What Bernanke said about cutting Social Security and Medicare

The increases in spending and reductions in taxes associated with the fiscal package and the financial stabilization program, along with the losses in revenues and increases in income-support payments associated with the weak economy, will widen the federal budget deficit substantially this year. The Administration recently submitted a proposed budget that projects the federal deficit to reach about $1.8 trillion this fiscal year before declining to $1.3 trillion in 2010 and roughly $900 billion in 2011. As a consequence of this elevated level of borrowing, the ratio of federal debt held by the public to nominal GDP is likely to move up from about 40 percent before the onset of the financial crisis to about 70 percent in 2011. These developments would leave the debt-to-GDP ratio at its highest level since the early 1950s, the years following the massive debt buildup during World War II.

Certainly, our economy and financial markets face extraordinary near-term challenges, and strong and timely actions to respond to those challenges are necessary and appropriate. Nevertheless, even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance. Prompt attention to questions of fiscal sustainability is particularly critical because of the coming budgetary and economic challenges associated with the retirement of the baby-boom generation and continued increases in medical costs. The recent projections from the Social Security and Medicare trustees show that, in the absence of programmatic changes, Social Security and Medicare outlays will together increase from about 8-1/2 percent of GDP today to 10 percent by 2020 and 12-1/2 percent by 2030. With the ratio of debt to GDP already elevated, we will not be able to continue borrowing indefinitely to meet these demands.

Addressing the country's fiscal problems will require a willingness to make difficult choices. In the end, the fundamental decision that the Congress, the Administration, and the American people must confront is how large a share of the nation's economic resources to devote to federal government programs, including entitlement programs. Crucially, whatever size of government is chosen, tax rates must ultimately be set at a level sufficient to achieve an appropriate balance of spending and revenues in the long run. In particular, over the longer term, achieving fiscal sustainability--defined, for example, as a situation in which the ratios of government debt and interest payments to GDP are stable or declining, and tax rates are not so high as to impede economic growth--requires that spending and budget deficits be well controlled.

http://www.federalreserve.gov/newsevents/testimony/bernanke20090603a.htm

Cuts in Social Security and Medicare will cause greater social upheaval than wealthy bankers can imagine. Except in the few cases where payments are to very wealthy people, Social Security and Medicare money goes straight back into the economy.

In fact, Social Security and Medicare are pretty much direct income back into the pockets of working Americans -- Americans located in the U.S. not in India or China. That is because most of it goes to pay rent, utilities, food and medical personnel, but that is a small amount considering how small the Social Security payments are. The little that remains may go to pay for medicines and a few consumer goods. Most of the Social Security and Medicare dollars, however, are spent in the U.S. That money helps keep the whole economy moving.

I have yet to see that very much of the millions given to bankers for their bonuses is spent in the U.S. or on keeping our economy moving, buying U.S. goods and services.

As for money spent on military hardware and even salaries of personnel -- to a great extent it is spent overseas or on raw materials that are ultimately wasted and just pollute the environment.

Cut military spending. Leave Social Security and Medicare alone. The elderly woman living alone in a tiny apartment on $880 Social Security per month is not to blame for our economic crisis. Nor is the elderly couple living in a retirement community on Social Security and what is left of their savings who play golf every day. They are not hurting the economy. And the money given to them goes right back into the economy. Why should the recipients of Social Security and Medicare pay for the mistakes and crimes of bankers and mortgage brokers?

Don't cut Social Security or Medicare.

Cuts to Social Security and Medicare will simply shift the cost of caring for the elderly to their children -- precisely at a time when the children are facing a bleak financial future. No, Social Security and Medicare are not where the cuts can be made.

for years.

capitalsm = death cult.

Why should Social Security recipients who paid their taxes all their lives be asked to pay for the bonuses and bail-outs of Wall Street CEOs and brokers who caused this mess. I'm really less and less enthusiastic about the Obama administration.

First scholarships for Muslim students when our own universities are raising tuition due to lack of money at the state level and then cutting Social Security and Medicare payments. Whose side is Obama on? Ordinary Americans who receive Social Security and want to go to college or the Muslim students? The priorities here are confusing.

taxes than necessary to support current beneficiaries at mandated levels.

we've been paying more than needed to support retirees for 30 years. if it had been going to support retirees i wouldn't mind, but it was going to support tax cuts for the super-rich.

Bernanke is another BushCo sleeper Cell...

I've been waiting for this.

We have $Trillions for failed Billionaire Wall Street Bankers.
We have $Billions for the useless Occupations of countries that can't threaten us.
We have $Billions to INCREASE Military Spending.


....but nothing for the most vulnerable among us.
....nothing for a REAL Universal Health Care System that would benefit ALL Americans.

Whose side are "they" really on?

And the dog is first class.

So what if we have only our indebtedness to show for his appointees?

We can't have everything.

i hear you :kick:

Will someone please stop these old people from torturing the cute puppy? If they eat each other the problem will solve itself!

For the Puppy's sake - please stop the elderly from living!

or giving away twice as much as necessary for meds simply because the Pharma lobbyists were able to write the legislation regarding drug benefits (no bargaining? even with an extremely large block as purchasers? Obvious scam to raid cash and give it to corporate donors).

Raising the cap is the obvious answer, even after all the looting it would become solvent - but the wealthy are not expected to contribute because they are considered modern royalty.

The safety net has solved so many problems that unraveling every remaining bit would only bring back the problems solved. Why is it that the corporate minority are so hell bent on denying basic needs to the non wealthy that contribute their entire lives just for a pittance to forestall starvation? How much more must they have off our backs beyond the millions or even billions that they have largely stolen for their retirement?

Doesn't anyone think it odd to interpret Bernanke's speech as an attack on social spending when Bernanke supported Obama's stimulus bill -- the largest New Deal spending bill since, well the New Deal?

Bernanke is saying the budget has to be balanced. He does not say how. Bernanke's background is not in business, but in academia, where he spent the last several decades studying the Great Depression and the New Deal.

Some news sources (not the World Socialist Web Site, sadly) are saying that Bernanke's speech is an attempt to give Obama ammunition to raise taxes on the wealthy and cut military spending, not to attack social security or medicare.

:kick: