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Excerpt on Social Security by Paul Craig Roberts

Many libertarians regard Social Security and Medicare as welfare handouts and as Ponzi schemes, when in fact these programs are a form of private property. People pay for these programs all their working lives, just as they pay premiums for private medical policies and make their deposits into private pension plans. Libertarians are great defenders of private property, so why don’t they defend the elderly’s private property rights in Social Security and Medicare benefits? Social Security and Medicare are contracts that government made with citizens. These contracts are as valid and enforceable as any other contracts. If Social Security and Medicare are in dire trouble, why is the government wasting trillions of dollars in behalf of private armaments industries, a neocon ideology, and Israel’s territorial ambitions? Why isn’t this question the most important issue in the campaign?

Instead, in a decade that has seen two massive stock market crashes and an amazing amount of financial fraud, libertarians prattle on about privatizing Social Security and about how much larger the retirement pensions would be. They speak about delaying the Social Security retirement age to 70 without any thought to what a person does who is retired by his employer at 65. People who suggest making Social Security and Medicare off limits until people reach 70 need to have a look at the cost of private medical plans for older people. A group plan with Blue Cross Blue Shield Florida for a 64-year old woman has a $18,000 premium, large deductibles per medical issue, and a 20% co-pay. Even a person with private insurance faces potentially ruinous health care expenses.


Libertarians will not wait to think before they inform me that private savings are funded but Social Security and Medicare are not. They are incorrect on both accounts.


Social Security and Medicare are funded with a payroll tax. It is true that the government has stolen the funds, spent them, and left non-marketable IOU’s in their place. But in our deregulated casino financial system with street registration of “securities,” the same thing happens to private holdings. Where is the money that individuals had in MF Global? What happened to people’s savings invested with Madoff? What happened to Enron’s investors? Can AIG make good on its promises to pay the benefits that people have purchased? Can banks whose balance sheets are loaded with subprime derivatives make good on their depositors’ accounts? US government debt is a component of many private pension plans. How secure are the values of Treasury bonds?


The notion that free unregulated markets are totally trustworthy is the enormous mistake that former Federal Reserve Chairman Alan Greenspan made, for which American and European peoples continue to pay. Libertarians endorse this fantastic mistake to the hilt.

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