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Pay no attention to the people behind the curtain

Thursday, September 16, 2010

Ron Johnson: Vote for me, because I don't understand how Social Security works, either

by folkbum

How long is this list, now, of things millionaire Senate candidate Ron Johnson doesn't seem to understand how they work? There's global warming, which he thinks is "just" caused by sunspots. There are industrial revenue bonds, which he thinks have no government subsidy attached. There's being a "self-made" man, which he thinks happens by marrying into wealth.

Now, he boldly and unequivocally tells teevee watchers that he doesn't know how Social Security works. "Russ Feingold and politicians from both parties," he intones, "raided the Social Security Trust Fund of trillions and left seniors an IOU. They spent the money, it's gone."

See, that "IOU" of which he speaks is a collection of US treasury bonds that, like all the other treasury bonds ever issued in the history of this country, will be honored by the federal government because the US is not, by law, allowed to default on its debt. The money for the Social Security trust fund is no more "gone" than the money Ron Johnson has invested in BP stocks, although you can rest assured that whatever specific dollars Johnson handed over to BP years ago have long been spent.

And why is the trust fund an "IOU" of t-bills? Because of decisions made long before Feingold--indeed, long before most of the current batch of Senators--was elected. Reagan, Greenspan, and Democrats in Congress in the early 1980s made the decision to over-tax the working class now (the payroll tax has, for 30 years, consistently raised more than it needed to, meaning you and I are overpaying) to prepare for the demands of later. It's a system that is working just fine, and even if we do nothing, it will pay out full benefits to retirees for 30 more years, and then still pay out 75% of promised benefits pretty much indefinitely thereafter. If we do nothing. If we make small tweaks, such as asking millionaires like Johnson to pay the payroll tax on their full income, the way you and I do on ours (I'm assuming the bulk of my readers earn less than $100k a year), then Social Security can pay full benefits for pretty much ever.

This is not complicated and it's something we've discussed here before (click on the "Social Security" label below). Why Ron Johnson, who's asking us to trust him because he's some kind of whiz at this whole finance thing, can't get it is beyond me. And he wants you to vote for him so he can be in charge of this program he doesn't understand? Good luck with that.

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