The value swings are terrifying.
Don Levit | 9/22/2012 - 3:54pm
Grumpy Bear:
I agree that the stock market is too risky a place in which to invest the excesss taxes (although there are no excess taxes anymore).  Neither are there any liquid investments in the trust fund, which can be cashed in without new general revenues (as any other pay-as-you-go expense, like Medicaid).
Any intact investment would be better than what we have, for the present investment doesn't even exist anymore.
That means just maintaining principal wouyld be a better inveztment than the present scheme of loaning out the entire "investment."
Posasibly investing in a mix of metals, such as silver and gold should be considered.
These are relatively neutral investments that do  not generaly favor one private interest over another.
Don Levit
Tom Maher | 9/21/2012 - 2:12pm
Don Levit # 25

Thanks for your kind words and your insights on Social Security and Medicare fudning problem.  It is a real public service for to point out to people all of the many very serious   financial  and economic problems involved.  People need all the technical information they can get to undersatnd the magnitude and seriousness financing problems and solutions that work without causing other economic problems.


The 2012 Summary Reports of the Board of Tustees of Social Security and Medicare agrees with especailly the part about tapping new general revenues  It is important for people to know that as of 2008 Social Security and Medicare payments exceed payroll tax collected for Social Security.  We are in a new era where to make all payments on time expenses other Trust Fund revenues must be tapped for the first time. The use of these Trust Fund paper assets  will be eventually be depeleted over the years.

But as you point out the actual cash for these paer asset requires governemnt to tape other general revenue sources.  This puts Social Security and Medicare in competion with other governement espenses such as health, education and military for the frst time.  The Trustees are very concerned about that especially in the future where there may not be enough general revenue or credit to go around if that isn't a problem even now.  

A fix is need to restore Social Security and Medicare to be self-financing without tapping gneral revenues which may not be there in the future to avoid any future fiancial surprises where there is just not enough money in the Truesury to fully pay all beneficiaries on time.  We must avoid the risk of a surprise default which would be very harmful to the beneficiaries and the economy as a whole. 

Thanks very much for your insight of the more immeadiate cash basis risk in financing Social Security and Mewdicare.  It would be a real disater if anything like that were allowed to happen as it very well could. 
Don Levit | 9/21/2012 - 11:25am
Tom:
Thanks for posting those excerpts from the 2012 Annual Report, published by the Boards of Trustees for Medicare.
From a cash perspective, the cash outgo has exceeded the cash income since 2008, as expressed on page 6 of the report.
The result is that when the trust fund interest (and eventually principal) is redeemed to make up for the shortfall, new general revenues must be tapped.  This is the same financial scenario that would be used at trust exhaustion.
So, from a cash standpoint, the trust fund is already exhausted.
Page 31  "Although the Trustes project that the HI trust fund would not be exhausted until 2024 under current law, the demands on general revenue (to pay interest and redeem the Treasury bonds held by the trust fund) have alraedy begun 15 years before the projected exhaustion date."
www.healthreformgps.org/wp-content/uploads/tr2012.pdf.
As far as the trust fund being kept solvent, what that means is that there is a positive balance.  Unfortunately, actually tapping that balance is the same way we pay all pay-as-you-go expenses, such as Medicaid.
Don Levit
Tom Maher | 9/21/2012 - 10:16am
E Lemming # 23

Another quick and easy fix that  noone is proposing for legislation. Like all quick and easy fixes these proposals assumes falsely that "just" raisiing more taxes has no significant adverse economic impacts when in fact these fixes create worse economic problems.  Raising taxes is a barrier to economic growth and  slows down an economy even to the point of causing a recession if the economy is already weak  So the orignal fudnign problem worse.  Adverse economic impacts of these quick and easy fixes matter. which is why these proposals are not under consideration.

The idea of taxing investment income is just the opposite of what  economist are proposing.  Investment income create new jobs and whole new industires.  All current proposals are to lower investment income taxes to encourage more investments.  In a global economy investors and especially foriegn investors will invest in other countires if investment taxes are rasied. 

Quck fixes by rasiing taxes do not work and are not being considerd as a soltuion to anything.
Gary Denton | 9/21/2012 - 2:25am
Just eliminate the cap on income subject to the FICA Social Security tax (currently set at just the first $106,800 of wages or net income from a business or profession), and end the exclusion of investment income, so that people who earn their money sitting on their buns trading stocks at home or in fancy offices buying and selling companies, pay Social Security taxes on their profits, and bingo, there’s no more risk of burning through the Trust Fund. A Senate report found that by just taxing all earned income, the Social Security Trust Fund would be flush indefinitely.  That seems quick and easy to me.
Elaine Smith | 9/20/2012 - 9:58pm
 
 
"[She] called altruism a 'basic evil' and referred to those who perpetuate the system of taxation and redistribution as 'looters' and 'moochers.' She wrote in her book 'The Virtue of Selfishness' that accepting any government controls is 'delivering oneself into gradual enslavement.'" Patia Stephens
"Rand also believed that the scientific consensus on the dangers of tobacco was a hoax. By 1974, the two-pack-a-day smoker, then 69, required surgery for lung cancer. And it was at that moment of vulnerability that she succumbed to the lure of collectivism.
. . .
"But at least she put up a fight before succumbing to the imperatives of the real world – one in which people get sick, and old, and many who are perfectly decent and hardworking don't end up being independently wealthy.

"The degree to which Ayn Rand has become a touchstone for the modern conservative movement is striking. She was a sexual libertine, and, according to writer Mark Ames, she modeled her heroic characters on one of the most despicable sociopaths of her time. Ames’ conclusion is important for understanding today’s political economy. 'Whenever you hear politicians or Tea Partiers dividing up the world between ‘producers’ and ‘collectivism,’' he wrote, 'just know that those ideas and words more likely than not are derived from the deranged mind of a serial-killer groupie....And when you see them taking their razor blades to the last remaining programs protecting the middle class from total abject destitution—Social Security, Medicare and Medicaid—and bragging about how they are slashing these programs for ‘moral’ reasons, just remember Rand’s morality and who inspired her.'"
"In the real world, however, Rand herself received Social Security payments and Medicare benefits under the name of Ann O'Connor (her husband was Frank O'Connor)."
 
http://www.alternet.org/story/149721/ayn_rand_railed_against_government_benefits%2C_but_grabbed_social_security_and_medicare_when_she_needed_them?paging=off
 
Rick Francis | 9/20/2012 - 5:35pm
Yes, it's true, the Social Security surplus is "mere" IOU's, mere T-bonds backed by the full faith and credit of the US.  How risky are those T-bonds?  Ask any investor.

There are lies, damn lies, and then there's the fundamental misunderstanding of US economy which results when people confuse our currency system with a commodity-based system, which it hasn't been since 1971.   As if that weren't enough, you ignore that social security is almost entirely funded by actual payroll funds.  There is no social security crisis.

If you try hard enough, you can find some statistics to show that the sky is falling because of govt growth.  That doesn't change the fact that public sector employment is much lower now than when Obama took office, that fed govt growth was much higher under GWB than under Obama, or that the growth of food stamps correlates with recessions, not the occupants in the WH.  Is that really the best you've got?  Slightly more govt spending during a major recession, with a war going on that only went "on the books" when Obama became president?
J Cosgrove | 9/20/2012 - 5:05pm
''The reason no evidence is provided that Obama is pursusing government expansion is because there IS no evidence.''


The size of the federal government in terms of employees have grown modestly in recent years.

2007 - 1862k
2008 - 1939k
2009 - 2038k
2010 - 2113k
2011 - 2130k

In terms of salaries

2007 - $66.8 k
2008 - $69.0 k
2009 - $71.9 k
2010 - $74.3 k
2011 - $75.3 k

Source: http://www.fedscope.opm.gov/etrend.asp

This does not include benefits which add almost 60% to the base salary and has increased dramatically due to rapid increases in health insurance.

It doesn't take rocket science to to do the federal budget numbers which includes much more besides expenditures for government employees and has grown dramatically since the Democrats have been writing the budgets starting in FY 2008 after they won the Congress in 2006 and especially after Obama got elected.   I hopes this helps.
J Cosgrove | 9/20/2012 - 3:06pm
''Tom Maher and others are very wrong when they claim Soc Sec will ''go bankrupt.''  The funds are there for 50+ years,''

Here is something I wrote on Social Security on this blog last April.  It is now in the red and will be forever more.

''I believe the social security fund in now in the red on a yearly pay as you go basis.  That is yearly payments exceed revenues.  However, over the past 30 years the fund was in the black each year but the excess was spent by the government and the government gave the social security fund IOU's in terms of treasury bonds.  IOU's which will probably never be paid as social security is just another budget item which is now in the red.


So the social security fund is on paper in the black but in reality the excess does not exist because it has been spent by the feds and money must now be borrowed each year to pay for the current short falls which was moved up a few years because of the large unemployment problem and social security collection shortfalls.  It is also means that social security no longer is able to fund the current deficit.


So when people mention certain years in the future when the fund will be bankrupt, it is just fun and games to pull the wool over the people's eyes.  The money is gone and accounting games are just that, games.


There are some things that would be prudent.  One is to cut benefits for new recipients in the future.  They are destined to receive more than current recipients in current dollars, I believe up to 40% more.  Limiting them to current benefits would help a lot but the fund is still in the red now and unlikely to ever return to the black.


However, social securituy is small change and the real problem is medical expenditures.  There is no good way to handle it and every year it is put off makes it harder to deal with.  And this is where Ryan spends more of his time looking for ways to control these costs but all Ryan gets in return is hate and disdain.  Ryan rightly points to the problem with third party payment policies and maybe this shoud be examined for real change and not just kick it down the road some more where the problem will be worse.


As bad as health care is for the future, it does not compare to the problems with those who have defined benefit plans and will demand to be paid as they live in to their high 80's or 90's with all the increased medical breakthroughs.  These pension payments are expanding dramatically each year.  I love it when people are cavalier about all these problems like there is some bottomless source of money.  In certain areas people are getting laid off because pension payments are eating up local budgets and that is real.''
Rick Francis | 9/20/2012 - 2:49pm
Walter Mattingly writes "President Obama was wise in the convention to campaign as President Clinton, who had a degree of economic success pursuing those policies that Obama dearly covets. Problem is, Obama is moving in the opposite direction, with the predictable results of bad turning to worse."

I hear this claim a lot, and NEVER with any evidence.  The reason no evidence is provided that Obama is pursusing government expansion is because there IS no evidence.  What has happened since Obama took office is that public sector employment is DOWN by >700K, and the Fed has has the slowest growth in 60 years.  It is more accurate to call it an austerity approach, and it is having the predictable result that austerity programs are having everywhere.  It is slowing recovery here. 
Rick Francis | 9/20/2012 - 2:34pm
Tom Maher and others are very wrong when they claim Soc Sec will "go bankrupt."  The funds are there for 50+ years, and to make it go forever, all it would take is lifting the cap on the amount on which the funds are collected.  It is a common lie one hears all the time, but a lie nonetheless.

Social Security is funded separately by payroll taxes, and that requires no annual congressional legislation. That means that unlike the military, FDA, NSF, etc etc etc., it is almost the ONLY major program that can't be killed in one year.  You could freak out most months of the year because the military budget (and almost every federal budget) is only as good as the next congressional appropriations bill, but you don't. "The defense of the country will go bankrupt if Congress doesn't act!!!"   That in fact is true, but it's not true of social security.  Even if WERE true, Congress could appropriate funds every year, as it does for everything else.  

Most people have it backwards.  Social Security has funding independent of congressional appropriations.  It is more secure than any other program you can name.  Why do you think most people have it backwards, hmmm? 
Conrad Baylor | 9/20/2012 - 2:31pm
''It is impossible to summarize these statements without sounding like a breathless conspiracy theorist.''

That's exactly what it sounds like.
MATTHEW SHADLE | 9/19/2012 - 3:56pm
Vince, when Ryan says “Every worker, every laborer in America will not only be a laborer but a capitalist. They will be an owner of society, they will be an owner and a participant of our free enterprise system, of our capitalist system,” is that very different from this:
“But it is not enough to assert that the right to own private property and the means of production is inherent in human nature. We must also insist on the extension of this right in practice to all classes of citizens. . . . Now, if ever, is the time to insist on a more widespread distribution of property, in view of the rapid economic development of an increasing number of States. It will not be difficult for the body politic, by the adoption of various techniques of proved efficiency, to pursue an economic and social policy which facilitates the widest possible distribution of private property in terms of durable consumer goods, houses, land, tools and equipment (in the case of craftsmen and owners of family farms), and shares in medium and large business concerns. This policy is in fact being pursued with considerable success by several of the socially and economically advanced nations.” (John XXIII, Mater et Magistra #113-15)
Or this:
“Private property or some ownership of external goods confers on everyone a sphere wholly necessary for the autonomy of the person and the family, and it should be regarded as an extension of human freedom. Lastly, since it adds incentives for carrying on one's function and charge, it constitutes one of the conditions for civil liberties.” (Gaudium et Spes #70)
And you could find similar sentiments in CST from the beginning. In fact, one reason Pope Leo XIII makes this point in Rerum Novarum is precisely to keep workers from becoming socialist:
“Thus, if he lives sparingly, saves money, and, for greater security, invests his savings in land, the land, in such case, is only his wages under another form; and, consequently, a working man's little estate thus purchased should be as completely at his full disposal as are the wages he receives for his labor. But it is precisely in such power of disposal that ownership obtains, whether the property consist of land or chattels. Socialists, therefore, by endeavoring to transfer the possessions of individuals to the community at large, strike at the interests of every wage-earner, since they would deprive him of the liberty of disposing of his wages, and thereby of all hope and possibility of increasing his resources and of bettering his condition in life.” (Leo XIII, Rerum Novarum #5)
Leo is thinking primarily of land, but as John XXIII pointed out, ownership also includes corporate stock. Clearly, though, even in CST there is a sense that ownership puts “more people on our team,” even if the teams aren’t exactly the same.
My point is not that the privatization of social security is the right way to go or that it necessarily follows from CST, just that it isn’t completely foreign to it, either. It doesn’t necessarily have to be thought of in the individualist terms Ryan uses (it is called a “mutual” fund for a reason).
Joshua DeCuir | 9/19/2012 - 10:31am
If Mr. Miller believes that changing programs from a "defined benefit" model to a "defined contribution" is simply some nefarious, Randian notion, then he has been paying attention to (a) changes in compensation that have been occuring in the private sector for the last, oh, 20 years (at least), (b) the abysmal economic consequences of defined benefit programs that are incapable of delivering the promised benefits (see, e.g. the Big 3), or (c) reform proposals from the Democratic Party, starting with the Clinton Commission, to move toward a premium support system.

Liberals like Mr. Miller seem convinced that as long as they can trot out some proof of Ryan's nasty Randian fixation that it makes the problems go away.  Fortunately, more level-headed Democrats like Alice Rivlin, Ron Wyden, and, yes, Bill Clinton, seem to understand it won't.