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Social Security Last Updated: May 19th, 2009 - 00:59:02

Bailing out banks drains Social Security and Medicare
By Jerry Mazza
Online Journal Associate Editor

May 19, 2009, 00:24

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Recession Drains Social Security and Medicare was a headline from the New York Times that seemed to me a distortion of facts in order to scare people.

After all, what caused the recession but the criminal behavior of predatory mortgage companies and banks who made unfair subprime loans, collateralized them, shipped them downstream to investment banks that securitized them and sold them knowing what junk they were to investors. That combined with a shark tank of hungry salespeople who went at the assets of poor and not so poor homebuyers with time-bomb mortgages whose interest exploded at some point, scattering them into massive indebtedness. Neither Social Security nor Medicare did this.

As to the banks supposedly showing profits recently from the bailouts, take a look at Dr. Martin Weiss� article, Big bank profits are bogus! Massive public deception! He writes, �Was the bad-debt disease magically cured? Did the economy miraculously turn around? Not quite. In fact, we have overwhelming evidence that the condition of the nation�s banks has deteriorated massively since then.

�How can our trusted authorities be so blatantly deceptive and still keep their jobs? Perhaps you should ask Fed Chairman Ben Bernanke. Not long ago, for example, he declared that the total losses from the debt crisis would not exceed $100 billion, while conveying the hope that most of those losses could be soon written off. Also around that time, the International Monetary Fund (IMF) estimated the losses would be $1 trillion, with only a small percentage written off. The IMF�s latest estimate: $4 trillion in losses, with only one-third of those written off so far. Bernanke�s error factor: He was 4,000 percent off the mark, in a world where 50 percent errors can be lethal.�

And the critics talk of Medicare�s $1 trillion in costs last year to cover 42.5 million seniors. This cost was inflated by the privatized HMOs, PPOs inserted into Medicare along with the rule that Medicare could not bargain with Big Pharma on drug pricing as does Medicaid. These are a few of the negative impacts inflicted on Medicare by the Bush administration and others. In fact, Medicare began in 1964 under Lyndon Johnson as a classic single-payer health insurer. Listen closely, President Obama. It was only later that the privateers were ushered in to gobble up 12.6 percent of its premium revenue for �administration.�

Yet the Times reports, �as a result, the administration said, the Medicare fund that pays hospital bills for older Americans is expected to run out of money in 2017, two years sooner than projected last year. The Social Security trust fund will be exhausted in 2037, four years earlier than predicted, it said.� The question is to whom will that money run out to?

The truth is that presidents have been perennially sticking their hands in the Social Security Trust Box to fund their shortfalls and pet projects, in this case to bail out profligate banks, mortgage lenders, hedge funds, and the creator of financial weapons of mass destruction, the derivatives, AIG Financial Products, among many others. In fact, you may remember the astute George W. Bush saying the Social Security Trust Box was filled with useless pieces of paper, that is, Treasuries taken for previous lifts, gotta-haves and gimmes.

To add insult to injury, as the National Committee to Preserve Social Security and Medicare (NCPSSM) reports, �Many of those ideologically opposed to Social Security and Medicare now point to these programs as economic threats that should be slashed to reduce the federal deficit.� One wonders if they ask whether the trillions of dollars in tax cuts to the rich and two wars whose price tag also run in the trillions have been considered for cuts. Iraq remains a cesspool of corruption. And Afghanistan, unconquered by Alexander the Great, The British Empire and the former Soviet Union, is now being taken on by the exhausted US Army. But I digress.

�The major news media,� NCPSSM tells us, and �a growing numbers of Americans -- and quite possible your own senators -- are buying this false claim to some degree. More and more the views of fiscal conservatives in Washington are making headlines, hitting the airwaves, and fueling the �fire� for Social Security and Medicare spending cuts.� These are the same people headed by the mindless George Bush who wanted to �privatize� Social Security. Would you have liked Wall Street to now have lost your Social Security, melted your Medicare along with pensions, savings, and credit itself? I don�t think so.

But NCPSSM also points out that a prominent DC radio station had the temerity to run a commentary comparing Social Security to the Bernard Madoff investment scandal -- essentially, a Ponzi scheme to take people�s money with no intention of paying out the promised return. As a proud recipient of Social Security and Medicare I can tell you personally that the money I paid during my working years and pay towards Medicare continue to be returned monthly in real (not vanished) benefits that are an essential part of my economic picture. Bernie Madoff was a beast, posing as the financial Sugar Fairy largely, cynically to Americans of Jewish extraction, as if they had been singled out for prosperity because of their heritage, when in fact, the ruthless, financial Nazi Bernie, was planning their financial Holocaust for his own profit.

That�s not Social Security or Medicare, which comes equally to all and any Americans who have worked for and earned them.

Additionally, as NCPSSM reports, �CNN aired the controversial movie, I.O.U.S.A., bought and paid for by billionaire [Bilderberger] Peter G. Peterson -- an outspoken proponent of �entitlement reform� as a way to tackle federal debt.� First, I take umbrage at using �entitlements� to describe Social Security and Medicare when in fact you pay taxes towards Social Security for all of your working life and pay monthly fees for Medicare for the balance of your life.

Secondly, at regular intervals through the documentary, CNN engaged a panel consisting only of Peterson and other high profile fiscal conservatives to discuss their view that Social Security and Medicare are promises the government cannot keep. This would be like inviting a panel from the Klu Klux Klan to talk about continuing the struggle for racial equality and civil rights. It�s more than self-serving. It�s obscene. It�s yellow journalism at its worst.

What�s more, former New York Fed bank chief, Treasury Secretary Timothy F. Geithner, according to the Times, �said the only way to keep Medicare solvent was to �control runaway growth in both public and private health care expenditures.�� And he said Mr. Obama intended to do that as part of his plan to guarantee access to health insurance for all Americans. I hope he�s not talking about cutting care for the sick, the poor, and �the useless eaters,� a kind of euthanasia by scrimping or neglect.

Do you think that�s too bizarre? Take a look at Lyndon LaRouche�s challenging article, Hasting Center�s Nazi Doctors Set Orszag�s Agenda to Kill Useless Eaters. He writes: �This is the title of a 1998 paper co-authored by Ezekiel Emanuel, a leading adviser to Budget Director Peter Orszag and a member of President Obama�s elite 15-person Federal Coordinating Council on Comparative Effectiveness Research. The Council is charged by the Obama administration with preparing the list of which medical procedures will henceforth be permitted, and which not, with an eye to cutting $2 trillion from health care payments -- to be handed over to the bankrupt hedge funds and banks which run the HMOs.� How dark, how ominous is that?

I�m also troubled by President�s Obama�s statement: �What we have done is kicked this can [Social Security and Medicare reform] down the road and are not in a position to kick it any further. We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else�s.�

Excuse me, Mr. President, but weren�t the defenders of Social Security and Medicare all along �serious� and making �hard decisions� when they warned against Wall Street privatization? Wasn�t America �serious� and making �hard decisions� when it elected you to end both wars and free up that enormous amount of capital for the preservation of our own people�s futures? What is it specifically that you�re rattling your saber at here? I hope it isn�t �useless eaters.� And I hope your hard decisions are not to financially squeeze seniors, the sick and poor into oblivion.

Lastly, I have a financial recommendation for aiding Social Security and therefore Medicare. Why not raise the income cap on Social Security tax? Right now, it�s set at $106,800 for 2009. So, is it fair that billionaires only pay on that meager share of their vast incomes? Could we not create a progressive Social Security tax or, at the very least, reset the cap at $250,000, so that those high earners contribute more to this fund that will repay them monthly and offer them Medicare as well for its standard price. Their benefit return could remain the same as that provided to the $106,800 wage earner, since the bigger earners probably have accrued other savings, stocks, bonds, property, etc. Or you could make a modest adjustment upwards in their benefits. I leave that to the actuaries. Raised income caps would definitely help to deal with the following facts from the Times, on which I will comment briefly . . .

�The trustees said that one-fourth of Medicare beneficiaries would face sharply higher premiums (itals mine and, they�re high enough already): about $104 next year and $120 in 2011. This group includes new Medicare beneficiaries and those with higher incomes (over about $85,000 a year for individuals and $170,000 for couples).� So, what is the Times� point? They don�t deserve what they paid for?

�Seventy-five percent of beneficiaries will not pay any increase, so the remaining 25 percent have to pay more to keep the trust fund at the same level, Medicare officials said.� That won�t kill the people who can afford it for �the common good.�

�The aging of baby boomers will strain both Medicare and Social Security, but Medicare�s financial problems are more urgent.� They are certainly less urgent than the pathetic, chronic giveaway of trillions to dysfunctional banks and corporations!

�The trustees predict a 30 percent increase in the number of Medicare beneficiaries in the coming decade, to 58.8 million in 2018, from 45.2 million last year. But the projected increase in health costs and the use of medical care is a more significant factor in the growth of Medicare. The trustees predict that average Medicare spending per beneficiary will increase more than 50 percent, to $17,000 in 2018, from $11,000 last year.� And yet, look at how the cost of arms� spending is increasing, and how the national deficit is increasing, to fatten the bottom lines of sacred corporate cows. Why not cut deeply along those lines?

As daunting as that may seem, and if those numbers are real, in fact, the very seed, as I have mentioned, of Obama�s single-payer health care for all aged Americans exists already in the paradigm of Medicare. What needs to be done is kick out the useless HMOs; get fairer drug prices from Big Pharma; put all of Social Security and Medicare�s dollars to work for those intended, not more fat cats filling the corner offices of AIG and other insurance companies. And, lastly, to end the stress-less stress-testing of banks that are terminally failing. And don�t, I repeat, don�t put any more lipstick on those pigs and pretend they�re beautiful. These are the hogs eating our money, eating our guts out in fact. These are the true �useless eaters� that should be euthanized, ASAP!

Septuagenarian Jerry Mazza is a freelance writer living in New York City. Reach him at His new book, State Of Shock: Poems from 9/11 on� is available at, Amazon or

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