station a big thanks to everyone who helped the tucson festival of books come together. we'll be talking for about an hour here in the first 40 minutes will be q&a with mr. larsen and myself and then questions from the audience. hang on to your questions until then. when they get wrapped up, because southwest of the student union so he can autographed copies of this book. if you turn off your cell phones now, that would be great. let's get introductions out of the way. eric laursen is an independent financial literal activists and in addition to writing "the people's pension," he has cowritten understand the crash and is written for a wide variety of publications, the village voice and the "huffington post." please welcome eric laursen to

the festival of books. [applause] >> very glad to be here again. let's start with the question raised by the title of our session here and that is the social security manufactured crisis? the short answer is yes. there is not existential crisis for social security faces in the sense it will not exist in x number of your system and drastic is done. but there's two crises only talk about a social security crisis. number one is a fiscal crisis. what have enough income and revenues from whatever source to support itself in future years on the second crisis is a political crisis and i do find that as a crisis in terms of whether, for lack of a better term, the governing class in this country wants to support social security anymore and the degree to which there is

sufficient popular support, mobilize popular support that it has to continue. so i'll address the fiscal crisis for us because that is the one in the media all the time. to do find this a little more closely, social security depends on two sources of income. payroll taxes and interest income on the trust fund is built. i can go into that and a little more detail, but i'm not sure you'd want me to. the point is the current projections by the social security administration and the congressional budget office and what you see in the media all the time that in 2033, the latest estimate they have come a social security will run a run in the trust fund. that means i will have to pay benefits as the current payroll tax revenue coming in. what that means that projections are correct and remember these

are only projections for social security would only have enough money to pay 75% of benefits in 2033. what that means is that congress would either have to -- how was it has to be sent in to balance the books because social security is not legally able to draw from other sources. it has to use the income it gets from those two sources i mentioned. congress would have to cut benefits, to match the money coming in or have to raise payroll taxes or figure out some other source of income to adding to make up the difference. so that is what we are talking about when we talk about a fiscal crisis. a few things to keep in mind to put this in context. first of all, some of you may have heard me explain this on a panel i was on so i hope i'm not repeating myself too much is that social security, with the congress could do is raise the cap on income subject to payroll

tax. it is the idea some of you may have heard. what that really means is currently, only the first $113,000 of a person's income is subject to payroll tax. what we could do is raise the cap to 200,000 or 250,000 or this is an idea senator bernie sanders has put out. we could have a doughnut hole amalie subject over 250,000 payroll tax. there's a number of ways to do it. but the point is people making that kind of money, more income should be exposed to payroll tax. by some estimates at the cap was completely eliminated, that would eliminate the problem altogether for the year 2033. we have 75 years at least of healthy social security. if it was simply raised to 200,

$250,000, we could eliminate close to half the shortfall. there's other things that could be done, too. when i didn't come forward is to raise the estate tax back to where it was an without that revenue to social security. another idea that is, to simply to raise payroll tax across the board a little bit gradually over 20 years. it can be done slowly enough so wouldn't affect anybody's purchasing power and that would do the trick. we would be talking about a dollar 50 a week or something like that. so the key point in this gets into the political crisis problem is there's three solutions to social security being discussed all the time in washington by the economic and political elite i guess you'd say. what paul krugman caused a very serious people. i called the solutions the three headed monster.

one of them is to raise the retirement age, which would effectively be a cut in benefits, especially for people who live a very long life span. number two is to means test social security, essentially reduce or eliminate benefits for upper income people. these two problems with that. first of all, you would have to means test of a pretty low-level, by some estimates to the point of cutting and if it's for people whose lifetime or that fit their highest income in their working years is about $62,000. those aren't exactly affluent people. also, you wouldn't really be of a race that much money. the other thing is that would undermine social security, which i think is the most important element of social security, which is social solidarity aspect, the fact that people of all income levels could send and from that, participate in africa the sense of loyalty or ownership. the third idea they come up with

this repeated over and over again in the national media is the chained cpi, which is to be quick and dirty about it means adjusting the formula used to compute benefits so they would go down. it's sort of a technical correction, but it actually be a serious change. it would start to affect people pretty materially within the next decade and more and more after that. the common denominator of these three ideas for fixing show so security is they would all of them strangely enough exam the most affluent people. they would see a little bit of reduction of benefits, but that is not a big deal to them. if they live longer, david the reduction in benefits. but they've got plenty of other money. it really would be a very, very small hate saddam.

now if the cap is raised as one of the more progressive ideas, it would be fairly significant cut in their annual in town. so what we have is a political crisis, number one. it is a crisis in terms of what adjustments do we make? social security is not threatened in any existential way. the question is which way do we go in terms of fixing problems if we do need to fix them. there's an argument that maybe we should wait until we are closer to the time it that theoretically projections would start to take hold. if are going to put that aside for a second, the question is do we want to do this in a progressive way or nonprogressive weight? the problem is there is a bit of a disconnect between the public and is a loosely call them, the governing class, economic and political governing class, consistently the public supports

raising the cap, raising payroll taxes modestly across the board if they would preserve social security. these people value social security. in washington that's not the case. it's more a question of which constituency are we harming them is going to happen to her ability to raise funds for ourselves. so that explains the dynamic. >> okay. how important is social security of the people who do depend on it? >> social security, i'll throw out a couple of figures. about 45% of people who receive social security depend on it for 75% -- 90% of their income. beginning two thirds of the people who receive social security depend on for perhaps 90% of their income. is that right? okay, thank you.

what you need to keep in mind is social security sound overly generous system. it's the least generous national at retirement system in the industrialized world. people on social security are not getting rich off it. the largest benefit you get per month is around $2000. the average is more like $1300. so it is not getting anybody rich. as a result, an awful lot of people come to keeps every year out of poverty, 20 million people. that's like 7% of the u.s. population. if you start making changes, if you implement the cpi, for example, an awful lot of people that just besides the poverty line. the result is literally unique

what advertisers small technical corrections to social security worship may keep working longer, you're actually going to throw a lot of people into poverty. there's a material human cost of doing that, which i don't think the public wants to pay. >> you do take a deep dive into the origins of the debate over social security. what led you into this project? >> i started researching in the mid-90s when i was editing a magazine called plan sponsor, a magazine for people who went public and private pension funds still going strong. i got an interest because around the time i was running sponsor was the privatization of social security became a hot topic. suddenly that's what everyone was talking about as the solution to the social security

problem. so privatization intrigues me that people would entertain ideas like that about a system that was so popular and was underpinning for private pensions all across the country that just seemed staggering to me. so i got interested in the issue. i started looking around for isn't there some book i can read that gives me the history of this debate, this ideological tug-of-war over social security and i couldn't find one. i kind of knuckle under and under and senate guesstimate how to write it myself. so that is what i began to do. a couple of other things here. as i started delving into the history of social security, it goes beyond the framework of the book, which really begins in 1980, but he began to look in the history and i wanted to understand, why is it different

from other government programs? i traced its origins back to a number of things, but mutual aid societies set up in the mid-19th century by working people come in the early days of the industrial revolution who had social protection at all and created everything from the masons to the elks, to all kinds of groups, which some of them are still around today. back then the purpose was to contribute membership fees, which go to pay for health care, survivors benefits, all kinds of things. there is a social solidarity element. i realize with a social insurance like social security began to be instituted in the early 20th, they were taking this idea of mutual aid and institutionalizing it. i thought that's very powerful. that's different from some unlike welfare. this is not something you are given because congress feels

like they want to be nice to you. this is a u.k. because he paid for it, because it belongs to you and that is something that could bust in the debate sometime. i have an interesting anecdote, that the other thing that got me going and were committed was because i began to realize i was very directly affected by this. i am a freelance writer in the doing this for about eight days in years. i have an ira. it took a hit with the.com bust and the financial crash in 2008. i don't even want to think about my home-equity at this point. it's very hard to say. it's a tough racket, freelance writing. i realized when i received a statement used to censure on paper, but she now have to look at online to tell you what your social security would be, which

you accumulate enough you look at 65, 70, i realize that's incredibly important to me. thank god or whatever that there is going to be at least that. so this is a very vital piece of history and a very vital issue for me as an individual. now that the anecdote from the 2000 election. there was an exchange that happened between bush and gore. bush said at one point, al gore wants you to think that social security is a government program. it's not. it belongs to you and al gore had fun. he doesn't understand that the government program. the shows are ignorant he is. bush was right. social security is not like any other government program. sunday we paid for, blocks to us, and managed as a trust, that

really is ours in a legal sense. bush's intentions are quite different. he wanted to encourage people to think of payroll tax is something they should put into a private account instead of letting it be managed by the social security administration. i think there is a profound truth that got turned around and cheesy people on the progressive side as well as the conservative site can get confused about this and the reality, the more fundamental reality of social security as a form of mutual aid gets lost sometimes. >> you've talked about the three stages in this effort to undermine social security. who do you see as people behind the? what was the first stage during the reagan administration? >> to be really quick because it's on the book, so read the book. as for status to the history told in this book.

social security did face a serious funding crisis. they have to do with a lot of things, including rampant inflation, which cost benefits to boost more than they should. but that was an actual crisis solved an 83 by the greenspan commission, which you may have heard of. there were some adjustments made. right after that where group of influential and wealthy people. one was peterson, an investment banker who were furious that more fundamental drastic changes were made to social security and 83, said they launched a multipronged movement to cut social security and they were able to poland center-right democrats as well as republicans on this. there is a group called americans for generational equity they began putting out research in pulling together influential people behind the idea that we have to cut social security. a little known fact, every

president from jimmy carter on as attempted at some point or another to cut social security. that includes barack obama, bill clinton, republicans as well as democrats in these groups in the 80s managed to -- they didn't manage to sell the public on the idea of cutting social security, but they've built up a strong constituency among the washington and financial elites that this has to be done. in the mid-90s, stage three b. can't come at a privatization. the stock market was going great. wall street got behind a movement to privatize social security and suddenly all the proposals you heard for 10 years after that included carving private accounts out of social security for creating them on the site in reducing benefits to the same thing. stage three ended in 2005 when george w. bush got on the campaign trail again and attempted to sell the idea to

the public. it is such a disaster that it became political poison. as a result, the movement against social security shifted back to the state still right now, which is the stage of saying that it's going to cut it. it has to be cut. the politics has been a mating dance between the republican right in democratic center-right as to how to do this. how can we make this politically acceptable enough to cut social security? so that is the arc of the story of this evolution in the movement. i have to ask you to repeat the first half of your questi3 movement. i have to ask you to repeat the first half of your question. >> as you were talking, i was thinking about the bush at first. i remember attending one of those town hall swinney came through tucson and really seemed more like an infomercial down the hall. you had people from the community, that they had

scripted lines and it was all focus on the idea of how wonderful private accounts would be. i didn't go as well as he pointed out in your book. >> is an interesting incident that happened during the whole rigmarole. that was the one time in the hole. i covered that the national media turned against cutting social security. generally the national media has been very center-right as a general sayed. their studies about this. they turned against because he presented them in such an inept way. it was so skewed in such a dog and pony show that they got tired of it and started editorializing against them. one interesting thing happened during that campaign apace. i went to highlight in denver a group of three college students who attempted to get into one of those town halls.

they had tickets and they wanted to get an m.a. had t-shirts that say don't cut social security and they were stopped at the door, turned away and they went to court and said the race had been violated. turn side of the secret service people did it. secret service people used on the tour of italy. as a congressional investigation about it in those three inevitably became known as the denver three. the interesting thing is they were not retirees. they were not older workers. they were not union members. they were college students. they were people you didn't have typically is being concerned about social security and that's one thing i want to digress about a little bit as most of the proposals i outlined to cut social security means testing, change cpi, most of them would

affect retirees considerably in the next couple decades. the people most affected are people that 20th, 30s and 40s today. the people most at risk from cutting social security and the retirement crisis that i think we've got coming quickly in the united states is not people retire today. people over 55 are facing that, the younger people now come to younger workers are the ones who are going to behave. the reason is because other sources of income are disappearing. home equity, ability to save privately. consumer debt, employer-based pensions disappearing. people in the 20s, 30s and 40s today will rely more than ever as social security and this is why there is a certain man of craziness and washing and they would consider cutting this thing, which is only going to become more vital. one of the things i want to

stress here is the need for younger workers and younger people to become more aware of what's going on the social security because they are the ones most at risk here. >> and we've heard the famous ufo factoid. more people believe they will be visited by ufos and will collect social security. i think that is something definitely up there in the media. you're skeptical of that and that's part of the basis of people saying we should use some money in private accounts. >> outplayed the story really quick. it was in a pool that frank luntz a republican pollster put together for a group called the millennia, which is an astroturf young people passionate about cutting the deficit group put out in the mid-90s. what they did is they ask, do

you believe in ufos? five minutes later, do you think social security will be there? there was a direct comparison made to do you think one is more likely to happen any other? but he was treated like that in their press release. a couple years ago and the responsible group did a poll did put those two together and overwhelmingly, people said they think social security will be there better than a ufo land. the ufo factoid was endlessly in the press. in the late 90s and early part of the next decade to the point where it became in green sap mull over the place and you still hear it occasionally. >> i'm sure there's other panels that would take deep into the ufo phenomenon. let's get back to the private accounts question. the whole idea of diverting

social security money into private accounts. the winners and the losers in that scenario. >> there some people who read the panel panel on yesterday specifically about that, but i'll give a quick answer to that question. the quick answer is very simple. private accounts carved out of social security would be a modest boost for people affluent were already able to save. for people who are not affluent they can't afford to save, they wouldn't do very much could. they would put money at risk which shouldn't be at risk. if you're a person as increasing numbers in our economy who spend their entire careers working in low-wage or close to minimum wage jobs will not be out to save enough. the only way to help them save enough for us to actually for the government to contribute money physically to that account to the reset account by giving them money money and that is

some that's not in the cards politically and even that wouldn't work very well. it is very difficult. anyone who has a 401(k) or ira knows that it's difficult to time and investment pool like that so you gradually reduce the riskiness of your positions to the point where when you reach retirement age, you are in a safer set of investments. people in the late 50s, early 60s right now find themselves in a position where their 401(k)s and iras have tanked and we have stories over and over again about people in that age group who have resorted to riskier investment in order to quickly boost retirement nest egg. it backfires and they find their lower down than where they needed to be and we have crises. this is what would have been on a larger scale if social security were privatized. social security privatization on

practical proposals are put together for doing that, it always includes reducing the core benefit, the current benefits that you get less they are. they don't make a fortune on your private account. so we are talking about people who would be an even worse position because social security would be reduced. so this is a very bad idea. the only way to make it palatable would be to guarantee somebody minimum said every time you met. that again turn social security into a welfare type system. that's the kind of thing in the political dynamic we have today gets cut. i do not see -- i see private accounts to a further decreases than even the one we are facing now. >> i suppose there would be the folks on wall street money managers of such a thing were to

occur? >> this is the other thing is that it would be what i call a form of welfare for wall street. private accounts, the one thing they would do is guarantee a steady stream of income from management fees to wall street, which i think was a pernicious thing and that it would encourage wall street firms and give them a cushion on which they could continue to make sort of reckless investments in pursuing our trading strategies that got them into trouble over the last 25 to 35 years. ..

the reason the bubble in mortgage-backed security invested existed to begin with is because wealthy investors hedge funds, wall street had so much money floating around, so much money, a lot of it due to tax breaks and other things that they needed someplace to put it and so you have serial bubbles developing around the globe and this has been happening for 30 years. you think back to latin-american bonds in the early 80's this has been going on over and over a reputedly privatized social security and the funds flowing into wall street as a result would aggravate the problem.

>> one of the things you talk about in your book is a complexity house social security works to the average person is not aware of and that also complicates the effort to reform it or make it work in the future. >> that is an issue. social security is little like wall street. it is arcane to some extent. the formula that is used as complicated. the way it's funded through the trust fund through treasury bond is and how that accumulates is a somewhat complicated economic concept that people are not educated on. there is no civics course that teaches you how this works or teaches you what the federal reserve is for that matter. and so social security seems like something that we don't understand. the average working person doesn't understand and so you

hear somebody like alice rivlin, the former head of the budget office of the white house who is funded by pete peterson and she comes out and says social security is going bankrupt we need to stop it or capsize and they don't always get the message about what is really going on. so the sort of an element of complexity and lack of good information out there about social security is a real issue. >> it has political support among the voters in general. >> i did the polling going back 35 years and i found it consistently if people were presented with the option of paying a little bit more in payroll tax in order to secure social security, they all say yes this is the earliest poll i found that was in 1977, and it's

consistent. what's changed is the view of the elite in this country, not of working people. >> talk about what needs to be done politically to strengthen the social security system. >> there's three things that need to be done. we are talking about the political crisis, not the suppose of fiscal crisis. number one is, and this may sound a little out of left field we need to revise the movement in this country. the movement has been consistently a very strong supporter of social security. maybe the strongest supporter in the political realm and the really disturbing moves against the union movement, the right to work law and a number of states these directly impact social security. another is that much more activism needs to spring up among younger people. they are the ones that face the

biggest risk and they are the ones that are not part of the equation publicly because it's not something they think about as a general habitual things of that needs to change. we need to have more awareness on the part of younger people. finally this is something that is a much bigger problem, social security depends on payroll taxes for the bulk of its income. payroll taxes depend on wages. wages going up, high wages, good paying jobs. it is a prerequisite for a healthy social security system over time. people look at the economic landscape we have now where the wages are stagnating, good jobs are few and far between, and the impulse among social security is to say that's always the way it's going to be so let's cut

social security because we can't afford it anymore because we will never, ever again have a prosperous work force in this country. well, if we don't have -- to back up the second, wages in this country, real wages have stagnated the better part of 40 years and we've seen what has happened to jobs. sooner or later we need to address the problem in the country of giving people decent jobs starting to boost the minimum wage again is one small step in that direction. the best thing we can do to keep social security healthy is to give american workers a raise. now what we need to do politically to give them a raise? we need a strong labor movement, we need workers who are prepared to organize in their workplace and push their politicians for high year wages for better jobs for an industrial policy that would achieve this. so, those are the things i think we need to get social security

on track. >> the skepticism about the reliability of the treasury bonds that social security has invested in. >> all they are is iou's you hear this over and over again to a brief summary, social security is based on payroll taxes. payroll taxes come in every year and most of that is to pay current benefits. the rest of it goes into this trust fund set up to make sure that social security house the money to pay benefits of the payroll taxes fall below a certain level. the treasury bond is invested, the trust fund is invested in u.s. treasury bonds just the same kind of treasury bond that he would buy on the open market that federal reserve owns the bank of china wones, goldman sachs and anybody else. they are covered by the full faith and credit of the u.s.

government. but in order to purchase those bonds, the social security trust fund uses the money coming in from payroll taxes so that money is then available to the federal government to use for whatever other purposes to use them for fighting the war in the middle east that's the origin of the trust fund has been rated. i see it a little differently. i think that social security to the extent that it's a secure and safe retirement system is based on the united states economy, the health of the united states economy. it means good wages, good wages means plenty of money coming into social security. those treasury bonds are in essentially a bet that investors take making a bet that the united states can run an economy that is good enough to generate

high wages so essentially goes treasury bonds and the trust fund or a wager that we, the people of the into social security are making on the united states economy. that sounds a little complicated, but i think that is the fundamental thing about any retirement system anywhere that if you have a healthy economy can have a healthy retirement system. you don't necessarily have to have a trust fund. countries in europe have social security systems. they don't have a separate trust fund for the payroll tax generally. but it's the same thing is true. they are betting that the economy and the country will be successful in tax revenue will be raised and will cover these costs so that gets me back again to this point about wages, the need to give americans a raise. if we don't give them a raise we have problems in social security, we have big problems about anything else and i don't

have to even tell you what those are. that's what we ought to be concentrating on right now instead of worrying about projections 20, 30, 40 years into the future. what can we do for american workers today that will determine how prosperous american workers are able to be tomorrow in terms of how where they start out. >> we are going to go to questions from the audience here in just a moment so if the folks on to line up at either the microphone or ask a few questions that would be great. while they are doing that, why don't you talk just a little bit about -- life is intrigued with use of the mutual aid society. if you to speak briefly to that as folks lie not here. >> i became fascinated by this. there is actually a very good book that talks about it called a welfare state that talks about the origins of social insurance as an idea. related to that first of all,

the mutual aid societies are something that at one point in the early 20th century two-thirds of american males pilon to some kind of a mutual aid in fact that number was higher among black population and the white population because they got even less in terms of social benefits. there were mutual aid societies all over the place. the odd fellows, the mutual aid society, the elks or a mutual aid societies. so when you watch the flintstones and see the water buffaloes or the honeymooners and see the raccoons, those are the origins of these kind of organizations was the need to provide for people at the time when there were no social benefits. one of the little less known benefits and the social security gives you actually is a burial benefit. a small terri hail benefit. and that goes back to 19th century when that is one of the things the workers most demanded

from the mutual aid societies was the workers wanted to be able to have a decent burial, it was very important for families that were what he called to work but respectable to be able to do things like that. so that benefit is really kind of an artifact of social security's origins in a way. this strikes me as very interesting. and of course what's really important about the concept of mutual aid is that that's where the loyalty of the public to social security comes from is this idea that we are all in it together. the social solidarity element. that is what would disappear specifically if he were to start to cut and means test social security. i will stop babbling. >> over year, the microphone. >> i wonder if you would speak for just a moment about why the income cap on social security was implemented in the first place. >> was implemented for a good reason i think. the idea is that social security

is not supposed to be something that means you rich putative was supposed to be a base income than you could build on. other countries had national retirement systems where people didn't have an employer base pensions or people were not as likely to be homeowners and so there was an assumption in the united states and over roosevelt that what was needed was and a system the would basically pay your whole way but provide you a base you could build on. so the cap came in in the early 80's when the basic idea is you don't want to tax beyond a certain point because people shouldn't expect benefits beyond a certain point. you wouldn't want somebody that is a millionaire to be getting a percentage of $1 million a year as their social security benefit. that person you had to cut it off somewhere and say if you

make $113,000 a year you will get x and to make to under $50,000 a year you will get the same as the person that made 113,000. there is some sense in that but when the system was set up, they set it up so that there the formula is used to boost it a little bit every year when they set it up they set up such that 90% of income over all on average would be taxed, applied to payroll taxes. now what's happened in the last 30 years is that the income of the top 1 percent or 2 percent of the population in this country has shot up words, has been way out of proportion shot up words and so right now is down to about 80% of income being subject to payroll tax. the idea would be to increase it such that we could get it up to about 90% which would -- we could assume what sort of be the fare cut off because if you do raise it you have to pay people

more in benefits, too. the idea is to keep it as a sort of base but raise a back to that 90 present levels of that is what happened there. >> over on this side. >> one is the trillion dollar plus in the social security trust fund and treasury debt i think that's backed by the full faith and credit of the united states like your dollar bills or savings bonds. the second question are you aware of any data, any economic projections of where the country would be economically or how deep the recession after the economic collapse in 2008 would have descended had there not been the demand created by the tens of millions of dollars of people not able to receive retirement benefits because the social security system exists?

>> social security there's a reason why they call with a safety net. it was actually we play a very strong role after the recession hit. and in keeping it from getting worse because you have at least one part of the population namely three parts of the population, the elderly, survivors and the disabled who have a cushion for their income and so there was a certain amount of consumer spending, a normal consumer spending, it wasn't interrupted because of this. there aren't any release all the figures on how significant it was. i have not -- i have seen various numbers, some of which are larger than others. but i think that the overall answer is that the safety net essentially worked the way it was supposed to.

survivors' benefits, social security disability come to some extent tanif and unemployment benefits for a really solid cushion. now contrast to social security with unemployment insurance, which we have had a fight after a fight in congress to extend for another year, another two years while employment continues to not an approved and not recover and in contrast to that is the fact social security continues to pay out and hasn't been controversial at least and the benefits are being paid and think about what would happen if social security was more like a welfare system and it wasn't able to operate the way that it does. it would have been -- things would have been quite different over the last several years. >> over on this side? >> you answered my first question and that's when you raised the income cap you have

to pay out more benefits. would that be self-defeating you are just getting more money in that you have to pay more money out of the the the second question is why do they want to weaken social security? i don't see where the social security system benefits anybody. >> the first question, the benefits -- the numbers have been wrong on this. benefits wouldn't go out so much that they would impact -- that they would stunt the positive impact of the high year cab. the second point is why does the elite want to do this? i can give you a fairly simple in answer to this question but i think it's very important and this is something i was trying to puzzle out riding "the people's pension" is why was there a point of view changing so much.

>> if you want to call them that they've created a very favorable tax situation for themselves in this country. capital gains taxes have been lowered drastically cut income taxes top margins, corporate taxes are so full of holes to say we have a corporate tax isn't even reality anymore for a lot of large companies. this is something that started in the carter administration, not the reagan administration. its continued off and on for 35 years and the 1% had been a very accustomed to this favorable tax situation they have for themselves and the overriding concerns and everything else is to maintain and extend it the best they can. there's been some hiccups in january when the fiscal quiff deal eliminated some of the bush tax cuts. only some of them. but for the most part, this sort

of favorable tax situation for the wealthy has been kept in place. the the reality is the we do have an aging population in this country. we will have to pay more to support them. there's figures on this. social security amounts to about 4.5% of gdp the will go up to about 6%. we will have to pay more. the overriding concern of the elite is to make sure that that extra burden doesn't fall on them. the way to do that is to cut social security so that the burden is shifted from this collective system that we have, social security, medicare on to the individual household. it's not funded by raising taxes anymore on the wealthy. that's why the solutions that we see on the right in the means testing and the changed cpni etc

that's why they support efforts like that. it's the desire to keep the tax system in place. i wonder if we are not at the beginning of a paradigm shift where our stock market is as high as it has ever been and our economy is improving, the wages aren't come of the recessions of people moving from permanent jobs to part-time work, dropping wages, robotics, picking up outsourcing, all those things tend to indicate that we may be dealing gang that improving economy from improving wages co to estimate i would suggest it goes back much further.

the first thomas of high unemployment and the stock market boom happening at the same time. if we can trace this pergola in the history right back to that point that is the first time that we saw something like that happen in this society. that's where the stock market really kind of and the investment world sort of dealing to themselves from what's happening to the working public. one thing that is worth mentioning is the idea and used to be what henry ford said. i want to have reasonably high paid workers so they can buy cars that is in the case anymore. many factors in this country the extent we have manufacturers are those that invest in manufacturing will simply say we've got a rising middle class in east asia. they can buy our products. americans can work either in quote on quote knowledge based

businesses or at 7/11. we have middle class people over there that buy our product and we are making those over there anyway so there is a lot less concern about nurturing the prosperous american working-class. what to do about it, again, i think if we want to do something about it within the present system we have, we have to do the things i was discussing earlier. we need to change the law that prevent them from organizing any reasonable way. we need to have an industrial policy that led begin to create or merger industries and create good paying jobs. we need a reasonable trade policy that doesn't simply give away everything to the big business in the form of the multilateral trade agreements. revival of the seattle agreement would be a good thing. if we can't -- if we don't see these things happen, if working

people in this country have really lost control of the state and of the governing class, and this is a serious possibility we need to start thinking about drastic things i could even see this is looking ahead of it obviously going back to the sort of cooperative movement and mutual aid movement to say we have to do this ourselves as working people to set up institutions outside of government that they are not subject to these kind of pressures. that's the kind of thing we have to see because the pressures on social security are enormous, but the reality is as a society that complex industrial or post industrial society we can't do without social security. we need something like this. the social solidarity institution if the governing class is sending a clear message that the state will no longer do this for us and it's only a

matter of time before they implement the kind of changes they want, i am hoping they don't but to then they have to start thinking about a different way to think about ourselves as a community. that's maybe the long term reality we are facing. >> over here? >> can you comment on whether contributors to social security even though lower earners or higher earners get more back than they contributed taking into account inflation and passage of time or cost of money? >> there's been a lot of attempts to study this. do you get a good or fair benefit return on the money that you pay into social security and payroll taxes? there is a number of ways to look at this.

one is if you are -- i like to think of economics as the sort of part of manipulating statistics to tell a story and there's a number of ways you can analyze this and i've seen people run numbers that say know you are getting a terrible return on your social security but you're getting a good return. but the reality is this. the social security is indexed to the cost of living. it to the growth of the wages rather than the growth of crisis and that is the key. a means that social security little the allows you to maintain a middle class standard of living as you had as a working person. now if you try to buy an annuity that is indexed to inflation even just a price inflation you have to pay a fortune for it coming you couldn't do that as a working person in this country, are very, very wealthy. it's at the very reasonable price. so there's something about the social security in the price

list for working person's. the other aspect is that the social security is on just retirement benefits. if you're a working person dies at the jet 50 and you have a spouse and a couple of kids, social security pays the survivor benefits for them, paul ryan, representative paul ryan, she admitted a couple of years ago one of his parents died when he was 16, she received reza wires benefits from social security ought and allow them to go to college, so you have all kind of ways in which social security is a pervasive benefit and something that is absolutely essentials and all kind of facets' the middle class live in a and it's impossible to replicate that in a private market based setting i would submit any reasonable price. over here? >> i would like to thank you for

addressing the long-term prognosis that we are facing and at addressing that there seems to be a lot of hysteria about against the government and how easily this -- evil it is. i would like to hear the distinction when you said it is not a government program, but yet there is a payroll tax people are required to pay so they perceive it as it is taken by the government. and so how do i address that argument? >> we are getting the two-minute warnings and you will have to make that quick. >> i will take that one quickly. that is the kind of notion that we keep hearing about, glad you brought it up. the argument is why should the government get your payroll tax rather than you being able to invest it any way you want for your retirement clacks the

answer is that we all the diomede because it goes into something they're belongs to us collectively. it's a government program run by the government, but two things, number one again it's a trust fund and there's a reason why it's called a trust fund because it's not something the government can do as it pleases its required to invest in the treasury bonds rather than putting into hedge funds or mortgage-backed securities or something because it suppose to be saved money. so that's the fang -- the thing. i think that is a strong indication that the public regards it as something different and wanted to be -- wants it to be treated as something different. >> okay. i think we are at a time where we need to start wrapping up the

session. [applause] >> you wanted to mention your book is available at revolutionary ground here in tucson and you had some internet url you wanted to mention? >> i was asked earlier what are good sources of information on social security that's not disinformation that's useful? there's a wonderful organization called social security works. they have a web site, you can google that come and they have terrific material that is brief and to the plight and addresses a lot of issues. i would urge you to go to the social security works web site and check them out to get a couple of the organizations in the policy research and the center for budget and policy priorities put out great research that counters a lot of the myths about it and there's -- you can also get some of that from the national academy of social and insurance and i was just going to say i would be happy to talk further and signed

copies of my book. if they run out at the tent going to deceive the people what revolutionary grounds, 313, the of copies as welcome and support them. they are your local and anarchist workshop and they they are run by an incredibly adorable 7-year-old girl. she really runs the place and does a great job. >> terrific coffee as well. >> thanks to erik larsen and all of you for attending this session. [applause] >> thanks very much. >> it was a small airport in the 20s and the military came and established a base in the second world war and it was a very active base and it was an attribute to yuma until the second world war ended and it closed and the little town had

9,000 population and it was dwindling because there was no construction going. to reason had not been established. and the town had not a very bright future. population was dwindling, the junior chamber of commerce said something had to be done to attract attention to our good weather and tried to get the air base reactivated. they came up with an endurance flight because every time the flight was mentioned they said yuma, arizona and get to know about the interest in reactivating the air base of the first attempt failed and in august they stated several days and then had a major problem and it was hot, really hot, people said we would go up two or tweak thousand feet and it took of while to get parts and repairs done for the airplane and get it ready, the 24 sonatas they