Politics in America

From the NY Times:

The influx of support has helped Mr. Sanders build a formidable war chest, with his campaign raising $15.2 million as of the most recent filings with the Federal Election Commission in July. Campaign officials say he has raised millions more since then and will far surpass that total this quarter. That still puts him far behind Mrs. Clinton’s fund-raising juggernaut, but Mr. Sanders said in an interview that he was unbowed.

“We will be greatly outspent, yes, but we will raise enough money to wage a winning campaign,” he said.

Democratic strategists are beginning to take notice.

[snip]

Even so, Mr. Sanders in the last quarter raised less than a third as much as Mrs. Clinton, whose campaign reported contributions of $47.5 million in the spring quarter.

But Mr. Sanders and his aides say they can blunt the effect of Mrs. Clinton’s financial advantage by running a more frugal campaign, even as they build campaign operations in Iowa, New Hampshire, Nevada and South Carolina.

So far, the more-with-less approach is holding up.

In his filings to the election commission, Mr. Sanders reported spending only about $3 million — or less than 20 percent of the money he had raised. Mrs. Clinton, in comparison, reported spending at about twice that rate, or about $18.7 million — nearly 39 percent of her contributions — on things like catering at fund-raisers and slick media productions. (Her campaign asked for approval from the election commission this month to allow donors to pay for their own food, drinks and valet parking at some events.)

Mr. Sanders was left with $12.1 million in cash on hand at the end of June, and Mrs. Clinton had $28.9 million.

 Also from the NY Times:

DUBUQUE, Iowa – A journalist for the Spanish-language network Univision who asked Donald J. Trump about immigration was mocked by the candidate, then escorted out of a news conference here on Tuesday evening.

Jorge Ramos, an anchor for Univision news shows based in Miami, stood and began asking a question just as Mr. Trump recognized another reporter. “Excuse me, sit down. You weren’t called,” Mr. Trump told him. “Sit down. Sit down.”

Mr. Ramos asked Mr. Trump about his call to deport 11 million undocumented immigrants in the country and build a wall the length of the Mexican border.

“You haven’t been called, go back to Univision,” Mr. Trump said.

As security officers approached Mr. Ramos, a Mexican-American, he said: “I am a reporter. Don’t touch me. I have a right to ask the question.”

Mr. Trump was silent as Mr. Ramos, an Emmy-winning journalist who was on the cover of Time magazine’s World’s Most Influential People issue, was removed from the room.

Couldn't Resist

From KSDK television in Missouri, via Talking Points Memo, a woman in Missouri had the unsettling experience of opening her tub of butter and finding Donald Trump looking back at her.

I think I'll pass on breakfast, thanks.

Bernie Sanders

Talking Points Memo says this is a video that sums up the Bernie Sanders candidacy, and I agree.

Julian Bond

I was surprised and saddened to see that Julian Bond passed away last night.

I had the pleasure of meeting Julian Bond when he gave a talk at Coe College. We were on our way to becoming BFF's, but sadly lost touch shortly after the handshake.

One memory that the NY Times' obituary doesn't mention is that Bond was, as far as I know, the first black man whose name was put into nomination at the convention of a major political party. At the the raucous 1968 Democratic convention in Chicago, Bond was a member of an alternate (to the all-white, racist) delegation from Georgia. An earlier Barack Obama, he wowed the crowd with his oratory, and his name was put into nomination as Hubert Humphrey's Vice President on the ticket.

Bond, who was 28 years old at the time, thanked the crowd but declined the nomination because the Constitution requires the Vice President to be 35.

Bond had a solid, honorable career. He was a founder of the Student Non-Violent Coordinating Committee (SNCC), served 20 years in the Georgia state legislature, was chairman of the NAACP for 12 years, and on and on.

Yet, I always had the feeling he was an underachiever. I should be such an underachiever.

Obama's Reading List

From Tracy Mumford at MPR News, here's Obama's summer reading list:

• "All That Is" by James Salter
• "All The Light We Cannot See" by Anthony Doerr
• "The Sixth Extinction" by Elizabeth Kolbert • "The Lowland" by Jhumpa Lahiri
• "Between The World and Me" by Ta-Nehisi Coates • "Washington: A Life" by Ron Chernow

The Looting of Social Security

A year and a half ago I promised to review a book called The Looting of Social Security, by Allen W. Smith. I encourage you to re-read (I say presumptuously) that post before reading further on this one.

According to the book’s “About the Author” blurb, Smith taught economics at Eastern Illinois University for 30 years before embarking on a career as a full-time writer. The Looting of Social Security, first published in 2004, is one of his efforts, and I have to say it is not the best-written book that has come into my hands. The subject is very complex, and the good man needs an editor. But rather than dwell on that, here’s my version of what he’s so upset about (and he’s right to be upset).

Smith writes, “The Social Security Amendments of 1983 laid the foundation for the worst fiscal fraud in the nation’s history….”  The 1983 Amendments were based on recommendations of a special Presidential Commission on Social Security (popularly called the Greenspan Commission) charged with finding a solution to projected Social Security trust fund shortfalls expected with the retirement of the Baby Boomer generation. What the amendments did was gradually increase the Social Security tax base and tax rates in order to build up a surplus in the retirement and survivors’ trust fund sufficient to pay the Baby Boomers’ benefits when they retired.

In effect, the Baby Boomers, whose Social Security taxes were already paying the retirement benefits of their parents, increased their Social Security taxes in order to build up the trust fund for their own retirement, although you will rarely see it painted that way by financial writers (and never by politicians). According to Smith, “[t]he 1983 legislation generated a Social Security surplus of $9.4 billion in 1985 with increasingly larger annual surpluses thereafter. The Social Security surplus was $38.8 billion in 1988, $56.6 billion in 1990, and $99.2 billion in 1998.”

Why Allen says this resulted in “worst fiscal fraud in the nation’s history” is connected what happened to all those billions.

Lawmakers have always had three choices for what to do with the accumulating trust funds. They could invest them directly in the American economy by buying stocks and bonds, but that would make the government a major – no, THE major – stockholder in the market. [I don't need to explain to my intelligent readers that that's a bad idea.] They could just hold them (put them “in a sock under a mattress”), but that would take trillions of dollars out of the economy and cause an economic collapse. Or, they could invest them in Treasury securities, with  repayment scheduled as funds were needed for benefits.

The last option describes how Social Security trust funds have operated for nearly 80 years. However, prior to 1983 Social Security was a pay-as-you go system, with accumulated funds sufficient only to pay benefits for one year, should no additional income be received. After 1983, the trust funds became much larger, and the temptation to use them as general operating funds greater. And that’s what happened. With burgeoning Social Security trust funds to put to use, Congress used them to fund the everyday workings of government, making it possible to cut other taxes, especially for those in the very highest tax bracket. Reagan did it, Bush I did it, Clinton did it (and even claimed to be running a budget surplus, with Social Security trust fund income included), and Bush II did it.

The result was that American workers who raised their taxes to fund their retirement benefits instead funded tax cuts to the wealthiest. Senator Daniel Patrick Moynihan was so disgusted by the turn of events that he proposed going back to pay-as-you-go. But now, as the Baby Boomers reach retirement age, and some scenarios project trust fund shortfalls, the only option that seems to be completely off the table is raising taxes on the people who benefited most from the shell game.

What else could Congress have done with the trust fund surpluses? By law, the only option for the trust funds is investment in Treasury securities. But laws can be changed.

Smith argues, “Every dollar of Social Security revenue, in excess of what is required to pay current benefits, would be better used in paying down the gigantic national debt. Doing so would have the equivalent effect of putting the money into a separate bank account that is off limits to politicians who are tempted to borrow the funds to pay for general government operations or to fund tax cuts. Using Social Security surplus funds to pay down the national debt between now ( i.e., 2004) and 2018, and then borrowing those dollars back during the years in which Social Security deficits will occur … would be the fiscally responsible thing to do.”

Which sounds like a reasonable approach.

It’s a moot argument now, though. The money’s gone.