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Off the Top of My Head

Why Are Democrats Not Hammering on the Trump Tax Cuts Which Need to be Increased for Middle Class and Eliminated for the Rich

by John Lawrence

American voters love tax cuts. That's the main appeal of a Republican administration. Biden has said he won't raise taxes for anyone making less than $400,000. This is not a strong enough statement. He, or whoever eventually is the Democratic nominee, should say that they will lower taxes for anyone making less than $400,000. Most of the Trump tax cuts go to those making over $400,000. CNN reported: "The highest-income households would receive more than 45% of the benefits if the expiring provisions of the 2017 Tax Cuts and Jobs Act are extended, according to an analysis released Monday by the Urban-Brookings Tax Policy Center." Why can't the Democrats see this? The Republicans' only appeal to the middle class are the tax cuts which give them a paltry $1000 or 1.3% of their income off their taxes while the rich households making at least around $450,000 – roughly the top 5% - would see their after-tax income increase by 3.2%. Democrats need to take this issue away from Republicans. Right now their rhetoric around this issue is too weak.

For those in the top 1%, who make at least $1 million, they get a tax cut of about $70,000, on average, in 2027. The top 0.1%, who make at least $5 million, would pocket a tax cut of nearly $280,000, on average, or about 3% of their after-tax income. Also extending the Trump tax cuts would have a big impact on the national debt, raising it by more than $4 trillion over the next 10 years – before interest costs are factored in, according to the Congressional Budget Office. Of course this will give power to Republican claims that the government can't support social security and Medicare any more. There will not be any more money available after supporting a one trillion dollar military budget and paying interest on the national debt.

What is wrong with the Democrats? There is already too much disparity between the very rich and the middle class. We are going back to a medieval society where the rich aristocracy run the political establishment and the middle class are nothing but modern day peasants. The peasants will not be able to build wealth because they won't be able to buy a house which is the main wealth builder for the middle class. They all will be renters for life living paycheck to paycheck. This is the reality for life in America today. People who have even one asset, a house, will get ahead by building wealth. People who are life long renters will only create wealth for their landlords. This is the way it was 500 years ago. Well, at least today, everyone has a cell phone.

The biggest contrast in the upcoming election (other than democracy vs. "blood in the streets" fascism)

Robert Reich

Mar 18, 2024

 

 

 

Friends,

One of my goals in this daily letter to you is to give you the facts and analysis you need to make informed decisions, especially political ones — and equip you to spread the word to others. So here goes on social security.

During a typically rambling and incoherent interview last week, Trump admitted he would cut Social Security and Medicare if reelected. “There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and the bad management of entitlements.”

Trump has tried to walk back the remarks, saying that when he used the word “cutting” he didn’t actually mean “cutting,” and that Social Security has a lot of waste. (In fact, Social Security is well managed, and theft or fraud is rare.)

But there’s no question Trump and his Republican allies want to cut Social Security and Medicare.

Here’s why. At the heart of their economic agenda — at least the portion they’re sharing with their super-wealthy backers — is another giant tax cut for the super-wealthy and big corporations.

The problem is that this tax cut would cause the federal budget deficit to explode — as did their last tax cut for the wealthy — unless Social Security and Medicare are cut. (Remember that as president, Trump repeatedly included cuts to Social Security and Medicare in his official budget proposals.)

This is why Trumpers have been ramping up calls for cuts in Social Security (or raising the age of eligibility, which is the same thing).

Last week, Daily Wire founder and professional bloviator Ben Shapiro — oblivious to the fact that millions of Americans do hard work that takes a toll on their bodies — urged that the retirement age be raised. “No one in the United States should be retiring at 65 years old. Frankly, I think retirement itself is a stupid idea unless you have some sort of health problem.” Turning Points USA founder Charlie Kirk echoed Shapiro: “I’m not a fan of retirement. I don’t think retirement is biblical.”

I want to be clear with you about Social Security. (I was once a trustee of the Social Security Trust Fund, so I know about this issue.)

Even without another Trump Republican tax cut for the rich, America still faces a pending problem financing Social Security. (Medicare is less problematic because the rise in health care costs has slowed, probably due to the Affordable Care Act.)

That’s because the American population is aging, with a rising ratio of retirees receiving Social Security benefits to workers paying into Social Security.

 

Franklin D. Roosevelt signs the Social Security Act in 1935 (Secretary of Labor Frances Perkins, who devised the system, is just behind him).

The Congressional Budget Office expects that over the next 20 years, spending on Social Security and Medicare will rise by about 3 percentage points of GDP.

In their annual report, the trustees of the Social Security Trust Fund said that Social Security will be able to pay full benefits for another decade but thereafter faces a significant funding shortfall. Unless something changes, after 2034 it will be able to pay only about 80 percent of scheduled benefits.

But this pending problem in no way requires cuts to Social Security benefits or increases in the retirement age.

In sharp contrast to Trump, Biden correctly asserts in his new budget that Social Security (and Medicare) can remain solvent by raising taxes on high incomes rather than by cutting benefits.

The problem isn’t that the giant baby-boom generation is sucking up too many Social Security benefits. The Social Security trustees anticipated the boom in boomer retirements. This is why Social Security was amended back in 1983, to gradually increase the age for collecting full retirement benefits from 65 to 67. That change is helping finance the retirements of boomers (like me).

So what did the trustees fail to anticipate in 1983 when they raised the retirement age for collecting full benefits? Answer: the degree of income inequality in 21st century America.

Put simply, a big part of the American working population is earning less than the Social Security trustees (including me) anticipated decades ago — and therefore paying less in Social Security payroll tax.

Had the pay of American workers kept up with what had been the trend decades ago — and kept up with their own increasing productivity — their Social Security payroll tax payments would have been enough to keep the program flush.

At the same time, a much larger chunk of the nation’s total income is going to the top than was expected decades ago.

Here’s the thing: Income subject to the payroll tax is capped. Not a single dollar of earnings in excess of the cap is subject to Social Security payroll taxes. This year’s cap is $168,600.

Which means, for example, that Jeff Bezos finished paying all his Social Security payroll taxes due this year at around 7 minutes into January 1.

The Social Security cap is adjusted every year for inflation, but the adjustment is tiny compared to what’s happened to incomes at the top.

As the rich have become far richer, more and more of the total income earned by Americans has become concentrated at the top. Therefore, more and more total income escapes the Social Security payroll tax. 

 

The obvious solution to Social Security’s funding shortfall, therefore, is to lift the cap on income subject to the Social Security payroll tax, so the super-rich pay more in Social Security taxes.

To make sure it’s the super-rich — and not the upper-middle class — who pay, it makes sense to eliminate the cap altogether on earnings in excess of, say, $400,000.

As it happens, Biden’s plan does exactly this.

So there you have it: Trump and his regressive mouthpieces want to cut Social Security so they can give another giant tax cut to the super-rich.

Biden wants to save Social Security by having the super-rich — who have become far richer over the past several decades — pay more Social Security taxes.

The contrast couldn’t be more obvious or more important. Please help get the word out.

Off the Top of My Head

Why the Republican Congress Will Drive the US into Default

by John Lawrence

Simply put it's in their interests to do so. They themselves will profit politically and financially. They will blame Biden for the default, and they will sell short their stock portfolios so that, when the stock market crashes, they will make money. Default doesn't mean that the US will not pay its debts. It means that going forward seniors on social security will not get their monthly checks. Neither will Federal workers or active duty military. However, since the US Treasury still has some money and money coming in from taxes, it will prioritize paying interest on Treasury bonds. So rich people that hold financial obligations of the US government will be paid while everyday average slobs will be left to suffer. This is exactly the type of solution Republicans have always sought. It fits in nicely with their modus operandi: cater to the rich and starve the poor and working class. Millionaires and billionaores will not suffer. Smart people who sell stocks short will not suffer. They will prosper. Financial wizards and private equity corporations will snap up distressed properties like a shark snapping up a school of fish.

The financial obligations of the US, money that has supposedly already been spent, is a misnomer. They represent money that has already been allocated by the previous Democratic controlled Congress. If Republicans had controlled the previous Congress instead, the money would never have been allocated. So it's not money that's already been spent, it's money that's already been allocated. The spending is in the future. The allocation was in the past. If Democrats controlled the present Congress, there would be no problem. Since it's up to the Congress both to allocate spending and to raise the debt limit, there is a whiplash if one party allocates the money and the other party is supposed to preside over the spending of the money. In a sense the Republican Congress is rebelling over the fact that, although they didn't allocate the money, they are supposed to preside over the spending of it.

Now Joe Biden could preempt the Congressional decision not to raise the debt limit by using unconventional but completely legal means, something that has never been done before. The Federal Reserve Act gives the power to print money to the Fed, However, the Coinage Act grants the Secretary of the Treasury rather broad coin seigniorage authority. The debt ceiling could be side stepped by ordering the West Point Mint to coin a 1 oz. $ 1 trillion coin. Treasury can then present the jumbo coin at the NY Fed to buy back $1 trillion in Fed-held debt (the Fed has to accept it, a creditor can’t refuse legal tender paid in to settle a debt). Or I see no reason why the Treasury couldn't simply deposit it in its account at the Fed thereby giving the US government the wherewithal to pay its bills. Esteemed economist Paul Krugman is all for the minting of the trillion dollar coin: "So go ahead, Democrats, and do whatever it takes to get through this. Gimmickry in the defense of sanity — and, in an important sense, democracy — is no vice."

Republicans would have you believe that spending is out of control. No, undertaxation is out of control especially undertaxing the rich. Economic inequality has soared reaching unprecedented new heights not seen even in the Gilded Age. As Joe Biden has proposed, the budget could easily be balanced and the debt paid down by taxing the rich. Republicans would have you believe that raising taxes is a policy that would have to be enforced on everyone including the poor and the middle class, but that, unfortunately for them, is not the case. It is not written in stone that raising taxes would have to apply to everyone. As Bernie Sanders, Elizabeth Warren, AOC and others have pointed out, raising taxes on the rich could not only balance the budget, but could solve the problem of social security shortfalls. Republicans are in the unenviable position of wanting to screw the working class while catering to the rich while holding on to their MAGA supporters, a large portion of whom are the working class.

So given the fact that Republicans don't care about social security or Medicare recipients, there is a good chance that they will not vote to raise the archaic debt ceiling and force the US into default not on its debt but on its ongoing payments to Federal workers, who they hate anyway, social security recipients, who they will cheerfully throw under the bus and active duty military who as MAGA supporters will cheer them on at their own expense. Meanwhile, Congressional Republicans, private equity corporations and billionaires will short the market and salivate over the cheap assets they will be able to snap up. In other words they will profit from a default.

Sanders-Warren Plan Would Tax the Rich to Increase Social Security by $2,400 a Year

"Right now, a Wall Street CEO who makes $30 million pays the same amount into Social Security as someone who makes $160,000 a year," said Sen. Bernie Sanders. "Our bill puts an end to that absurdity."

Kenny Stancil

Feb 13, 2023, from Common Dreams

 

As congressional Republicans threaten to cut Social Security and other key federal programs, progressive Sens. Bernie Sanders and Elizabeth Warren led a group of lawmakers Monday in unveiling legislation that would increase Social Security benefits by at least $200 per month and prolong the program's solvency for decades by finally requiring wealthy Americans to pay their fair share.

 

The Social Security Expansion Act, introduced by Sanders (I-Vt.) and Warren (D-Mass.) in the Senate and by Reps. Jan Schakowsky (D-Ill.) and Val Hoyle (D-Ore.) in the House, would put an additional $2,400 in beneficiaries' pockets each year and ensure the program is fully funded through 2096.

The bill would accomplish this by lifting the cap on the maximum amount of income subject to the Social Security payroll tax—a change that would not raise taxes on the 93% of U.S. households that make $250,000 or less per year, according to an analysis conducted by the Social Security Administration at the request of Sanders.

Currently, annual earnings above $160,200 are not subject to the Social Security payroll tax, which means that millionaires will stop contributing to the program later this month. The legislation proposes lifting this cap and subjecting all income above $250,000 per year to the Social Security payroll tax. If enacted, the bill would have raised more than $3.4 billion from the nation's top 11 highest-paid CEOs alone in 2021, including $2.9 billion from Tesla and Twitter executive Elon Musk.

"The legislation that we are introducing today will expand Social Security benefits by $2,400 a year and will extend the solvency of Social Security for the next 75 years."

"At a time when nearly half of older Americans have no retirement savings and almost 50% of our nation's seniors are trying to survive on an income of less than $25,000 a year, our job is not to cut Social Security," Sanders said in a statement.

“Our job is to expand Social Security so that every senior in America can retire with the dignity that they deserve and every person with a disability can live with the security they need," the chair of the Senate Committee on Health, Education, Labor, and Pensions continued. "The legislation that we are introducing today will expand Social Security benefits by $2,400 a year and will extend the solvency of Social Security for the next 75 years by making sure that the wealthiest people in our society pay their fair share into the system."

"Right now, a Wall Street CEO who makes $30 million pays the same amount into Social Security as someone who makes $160,000 a year," the Vermont Independent added. "Our bill puts an end to that absurdity which will allow us to protect Social Security for generations to come while lifting millions of seniors out of poverty."

As Sanders' office noted:

Before 1935, when it was signed into law by President Franklin D. Roosevelt, about 50% of the nation's seniors were living in poverty, as well as countless Americans living with disabilities and surviving dependents of deceased workers. Nearly 90 years later, the senior poverty rate is down to 10.3% and in 2021 alone, during the onslaught of the Covid-19 pandemic, Social Security lifted 26.3 million Americans out of poverty, including more than 18 million seniors.

Despite this long legacy of combatting poverty, more must be done to strengthen the program, not cut it. While the average Social Security benefit is only $1,688 a month, nearly 40% of seniors rely on Social Security for a majority of their income; one in seven rely on it for more than 90% of their income; and nearly half of Americans aged 55 and older have no retirement savings at all.

Schakowsky warned that "instead of working to protect Social Security, my Republican colleagues are plotting to cut benefits and raise the retirement age."

Contrary to the claims of GOP lawmakers who are clamoring to slash benefits and postpone eligibility, the latest annual Social Security trustees report showed that the program has a $2.85 trillion surplus in its trust fund, enabling it to pay 100% of promised benefits through 2035, 90% for the next 25 years, and 80% for the next 75 years.

"While House Republicans are willing to put Social Security on the chopping block, we are fighting hard to protect Americans' hard-earned benefits and expand coverage," said Hoyle. "With the rising cost of living, it's time to modernize and expand the program."

"While House Republicans are willing to put Social Security on the chopping block, we are fighting hard to protect Americans' hard-earned benefits and expand coverage."

In addition to lifting the tax cap to boost benefits by $200 each month for all recipients, the Social Security Expansion Act would increase Cost-Of-Living-Adjustments by adopting a more accurate measure of inflation, improve the Special Minimum Benefit to help keep low-income workers out of poverty, and restore student benefits up to age 22 for children of disabled or deceased workers.

Endorsed by 56 labor unions and progressive advocacy groups, the legislation is overwhelmingly popular among voters, who have consistently expressed opposition to cutting or privatizing Social Security.

According to polling results published Monday by Data for Progress, 78% of likely voters support the Social Security Expansion Act, including 85% of Democrats, 75% of Independents, and 72% of Republicans. The survey, commissioned by Social Security Works, was conducted online from January 27 to January 30.

"Social Security Works is proud to endorse the Social Security Expansion Act," the group's executive director, Alex Lawson, said in a statement. "This bill is the answer to any politician or pundit who claims we 'can't afford' Social Security. It protects and expands benefits, and it is fully paid for by finally requiring the wealthy to contribute their fair share."

"During the State of the Union, nearly every member of Congress stood and clapped for protecting seniors," Lawson noted. "They should prove it by passing this bill into law."

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

 

Social Security Independence Day

Stephanie Kelton

2 hr ago

 

Happy 4th of July to everyone with $291,000 in gross annual wage income! Today is the last day you will contribute to Social Security. For you, Independence Day begins tomorrow, when your take-home pay will jump by 6.2 percent. That’s because only about half of your wage income (50.5%) is subject to the payroll tax withholding for Social Security.

For those of you with gross annual wage income of $147,000 or less, your contributions will continue through December 31. That’s because 100 percent of your income is subject to the payroll tax withholding.

Many democrats would like to change that. Here’s Senator Bernie Sanders (I-VT):

Today, absurdly and unfairly, there is a cap on income subject to Social Security taxes which is just $147,000 a year. That means that if you’re a multi-billionaire you pay the same amount into Social Security as someone making $147,000 a year. 

It means if you make $147,000 a year or less you pay 6.2% of your income in Social Security taxes. But if you make 10 times more – $1,470,000 – you pay just 0.62% of your income in Social Security taxes. That may make sense to someone. It doesn’t make sense to me.

Sanders has introduced legislation to change the way the payroll tax withholding is applied. It won’t pass, but if it did, it would apply the Social Security payroll tax to all forms of income, including capital gains and dividends, for those who make over $250,000 a year. It would have no impact on 93.6 percent of Americans, but it would raise taxes on the wealthiest 6.4 percent of households. 

As I’ve explained in recent columns, his motivation is simple:

[O]ur legislation would make Social Security solvent for the next 75 years, expand benefits for seniors and people with disabilities by $2,400 a year, and increase COLAs, which would lift millions of seniors out of poverty.

I won’t rehash the MMT line of argument here. Just click on one of my recent columns if you need a reminder. And if you want to play around with the numbers to see when Independence Day comes for people who occupy different rungs of the income ladder, just click here.

Have a safe and Happy 4th!

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By Stephanie Kelton  ·  Hundreds of paid subscribers

Economic analysis, research, and commentary using the lens of MMT

Off the Top of My Head

So What's Wrong With Means Testing Biden's Human Infrastructure Plan?

by John Lawrence

Progressive Democrats want universal free Pre-K. Joe Manchin wants to means test it. That means that rich Americans would still pay and poor Americas would not. Not a big problem, I say. In fact I think social security should be means tested. Why should billionaires or people with retirement pensions of over $100,000 a year get social security? Spend the money on the poor and middle class. I'm with progressives on most things, and I certainly want Joe's Build Back Better program implemented. But if you can bring the cost down by means testing and this would lead to its passage, let's get on with it. Furthermore, the military budget can be cut because we are no longer spending $300 million a day in Afghanistan. Manchin is actually for most of Biden's Build Back Better plan. He just wants it in a different form so that it's not universal meaning a giveaway to all concerned, rich and poor alike. Progressives want rich families and poor families to enjoy free pre-K and free community college.

Manchin is not against taxing the rich or a modest effort towards climate change either. His objections seem to be more about fiscal prudence than any of the elements of Biden's plan. Sinema, on the other hand, is the more sinister of the two when it comes to tanking Biden's plan. She doesn't want taxes raised on the rich, for example, and she doesn't want Medicare to be able to negotiate with pharmaceutical companies in order to bring the cost of drugs down. Manchin wants the Hyde amendment included in the bill which prohibits Federal funding for abortions. Big deal. That's the way it is now. Progressives should be able to live with the Hyde amendment. Nothing is changed. Manchin is an old line fiscal hawk when it comes to deficit spending, but as Modern Monetary Theory has made clear Deficits Don't Matter. Inflation, however does, but taxing the rich removes money from the economy and reduces inflation while paying for everything in Biden's reconciliation bill is inflation neutral.

When all is said and done, the proposed money to be spent on social infrastructure pales in comparison with the money spent on the military budget over the next 10 years. A conservative estimate is that the US spends $725 billion a year on defense. It's actually closer to a trillion when you factor in other costs not usually counted like the cost of nuclear weapons and intelligence services. For instance, future medical and disability costs for Iraq and Afghanistan veterans will total between $2.2 trillion and $2.5 trillion. So over a ten year period, military related costs will approach $10 trillion. Progressives want $3.5 trillion for social infrastructure over a ten year period, a pittance compared to military related costs. However, progressives and moderates will haggle over the cost until, eventually some compromise will be come up with, probably around $2 trillion or $200 billion per year. Reducing the defense budget will also calm fears over inflation as will the Fed's backing off from quantitative easing. Manchin is a reasonable person, but Sinema is the wild card who singlehandedly could tank both bills.They need to get the reconciliation bill fully fleshed out and negotiated on and ready to go so that both the bi-partisan and reconciliation bills can be voted on simultaneously in both Houses of Congress.

Off the Top of My Head

Republicans Want to Get Rid of Social Security. Is This Fiscally Prudent or Necessary?

by John Lawrence, January 3, 2020

Republicans say social security is adding to the deficit. The nation just cannot afford to keep such an expensive entitlement program in effect. Americans pay a tax just so they can look forward to a secure retirement. In earlier years there was more money coming in to the social security trust fund than was needed to pay out. Now that money is running out and less is coming in than will be needed to pay out in a few years. Modern Monetary Theory (MMT) says that the money will always be there since the US Federal Reserve can always print enough money to meet any US commitments. Former Speaker of the House Republican Paul Ryan's pet project was to privatize social security much in the way that Republicans have privatized pension funds with 401(k)s. USA Today reported,"For nearly two decades, Ryan had been a voice of fiscal rectitude, warning of the dangers of high taxes, large deficits and suffocating government debt." Republicans have wanted to scale back or get rid of "entitlements" like Medicare and Social Security for decades. But they have had no problem with giving tax breaks to the rich which also have contributed to the deficits. The Trump tax cuts alone added $2 trillion to the deficit.

One day in 2005 Ryan brought a very conservative witness to testify before Congress. After laying out his position that there was a financial crisis brewing and that Social Security and Medicare were unsustainable entitlement programs, Ryan asked the witness if he agreed with him. The witness was Alan Greenspan, a conservative American economist who served five terms as the 13th Chair of the Federal Reserve of the United States from 1987 to 2006. I'll let Stephanie Kelton tell the rest:

"Ryan almost certainly assumed that Greenspan, a fellow libertarian [and Ayn Rand enthusiast!], would agree that Social Security's financing was unsustainable and that moving to a system of personal retirement accounts was a good idea. So, Ryan lobbed Greenspan the following softball question, expecting him to dutifully knock it out of the park. "Having personal retirement accounts is another way of making future retiree's benefits more secure for their retirement," Ryan asserted. ... [The question is too abstruse to be repeated here.]

"Put simply, Ryan was asking Greenspan whether he agreed that Social Security was in financial trouble and that moving to a system of private, Wall Street-managed retirement accounts would help address the crisis.

"To his credit, Greenspan didn't swing at that pitch. Instead, he leaned forward into the microphone and told Ryan something that shocked him: the truth. Greenspan started by dismissing the entire premise behind Ryan's question. "I wouldn't say that the pay-as-you-go benefits are insecure," he said, " in the sense that there's nothing to prevent the federal government from creating as much money as it wants and paying it to somebody."

The Federal Reserve can clear any payment that has been authorized by Congress. That's the truth. The US Treasury does this by auctioning off Treasury bonds which are sold to primary dealers (mainly big Wall Street banks) which are obligated to buy them. They are then marketed to whomever wants to buy them including rich investors and foreign governments. If there are more Treasury bonds on the market than there are investors willing to buy them, they sit on the Wall Street banks' balance sheets until the Fed "liquidates" them by taking them onto its balance sheet in return for money which the Fed creates by a few keystrokes on a computer. They can sit on the Fed's balance sheet forever or they can be sold if market conditions are favorable.This is sort of a roundabout process for the fact that the US Fed can print as much money as the US government needs when these needs are authorized by the US Congress.

But Greenspan went even further that day. Greenspan told Ryan that, although there was no need to worry about the program's finances, the real issue was: "How do you set up a system which assures that the real assets are created which those benefits are employed to purchase?" In other words the finances aren't the problem; making sure that there is enough stuff in terms of human and material resources to fill the needs of retirees is. Kelton says in The Deficit Myth: "When we talk about whether entitlements are sustainable, we need to think in terms of our economy's real productive capacity. We need to think about how the economy will absorb those dollars, not where those dollars will come from." We are experiencing this problem right now as there aren't enough ICU beds, hospital facilities, doctors and nurses to take care of all the patients who have succumbed to the coronavirus despite the government's use of the Defense Production Act providing the money. It's a similar situation.

As MMT has pointed out and as billions of dollars of tax cuts added to the deficit have illustrated, as long as Congress OKs it, by means of  a round about process, the Federal Reserve can create as much money as the Treasury department needs to meet its obligations by just "printing" (actually a few keystrokes on a computer) the money. The real problem is does the economy have enough reserve capacity to actually make constructive use of the money.

Off the Top of My Head

The Biden Plan for Senior Citizens

by John Lawrence, October 30, 2020

Joe Biden realizes that senior citizens are being underserved by social security. Many are receiving less in social security payments than what is considered necessary to be above the poverty line. One in four Americans rely on Social Security for all, or almost all, of their income. The Biden plan will "Implement a true minimum benefit for lifelong workers. No one who has worked for decades and paid into Social Security should have to spend their retirement in poverty. The Biden Plan will revolutionize the Social Security’s minimum benefit, which has deteriorated over time to the point of being entirely ineffective. Under the Biden Plan, workers who spent 30 years working will get a benefit of at least 125% of the poverty level." Additionally, the oldest Americans, those who have been receiving social security for 20 years will get an additional benefit. Right now some social security recipients are receiving as little as $500. a month after they pay the rising Medicare Part B premiums. That means they are in the homeless income range.

Republicans have been whittling down social security payments for years. The COLAs for social security have been going up slower than the rising premiums for Medicare Part B. I wrote this previously: "In 2016 I received a monthly social security benefit of $735.90. My Medicare monthly premium was $104.90. So the amount that the Social Security Administration deposited in my checking account each month was $631. Now despite the fact that I'm still working and paid $430. self employment tax in 2017, which should have given me an increase in my monthly social security check because the amount you get depends on the total amount paid in and I'm still paying in, the amount deposited in my account each month has gone down to $618. How could this be possible, you might ask? The answer is simple. I was given a paltry $1 a month increase in social security based on the fact that I paid $430 into it so the government made $418 off me in self employment tax for 2017. However, my monthly Medicare premium went up to $134. So my Medicare premiums are going up much more than the paltry amounts the government thinks I should get because I'm still working and paying into social security. In short I'm getting ripped off as an elderly person who still works."

So Joe Biden's plan makes the minimum social security payment 125% of the poverty level which is $12,760 for a single person. That means the minimum payment would be $15,950 a year or $1329.17 a month. This would more than double my current monthly payment. However, is this before or after they take out for Medicare Part B? Also The Biden Plan will provide the oldest beneficiaries – those who have been receiving retirement benefits for at least 20 years – with a higher monthly check to help protect retirees from the pain of dwindling retirement savings. I thought a previous version of Biden's website specified how much this amount would be. The current website doesn't. The bottom line is that older Americans should be provided with enough money to sustain themselves even if it is means tested. Many older Americans including myself have other income, but a lot have only social security and that's it. For them $1300. a month is not enough to live on with rents being as much as $1000. a month. At any rate Joe Biden wants to increase social security payouts to older Americans especially the oldest older Americans. That is a good thing.

Off the Top of My Head

How Ya Gonna Pay For It?

by John Lawrence, July 27, 2020

This is the question they often asked Bernie Sanders when he talked about the various programs that he would seek to implement as President. Programs like a Green New Deal, Medicare for All, forgiveness of all student loan debt, free college, free pre-school etc. Bernie never really had a good answer except for taxing the rich. Well, that was a pretty good answer, but it is not even necessary to raise taxes on the rich to implement all of Bernie's programs. Modern Monetary Theory maintains that the US, as a currency issuer, can just issue the money into the economy. The US dollar, actually a Federal Reserve Note, is issued by the Federal Reserve bank. The Fed has created or "printed" trillions of dollars bailing out the banks in 2008, with its quantitative easing programs since then and now to fund the response to the coronavirus pandemic. It's obvious that the Fed can just print money and add it to the economy. It can buy up the national deficit and debt. There is no need to worry that the US, which has a sovereign currency can ever run out of money. While you and I, states and countries which do not have a sovereign currency or which have loans in other currencies do have to pay them off, any nation like the UK, Japan, the European Union and China do not have to worry about running deficits.

Republicans have traditionally run on the mantra that Democrats will raise your taxes. Remember George H W Bush's pledge: "Read my lips. No New Taxes." Then he did go ahead and raise taxes after he got elected. Well now it is becoming obvious that Americans don't have to worry about new taxes. Social programs as well as the military can be funded by the Fed just printing the money. Of course it would not be a good idea simply to flood the economy with money for which there is no good purpose. That would lead to inflation and to a loss of trust in the dollar. Under current conditions, however, the dollar is the world's reserve currency and that is not going to change any time soon. So prudent and responsible spending is still necessary. It's just that the US does not have to worry about deficit spending. Other central banks like Japan's are doing the same. In fact Japan has a greater deficit to GDP ratio than the US does.

Which brings us to social security. The conventional wisdom is that the Social Security Trust Fund is in deficit and will be exhausted by 2035. Modern Monetary Theory says that this is rubbish. The US as a sovereign currency issuer can never run out of money. Al Gore used to talk about putting social security in a lockbox. Not necessary. It is not even necessary to debit everyone's paycheck to provide revenues for social security. This is not a program that people who have worked all their lives have "earned." It is a social welfare safety net program pure and simple. To apply basic accounting to social security as if people's payroll tax contributions were necessary to fund it is not necessary or desirable. To argue over whether or not the payroll tax needs to be increased or whether the cap (the payroll tax is just taken on the first $137,700 of a person's earnings) needs to be lifted is pointless. There was an old saw about you can't have both "guns and butter." Well, you can have both and tax relief too! We just have to determine the prudent balance between guns and butter based on other criteria. It is not true that there is only a finite amount of money based on tax revenues that determines total expenditures.

Look at reality. The US has been running deficits for years. Now we're running trillion dollar deficits. Is any creditor coming after us? I don't think so. And there is no inflation. So we don't have to limit our thinking to the Federal government's just spending what it takes in in taxes. In fact we haven't done this in years since Clinton balanced the budget when he was President.

Joe Biden has some good benefits proposed for older retirees. From his website:

"The Biden Plan will provide the oldest beneficiaries – those who have been receiving retirement benefits for at least 20 years – with a higher monthly check to help protect retirees from the pain of dwindling retirement savings."

and

"Under the Biden Plan, workers who spent 30 years working will get a benefit of at least 125% of the poverty level"

The poverty level for a single individual is $12, 760. 125% of that is $15,950. So a minimum monthly payment would be $1329. This is over twice what I am now receiving so I would be very happy if Joe is able to implement this plank of his platform. There is no way a person can live on $641 a month. Fortunately, I don't have to. Currently, the minimum monthly payout for a single individual is $510 a month. That amount is approximately $2,000 less than the annual poverty threshold for an aged individual. Bringing monthly payments for the elderly up to snuff is something Republicans have resisted for years. Then, they have tried to defund all social and welfare programs. However, funding for the military-industrial complex has been relentlessly increased come hell or high water. For that expenditure, deficits don't matter. They shouldn't for infrastructure development and social safety net programs either.

The Trump Administration's "Monstrous Idea": Direct Payments in Exchange for Cuts to Social Security Benefits

Published on

Monday, May 11, 2020

by

Common Dreams

"Donald Trump and his administration will stop at nothing to cut Social Security."

 

by

Jake Johnson, staff writer

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 82 Comments

White House Chief of Staff Mark Meadows and senior advisor Jared Kushner listen as President Donald Trump meets with Florida Gov. Ron DeSantis in the Oval Office of the White House on April 28, 2020 in Washington, D.C. (Photo: Doug Mills/The New York Times/Pool/Getty Images)

Suddenly concerned about the growing national debt now that corporations have secured access to trillions of dollars in Covid-19 bailout funds with little oversight, Trump administration officials are reportedly considering several proposals purportedly aimed at reducing government spending—including a pair of plans that would provide Americans with cash payments in exchange for delays or cuts to their Social Security benefits.

"Social Security is an earned insurance benefit. It is not a piggy bank. This plan, and any plan that raids Social Security, is a moral abomination."
—Alex Lawson, Social Security Works

In addition to weighing a push for automatic federal spending cuts that would take effect once the economy rebounds from the coronavirus crisis, Washington Post reported Sunday that top White House economic officials are "exploring a proposal floated by two conservative scholars that would allow Americans to choose to receive checks of up to $5,000 in exchange for a delay of their Social Security benefits."

Senior administration officials have also "discussed the 'Eagle Plan,' a 29-page memo that called for an overhaul of federal retirement programs in exchange for upfront payments to some workers,"  according to the Post. "The proposal calls for giving Americans $10,000 upfront in exchange for curbing their federal retirement benefits, such as Social Security."

The "Eagle Plan" was crafted by a State Department official close to President Donald Trump's son-in-law and senior adviser Jared Kushner, who forwarded the proposal to the White House Council of Economic Advisers. Art Laffer, a conservative economist and Trump adviser, told the Post that he supports the proposal.

Alex Lawson, executive director of advocacy group Social Security Works, said in a statement Monday that the plan would "force people to choose: Go hungry today or work until you die."

"The Trump administration is obsessed with using the coronavirus crisis to undermine our Social Security system," said Lawson. "Social Security is an earned insurance benefit. It is not a piggy bank. This plan, and any plan that raids Social Security, is a moral abomination. Instead of trying to steal the earned benefits of desperate people, the government should be sending $2,000 a month to everyone in America, as Democrats in Congress have proposed."  

They're calling this monstrous idea the "Eagle Plan" but it should be called the "Work 'Til You Die Plan."

The only reason to support it over simply sending people $2,000/month is to undermine our Social Security system. https://t.co/ZLNDaV2SYf

— SocialSecurityWorks (@SSWorks) May 10, 2020

Trump officials have circulated 29-page “Eagle Plan,” written by a State Dept official, calling for allowing ppl to get cash now if they delay their Social Security benefits

Memo was sent to Kushner, who sent it to WH economists

WH spox calls it DOAhttps://t.co/iPb1OFZsU0

— Jeffrey Stein (@JStein_WaPo) May 10, 2020

Hogan Gidley, a White House spokesman, indicated that Trump is opposed to the ideas laid out in the "Eagle Plan"—which he described as "ludicrous on its face"—but the Post reported that the president has not reviewed the proposal.

After vowing during his 2016 presidential run to shield Social Security and Medicare from cuts, Trump has proposed slashing both programs in his annual budget blueprints. Trump also said during an interview at the World Economic Forum in Davos in January that he would consider cuts to Social Security and Medicare if reelected in November.

Amid a global pandemic that has left more than 30 million people in the U.S. jobless, Trump's top economic stimulus idea has been cutting the payroll tax, which funds Social Security and Medicare. The president said during a Fox News town hall last week that he would not sign any future Covid-19 stimulus package that does not include a payroll tax cut.

"Donald Trump and his administration will stop at nothing to cut Social Security," said Rep. Pramila Jayapal (D-Wash.), co-chair of the Congressional Progressive Caucus.

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'Pathetic': Trump Says No to Additional Covid-19 Stimulus Checks, Backs Cutting Tax That Funds Social Security Instead

Published on

Wednesday, April 29, 2020

 by

Common Dreams

"Cutting payroll taxes does nothing to help seniors or the millions of people who just lost their jobs. It does, however, defund Social Security and Medicare—which is why Trump is obsessed with the idea."

 

 

by

 Jake Johnson, staff writer

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 84 Comments

President Donald Trump takes questions from reporters during an event in the East Room of the White House April 28, 2020 in Washington, D.C. (Photo: Win McNamee/Getty Images)

President Donald Trump on Tuesday expressed opposition to providing additional direct relief payments on top of the $1,200 checks that are slowly trickling out to eligible U.S. households, saying he would instead prefer to slash the tax that funds Social Security and Medicare.

"Well, I like the idea of payroll tax cuts," Trump said at a press conference when asked about the idea of authorizing another round of direct payments in the next coronavirus stimulus package as mass layoffs continue.

"A payroll tax cut does nothing for the 26 million who lost their jobs."
—Sen. Bernie Sanders

"I've liked that from the beginning," the president said. "That was a thing that I really would love to see happen. A lot of economists would agree with me. A lot of people agree with me. And I think frankly it's simple, it's not the big distribution, and it would really be an incentive for people to come back to work and for employers to hire."

Watch:

As part of his case that he saved hundreds of thousands of lives, Trump is now citing made-up experts who he claims said that the coronavirus wouldn't impact the US (no experts thought this) pic.twitter.com/OJT6XTFNOn

— Aaron Rupar (@atrupar) April 28, 2020

Trump has floated the idea of a payroll tax cut several times in recent weeks—suggesting at one point earlier this month that the cut should be permanent—even though the move would not provide any relief for the tens of millions of people who have lost their jobs since mid-March.

"Economists don't actually agree with him," said Justin Wolfers, economics professor at the University of Michigan. "Payroll tax cuts are too slow and poorly targeted."

But a payroll tax cut would advance a longstanding objective of the conservative movement by striking a blow to Social Security and Medicare funding, advocacy groups pointed out. The CARES Act, which Trump signed into law last month, contained a little-noticed provision allowing employers to delay payment of the payroll tax for at least the rest of 2020.

"Unlike additional stimulus checks, cutting payroll taxes does nothing to help seniors or the millions of people who just lost their jobs," tweeted Social Security Works. "It does, however, defund Social Security and Medicare—which is why Trump is obsessed with the idea."

The president's opposition to additional direct payments comes as progressive lawmakers and activists are pushing for $2,000 monthly payments to all U.S. households for the duration of the Covid-19 crisis because the initial $1,200—for those lucky enough to have received it—was far from sufficient to cover basic expenses.

"Pathetic," Sen. Bernie Sanders (I-Vt.) said in response to Trump's remarks. "A payroll tax cut does nothing for the 26 million who lost their jobs. With rent due on May 1, we need to provide $2,000 a month to everyone until this crisis is over. If we can bail out corporations, we can make sure everyone has enough to pay for basic necessities."

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Off the Top of My Head

Joe Biden and Amy Klobuchar Would Make a Good Team

by John Lawrence, March 12, 2020

Amy Klobuchar was really running for vice President anyway, and she would bring the midwest rust belt voters along with her neutralizing the influence of Mike Pence's Indiana midwest cred. Pete Buttagieg was just running to raise his profile which he successfully did. Same for Kamala Harris and Cory Booker. Some of the candidates were never serious candidates for the Democratic nomination. Bernie Sanders is still in the thick of it despite Biden's commanding lead, and he will have a lot of influence over the party platform at the convention. The vice Predidential candidate is very important as Biden is basically a placeholder. His advanced age and apparent loss of some mental function means that whoever comes after him is very important. So Joe Biden may win the election, but his influence may wane compared to the resurgent Democrat progressives who will still be a force in waiting.

The main thing at this point in many voters minds is simply to get rid of Donald Trump. A Biden-Klobuchar team could do that. Amy is very proficient and she could make up for Joe's loss of a few marbles. Rejoining the Paris Accords on Day 1 is very important for climate change. Joe's plans for infrastructure are very good. A massive investment in infrastructure and a greening of infrastructure seems to be on his menu. A national infrastructure of electric charging stations, more electric vehicles on the road - these are very important things which Joe seems to have a handle on. He's even into high speed rail.

Biden's plans for Medicare and Social Security don't make many changes to these programs which are already available other than protecting them from assault by Republicans, not a piddling undertaking. I did notice one advantage for older Americans though. The Biden Plan will provide the oldest beneficiaries – those who have been receiving retirement benefits for at least 20 years – with a higher monthly check to help protect retirees from the pain of dwindling retirement savings. Huzzah! I will qualify for that in about 3 years so maybe finally, I'll get a monthly check which will be more than about one third of what you need to rent an apartment. Fortunately, I have other income, but I'm still in the situation of working, paying 15.3% of what I earn as social security and Medicare tax, while collecting a pitifully small amount of social security. I like this too: "The Biden Plan will revolutionize the Social Security’s minimum benefit, which has deteriorated over time to the point of being entirely ineffective. Under the Biden Plan, workers who spent 30 years working will get a benefit of at least 125% of the poverty level." The poverty level for one person is $12,490. 125% of that is $15,612.50. I've been working for about 50 years so I should qualify for that. That would double my monthly social security check. Huzzah!

Well, that's a good start. Unfortunately, no Medicare for All under Joe's plan, but maybe that will come later.

Off the Top of My Head

How Come Democratic Socialism Works So Well in Scandinavia?

by John Lawrence, March 2, 2020

Bernie Sanders is being blasted by the old bugaboo of capitalism vs communism. This is a pitched battle which is so 20th century. The reality today is that what we have in the US and around the world is neoliberism, a virulent form of capitalism which is "an account of human nature where economic competition is the highest value [which] leads to a political theology where the prime duty of the state is to enable, and indeed mandate, such competition, and the result is a world wherein individuals, firms, and states are all continually constrained to express themselves via economic competition." Neoliberalism is a system in which "more and more people — especially young people who were born and raised in the neoliberal era — have started to question a system that has left their generation drowning in debt, burned out and mentally exhausted, and stuck in an endless loop of precarious uncertainty."

So what is democratic socialism? It is widely practiced in the Nordic countries of Sweden, Denmark, Finland and Norway. Currently, the Nordic countries are described as being highly democratic and all have a unicameral form of governance which use proportional representation in their electoral systems. There is  support for a universalist welfare state aimed specifically at enhancing individual autonomy and promoting social mobility; a corporatist system involving a tripartite arrangement where representatives of labor and employers negotiate wages and labor market policy mediated by the government; and a commitment to private ownership within a mixed economy.

Far from discouraging entrepreneurialism, these countries are hotbeds of it. The Scandinavian countries of Norway, Sweden and Denmark are regularly ranked among the best places in the world to start a new business despite their high-tax environments. Well known businesses Spotify, Just Eat and airline Norwegian have all emerged from this part of the world to international success. Somehow, these small, Northern European nations have managed to pursue large income redistribution without disincentivising hard work and corporate invention.

So there you have it. Democratic socialist countries are arguably more democratic than is the US and countries modeled after it due to its unicameral legislative branch based on proportional representation as opposed to the winner take all two party system in the US. There is a spirit of comaraderie and cooperation instead of a spirit of solipsistic competition. A spirit that "we're all in this together." There is more social mobility than in the US. Harvard professor Raj Chetty proclaimed:"If you were an immigrant choosing where to go and have the best chances of climbing the income ladder, then statistically you’d have a better shot of achieving ‘the American dream’ if you’re growing up in Canada or in many Scandinavian countries than the United States." In addition you would have universal health care and free college education. Pretty much many of the elements Bernie Sanders advocates.

Many of the elements of democracy and common purpose that the US was originally founded on are better exemplified in other socialist democratic countries than they are in the present day neoliberalist US. Conor Lynch writes:

Neoliberalism is the opposite of solidarity. It encourages an extreme form of selfish individualism that ends up depoliticizing the populace and eroding the collective spirit of democracy. It also leaves the individual isolated and alone. “In a brutal, competitive, and atomized society, psychic well-being is so difficult that success on this front can feel like a significant accomplishment,” observes political theorist Jodi Dean. “Trying to do it themselves, people are immiserated and proletarianized and confront this immiseration and proletarianization alone.”

No wonder so many young people who are drowning in student loan debt and lack of medical care, not to mention a government not the least bit concerned about global warming, are finding inspiration in a more egalitarian system of government in which more entrepreneurial activity is taking place and more upward mobility is being realized than in the United States of America. The real debate is not between authoritarian socialism and capitalism; it's between democratic socialism and neoliberalism. What kind of a world do you want to live in?

Off the Top of My Head

Bernie Socks It To Them

by John Lawrence, February 25, 2020

The critics have piled on Bernie about how he's going to pay for his proposals for Medicare for All, a Green New Deal, forgiving student loan debt and free college tuition. Now Bernie has come out with a detailed plan about how to do it. The obvious answer is how do other countries do it? Most other advanced countries have free universal health care and free college tuition. They take it for granted. I had some passengers from Calgary, Alberta whom I asked 'how do you like the Canadian health care system?'. He replied, "It's free." I said, "Yeah, but don't you have to pay for it in your taxes?" He said, "I guess so." So he wasn't really concerned that he was paying taxes through the nose to pay for "free" health care. He didn't even know what percentage of his taxes went to health care. I suspect that once the tax structure changes here so that rich people pay more and poor people pay less that everything will be like that too.

It will cost $2.2 trillion to make public colleges, universities and trade schools tuition-free and to cancel all student debt over the next decade. It is fully paid for by a modest tax on Wall Street speculation that will raise an estimated $2.4 trillion over ten years. A Financial Transaction Tax has been talked about for years. Bernie is the only one bold enough to actually make it part of his campaign platform. It needs to be done. The financialization of the economy is what led to the 2008 economic debacle in which the banks were bailed out by the American people to the tune of trillions of dollars. So now even though it's years later, let them pay to bail out the American people. It's a good thing.

Bernie’s bill to expand Social Security will increase benefits for low-income senior citizens and people with disabilities by more than $1,300 a year. It is fully paid for by making the wealthiest 1.8 percent of Americans – those with incomes over $250,000 a year – pay the same rate into Social Security as working families. I like that a lot. Right now even though I'm still working and paying into social security, I'm receiving less than $700. a month in social security. Another $1300. a month would bring my social security up to $2000. a month. Why it's even enough to rent an apartment!

Bernie’s proposal to guarantee housing as a human right and to eliminate homelessness will cost $2.5 trillion over the next decade. It is fully paid for by a wealth tax on the top one-tenth of one percent – those who have a net worth of at least $32 million. (Bernie’s wealth tax will raise a total of $4.35 trillion.) A wealth tax on the rich! I love it. Eliminating homelessness and finally implementing the 1948 UN Declaration of Human Rights - priceless! It's time the millionaires and billionaires paid to eliminate poverty in this country. The wealth tax will also pay for universal child care and pre-school. By the way maybe the Congress should get on board and finally ratify the 1948 Declaration.

The Green New Deal will transform this country and be the first step in saving the planet from ultimate destruction. It needs to be extended to the rest of the world eventually as well. We need to cooperate with other countries to implement it and share renewable energy technology. This means joining China's Belt and Road initiative in terms of making sure everything under development is based on renewable energy and is non-polluting. It goes without saying that the US should rejoin the Paris Accords on climate change, but extend it even further.

All in all Bernie's plans are a wonderful and refreshing change of pace for the US of A and the rest of the world. If they come to pass, i will be proud of my country again for implementing both humanitarian policies and policies which will save the earth from a global warming catastrophe.

Millionaires Stop Paying Into Social Security for the Year Tomorrow, Highlighting Need to Scrap Payroll Tax Cap

Published on Tuesday, February 18, 2020

by Common Dreams

"The burden of Social Security taxes falls more heavily on those who make less."

by Jake Johnson, staff writer

 

22 Comments

Activists participate in a rally calling for the expansion of Social Security benefits in front of the White House July 13, 2015 in Washington, D.C. (Photo: Win McNamee/Getty Images)

On Wednesday, not even two full months into 2020, millionaires will stop paying into Social Security for the year due to the program's payroll tax cap.

The cap limits annual wages subject to the Social Security payroll tax to the first $137,700. Sarah Rawlins, program associate at the Center for Economic and Policy Research (CEPR), wrote Tuesday that the cap means "someone who makes $1,000,000 per year stops paying into the program on February 19, 2020."

"That makes a millionaire's effective tax rate well below the 6.2% of income that most Americans pay," Rawlins noted. "Instead, it is less than 1% of a millionaire's income. The Social Security tax is only levied on wages, excluding income from other sources like capital gains, meaning those with wages over the cap likely have an effective tax rate even lower than this estimate."

"The burden of Social Security taxes falls more heavily on those who make less," Rawlins added.

Social Security payroll tax cap is put into sharp focus this time each year. That’s when millionaires stop paying into #SocialSecurity for the year. Try CEPR’s handy calculator to see when you or your favorite 1% stops paying.https://t.co/La3exUHB0i

— CEPR (@ceprdc) February 18, 2020

Rawlins suggested that one way to make the Social Security financing system more progressive is "scrapping the payroll tax cap entirely and making everyone pay the same tax rate."

"Social Security gives retirement, disability, and survivor benefits to almost 20 percent of the U.S. population, including at least six million children," Rawlins said. "But it could do better."

Rep. John Larson's (D-Conn.) Social Security 2100 Act, introduced in the House in January 2019 with 208 Democratic co-sponsors, would apply the payroll tax to wages above $400,000.

Sen. Bernie Sanders (I-Vt.), a 2020 Democratic presidential candidate, has proposed subjecting all income above $250,000 in order to "expand benefits across-the-board, including a $1,300 a year benefit increase for seniors with incomes of $16,000 a year or less."

As Common Dreams reported last December, an analysis by Boston College's Center for Retirement Research found that Social Security has become increasingly regressive in recent decades due to a number of factors, including soaring economic inequality.

"The program's become less progressive," said Jim Roosevelt, a former associate commissioner for retirement policy at the Social Security Administration and a grandson of former President Franklin Delano Roosevelt, who signed the Social Security Act into law in 1935.

"It doesn't take care of the people at the lower- and middle-income levels as well as it was intended do," Roosevelt said, "and it needs to be updated."

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Off the Top of My Head

He had to Destroy Social Security in Order to Save It

by John Lawrence, February 19, 2020

Just as in Vietnam when a commander said, "It became necessary to destroy the town in order to save it", Trump and conservative Republican budget hawks are saying the same thing about social security and Medicare. "The president promised that unlike other Republicans, he wouldn't touch Social Security, Medicaid and Medicare. He's already broken that promise and gone after Medicare. Now it looks like Social Security is in the president's crosshairs as well," Schumer said at the outset of a press conference to discuss the Senate impeachment trial. Trump casually made his remarks at a World Economic Forum in Davos, Switzerland, a gathering of the world's financial elite.

Republicans wouldn't consider cutting the bloated military budget in order to reduce the deficit. Their whole thing is to go after social programs. They can't stand the fact that some old poor person might not have to end up on the street because a government program saved her. The last President to actually balance the budget was Democrat Bill Clinton. Republicans have only driven it skyward with their tax cuts for the rich (and to be fair pennies for the poor) and huge increases in military appropriations. "Even as this important trial continues, Americans should hear that the president is casually talking about cutting their Social Security at a Swiss ski resort with the global financial elite," Schumer added.

There is supposed to be a reserve of funds in the Social Security Trust Fund. In practice the government uses these reserves to fund other programs like the military. At the end of 2014, the Trust Fund contained (or alternatively, was owed) $2.79 trillion, up $25 billion from 2013. This is called intergovernmental debt, in other words money the government owes itself. This debt can be eliminated at any time by  a vote of Congress. In fact that is exactly what Republicans seek to do. Then they can use all government funds for the military. In their minds it's more important to fund the military than it is to keep old people off the streets.

Old people are finding that, despite the fact they are still working and paying into social security, their monthly social security checks from the government are actually going down. How can this happen, you ask? In 2018 I wrote this:

"In 2016 I received a monthly social security benefit of $735.90. My Medicare monthly premium was $104.90. So the amount that the Social Security Administration deposited in my checking account each month was $631. Now despite the fact that I'm still working and paid $430. self employment tax in 2017, which should have given me an increase in my monthly social security check because the amount you get depends on the total amount paid in and I'm still paying in, the amount deposited in my account each month has gone down to $618. How could this be possible, you might ask? The answer is simple. I was given a paltry $1 a month increase in social security based on the fact that I paid $430 into it so the government made $418 off me in self employment tax for 2017. However, my monthly Medicare premium went up to $134. So my Medicare premiums are going up much more than the paltry amounts the government thinks I should get because I'm still working and paying in to social security. In short I'm getting ripped off as an elderly person who still works."

Those vaunted COLAs are not even keeping up with the cost of living. Certainly not with the cost of renting an apartment. Bernie's plan is the following: "Our plan: make health care a right to all. Stop giving tax breaks to billionaires. Protect and expand Social Security, Medicare and Medicaid. Transition to sustainable energy and leave behind a livable planet for our children." Let's get behind it. He's right, you know. Stop the military onslaught which is all about the protection of oil. Keep fossil fuels in the ground. Fund green infrastructure with the Green New Deal. Is that socialism. Who cares? It's all about saving the planet for future generations.

Trump Budget to Propose 'Savage' Cuts to Medicare, Medicaid, and Social Security While Hiking Pentagon and Wall Funds

Published on Monday, February 10, 2020

by Common Dreams

"This budget is Trump's pledge that as long as he stays in office, slashing Social Security, Medicaid, and whatever's left of SNAP will remain a White House priority."

by Jake Johnson, staff writer

 

47 Comments

President Donald Trump signs Republican tax cut legislation into law in the Oval Office at the White House in Washington, D.C. on Friday, December 22, 2017. (Photo by Jabin Botsford/The Washington Post via Getty Images)

Just two days after vowing the White House "will not be touching your Social Security or Medicare" in its budget proposal for fiscal year 2021, President Donald Trump on Monday is expected to unveil a $4.8 trillion blueprint that includes hundreds of billions in combined cuts to those programs over the next decade, deep reductions in safety-net spending, and a major increase in Pentagon funding.

"The budget reportedly includes destructive changes to Medicaid, SNAP, Social Security, and other assistance programs that help Americans make ends meet—all while extending his tax cuts for millionaires and wealthy corporations."
—Rep. John Yarmuth

The president's plan, according to the Wall Street Journal, calls for hiking America's already outlandish military spending to $740.5 billion in FY2021 and pouring $2 billion more into the construction of a wall along the U.S.-Mexico border.

Meanwhile, Trump's budget would enact punishing cuts to Medicaid, food stamps, and other crucial safety net programs.

"The White House proposes to cut spending by $4.4 trillion over a decade," the Journal reported Sunday. "Of that, it targets $2 trillion in savings from mandatory spending programs, including $130 billion from changes to Medicare prescription-drug pricing, $292 billion from safety-net cuts—such as work requirements for Medicaid and food stamps—and $70 billion from tightening eligibility access to federal disability benefits."

Many will ignore the #TrumpBudget tomorrow, since they’ve all been so similar they feel like old news.

Don’t.

This budget is Trump’s pledge that as long as he stays in office, slashing Social Security, Medicaid & whatever’s left of SNAP will remain a White House priority. https://t.co/7bGyNmwz3v

— Rebecca Vallas (@rebeccavallas) February 9, 2020

Rep. John Yarmuth (D-Ky.), chairman of the House Budget Committee, issued a statement late Sunday condemning Trump's forthcoming budget proposal as "destructive and irrational."

"The budget reportedly includes destructive changes to Medicaid, SNAP, Social Security, and other assistance programs that help Americans make ends meet—all while extending his tax cuts for millionaires and wealthy corporations," said Yarmuth. "Congress will stand firm against this president's broken promises and his disregard for the human cost of his destructive policies."

Bobby Kogan, chief mathematician for the Senate Budget Committee, echoed Yarmuth on Twitter, calling the FY2021 blueprint "enormously cruel."

"Less than a week after promising to protect families' healthcare in his State of the Union address, the president is now brazenly inflicting savage multi-billion-dollar cuts to Medicare and Medicaid."
—House Speaker Nancy Pelosi

On top of the steep safety net cuts, Trump's budget proposal would also slash the Environmental Protection Agency budget by 27%, the Housing and Urban Development budget by 15%, and the Centers for Disease Control and Prevention budget by 9%—even amid the deadly coronavirus outbreak.

Warnings that Trump has Social Security and Medicare in his crosshairs intensified last month when the president told CNBC in an interview at Davos that he is "going to look" at slashing Medicare and Social Security should he win reelection in 2020.

After 2020 Democrats and others seized upon Trump's comments as further evidence that his 2016 campaign vow to protect Social Security and Medicare was a lie, the president has since claimed he is attempting to "save" the programs.

"We will not be touching your Social Security or Medicare in Fiscal 2021 Budget," Trump tweeted Saturday. "Only the Democrats will destroy them by destroying our Country's greatest ever Economy!"

In 2016 Trump ran as a different kind of Republican, who would raise taxes on the rich and wouldn't cut Social Security, Medicare and Medicaid. He was lying. https://t.co/5csGTIPWIb pic.twitter.com/hb4OIveUgW

— Paul Krugman (@paulkrugman) February 10, 2020

In a statement responding to the reported details of Trump's FY2021 budget, House Speaker Nancy Pelosi (D-Calif.) on Sunday said "once again the president is showing just how little he values the good health, financial security, and well-being of hard-working American families."

"Year after year, President Trump's budgets have sought to inflict devastating cuts to critical lifelines that millions of Americans rely on," said Pelosi. "Less than a week after promising to protect families' healthcare in his State of the Union address, the president is now brazenly inflicting savage multi-billion-dollar cuts to Medicare and Medicaid—at the same time that he is fighting in federal court to destroy protections for people with pre-existing conditions and dismantle every other protection and benefit of the Affordable Care Act."

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'More Lies,' Says Sanders as Trump Vows to 'Save' Social Security Just One Day After Threatening Cuts

Published on Friday, January 24, 2020

by Common Dreams

"As a candidate, Trump said he'd protect Social Security, Medicare, and Medicaid. Now he has an obligation to tell the American people: 'I was lying. It was all just a campaign ruse.'"

by Jake Johnson, staff writer

 

24 Comments

President Donald Trump speaks at a meeting with business leaders at the White House in Washington, D.C. on October 31, 2017. (Photo: Nicholas Kamm/AFP/Getty Images)

Just over 24 hours after threatening to cut Social Security at the World Economic Forum's annual gathering of global elites in Davos, President Donald Trump on Thursday vowed to "save" the New Deal-era program from supposed Democratic efforts to "destroy" it—prompting Sen. Bernie Sanders to accuse the president of peddling "more lies."

"Democrats are going to destroy your Social Security," Trump wrote on Twitter. "I have totally left it alone, as promised, and will save it!"

Sanders, a Democratic presidential candidate and long-time advocate of Social Security expansion, responded by pointing in a tweet to Trump's 2020 budget proposal, which called for $25 billion in cuts to Social Security and trillions more in cuts to Medicare and Medicaid.

In a separate tweet late Thursday, Sanders posted a video contrasting the president's comments at Davos with then-candidate Trump's pledge in 2015 to protect Social Security, Medicare, and Medicaid from cuts backed by Republicans in Congress.

"As a candidate, Trump said he'd protect Social Security, Medicare, and Medicaid," Sanders wrote. "Now he has an obligation to tell the American people: 'I was lying. It was all just a campaign ruse.'"

As a candidate, Trump said he'd protect Social Security, Medicare and Medicaid.

Now he has an obligation to tell the American people: "I was lying. It was all just a campaign ruse." pic.twitter.com/670Cl9exuI

— Bernie Sanders (@SenSanders) January 24, 2020

As Common Dreams reported earlier this month, the Trump administration is currently pursuing changes to Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) that, if implemented, could terminate crucial benefits for hundreds of thousands of vulnerable people.

The public comment period on the administration's proposed rule change—which would make it more difficult for people with disabilities and other serious ailments to receive Social Security payments—ends Jan. 31. Comments can be left here.

Opponents of the rule change, from progressive advocacy groups to the tens of thousands who have left public comments on the rule change, warned that it would have deadly consequences for those who rely on Social Security benefits to afford basic necessities.

"Donald Trump and his advisers know that this will kill people, and they do not care," Alex Lawson, executive director of Social Security Works, told Common Dreams. "Every current and future Social Security beneficiary must band together to defeat this horrific proposal, or else all of our earned benefits will be next."

Even by Trump standards, this is a horrific lie.

He's currently trying to rip Social Security benefits away from hundreds of thousands of Americans with disabilities.

Submit a comment to SSA opposing Trump's cuts here: https://t.co/2SpTP4fhHx https://t.co/GpSOrJujjW

— SocialSecurityWorks (@SSWorks) January 23, 2020

According to the Wall Street Journal, the Trump administration is also in the process of crafting separate SSDI changes that would "tighten eligibility requirements for disability benefits, especially for older Americans."

"The proposal being prepared by the Social Security Administration would revise eligibility for disability benefits based on age, education, and work experience," reported the Journal, which viewed a draft of the plan. "Those factors determined the eligibility of about 500,000 people in 2017, according to the latest available data. More than eight million people currently receive disability payments."

Social Security has become a major topic in the 2020 Democratic presidential race, with Sanders and Sen. Elizabeth Warren (D-Mass.) hitting former Vice President Joe Biden over his decades-long record of advocating cuts to the popular New Deal-era program.

"Let's be honest, Joe," Sanders tweeted earlier this week. "One of us fought for decades to cut Social Security, and one of us didn't."

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'Cutting Social Security Is Murder': Flood of Public Outrage Greets Trump Proposal to Slash Benefits for Hundreds of Thousands

Published on Monday, December 23, 2019

by Common Dreams

"We cannot let Trump get away with this cruelty. An attack on any part of Social Security is an attack on the entire system."

by Jake Johnson, staff writer

 

51 Comments

Protestors rally against Social Security cuts on December 10, 2012 in Doral, Florida. (Photo: Joe Raedle/Getty Images)

"This policy change is abhorrent and absolutely unjustifiable."

"We all know that the cruelty is the point with this administration, but this sinks to yet another low."

"This would be a crushing blow to me and my family."

Those are just a few of the more than 1,700 official comments members of the U.S. public have left on President Donald Trump's proposed Social Security rule change, which could strip lifesaving disability benefits from hundreds of thousands of people.

"They want to destroy every part of Social Security, including retirement benefits, and turn it over to their criminal friends on Wall Street. We must stop Trump's plan."
—Alex Lawson, Social Security Works

 

The proposal received hardly any media attention when it was first published in the Federal Register in November. But recent reporting on the proposed rule change, as well as outrage from progressive Social Security advocates, sparked a flood of public condemnation and calls for the Trump administration to reverse course.

Backlash against the proposal can be seen in the public comment section for the rule, where self-identified physicians, people with disabilities, social workers, and others have condemned the change as monstrous and potentially deadly. The number of public comments has ballooned in recent days, going from less than 200 to more than 1,700 in a week.

The public comment period ends on January 17, 2020. Comments can be submitted here.

"Cutting Social Security is murder and this immoral administration knows it," wrote one commenter. "I will fight it every way I can."

A commenter who identified as Karla Kirchner said Social Security is her "only source of income."

"If I lose my checks, there will be nothing left to keep me alive," Kirchner wrote.

The Trump administration's proposal would add another layer of complexity to the process of obtaining Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits.

If implemented, the rule change would require people categorized by the federal government as Step 5 recipients—typically older individuals with serious physical ailments or mental illness—and others to re-prove their benefit eligibility every two years.

Critics and policy experts warned that the goal of imposing more onerous eligibility requirements on disabled Social Security recipients is to slash people's benefits. An estimated 4.4 million people would be subject to the new requirement if the Trump administration's proposal takes effect, according to the Philadelphia Inquirer.

Alex Lawson, executive director of progressive advocacy group Social Security Works, wrote in an op-ed last week that "there is no justification for this policy."

"The United States already has some of the strictest eligibility criteria for disability benefits in the world," wrote Lawson. "More than half of all claims are denied."

The Trump Administration is trying to cut #SocialSecurity benefits for hundreds of thousands of people with disabilities.

We cannot let Trump get away with this cruelty. An attack on any part of Social Security is an attack on the entire system.https://t.co/xgeMPo3w9a

— SocialSecurityWorks (@SSWorks) December 20, 2019

Lawson urged members of the public to call their elected officials and leave a comment on the Trump administration's proposal because "if they are allowed to get away with this attack, it will be only the beginning."

"They want to destroy every part of Social Security, including retirement benefits, and turn it over to their criminal friends on Wall Street. We must stop Trump's plan," Lawson said. "If we let the politicians in Washington, D.C., take away some people's earned benefits, it means they can take away all of our earned benefits."

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After Handing Rich $1.5 Trillion Tax Cut, Trump Reportedly Considering Slashing Medicare and Social Security as 'Second-Term Project'

Published on Friday, August 23, 2019

by Common Dreams

"Mr. Trump, you are not going to have a second term," tweeted Sen. Bernie Sanders in response to the president's reported plan

by Jake Johnson, staff writer

 

19 Comments

President Donald Trump speaks before signing an executive order for sanctions on Iran's supreme leader in the Oval Office of the White House on June 24, 2019 as US Treasury Secretary Steven Mnuchin looks on. (Photo: Mandel Ngan/AFP/Getty Images)

After exploding the federal budget deficit with over a trillion dollars in tax cuts for the rich and massive corporations, President Donald Trump is reportedly considering using his possible second term in the White House to slash Medicare and Social Security—the final part of a two-step plan progressives have been warning about since before the GOP tax bill passed Congress in 2017.

"The Trump/GOP tax cuts for the wealthy will add over $1.5 trillion in debt. Now we know how they'll pay for those tax cuts, by cutting Social Security and Medicare."
—National Committee to Preserve Social Security and Medicare

 

The New York Times reported this week that, with the budget deficit set to surpass $1 trillion in 2020 thanks in large part to Trump's tax cuts and trade war, Republicans and right-wing groups are pressuring the president to take a sledgehammer to Social Security and Medicare, widely popular programs Trump vowed not to touch during his 2016 campaign.

Sen. John Barrasso (R-Wyo.) told the Times that his party has discussed cutting Medicare and Social Security with Trump and said the president has expressed openness to the idea.

"We've brought it up with President Trump, who has talked about it being a second-term project," said Barrasso.

Senator John Thune (R-S.D.), the number two Republican in the Senate, echoed Barrasso, saying it is "going to take presidential leadership to [cut Social Security and Medicare], and it's going to take courage by the Congress to make some hard votes. We can't keep kicking the can down the road."

All to pay for his #GOPTaxScam... Horrific. https://t.co/IiTC2EUHY1

— For Tax Fairness (@4TaxFairness) August 22, 2019

"The Trump/GOP tax cuts for the wealthy will add over $1.5 trillion in debt," said the National Committee to Preserve Social Security and Medicare. "Now we know how they'll pay for those tax cuts, by cutting Social Security and Medicare."

According to the Washington Post, Trump has already "instructed aides to prepare for sweeping budget cuts if he wins a second term in the White House."

"Trump's advisers say he will be better positioned to crack down on spending and shrink or eliminate certain agencies after next year, particularly if Republicans regain control of the House of Representatives," the Post reported last month.

The president, despite his campaign promises, has included major cuts to Social Security and Medicare in his budget proposals—while predictably demanding massive increases in Pentagon spending.

In his budget blueprint for fiscal year 2020, as Common Dreams reported, Trump called for $845 billion in cuts to Medicare and $25 billion in cuts to Social Security.

Sen. Bernie Sanders (I-Vt.), a 2020 Democratic presidential candidate, tweeted Thursday his belief that Trump will not have a chance to carry out his "second-term project."

"Mr. Trump, you are not going to have a second term," said Sanders.

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Off the Top of My Head

Expanding Earned Income Tax Credit is Preferable to a Universal Basic Income

by John Lawrence, March 5, 2019

The EITC is a Federal program for low and moderate income earners which gives them a tax refund even if they don't pay any taxes. As such it is sort of a guaranteed income for those having little or no income. As a person's or family's income increases, the EITC gradually decreases until it disappears after a certain level of income is reached. As a family's income increases, the EITC effectively lowers the tax they would otherwise pay. In a random survey of 568 members of the American Economic Association in 2011, roughly 60% of economists agreed (31.7%) or agreed with provisos (30.8%) that the Earned Income Tax Credit program should be expanded.

The Universal Basic Income (UBI) would give a fixed amount of money every year to every American citizen. That's why I'm against it. The rich don't need an additional amount of income. The poor and moderate income group do. The EITC raises the income for low and moderate income families especially those with children. These are the people that need additional income the most. Some 40 million Americans are one paycheck away from the street. Just 39% of Americans say they have enough savings to cover a $1,000 emergency room visit or car repair, according to data released by the personal finance site Bankrate. What will retirement be like for them? Meanwhile, the three richest people in the US – Bill Gates, Jeff Bezos and Warren Buffett – own as much wealth as the bottom half of the US population, or 160 million people. Bezos' wealth accumulation vehicle, Amazon, will pay a whopping $0 in Federal taxes on $11.2 billion profits for 2018.

The beauty of the EITC is that it doesn't discourage people from working more and earning more. They still qualify for EITC albeit at a reduced level. Just as I believe that we should have Medicare for All with the rich paying more through increasing taxes on the rich, we should have an expanded EITC which I would call Social Security for All. There is no need for social security to be a universal program just as there is no need for a UBI. Rich people don't need an addition $1000 a month whether or not they paid into it. I am against universal programs that benefit the rich as much as they benefit the poor and middle income people.

Social security should be expanded for low and middle income retirees and eliminated for rich retirees. The EITC should be wrapped into social security. The whole program would benefit low and middle income people and families whether or not they were retired and whether or not they were supporting children. The income tax would just be adjusted to reflect these changes so that the rich and upper level income earners would pay more and lower income people would pay little or nothing or receive a monthly check from the government. This would constitute a negative tax for low and moderate income earners. Rather than a tax it would be a support. Low and moderate income earners would be supported by the government rather than taxed.

Robert Reich has some excellent ideas for expanding the EITC. See his article here. The gist of his ideas are the following:

1) Raise the maximum amount that very poor Americans receive from the Earned Income Tax Credit by several thousand dollars. 

2) Extend the Earned Income Tax Credit into the middle class, so even families earning the median family income – which was just about $76,000 in 2017 – will benefit. 

3) Expand the benefits of the Earned Income Tax Credit to two groups of Americans who are working hard, but not necessarily collecting paychecks: unpaid family caregivers of children and women.

4) Let people receive this money each month rather than in a lump-sum once a year at tax time.

These ideas combined with reducing the bloated military-complex budget approaching a trillion dollars a year will put the American People First rather than putting America First whatever that means. So the recipe is Medicare for all, Social Security for All and Tax the Rich,  Reduce the Military Budget to pay for it. That's simple, right?

Off the Top of My Head

Elderly Workers Paying into Social Security But Getting Less in Their Monthly Social Security Check

by John Lawrence, November 17, 2018

At the ripe old age of 77, I'm still working. Fortunately, I have good health and am still able to do so. I actually get pleasure at being a functioning, productive member of society. However, my monthly social security check, which I started receiving at the age of 62, gets less with each passing year despite the fact that I still pay into social security due to a self-employment tax of 15.3%. Because I am self-employed as an Uber and Lyft driver, I pay the employer's and the employee's share of social security tax. The social security tax is 12.4% and I also pay 2.9% Medicare tax despite the fact that I pay a Medicare premium each month for health insurance. So old people working get screwed six ways to Sunday.

In 2016 I received a monthly social security benefit of $735.90. My Medicare monthly premium was $104.90. So the amount that the Social Security Administration deposited in my checking account each month was $631. Now despite the fact that I'm still working and paid $430. self employment tax in 2017, which should have given me an increase in my monthly social security check because the amount you get depends on the total amount paid in and I'm still paying in, the amount deposited in my account each month has gone down to $618. How could this be possible, you might ask? The answer is simple. I was given a paltry $1 a month increase in social security based on the fact that I paid $430 into it so the government made $418 off me in self employment tax for 2017. However, my monthly Medicare premium went up to $134. So my Medicare premiums are going up much more than the paltry amounts the government thinks I should get because I'm still working and paying in to social security. In short I'm getting ripped off as an elderly person who still works.

You know the government likes to screw the old and the poor. It announced in my annual letter the following: "Your Social Security benefits will increase by 2.0% in 2018 because of a rise in the cost of living." So despite the fact that I'm still paying into social security and despite the fact that I got an increase in my benefits due to a "rise in the cost of living" my monthly social security check which is deposited directly into my checking account went down by $13! How's that for a screw job?

Meanwhile, the rich got a huge tax break due to Trump's giveaway to the rich. Inequality grew even greater. The gap between the rich and the poor widened. The ranks of the homeless increased. You can't even rent a room for $618. much less buy food or medicine. The government will give much more in a monthly social security check to millionaires who don't even need it than it will to poor people that have paid into it for 60 years or more.

I am fortunate. I have other sources of income than my monthly social security check, and I'm still in good health so I can still work. I only work part time so I still get to take a 4 hour break in my work as an Uber and Lyft driver each day during which I swim, have lunch and take a nap. So I'm still able to do everything I want to do in retirement. But, if this government gave a hoot about old people, they wouldn't require them to keep paying into social social security after retirement age despite the fact they might be still working. That would have saved me $430. last year.

Why Vote? Bernie Sanders Offers Simple Last-Minute Reminder: The GOP Agenda Is Horrific

Published on Monday, November 05, 2018 by Common Dreams

"Our plan: make health care a right to all. Stop giving tax breaks to billionaires. Protect and expand Social Security, Medicare and Medicaid. Transition to sustainable energy and leave behind a livable planet for our children."

by Common Dreams staff

 

25 Comments

On the eve of national midterm elections in the United States, Sen. Bernie Sanders (I-Vt.) was not alone as he participated in the frenzied effort of final campaign pitches and tried his best to make sure people get to the polls on Tuesday to defeat the GOP and issue a resounding to the agenda of President Donald Trump.

In a tweet on Monday, Sanders' final get-out-the-vote message was simple: the Republican Party's policy goals represent an unmitigated disaster for families, working people, and the planet while the alternative being offered by Democrats and progressive candidates in races nationwide would supplant those attacks with sensible and far-reaching set of solutions to the nation's most pressing problems.

The Republican agenda is clear.

Our plan: make health care a right to all. Stop giving tax breaks to billionaires. Protect and expand Social Security, Medicare and Medicaid. Transition to sustainable energy and leave behind a livable planet for our children. pic.twitter.com/cUCp1N5oI9

— Bernie Sanders (@SenSanders) November 5, 2018

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As GOP Moves to Cut Medicare and Social Security, 60% of Americans Say Repeal Trump Tax Scam Instead

Published on Friday, October 26, 2018 by Common Dreams

"Working families shouldn't have to pay for the GOP tax bill. The rich and big corporations must pay their fair share of taxes!"

by Jake Johnson, staff writer

 

45 Comments

A woman holds a sign at a protest of the "Trump tax scam" on Dec.4, 2017. (Photo: CDEL Family/Flickr/cc)

As President Donald Trump and Republican leaders make clear that they intend to enact deep cuts to Medicare, Medicaid, and Social Security after next month's midterms in a supposed effort to rein in the soaring deficit—which has ballooned largely due to Trump's $1.5 trillion tax law—a survey published on Friday found that nearly two-thirds of Americans would prefer repealing the Republican tax cuts over slashing the safety net.

Conducted by NPR, PBS NewsHour, and Marist, the poll found that 60 percent of Americans would rather eliminate Trump's tax cuts than gut safety net programs to reduce the federal budget deficit. Just 21 percent of Americans said they would rather slash the safety net than repeal Trump's tax cuts, which have overwhelmingly benefited the rich and corporations.

The new survey comes just over a week after Senate Majority Leader Mitch McConnell (R-Ky.) blamed the nation's rising budget deficit on Medicare, Medicaid, and Social Security and declared that these programs must be cut to bring federal spending under control. Trump echoed McConnell just 24 hours later, promising "a lot" of spending cuts after the midterm elections.

Working families shouldn't have to pay for the #GOPTaxScam's bill. The rich and big corporations must pay their fair share of taxes! https://t.co/c1O6O5TQHm

— For Tax Fairness (@4TaxFairness) October 26, 2018

As Common Dreams has reported, the GOP cuts have steadily declined in popularity since Trump signed them into law last December, and most Americans say they have seen little to no benefit from the Republican law.

Meanwhile, the rich and massive corporations have seen an enormous windfall from the Republican tax cuts, which sparked an unprecedented spree of stock buybacks and record profits for Wall Street banks and major companies.

These disproportionate rewards for the rich likely explain why Republican candidates have "barely" been mentioning the tax law with just 10 days left before the Nov. 6 midterms.

"When you vote for bunk economics," concluded Patriotic Millionaires, "don't expect it to be an electoral boon."

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Three Easy Fixes to Social Security and Medicare that Republicans Don’t Want You to Know About.

by Robert Reich

 

Thursday, October 18, 2018

Republicans would love to get rid of Social Security and Medicare. But they can’t, because Social Security and Medicare are among the most popular of all federal programs. Besides, most Americans have been paying into them their whole working lives, and depend on them.

So how will Republicans attempt to end these programs? By doing nothing to save Medicare and Social Security. 

The trustees for Medicare and Social Security – of which I used to be one – say Medicare will run out of money by 2026, three years sooner than last projected, and Social Security will run out in 2034. 

But this doesn’t have to be the case.  

Here are three easy fixes to Social Security and Medicare that Republicans don’t want you to know about.

First: Raise the cap on income subject to Social Security payroll taxes. 

This year, that cap is $128,400, meaning that every dollar earned above $128,400 isn’t subject to Social Security taxes. 

So the typical CEO of a big company, who makes over $15 million, pays Social Security taxes on just $128,400 of his or her income, a tiny fraction. While the typical nurse practitioner, who takes home around $100,000, pays Social Security taxes on every dollar of his or her income.

In this era of raging inequality, that’s not fair. And it’s not even logical. Raise the cap.

Second: To help rein in Medicare costs, allow the government to use its huge bargaining power to negotiate lower drug prices. 

Big Pharma has gotten legislation barring the government from negotiating lower drug prices. That legislation should be repealed. 

Big Pharma says this would mean less research on new drugs, but that’s baloney. Pharma already spends more on advertising, marketing, and lobbying than it does on research.  

Third: To deal with a basic reason why Social Security and Medicare are running out of money, allow more young immigrants into the U.S.

The basic reason why Social Security and Medicare are running out of money is the American population continues to age and live longer – leaving a relatively smaller working population to pay into Social Security and Medicare. 

What to do? Allow in more young immigrants. Immigrants and their children are the fastest growing segment of the working population, already contributing billions in payroll taxes every year. Instead of shutting immigrants out, allowing more immigrants into the country will help secure the future of Social Security and Medicare.  

This isn’t rocket science, folks. Raise the cap, negotiate drug prices, and allow in more immigrants. Do these three things and you won’t have to worry about Social Security and Medicare not being there when you need it.

The Tax-Cut Con Goes On

Why Social Security and Medicare are on the ballot.

By Paul Krugman

Opinion Columnist, New York Times

• Aug. 23, 2018
• • 570

Image

CreditStephen Maturen/Getty Images

What will happen if the blue wave in the midterm elections falls short? Clearly, at this point it still might: Democrats will surely receive more votes than Republicans, but thanks to gerrymandering and population geography, the U.S. electoral system gives excess weight to rural, white voters who still have faith in President Trump. What if, thanks to that excess weight, the minority prevails?

One answer, obviously, is that the unindicted co-conspirator in chief will continue to be protected from the law. And for those concerned with the survival of American democracy, that has to be the most important issue at stake in November. But if the G.O.P. hangs on, there will also be other, bread-and-butter consequences for ordinary Americans.

First of all, there is every reason to believe that a Republican Congress, freed from the immediate threat of elections, would do what it narrowly failed to do last year, and repeal the Affordable Care Act. This would cause tens of millions of Americans to lose health insurance and would in particular hit those with pre-existing conditions. There’s a reason health care, not Trump, is the central theme of Democratic campaigns this year.

But the attack on the social safety net probably wouldn’t stop with a rollback of Obama-era expansion: Longstanding programs, very much including Social Security and Medicare, would also be on the chopping block. Who says so? Republicans themselves.

In a recent interview with CNBC’s John Harwood, Representative Steve Stivers, the chairman of the National Republican Congressional Committee — in effect, the man charged with containing the blue wave — declared that, given the size of the budget deficit, the federal government needs to save money by cutting spending on social programs. When pressed about whether that included Social Security and Medicare, he admitted that it did.

And he’s not alone in seeing major cuts in core programs for older Americans as the next step if Republicans win in November. Many major figures in the G.O.P., including the departing speaker of the House, Paul Ryan, and multiple senators, have said the same thing. (Meanwhile, groups tied to Ryan have been running attack ads accusing Democrats of planning to cut Medicare funding — but hey, consistency is the hobgoblin of little minds. So, apparently, is honesty.)

 Now, Republicans who call for cuts in social spending to balance the budget are showing extraordinary chutzpah, which is traditionally defined as what you exhibit when you kill your parents, then plead for mercy because you’re an orphan. After all, the same Republicans now wringing their hands over budget deficits just blew up that same deficit by enacting a huge tax cut for corporations and the wealthy.

So it might seem shocking that only a few months later they’re once again posing as deficit hawks and calling for spending cuts. That is, it might seem shocking if it weren’t for the fact that this has been the G.O.P.’s budget strategy for decades. First, cut taxes. Then, bemoan the deficit created by those tax cuts and demand cuts in social spending. Lather, rinse, repeat.

This strategy, known as “starve the beast,” has been around since the 1970s, when Republican economists like Alan Greenspan and Milton Friedman began declaring that the role of tax cuts in worsening budget deficits was a feature, not a bug. As Greenspan openly put it in 1978, the goal was to rein in spending with tax cuts that reduce revenue, then “trust that there is a political limit to deficit spending.”

It’s true that when tax cuts are on the table their proponents tend to deny that they’ll increase the deficit, claiming that they’ll provide a miraculous boost to the economy and that tax receipts will actually rise. But there’s not a shred of evidence to support this claim, and it has never been clear whether anyone with real political power has ever believed it. For the most part it’s just a smoke screen to help conceal the G.O.P.’s true intentions.

The puzzle is why Republicans keep getting away with this bait-and-switch.

Fifteen years ago I wrote a long piece titled “The Tax-Cut Con,” describing what was even then a time-honored scam; it reads almost word for word as a description of Republican strategy in 2017-18. Yet I keep reading news analyses expressing puzzlement that men who were strident deficit hawks in the Obama years so cheerfully signed on to a budget-busting tax cut under Trump. To say the obvious: These men were never deficit hawks; it was always a pose.

And the gullibility both of the news media and self-proclaimed centrists remains a remarkable story. Remember, Ryan, who was utterly orthodox in his determination to cut taxes on the rich while savaging programs for the poor and the middle class, even received an award for fiscal responsibility.

Which brings us back to the midterm elections. Rule of law is definitely on the ballot. So is health care. But voters should realize that the threat to programs they count on is much broader: If the G.O.P. holds its majority, Social Security and Medicare as we know them will be very much in danger.

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Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman

THE NEXT BIG FIGHT

 

by Robert Reich, Tuesday, January 30, 2018

Fresh off passing massive tax cuts for corporations and the wealthy, Trump and congressional Republicans want to use the deficit they’ve created to justify huge cuts to Social Security, Medicare, and Medicaid.

As House Speaker Paul Ryan says “We’re going to have to get… at entitlement reform, which is how you tackle the debt and the deficit.” 

Don’t let them get away with it.  

Social Security and Medicare are critical safety-nets for working and middle-class families. 

Before they existed, Americans faced grim prospects. In 1935, the year Social Security was enacted, roughly half of America’s seniors lived in poverty.  By the 1960s poverty among seniors had dropped significantly, but medical costs were still a major financial burden and only half of Americans aged 65 and over had health insurance. Medicare fixed that, guaranteeing health care for older Americans. 

Today less than 10 percent of seniors live in poverty and almost all have access to health care. According to an analysis of census data, Social Security payments keep an estimated 22 million Americans from slipping into poverty. 

Medicaid is also a vital lifeline for America’s elderly and the poor. Yet the Trump administration has already started whittling it away by encouraging states to impose work requirements on Medicaid recipients.  

Republicans like to call these programs “entitlements,” as if they’re some kind of giveaway.  But Americans pay into Social Security and Medicare throughout their entire working lives. It’s Americans’ own money they’re getting back through these programs. 

These vital safety nets should be strengthened, not weakened. How? 

1. Lift the ceiling on income subject to the Social Security tax. Currently, top earners only pay Social Security taxes on the first $120,000 of their yearly income. So the rich end up, in effect,  paying a lower Social Security tax rate than everyone else. Lifting the ceiling on what wealthy Americans contribute would help pay for the Baby Boomers retirements and leave Social Security in good shape for Millennials. 

2. Allow Medicare to negotiate with drug companies for lower prescription drug prices. As the nation’s largest insurer, Medicare has tremendous bargaining power. Why should Americans pay far more for drugs than people in any other country?

3. Finally, reduce overall health costs and create a stronger workforce by making Medicare available to all. There’s no excuse for the richest nation in the world to have 28 million Americans still uninsured. 

We need to not just secure, but revitalize Social Security and these other programs for our children, and for our children’s children.  Millennials just overtook Baby Boomers as our nation’s largest demographic.  For them — for all of us — we need to say loud and clear to all of our members of congress:  Hands off Medicare, Medicaid, and Social Security. Expand and improve these programs: don’t cut them.

Off the Top of My Head

How the Republicans Will End Social Security

by John Lawrence

They will not end it abruptly with a bang. No, that would be too noticeable. They will start by leaving it intact for those receiving it already, and those about to receive it ... say 55 years old and older. Then for every year of age younger than 55 they will decrease the amount received by 2%. So those 54 year olds will only receive 98% of what they should have received. 50 year olds will receive 90%. 40 year olds will receive 70%. 30 year olds will receive 50% and so forth.

At the same time Republicans will increase the age at which one can receive social security. Right now the full retirement age is 66. You can start receiving social security at 62, but you will only get 75% of the full amount. They will probably raise the full retirement age by one year every couple of years. So in ten years the full retirement age will be 71. In 20 years it will be 76 and so forth. So by the time a 30 year old reaches the age of 60, the retirement age will be 81 - only 21 more years to go to receive social security!

This is the "boiling a frog" strategy. You put a frog in lukewarm water and the frog is happy. Then you gradually start raising the temperature. The frog is still happy because the change is so gradual. As the temperature reaches the boiling point, the frog would like to jump out but is helpless to do so. So the frog gets boiled whereas if you put the frog in a pot of boiling water to begin with, it would have jumped right out because of the shock. Likewise Republicans will change social security so gradually that no one will really be able to catch on or get too excited about it until it's totally eliminated. Then they'll say, "Wha Hoppened?!"Thus Republicans will have accomplished their goal. A 30 year old will have to wait until the age of 81 and then get only half of what a social security recipient gets now at age 66.

If the inflation rate is 2% per year, in 50 years costs will have increased by 100% or doubled so a 30 year old will pay twice as much for goods and services while getting half as much social security as a social security recipient gets now. I doubt that Republicans will allow for a COLA.

A New Year’s Resolution for the Media: Do Not Let Republicans Get Away With Saying ‘Reforms’ When They Mean ‘Cuts’

Published on Monday, January 01, 2018 by Washington Post

There’s no reason to expect general readers to intuitively understand that when House Speaker Paul D. Ryan (R-Wis.) says he plans to “reform” entitlements, he means to cut them.

by Jared Bernstein

 

16 Comments

Speaker of the House Paul Ryan and his fellow congressional Republicans have a very simple plan: now that they've further ballooned the national deficit with a massive tax giveaway to the rich, they want to slash spending on the safety net in the name of fiscal responsibility. Don't buy it for a second. (Photo: Bill Clark/CQ Roll Call file photo)

I have a simple request to journalists, columnist, pundits, and others writing about forthcoming efforts of Republicans to cut Medicare, Medicaid, Social Security, and the anti-poverty programs that make up our safety net. Call such efforts “cuts.” Do not call them “reforms,” “changes,” “overhauls,” “fixes,” “reshaping,” “modernizing,” or any other euphemism that could easily be misconstrued. At least, do not do so without also clearly defining what they really are, which is cuts.

While D.C. insiders speak the unique creole of our swamp, there’s no reason to expect general readers to intuitively understand that when House Speaker Paul D. Ryan (R-Wis.) says he plans to “reform” entitlements, he means to cut them. Journalists, in particular, should not do Ryan et al.’s bidding by assuming readers get the meaning behind the words.

Examples abound. To be fair, these are often otherwise informative pieces, but they sometimes adapt the intentionally obfuscating language of those who would cut these programs.

A recent Congressional Quarterly piece (no public link) probed the interesting political disagreement between Ryan and Senate Majority Leader Mitch McConnell (R-Ky.) on the wisdom of going after the safety net in an election year. In describing Ryan’s agenda, the piece noted (my bold, in all cases below) that “the Wisconsin Republican has detailed an ambitious effort to dramatically reshape Medicare, Medicaid and welfare programs that the GOP has long targeted as ripe for reforms. … Ryan has said he plans to use the budget reconciliation process for entitlement changes.”

CNN: “The House GOP caucus plans to work on entitlement reform next year as a way to ‘tackle the debt and the deficit,’ according to House Speaker Paul Ryan. … Ryan also noted that, in addition to health care, the GOP plans to work on reforming the US welfare system.” To its credit, the piece later cites Sen. Bernie Sanders (I-Vt.) saying these reforms are really cuts, but why set this up as “he said, she said?” Ryan is talking about cuts, plain and simple, but lacks to courage to say so. His position should not be accommodated.

This Politico report talks about Ryan’s “obsession” with “fixing” the “ballooning entitlement state” and “tinkering with the social safety net.” Who could possibly be against “fixing” something! And “tinkering” certainly sounds awfully benign, especially in contrast to Ryan and the Republican’s actual, articulated plans to significantly cut programs that help low-income households.

Let me be clear. I’m not arguing against such cuts, at least not yet (that comes in a moment). Those advocating cuts to these programs have every right to make their case. But they’ve no right to mislead, which is, of course, the reason they employ such gilded language. And the media has no right to help them do so. To the contrary, it has an obligation to cut through their linguistic fog.

Along with the euphemisms for cuts, here are some other words and arguments politicians use to prevent us from understanding what they’re actually talking about.

Unsustainable: This is one the most misused, misunderstood words in budget debates. To say a program is unsustainable is almost always meaningless. Instead, what’s really being said here is that the politician is not willing to advocate for the resources necessary to meet the obligations of a program he disfavors, compared with one he likes. Medicare is unsustainable. Defense spending must go up.

It is unquestionably the case that our aging demographics mean that for a period, the costs of fully funding Social Security and Medicare will rise in a way that by 2035, they will require another 3 percentage points of GDP (1.3 for Social Security and 1.7 for Medicare/Medicaid). We can and should have good arguments as to whether that’s the best use of 3 more points of GDP, but there is no coherent argument that it would be impossible to do so.

The deficit, the debt! President Trump and the Republicans just added at least $1 trillion to the 10-year deficit with their deficit financed tax plan. Based on their rhetoric of extending tax cuts they themselves scheduled to expire, the hit to the debt could be twice as large. By so doing, they sacrificed their tactic of using bigger deficits as leverage to cut spending programs they oppose. Yes, I know they argue that the tax cuts will more than pay for themselves through higher growth rates, but that just makes my final point.

Cherry picking the scores. During the tax debate, the blogger Kevin Drum made an important point: If the tax cuts are going to lift growth as much as the Republicans say, then revenue generated by that growth can also help pay for social insurance and safety net programs. True, they cooked up those growth effects to sell the tax cuts, but they should be pressed to explain why, if they really believe the economy will now be growing much faster, the new revenue flooding in should only pay for regressive tax cuts as opposed to progressive social programs.

I’ve long maintained that the policy media has seriously picked up its game in the age of Trump. Both on health care and taxes, more often than not, journalists cut through the phony language and clearly identified who was expected to win and lose from the proposals.

They say here at The Washington Post that “Democracy Dies in Darkness.” That’s surely true, and when we force the powerful to speak plainly, we light a match in the darkness.

With that, bye-bye 2017! Don’t let the door hit you on the way out.

© 2017 Washington Post

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities and previously served as an economic advisor to the Obama administration.

Off the Top of My Head

Even With COL Increase Social Security Less Than It Was Two Years Ago

by John Lawrence

In 2016 my social security monthly income was $631.00. Not a lot , but I took it at age 62 instead of waiting to 65 when I would have got more. Now I get a letter informing me that for 2018 I got a 2% cost of living increase and my monthly payment would be ... drum roll please ... $618. So even with a 2% COL increase my social security income will be $13.00 less. How could this be?

Very simple. Medicare premiums which are extracted from your social security payment before it comes to you have gone up faster than the cost of living! Medicare Part B premiums were $104.90 per month in 2017, which was the same as the 2016 and 2015 premiums. A little research came up with this gem: "The 30 percent of all Part B enrollees who are not subject to the “hold harmless” provision will pay the full premium of $134 per month in 2018. Part B enrollees who were held harmless in 2016 and 2017 will see an increase in the monthly Part B premium from the roughly $109, on average, they paid in 2017."

A little math shows that my social security payment for 2017 before the Medicare deduction was $735.90. 2% of this which represents my increase is $14.72. Therefore, my total social security for 2018 would be $750.62. Since my actual monthly payment will be $618., the difference is $132.62 which represents a 21% increase in my Medicare Part B premium which they withhold from my social security payment. Gee thanks, Republican controlled government. If you can't eliminate social security and Medicare altogether, I guess you'll have to be satisfied with whittling it down.

A little more research showed: "A medicare hold harmless provision is a legal statement prohibiting an increase to Medicare B premiums for the vast majority of American citizens. The Medicare hold harmless provision ensures that Medicare B premiums can not rise more than the previous year's cost of living increase in Social Security benefits." Well, I guess, I wasn't "held harmless." In fact a certain amount of harm was inflicted seeing that my social security monthly allotment is on the low side in the first place. Bernie Sanders wants to actually raise social security payments. Good man, but Republicans want to do away with them altogether. What you going to do??

More research showed: "The beneficiaries who are not protected from rising premiums by the hold harmless provision will likely see their part B premiums rise, since they (A) Did not have part B premiums deducted for their Social Security distributions, (B) paid a higher part B premium surcharge based on their higher income or (C) were newly enrolled in Medicare part B." I guess I was not held harmless because in 2017 I paid a higher premium for Part B because my income in 2015 was higher than normal due to the sale of two pieces of property which allowed me to pay off mortgages and have a modest retirement income from rental property. In 2016 my income went back down to its usual lowly amount.

I can't say "woe is me" because I'm better off than most senior citizens who have no income other than social security. At least I have some other income from rental property and being an Uber and Lyft driver. I guess from now on I will be "held harmless" though unless the not being held harmless provision will propagate itself throughout the years.

Why Aren't Seniors Getting a Raise This Year?

by John Lawrence

CEOs Got a Pay Increase Last Year But No COLA for Social Security Recipients

The Social Security Administration announced that senior citizens would get no increase in their monthly checks because there wasn't any inflation last year as measured by the increase in paychecks for urban and clerical workers. Yes, those workers didn't make any more money, but CEOs certainly did. Why don't they gear their index to the increase in paychecks for CEOs? That was a whopping 3.9%. Senators Bernie Sanders and Elizabeth Warren (the only Senators who stand up for We the People) are introducing legislation that would give seniors the same increase that CEOs got last year. It has a snowball's chance in Hell of passing, but they get A for effort.

It would provide an emergency payment of about $580—that's equal to 3.9% of the average annual Social Security benefit—which could help some 70 million seniors, veterans, people with disabilities, and others meet critical needs. The average CEO compensation for the 350 largest firms was $16.3 million in 2014. While CEO pay is skyrocketing, they are also enjoying a savory loophole which gives them even further gains. That's right, CEO paychecks are subsidized by you, the American taxpayer. As long as the CEO pay is considered "performance based," anything over a million dollars can be deducted from taxes by corporations. If these companies paid the statutory 35 percent corporate income tax rate, their use of the performance-based compensation loophole for just the 20 highest paid CEOs cost American taxpayers $235 million.

CEOs and their corporate lawyers are becoming increasingly savvy about rigging the system to their advantage. And they also have the benefits and the services of lobbyists who write the laws that favor the already rich. “Especially during a long-term recession giving rise to major cuts in public services, and after American taxpayers bailed out Wall Street to the tune of trillions of dollars, it’s unconscionable that we continue to subsidize CEOs’ exorbitant salaries,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division.

The government has all kinds of rules which nitpick social security checks down and practically force social security recipients into privatized Medicare Advantage programs. If this trend continues, Medicare will be eliminated by the fait accompli caused by transitioning to Medicare Advantage. For example, I started traditional Medicare in 2006. I wanted to stay away from Medicare Advantage on principle. I had no "secondary insurance" or Medicare Part D which is drug coverage. The Advantage programs give you all of the above for the same price as traditional Medicare (for now).

The way I look at it, I saved the government tons of money by virtue of the fact that I didn't take any drugs at all for 9 years after starting Medicare. But this year I had to go on blood pressure medicine. Even though it's so cheap I could pay out of pocket, I figure at this point in my life I need drug coverage and the lack of secondary insurance, which would cost a fortune if I needed to use the medical system at all, forces me onto a Medicare Advantage program. How you might ask does this relate to Social Security? They take $104.90 out of my social security check each month for Medicare Part B. They'll take out the same amount for Medicare Advantage. However, next year they will be taking even more because I have to pay a Medicare Part D penalty for all the years I didn't have Medicare Part D and didn't need or use prescription drugs.

I Will Pay a Penalty for Staying Healthy

So even though I didn't take any prescription drugs for the last 9 years and the drug I'm on now with co-pay will cost the government practically nothing, if I want drug coverage now, I have to pay a penalty of 1% of the "national base beneficiary premium" ($33.13 in 2015, $34.10 in 2016) times the number of full, uncovered months I didn't have Part D or creditable coverage. That comes to almost $40 a month that will come right off the top of my social security check.

But I digress. Two thirds of seniors rely on Social Security for the majority of their income. The Republican controlled Congress sets the rules which deliberately advantage their corporate overlords at the expense of average American seniors. The amounts paid out are completely arbitrary. There is no linkage between the amount paid into social security with FICA taxes and the amount ultimately received in the form of social security. While CEOs and billionaires are advantaged by the tax code that Congress sets, when they retire, they also receive social security checks each month taking money away from people who actually need it.

Progressives usually support everyone getting a social security check on the grounds that it is an entitlement, and as such won't be eliminated by Congress the way a "needs based" payout would. Well, guess again. No matter whether you call it an entitlement or a welfare program, conservatives are bound and determined to get rid of it and Congress can do just that at their discretion. There are no individual accounts, and you are not entitled to receive any amount of money regardless of what you paid in. It's all up to Congress and at their discretion.

The only people standing up for senior social security recipients in Congress are Bernie Sanders and Elizabeth Warren. In fact Bernie and Elizabeth want to expand social security benefits which they should be if they don't want seniors eating their cat's food. The Social Security Administration nickels and dimes recipients to death. In addition to the Part D penalty, I actually pay into social security each year a significant percentage of what I receive in benefits because I'm still working.

Ronald Reagan Screwed the Self-Employed

Since I'm self-employed, Ronald Reagan and Alan Greenspan (the Ayn Rand acolyte) came up with a nifty plan which involved making self-employed citizens pay both the employee's part and the employer's part of FICA tax which will be 12.4% for 2016. For example, if I earn $10,000 in 2016 through actual work, I will pay $1240 in FICA (social security) taxes in addition to income tax. But even though I keep paying in, I get only a couple of dollar increase in my social security check each month. The total increase of my social security check each year due to continually paying in to social security amounts to a minuscule percentage of what I actually pay into social security each year.

This year in fact, despite having paid over $1000. into social security in 2014, I received a $1. increase in my monthly social security check. I received a letter detailing these benefits. It says in part: "We increased your benefit amount to give you credit for your 2014 earnings." Hoorayy! The letter goes on to say that they will pay me $10.00 representing the dollar a month increase from January to October. Then from November going forward, I will receive a one dollar addition to my monthly check. Whoopee!! A whole dollar a month extra. That won't even buy a can of food for my cat!

You know what? They could just stop charging me FICA taxes since I'm already receiving social security and then they could do away with the monthly increases for the rest of my life. That would be fine with me. Make sense?

Meanwhile, the fatcat CEOs who made an average of $16.3 million last year only pay FICA taxes on the first $118,500 of that, and they only pay 6.2% not 12.4% like me. Thanks Alan Greenspan and Ronald Reagan who never tired of thinking of ways to bilk the poor while giving advantages to the rich.

Republicans never tire of saying that the Social Security trust fund is running out of money. It would never run out of money and benefits could be greatly expanded if the cap ($118, 500) was lifted and CEOs making an average of $16.3 million paid their 6.2% FICA tax on their entire income. That would amount to approximately a million dollars as opposed to the $7347 they pay now which is simply a rounding error of .045% on the amount of money they make.

"If we do nothing, on January 1st, more than 70 million seniors, veterans, and other Americans won't get an extra dime in much-needed Social Security and other benefits. And while Congress sits on its hands and pretends that there's nothing we can do, taxpayers will keep right on subsidizing billions of dollars' worth of bonuses for highly paid CEOs," Warren stated. "Giving seniors a little help with their Social Security and stitching up corporate tax write-offs isn't just about economics; it's about our values."

Sanders Calls the Lack of a COLA "Unacceptable."

"At a time when senior poverty is going up and more than two-thirds of the elderly population rely on Social Security for more than half of their income, our job must be to expand, not cut, Social Security," Sanders said in a press statement. "At the very least, we must do everything we can to make sure that every senior citizen and disabled veteran in this country receives a fair cost-of-living adjustment to keep up with the skyrocketing cost of prescription drugs and health care."

Bernie Sanders, American Socialist

by John Lawrence from the San Diego Free Press

Bernie for President

Bernie Sanders has been drawing huge crowds to his rallies. The American media cannot ignore that. But they will never use the S word to describe Bernie even though that is how he describes himself. Bernie represents those who would tax Wall Street to preserve social security and a host of other common sense proposals. He dares to suggest that college should be free rather than the first stage of a life of indentured servitude and indebtedness.

People are listening - especially young people. Bernie has been saying these things for years but the media for the most part has been ignoring him. Now he has a bigger megaphone. His decision to run for President in order to get his message out there is paying off.

As Bernie himself has said: “the ideas and the points that we are making are reverberating very strongly with the American people.” Whoever would have thought that Bernie Sanders, Socialist, would be reverberating with the American people, the American people who love freedom and think that society should be set up in such a way that everybody has a chance, no matter how small, of getting rich?

On the other hand Bernie points out that social security is not in danger of running out of money. All you have to do is lift the cap and let rich people pay the same percentage of their income into it as do poor people. That is pretty reverberating if you can just get the message out. Bernie is getting the message out.

The media wants to call Bernie a "populist." Well, in this instance populism equals socialism. The notion that rich people should pay a higher percentage of their income in taxes as they did during the Eisenhauer administration, that there should be a tax on financial transactions and that taxes on the rich should support programs that aid the poor, is that populism or socialism, or both?

But then Americans have always been hypocritical about socialism. Even when they are enjoying the benefits from it, they don't want to acknowledge it. In an article in the New York Times, Socialism, American Style, Gar Alperovitz and Thomas M Hanna point out that socialism is a way of life in many American states including those that are considered "conservative." Only you can't call it that. That would not be politically correct.

Conservative Alaska is a Hotbed of Socialism

Take Alaska, for example. In this ultra conservative state there is a little socialist program known as The Alaska Permanent Fund. The Alaska Permanent Fund, established by a Republican governor in 1976, combines not one, but two socialist principles: public ownership and the provision of a basic income for all residents. The fund collects and invests proceeds from the extraction of oil and minerals in the state. Dividends are paid out annually to every man, woman and child in the state. Even Sarah Palin's family collects them.

This is from an article I wrote titled The Alaska Permanent Fund: Socialism in a Republican State:

Alaska is a land of rugged individualists - Republicans all the way. However, a little known fact is that Alaska taxes the oil and gas corporations operating there and distributes the proceeds on an annual basis equally among every man, woman and child living in the state. The biggest farce of all is that Tea Party touter, Governor Sarah Palin, slapped an excess profits tax on the state's oil companies in 2008, the year she ran for vice-President alongside John McCain, so that every person in Alaska received a dividend of $3269 that year. That was a pretty good haul for a family of four: $13,076. For Palin's family - husband Todd, sons Track and Trig and daughters Bristol, Willow and Piper - it came to an even better haul - $22,883!

We have also written about the Alaska Permanent Fund here. With global warming heating up the climate, more people will be moving to Alaska, not only in search of a moderate climate, but also to take advantage of the yearly stipend which might grow to the point that citizens of Alaska wouldn't have to work at all especially in view of the minerals that are becoming available due to the melting of the Arctic ice cap. Of course, that oil should stay in the ground if the earth has a chance of not warming up by 2 degrees C and causing widespread calamity.

Political correctness and hypocrisy demands that neither Palin nor any Republican politician mention the Alaska Permanent Fund nor any other socialist program from which money is taken from corporations and redistributed to the people. After all other states might get the idea that, if Alaska can do it, their state might be able to do the same thing. Well, in ultra conservative Texas, they've already figured that out: give lip service to conservative, rugged individualist principles while employing de facto socialist ones.

Texans Don't Mind Benefiting from a Socialist Policy

As Alperovitz and Hanna state:

Texas is another example of conservative socialism in practice. Almost 150 years ago the Texas Permanent School Fund took control of roughly half of all the land and associated mineral rights still in the public domain. In 1953, coastal “submerged lands” were added after being relinquished by the federal government. Each year distributions from the fund go to support education; in 2014 alone it gave $838.7 million to state schools. Another fund, the $17.5 billion Permanent University Fund, owns more than two million acres of land, the proceeds of which help underwrite the state’s public university system.

You'd think that Bernie Sanders would have plenty of supporters in Texas, namely all those who benefit from the Texas Permanent School Fund and Permanent University Fund, but instead they're all supporters of ultra conservative Governor Rick Perry, at least the majority consisting of white Texans are. Again lip service to conservatism while the actual reality they benefit from is socialism.

It's the same with Obamacare. All those southern conservatives who are benefiting from it love the reality while at the same time calling for its repeal. As a Washington Post article stated: "When the political history of the Affordable Care Act is written, Kentucky will occupy a special place in the tale. The implementation of the ACA there has helped produce the second steepest drop in the uninsured rate of any state. Yet even though that’s occurring in one of the most unhealthy regions in the country, the general idea of 'Obamacare' remains deeply unpopular."

Many countries employ the same principles, but without the hypocrisy. These funds are called sovereign wealth funds. Norway imposes a 50% tax on oil extraction which is put into its sovereign wealth fund which provides pensions and benefits for the Norwegian people. There's no talk there of "ending social security" because they don't have the money. Norwegians have plenty of money since they have profited from their co-owned public wealth in the form of oil extraction.

Only in America is there talk about the nonviability of social security. Most people don't even realize that if the rich paid into social security at the same rate as the poor, social security would be overfunded not underfunded and senior citizens could get a nice raise especially the needy ones.

Frank Thomas has written knowledgeably about Norway's sovereign wealth fund here:

The sovereign wealth fund in which Norway saves its oil-gas income is invested internationally primarily in stocks, bonds, and, starting recently, real estate. The strict primary goal is to save for future generations, when hydrocarbons run out.  Investing abroad also helps to avoid overheating the Norwegian economy. In 2009, the fund advanced 34% to recover most of the bubble losses.The fund now owns more than 1% of the world’s shares in over 8000 companies. It is Europe’s biggest equity investor. Strategically, the fund takes a 30 year investment horizon. Thus, not surprisingly,the fund is  currently investing aggressively in green industries. Helped by the past 30 year petroleum revenues that have been well-invested, Norway has become the 2nd richest nation per capita.

What if California Had Invested in a Sovereign Wealth Fund?

What if California would have taken control of its oil and gas revenues and invested in a sovereign wealth fund? There would be no budget problems today and there would be plenty of money to invest in infrastructure like desalination plants. California would have had the money to deal with its water shortage problems. Instead it became a debt based economy owing what amounts to a mortgage to Wall Street.

Another example: The Permanent Wyoming Mineral Trust Fund, with a market value of more than $7 billion accumulated from mineral extraction, has helped to eliminate income taxes in the state. The basic principle is that the mineral resources of the state belong to the citizens of that state not some private corporation. The idea is that the state should endeavor to enter into a relationship that adequately compensates the citizens for the extraction of their property.

One of the largest “socialist” enterprises in the nation is the Tennessee Valley Authority, a publicly owned company with $11 billion in sales revenue, nine million customers and 11,260 employees that produces electricity and helps manage the Tennessee River system. It seems that some socialist enterprises are not only very successful but are also very popular with the citizens who collectively profit from such enterprises.

Another example is publicly owned utilities. There are, in fact, already more than 2,000 publicly owned electric utilities that, along with cooperatives, supply more than 25 percent of the country’s electricity, now operating throughout the United States. In one of the most conservative states, Nebraska, every single resident and business receives electricity from publicly owned utilities, cooperatives or public power districts. Partly as a result, Nebraskans pay one of the lowest rates for electricity in the nation.

Perhaps the best example of public ownership or socialism, if you will, is the Public Bank of North Dakota (BND). Instead of shipping money to Wall Street, North Dakota uses the profits from its state owned bank to reduce taxes, invest in infrastructure and provide reasonable student loans. Many cities, counties and states are waking up to the fact that the profits that have heretofore been reaped by Wall Street from operations in their states should instead be reinvested in the state or public entity itself. The BND is serving as an example for them to follow. Private profit that goes into out of state investors' pockets is replaced by public profit which benefits citizens locally whether in a state or a city or other public entity.

The American People Should Derive Part of their Income From Public Wealth

As I said in the aforementioned article: Rich people live off of dividends, rent or interest paid to them in one form or other from their accumulated wealth. Public wealth is owned by the citizens of the US collectively. To receive a dividend from their co-owned wealth would tend to ameliorate the growing inequality of wealth ownership in the US and supplement poor and middle class incomes. Every citizen should be in a position of deriving at least a part of their income from co-owned wealth, especially since income from jobs is going downhill due to automation and outsourcing. This would eliminate poverty, provide a basic income guarantee, stimulate the economic system from the bottom up and restore the middle class.

The US is a debt based country which by virtue of the dollar's place as the world's reserve currency can continue to go into debt. Most other countries don't have this luxury so they start sovereign wealth funds which invest in American debt among other things so that their citizens are in the position of being investors while American citizens are essentially debtors for whom the chickens have not yet come home to roost.

Bernie Sanders' message is starting to make good sense to thousands of American people who are fed up with the BS Republicans have been feeding them. They are listening to Bernie, Elizabeth Warren, the Pope and the Dalai Lama and beginning to take seriously the facts of climate change, free public education up to the university level, Medicare for all and a beefed up social security program. Ownership of wealth and assets should not be only for the rich. Socialism provides that public wealth shall be redistributed to the poor and middle class as well.

Bi-Partisanship We Don’t Need: The President Offers to Cut Social Security and Republicans Agree

by Robert Reich 

Tuesday, April 9, 2013

John Boehner, Speaker of the House, revealed why it’s politically naive for the President to offer up cuts in Social Security in the hope of getting Republicans to close some tax loopholes for the rich. “If the President believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said in a statement released Friday.

House Majority Leader Eric Cantor agreed. He said on CNBC he didn’t understand “why we just don’t see the White House come forward and do the things that we agree on” such as cutting Social Security, without additional tax increases.

Get it? The Republican leadership is already salivating over the President’s proposed Social Security cut. They’ve been wanting to cut Social Security for years. 

But they won’t agree to close tax loopholes for the rich.

They’re already characterizing the President’s plan as a way to “save” Social Security — even though the cuts would undermine it — and they’re embracing it as an act of “bi-partisanship.”
“I’m encouraged by any steps that President Obama is taking to save and preserve Social Security,” cooed Texas Republican firebrand Ted Cruz. “I think it should be a bipartisan priority to strengthen Social Security and Medicare to preserve the benefits for existing seniors.”

Oh, please. Social Security hasn’t contributed to the budget deficit. And it’s solvent for the next two decades. (If we want to insure its solvency beyond that, the best fix is to lift the cap on income subject to Social Security taxes – now $113,700.)

And the day Ted Cruz agrees to raise taxes on the wealthy or even close a tax loophole will be when Texas freezes over.

The President is scheduled to dine with a dozen Senate Republicans Wednesday night. Among those attending will be John Boozman of Arkansas, who has already praised Obama for  “starting to throw things on the table,” like the Social Security cuts.

That’s exactly the problem. The President throws things on the table before the Republicans have even sat down for dinner.

The President’s predilection for negotiating with himself is not new. But his willingness to do it with Social Security, the government’s most popular program  — which Democrats have protected from Republican assaults for almost eighty years — doesn’t bode well.

The President desperately wants a “grand bargain” on the deficit. Republicans know he does. Watch your wallets.

From Welfare Queens to Disabled Deadbeats

by Paul Krugman

from the New York Times, January 27, 2013, 

If you want to understand the trouble Republicans are in, one good place to start is with the obsession the right has lately developed with the rising disability rolls. The growing number of Americans receiving disability payments has, for many on the right, become a symbol of our economic and moral decay; we’re becoming a nation of malingerers.

As Jared Bernstein points out, there’s a factual problem here: a large part of the rise in the disability rolls reflects simple demographics, because aging baby boomers are a lot more likely to have real ailments than those same workers did when they were in their 20s and 30s. The Social Security Administration does a formal adjustment for this reality, and as Jared says, it looks like this:

It looks a lot less dramatic, doesn’t it?

And as for the rest of what’s going on, CBO — which also concludes (pdf) that a lot of it is demographics — adds this description of policy changes:

In 1984, lawmakers enacted the Disability Benefits Reform Act, which expanded the ways in which people could qualify for the DI program. That legislation, in addition to reversing several of the cost-containment measures enacted as part of the 1980 Social Security Disability Amendments, shifted the criteria for DI eligibility from a list of specific impairments to a more general consideration of a person’s medical condition and ability to work. The legislation allowed applicants to qualify for benefits on the basis of the combined effect of multiple medical conditions, each of which taken alone might not have met the criteria. It also allowed symptoms of mental illness and pain to be considered in assessing whether a person qualified for admission to the DI program, even in the absence of a clear-cut medical diagnosis.

So yes, there has been some liberalization of the criteria — if you have multiple interacting conditions or mental illness, you may qualify in ways you didn’t before — but that liberalization is pretty reasonable. It’s still quite hard to qualify for DI.

What strikes me, however, isn’t just the way the right is trying to turn a reasonable development into some kind of outrage; it’s the political tone-deafness.

I mean, when Reagan ranted about welfare queens driving Cadillacs, he was inventing a fake problem — but his rant resonated with angry white voters, who understood perfectly well who Reagan was targeting. But Americans on disability as moochers? That isn’t, as far as I can tell, an especially nonwhite group — and it’s a group that is surely as likely to elicit sympathy as disdain. There’s just no way it can serve the kind of political purpose the old welfare-kicking rhetoric used to perform.

The same goes, more broadly, for the whole nation of takers thing. First of all, a lot of the “taking” involves Social Security and Medicare. And even the growth in means-tested programs is largely accounted for by the Earned Income Tax Credit — which requires and rewards work — and the expansion of Medicaid/CHIP to cover more children. Again, not the greatest of political targets.

The point, I think, is that right-wing intellectuals and politicians live in a bubble in which denunciations of those bums on disability and those greedy children getting free health care are greeted with shouts of approval — but now have to deal with a country where the same remarks come across as greedy and heartless (because they are).

And I don’t think this is a problem that can be solved with a slight change in the rhetoric.

Social Security is Not Going Broke

By David Cay Johnston

May 4, 2012 from Reuters

Which federal program took in more than it spent last year, added $95 billion to its surplus and lifted 20 million Americans of all ages out of poverty?

Why, Social Security, of course, which ended 2011 with a $2.7 trillion surplus.

That surplus is almost twice the $1.4 trillion collected in personal and corporate income taxes last year. And it is projected to go on growing until 2021, the year the youngest Baby Boomers turn 67 and qualify for full old-age benefits.

So why all the talk about Social Security “going broke?” That theme filled the news after release of the latest annual report of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, as Social Security is formally called.

The reason is that the people who want to kill Social Security have for years worked hard to persuade the young that the Social Security taxes they pay to support today’s gray hairs will do nothing for them when their own hair turns gray.

That narrative has become the conventional wisdom because it is easily reduced to a headline or sound bite. The facts, which require more nuance and detail, show that, with a few fixes, Social Security can be safe for as long as we want.

SHIFTING TAX BURDENS

Let’s look at how Social Security taxes have grown in the last half century — a little-known tale of tax burdens shifted off the rich and onto workers. From 1961 through 2011, the year covered in the last Social Security report, Social Security taxes exploded from 3.1 percent of Gross Domestic Product to 5.5 percent.

Income taxes went the other way. The personal income tax slipped from 7.8 percent of the economy to 7.3 percent, with most of the decline enjoyed by people in the top 1 percent of incomes. The big drop was in the corporate income tax, which fell from 4 percent of the economy to 1.2 percent. Notice that the corporate income tax fell by 2.8 percentage points, an amount almost entirely offset by a 2.4 percentage point increase in Social Security taxes.

The effect has been to ease the taxes of the wealthy, while burdening the vast majority of workers. Considering how highly ownership of stocks is concentrated, the benefit of those lower corporate taxes went overwhelmingly to the top 1 percent and, especially, the top 1 percent of the top 1 percent. Considering that the Social Security tax is capped, most of the burden of the increased payroll tax went to the bottom 90 percent.

Now let’s look at how that $2.7 trillion Social Security surplus arose. In 1983, President Ronald Reagan sponsored an increase in Social Security taxes, changing the program from pay-as-you-go to collecting much more taxes than it paid in benefits. The idea was to have the Boomers prepay part of their old age benefits. The extra tax was supposed to pay off the federal debt and then be invested in federal bonds. Instead, Reagan ran huge deficits, violating his 1980 promise to balance the federal budget within three years of taking office.

FINANCING TAX CUTS

In my view, building the Social Security surplus has had two major effects.

One effect was to finance tax cuts for those at the top, whose highest tax rate fell during the Reagan years from 70 percent to 28 percent, and for corporations, whose rate fell from 50 percent of profits to 35 percent. Those with less subsidized those with more.

The other effect was a huge increase in consumer debt, as Americans saddled with higher Social Security taxes took out loans to cover other needs. Stagnant wages played a role, but the $2.7 trillion Social Security surplus is also a factor in a $1.5 trillion increase in consumer debt since 1984.

It is no wonder consumers have gone into debt. Paying a tax in advance is expensive. Indeed, the first lesson in tax planning is that a tax deferred for 30 years is effectively a tax avoided, provided the money is invested wisely. The reverse is also true. A dollar of tax paid in 1984 cost $2.20 in today’s dollars, and that’s before counting the interest that could have been earned.

With the coming bulge in retirees, Social Security will start to pay out more than it takes in 2021, according to projections in the latest annual report. Under current law the program would be able to pay only about three-quarters of promised benefits starting in 2033. But that scenario can easily be avoided through a combination of four policy changes that would ensure full benefits continue to be paid, though I fear Congress will continue to do nothing.

One would be restoring the Reagan standard that 90 percent of wages are covered by the Social Security tax, which now applies to only 83 percent of wages. If we went back to the Reagan standard, the Social Security tax would apply to close to $200,000 of wages this year instead of $110,100.

Two would be raising the Social Security tax rate by two percentage points. That tax hike could be smaller or even avoided if, three, we reignited the growth in wages. Median wages have fallen in 2010 back to the level of 1999. And, four, it would help just as much if we created millions more jobs, which since 2000 have grown at only a fifth the rate of population increases.

Under current tax rules, the Social Security shortfall for the next 75 years is $8.6 trillion.

But there is a much bigger problem that needs our attention. If we continue national security spending at current levels, with no future increases, the total cost would be $63 trillion, based on the figures in President Barack Obama’s latest budget. Unlike spending on Social Security, much of the national security spending goes overseas. And that makes us worse off.

What the World Needs Now? - More Cooperation or More Competition?

by John Lawrence

When I was a graduate student at UCSD in the midst of the anti-war movement, protesting the war in Vietnam, I went to the library and pondered what would make the world a better place, what could I do to contribute something that might make war less likely and peace time activity more likely. I concluded that more cooperation was needed. More ways to resolve conflicts big and small. For example, democratic voting systems resolve conflicts in such a way that solutions are found that are acceptable to all parties for the most part. I took it for granted that institutions that provided for more cooperation and less competition were more desirable. I thought that this was what the Enlightenment was all about. My heroes were the Enlightenment superstars: Jeremy Bentham, John Stuart Mill, Rousseau, Diderot, Voltaire, John Locke.

As I sat there and went through the stacks, I discovered another field and another set of superstars. Social choice has a long history going back to the French Enlightenment philosophers, the Marquis de Condorcet and Jean-Charles de Borda, and even further back than that. One of the 19th century superstars in this field was none other than the Rev. C. L. Dodgson otherwise known as Lewis Carroll, the author of Alice in Wonderland. These guys came up with voting systems which are essential to democracy and are essential to the whole notion of cooperation and conflict resolution. The most recent work in this field was by Kenneth Arrow who published a book Social Choice and Individual Values in the 1950s which attempted to generalize conflict resolution in society in both the political and economic spheres. Arrow concluded that this was impossible and came up with his famous Impossibility Theorem which was a generalization using sophisticated mathematics of the paradox of voting that was known to Condorcet hundreds of years ago. Therefore, Arrow concluded democracy was impossible and any economic system other than capitalism was impossible too. Hmmm, I thought, this is obviously a cop-out because some political and economic systems are more desirable than others and Arrow has done nothing except to throw cold water on any framework that could consider these. I took it as my self-assigned task to prove that Arrow was wrong, that social choice is possible. My work can be found on the website Social Choice and Beyond.

My latest work is "Politonomics: A Meta-Theory Encompassing Political and Economic Decision Making." This is from the Abstract:

In “Social Choice and Individual Values,” Kenneth Arrow said , “In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make ‘political’ decisions, and the market mechanism, typically used to make ‘economic’ decisions.” This paper resolves that dichotomy by developing a meta-theory from which can be derived methods for both political and economic decision making. This theory overcomes Arrow’s Impossibility Theorem in which he postulates that social choice is impossible and compensates for strategic voting, an undesirable aspect of decision making according to Gibbard and Satterthwaite. Thus the politonomics meta-theory spawns both political and economic systems which are indeed possible and which cannot be gamed. In a typical voting system the outcome of an election among several candidates results in one realized outcome – the winner of the election - which applies to all voters. In a typical economic system, a consumer may choose among a variety of possible baskets of consumer items and work programs with the result that multiple realized outcomes are possible with a unique or quasi-unique outcome for each worker/consumer. As the number of possible realized outcomes of a political-economic decision making process increases, the process becomes more economic and less political in nature and vice versa. We show that as the number of possible realized outcomes increases, voter/consumer/worker satisfaction or utility increases both individually and collectively.

I never considered, as I sat there pondering, that there would be people who would argue that what the world needed was not more cooperation but more competition, but, as I sit here today, I realize that the whole conservative right wing is in favor of just that. They want not more cooperation in either the political or economic realm but more competition believing that only winners should prevail and human progress is only possible when you give free reign to those among us who are the most talented, intelligent and ambitious. They believe that competition will result in the strongest among us winning just as Nietzsche believed that a good war hallows every cause. Their ethic is that the naturally gifted elite should prevail, and they are not concerned about what happens to the rest of us or of who is trampled in the process. This is also the philosophy of Ayn Rand as espoused in her novels Atlas Shrugged and The Fountainhead.

The debate today about increasing inequality in the world has to do with the prevalent conservative belief that only the strong should survive and be promoted and that freedom should preclude equality as a value. The rich should get more tax breaks because they are the true instigators of human progress and should be catered to at every turn. Perhaps a few crumbs will trickle down to the rest of us. This kind of thinking is counter to the Enlightenment and is fast returning us to a neo-Dark Age. No more is human progress to be measured in reduction of poverty and extension of basic services like health care to everyone. It is to be measured in terms of the great advances to human civilization like iPads, iPods and iPhones. People who are capable of coming up with these advances should be cut every break and none of the billions of dollars they make should be transferred by government to the least of these among us like the homeless, the poverty-stricken and the destitute because, well, they are the least among us, not the best among us who should be given every break.

Nevertheless, I remain in the camp of those who think that more cooperation in the political and economic spheres will do more for human progress than more competititon. I also have spent about 40 years in my spare time trying to prove that Arrow was wrong, that social choice is not impossible and that democracy in both the political and economic spheres is not only possible but desirable. This has a lot to do with voting systems, democratic institutions and constitutions but also with cooperative economic systems in which freedom is seen not as the freedom to make money at other people's expense (the losers in the competitive struggle) but the freedom to work as much or as little as one chooses and in accordance with one's preferences as much as possible. Freedom from work is for many people just as desirable a goal as the freedom to make billions of dollars, and wealthy people who don't have to work would be the first to tell you that. Economic democracy in my view is more desirable than cutthroat capitalism, and can be practiced not only at the national level, but at the enterprise level in the form of co-ops like the Mondragon Corporation.

Marx's famous definition of the "good society" was "from each according to his ability, to each according to his needs." This of course was perverted in defining communism as a society where all the wealth created by those who had a lot of talent and ability as well as a strong work ethic combined with those who had not so much in those categories would be thrown into a pot and then divided up in equal portions and handed out by the government. Such need not be the case in achieving the "good society." The "needs" part is pretty basic and could probably be accomplished with abouit 10% of the wealth that exists in the world today. Most people can provide for their own needs - no transfer necessary. There are some who cannot and to transfer a small part of the wealth of the wealthy to provide for their basic needs seems to me to be no more than humane. That still leaves the vast amount of wealth in the hands of the wealthy. In other words if you total up how much it would cost to provide for all the basic needs of everyone in the world and tote up how much wealth there exists in the world, it would take a fraction of all that wealth to provide the basic needs for everyone who cannot provide for their basic needs themselves who turn out to be mainly children, seniors and handicapped (whether physically or mentally) people.

A recent documentary by German TV station Deutsche Welle pointed out that half the world's production of food is wasted because super markets only want perfect vegetables and ones with slight blemishes are thrown out even though they are perfectly edible. Shelves need to be fully stocked with bread right up till closing hours even though any bread left over at the end of day will be thrown out as "day old." All the food that is thrown out by advanced nations is enough to feed all the world's hungry three times over although no governments or other institutions, much less the supermarkets themselves, seem to be interested in organizing that effort. This is what I mean by the fact that the basic needs of all the world's people could be satisfied without subtracting much if anything from the world's wealthy although a lot of them would admit they do not need incomes of millions of dollars a day like the Fortune 400 billionaires have.

Another documentary noted that Finnish school children have the highest test scores in the world despite the fact that they have one of the world's shortest school days with 15 minutes intermissions between classes during which time they are encouraged to go outdoors and play. All grades have large amounts of music, art and self-defined projects. They don't teach to the test. They are concerned with the development of each student as an overall human being not just as some super competitive cog in a nationally competitive machine. The Chinese on the other hand have the opposite approach demanding that children learn by rote methods and extra hours in school and at study. The Finnish schools are all public and everyone is accepted into every class. There are no advanced classes or tracking of students into lesser classes if they are not among the elite intellectually. Everyone is thrown in together; yet they have the best outcomes of any country in the world on standardized international tests. Egalitariansim seems to gain the best results.

An egalitarian ethic in which the concern is for the development of the whole human being rather than a promotion of just those who have superior abilities in accordance with a competitive ethic seems to me to be the most humanitarian way to treat both children and adults. The 1948 Universal Declaration of Human Rights already provides for most of the "from each according to their abilities, to each according to their needs" ethic. It calls for free health care which most advanced socierties, with the exception of the United States, already provide. It calls for free education and other public institutions and covers most basic human needs including food and shelter.

Here are Articles 25 and 26:

Article 25.

• (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
• (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

Article 26.

• (1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
• (2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
• (3) Parents have a prior right to choose the kind of education that shall be given to their children.

All the basic needs of everyone on the planet could be provided for without subtracting much of the wealth of the rich since most people can provide for at least their basic needs without any transfer of wealth whatsover being necessary. Interestingly, the US among other nations does provide food security for the poor through its food stamps program. And of course seniors are provided for through Medicare, Medicaid and Social Security, programs which conservative free marketers are anxious to change or eliminate.

I am with the Enlightenment thinkers especially the English utilitarians like Jeremy Bentham and John Stuart Mill who thought about the happiness of society as a whole and concluded that everyone counted, not only the ones with exceptional talent, ability and other admirable qualities. A society should be judged by how it treats "the least of these my brethren" which is the core and essence of Jesus' teachings but, sad to say, not the core and essence of Christianity as it exists in the world today. Perhaps we should start thinking about an alternative constitution for the US which has the world's oldest constitution (236 years old!) while being the world's youngest advanced nation. Other societies including most European societies while being older than the US have newer constitutions. As far-sighted as the Founding Fathers were, a new and updated constitution incorporating not only political but also economic rights along the lines of the UN Declaration of Human Rights would do much to right the wrongs and shortcomings of present day America and the world.

Greenspan's Fraud: Overtaxing the Poor; Reducing Taxes on the Rich

by John Lawrence

Greenspan's Fraud is the title of a book by Dr. Ravi Batra. In light of what's currently happening in Washington regarding the extension of the payroll tax cut, it is prescient. Greenspan engineered an increase in the payroll or FICA or Social Security tax in the 1980s at the behest of then President Ronald Reagan which effectively raised taxes on the poor while Reagan cut the income tax and effectively lowered taxes on the wealthy. The ostensible reason for this increase in payroll tax was a crisis in funding Social Security 35 years out (sound familiar). Republicans worked themselves and the American public up into a lather over a non-existent Social Security crisis. The real purpose of this supposed crisis was to shift the tax burden from the rich to the poor just as it is with Republicans today who don't really want to extend the payroll tax cut engineered by President Obama. Instead, they have pledged Grover Norquist not to raise taxes except ... they might make an exception for the payroll tax. In other words their pledge is to not raise taxes on the rich while they have no problem with raising them on the poor. They are showing their true colors ... again: protect the finances of the rich while exploiting those of the poor and middle class. Such was the brilliance of Greenspan's plan in the early eighties that hardly any Americans knew or realized what he was actually up to including the Democrats who went along with it. Personally, I've been self-employed since 1976, and I never realized that Greenspan had doubled my FICA taxes in 1983 so that I ended up paying higher payroll taxes than rich people paid in capital gains tax. Such is the reality of Republican subterfuge.

From Greenspan's Fraud, the book:

Greenspan's economics has extracted trillions of dollars in taxes from the American middle class and sharply enriched the rich, who are essentially people like himself and his friends - multimillionaires, politicians, and businessmen. ... His policies have led to the pooring of America as well as the world, while a tiny minority has raked in millions, even billions, in profit. He may be a legendary figure in the eyes of many, but when you carefully explore what he has wrought, the aura of public reverence around him can evaporate quickly. This book will show that because of Greenspan's beliefs or support for certain policies, family income and real wages have declined for a broad swath of Americans, while CEOs have earned millions in stock options and capital gains; US manufacturing has been decimated and the country is saddled with more than half a trillion dollars of trade deficit per year; nearly two million lucrative jobs have vanished since 2000, and millions of people have been downsized.

In December 1981 President Reagan selected Greenspan to chair a blue ribbon commission to "save" social security. When it became obvious that the Federal budget deficit was ballooning due to Reagan's 1981 tax cuts, Greenspan ginned up the Social Security crisis which allowed the payroll tax to be increased, and, since Social Security and the general fund had been part of the unified budget since 1969, the increase in revenues from the increased payroll taxes masked the Federal budget deficits due to Reagan's tax cuts. In simple terms the excess revenues from social security taxes offset the deficit in the general fund due to Reagan's tax cuts. But rather than raise the income tax, which would have increased taxes disproportionally on the wealthy, Greenspan's plan was to raise the payroll tax which is a tax primarily on the poor and middle class. In addition Greenspan also later proposed cutting benefits for social security beneficiaries.

The Reagan-Greenspan theology required that the income [taxes] remain small even if it became necessary to coax money out of the destitute because this is essentially what the commission proposed in 1983. Instead of the general budget that actually faced a massive deficit, the commission insisted that the Social Security Trust Fund faced a giant shortfall, some 30 to 75 years in the future, when baby boomers would retire in large numbers. Never mind that in 1983 itself, the Trust Fund's receipts began to rise because of increasing employment, while the general budget suffered an even larger deficit of $208 billion. In fact, by the end of the year, the Fund earned a small surplus. But the Greenspan commission relied on "forecasts" that showed a gargantuan deficit looming in the Fund, not five to ten years hence, but more than half a century later. It proposed eliminating the Social Security deficit expected from 1983 all the way to 2056 by overtaxing workers in advance, and generating an adequate surplus in the process.

So the money taken in in payroll taxes which was not used to actually make payments to social security recipients was transferred to the general fund and used to defray the budget deficits brought about by Reagan's tax cuts on the wealthy. In place of the money so used non-marketable Treasury bonds of an equivalent amount were placed in the Social Security Trust Fund (SSTF). Today they amount to $2.5 trillion. This is the amount owed to the SSTF by the general fund. Every year the surplus payroll tax revenues were spent in the general fund and IOUs of a similar amount were placed in the SSTF. The surplus dwindled over the years until today more money is actually being paid out to Social Security recipients than is being taken in in payroll taxes. That means that those non-marketable Treasury bonds in the SSTF must be cashed in and money taken from the general fund to make up the difference. Hence the general fund must accumulate an even larger deficit or it must raise taxes to make up the difference. This is why Republicans are again insisting that Social Security is in crisis. Pay-go demands that the amount paid out from the general fund to make up the difference between what is received in payroll taxes and what is paid out be paid for. Republicans want to make up the difference, as Greenspan wanted to do years ago, by cutting benefits. What they don't want to do is to raise income taxes on the wealthy to do so. Instead of honoring the special non-marketable Treasury bonds in the SSTF which would require either higher deficits or raising the income tax, Republicans want to cut benefits either by raising the retirement age or cutting the cost of living allowance. More extreme right wing Republicans, such as Paul Ryan, want to privatize social security so that the IOUs in the SSTF never will have to be honored. Both Paul Ryan and Alan Greenspan are devotees of Ayn Rand whose philosophy consisted mainly of unadulterated greed and to hell with the poor and middle class.

But Greenspan reserved his most draconian tax increase for the self-employed.

The Greenspan proposal would prove to be a crippling burden for the poor and the self-employed, because it sought to lift rates over and above those provided by a 1977 law. Today, [2005] a full-time minimum-wage earner, working for 2000 hours annually at a wage of $5.15 per hour, earns about $10,000 annually On that she has to pay a Social Security and Medicare tax of 7.65 per cent, or $765. which leaves her with $9,235. Add to this a state and local sales tax averaging 8% in big cities, and she forks over another $739 to meet her minimum consumption. This sum of over $1500 in taxes can make a difference between homelessness and living in an apartment, between three meals a day and malnourishment, between a doctor visit and living with illness.This is why the commission's tax propopsals amounted to coaxing money out of the destitute, i.e., the millions who subsist on the minimum wage. A worse outcome awaited for those working for themselves. Today [2005], a self-employed individual earning $30,000 a year, has to pay nearly 15% in Social Security taxes. Once $4500 is deducted in self-employment contributions, an individual is left with little to support a family, especially when his income is subject to the sales and income tax as well.

The Social Security or FICA tax is regressive; there are no deductions or exemptions. It's a flat tax that everyone, rich or poor, pays at the same rate. And it is only paid on the first $106,000. of income. All income over that amount is tax free as far as FICA taxes are concerned. This is why it's essentially a tax on the poor and middle class while the income tax which has higher tax rates for higher income earners is progressive and hits the rich more than the poor although today the highest tax bracket is 35% for income over about $380,000. That means that millionaires and billionaires pay income tax at the same rate as someone earning $380,000. There are no higher tax brackets for the truly rich.

Greenspan convinced his fellow commissioners and Congress to go along with his scheme and his proposals were enacted as Social Security Amendments in 1983. Greenspan's proposals also guaranteed that the maximum taxable wage base (which today is $106,000) would increase year after year so that Social Security taxes would increase on an annual basis. The reality of the situation is that the payroll tax increases of 1983 have been used primarily to fund the tax cuts of wealthy individuals and corporations. They don't want to give up the financial benefits they gained by having payroll taxes reduce their income taxes for 38 years. So they are in the process of reducing social security benefits by a combination of raising the retirement age, scaling back cost of living adjustments or possibly raising the payroll tax rates. The point is that there is no Social Security crisis if the non-marketable Treasury bonds in the SSTF are honored which is essentially the social contract entered into in 1983 by Greenspan and Reagan. If in fact these Treasuries were marketable instead of unmarketable bonds, they could be redeemed on the open market by the SSTF. In that case they would simply be rolled over by the Treasury Department and effectively become part of the ever increasing deficit and national debt. Alternatively, revenues could be sought from other sources most likely the income tax which has been kept low for decades due to the pilfering of the SSTF by the general fund.

Since Congress controls the rules regarding Social Security, they can change them at any time without any recourse by the American people. This means that they can bypass the implied contract to reimburse the IOUs in the SSTF with impunity effectively finessing the whole situation. A better way to place more money in the SSTF would be to lift the $106,000 cap on income subject to the Social Security tax meaning effectively that the rich would pay Social Security tax on all of their income, the same way the poor do.

Other posts on Social Security are the following:

1. You'll Never Hear a Republican Mention the $2.5 Trillion in the Social Security Trust Fund

2. Is Social Security Broke Or Solvent?

3. A Way to Make Social Security Solvent for the Next 75 Years

4. New Study Identifies Revenues for Doubling of Social Security Payout

5. The Only Social Security Reform Worth Considering: Raising the Ceiling on Income Subject to It

6. Schakowsky's Plan to Save Social Security, Reduce Debt, Grow the Economy

7. Remove the Cap On Social Security and Means Test It

8. Social Security Taxes Fall Unfairly on the Poor Self-Employed

9. Is Social Security a Government Sponsored Ponzi Scheme?

10. More on Social Security

 

Time to Retake Politics From the One Percent in Both Political Parties

Published on Monday, November 28, 2011 by CommonDreams.org

 

by Dean Baker

The country is still celebrating the inability of the supercommittee to cut Social Security and Medicare, but it is important to move on from this victory to retake control of the political debate from the One Percent. As it stands, the One Percent are insisting that the country genuflect over the non-problem of the budget deficit, at a time when tens of millions of workers are unemployed or underemployed, millions of people are facing the loss of their homes and tens of millions of baby boomers are approaching retirement with little other than their Social Security to support them.

The deficit is the agenda of the One Percent. There is no reason that the rest of us should be concerned about budget deficits when the rest of the country is struggling with the economic disaster created by the greed and incompetence of the One Percent.

This is not a statement of morality; it is a statement based on economic reality. Budget deficits can be a problem when an economy is near full employment and the deficit can be pulling resources away from private investment, thereby slowing growth. However, it is not a problem with large numbers of unemployed workers and vast amounts of excess capacity.

This is what the financial markets are telling us every day as interest rates on long-term government bonds hover near 2.0 percent. If deficits were really crimping the economy, we would be seeing interest rates of 6 or 7 percent, or even higher. The deficit hawks do not have an economic case to support their argument, just money and influence.

In the longer term, the deficit hawks can point to projections of outsized deficits, which they invariably attribute to Social Security and Medicare. The first part of this story is completely untrue.

Under the law, Social Security is financed from its designated tax. It, therefore, cannot contribute to the deficit unless Congress changes the law. (The payroll tax credit in 2011, which was replaced with general revenue, is an exception to this rule.)

According to the most recent projections from the Congressional Budget Office, Social Security benefits will be fully funded through the year 2038. After that date, if Congress does nothing to increase revenue, then the program would pay a bit more than 80 percent of scheduled benefits. (This would still be about 10 percent more than current retirees receive since benefits are projected to rise by approximately 1 percent a year.)

The real story of the soaring long-term deficits is exploding Medicare costs, which are in turn driven by our broken health care system. We already pay more than twice as much per person for our health care as the average for other wealthy countries, with little to show in the way of outcomes. This gap is projected to continue to grow in the years ahead.

To anyone who looks at the facts, the obvious answer to our deficit problem is fixing the health care system. This is difficult to do given the enormous political power of the pharmaceutical industry, the insurance industry, highly paid medical specialists, and the other members of the One Percent who profit from the waste in the system as it exists now.

If we can't immediately change the system, then why not take advantage of the gains from trade? If we change rules to make it possible for Medicare beneficiaries to buy into the health care systems in other countries or make it easier for patients to have medical procedures done at far lower cost elsewhere, it should be an enormous win-win, offering gains that could be in the trillions of dollars. And what free-market fundamentalist can argue against the principle of giving people a choice?

In fact, conservatives and self-described free traders run screaming from the idea of opening medical care to trade. They want trade that will lower the wages of auto workers and textile workers by putting them in direct competition with low-paid workers in the developing world; they hate trade when it threatens to reduce the income of the pharmaceutical industry, the insurance industry, and others in the One Percent.

It's time to expose the lies for what they are. The One Percent have rigged the deck over the last three decades to accomplish the most massive upward redistribution in the history of the world. These are not people who care about budget deficits or free trade or free markets. They care about making themselves richer at the expense of everyone else.

© 2011 Dean Baker

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.

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Inchoate Demands of Occupy Wall Street: Can They Be Accomplished Without a Revolution?

by John Lawrence

Much has been said about Occupy Wall Street's lack of particular demands. However, their inchoate demands are numerous and plentiful, and what they amount to when totaled up is a complete repudiation of the organization of business and government and the way they are now constituted which isn't the way the Founding Fathers envisioned them at all. The way business is being conducted in the US amounts to a transmogrification of American values under the guise of an evolution of those values. America has morphed into a pseudo republic based on lies and hypocrisy, on militarism in the name of rationality, on the worship of money and the legitmation of any means to obtain it. Without getting specific the Occupy movement represents a repudiation of these abhorrent values which represent the corruption of everything Americans used to hold dear in the service of unmitigated greed and a glorification of unlimited wealth regardless of the plight of the vast majority of the people.

What the Occupy movement really wants in a vague indefinite way among other things is

(1) Getting money out of politics. That encompasses two ideas: that political campaigns should be publicly funded instead of funded by Wall Street and other wealthy interests and that lobbyists should be gotten out of Washington. Right now 40,000 lobbyists swarm Capitol Hill writing legislation in favor of the corporations that pay them an average of $300,000. starting salary to obtain legislation that stacks the cards in the corporations' favor. Is it any wonder tax policy favors the rich and exploits the poor? Does anyone truly think that getting money out of politics can be accomplished without a revolution? No way. The wealthy and the powerful will never back off. They have morphed American democracy into a plutocracy, and Democrats, who by and large have been bought off by the same wealthy interests, are not a true opposition party. They talk out of one side of their mouth while fund raising out of the other. True democracy cannot exist again until politics becomes something other than the tool of monied interests.

(2) The rich must pay their fair share of taxes. Tax policy as a result of frenetic lobbying has favored the rich while exploiting the poor. That's the whole purpose of lobbying: to seek tax advantages for the rich at the expense of the poor. That's the whole raison d'etre for lobbyists getting paid their obscene salaries. Reagan and Greenspan were experts at raising taxes on the poor while lowering them on the rich and at the same time obfuscating what they were doing and convincing the middle class that taxes were being fairly raised or lowered on everyone. Not true. Implicit in the tax code is favorable treatment for the upper 1% and an albatross around the neck of the poor and middle class - the 99%. Wealthy Wall Streeters pay only a 15% capital gains tax and benefit from "carried interest" which gives them the same tax rate no matter how many billions they make. And Republicans fight like hell to preserve these tax advantages for the rich, every last penny of them. They will never agree to tax capital gains as ordinary income, a millionaires's tax or a financial transactions tax. Does anyone think that any of these things can be accomplished without a revolution?

(3) The filibuster rule. The most antidemocratic tool of the Republican dominated Senate. A return to democracy would require the abolition of the filibuster rule. Does anyone think this can be accomplished without a revolution? The filibuster rule means that the majority does not rule and never will again as long as the present regime holds sway.

(4) Health care as a right. Medicare for all. Medicare's overhead is 3%. Private health insurance's overhead is 30%. Health insurance corporation CEOs made an average of $11 million last year while the highest salary paid to anyone in Medicare administration was less than $200,000. That's the reason why health care is becoming so expensive with paltry outcomes. Private health insurance  corporations are under Wall Street's thumb. Wall Street demands higher and higher profits and increasing returns for investors. The result comes about from reducing the Medical Loss Ratio (MLR) which is the percentage paid out for actual medical care compared to the percentage paid out to investors and CEOs. I'ts a classic case of profit over people and again Wall Street is the culprit. Is there a theme developing here? Wall Street has its finger in every pie of the economy demanding that profits be placed over people. The Occupy Wall Street movement has pointed its finger at the exact culprit in every facet of American life that needs changing and Wall Street is at the heart of it. Does anyone think the US will join the rest of the world in providing a universal, cost contained health care system without a revolution? There is no way that "reform" will accomplish this. Obamacare was a valiant effort, but, ultimately, it is no complete solution, and its provisions are subject to being rolled back at the first opportunity by Republicans who want to eliminate not only Obamacare but also social security, Medicare, Medicaid and any other social program benefitting the poor and middle class.

(5) The student loan crisis. The heart of the student loan crisis is the privatization of the student loan industry. Instead of assisting or subsidizing students to get a college education, privatization has led to the exploiting of students in order to maximize profits. Again Wall Street is at the heart of the problem demanding higher and higher returns for investors. Instead of assisting students, the private student loan industry exploits them burdening them for life with debt which cannot be discharged in bankruptcy. Republicans and Wall Street worked together to change the law in 2006 which now requires students to pay for life to discharge their debt even going so far as to allow garnishing of their social security benefits. Democratic legislation under Obama has rolled back some of these draconian measures but has done nothing to reverse the bankruptcy law of 2006. Again Wall Street has been catered to and profits have been placed above people. Does anyone think students will ever be able to dischartge student loan debt in bankruptcy without a revolution?

(6) The foreclosure crisis. Wall Street was allowed to get completely off the hook with regard to mortgage loan modification. The performance of Obama's Home Affordable Modification Program (HAMP) has been underwhelming at best. Housing experts say the $1,000 payments mortgage servicers get for successful modifications, and the lack of consequences for disobeying program guidelines, don't provide enough incentive to modify many mortgages. The well intentioned Obama administration made mortgage modification voluntary on the part of the banks. Guess what? Wall Street has decided it would not "volunteer" to reduce its profits by giving underwater home owners a break. Again the middle class gets screwed in order to maximize Wall Street profits. What was Obama thinking? Does anyone think Wall Street will write down mortgages giving themselves a voluntary haircut without a revolution? Does anyone think Republicans will have a change of heart and suddenly decide to do the right thing with respect to the middle class against the wishes of Wall Street as long as they control at least one branch of Congress or even if Democrats control both branches of Congress and the Presidency as long as the filibuster rule is in effect? Does anyone think mortgages will ever be modified favoring the middle class without a revolution?

(7) Jobs. Does anyone think the government will ever create jobs directly by reinstating an FDR style Works Progress Administration (WPA) or Civilian Conservation Corps (CCC) or even an infrastructure bill without a revolution? Will it ever be the policy of the US to be the employer of last resort without a revolution? It'll never happen. Instead, homelessness on an ever increasing scale will become a "normal" part of American life because this is perfectly consistent with capitalism. The impoverishment of millions will become normalized. As Herman Cain says, "If you don't have a job, blame yourself." THe US will join the rest of the underdeveloped world in a world class regression to a society composed of the very rich and an extremely impoverished class of everyone else.

(8) Corporations are people; money is speech. The Citizens United Supreme Court decision verified that corporations are people and money is speech. In particular corporations can spend as much money as they want on political advertising. They have an unlimited right to spend as much as they want to get the candidates elected who will do their bidding. They can propagandize to their heart's content, and the easily led lemmings will buy it and follow them off a cliff. There is no other consideration in electoral politics than money. Democracy is irrelevant; plutocracy shall rule the day. Does anyone think that anything short of a revolution will change this state of affairs?

(9) The war in Afghanistan should be ended, and the $2 billion per week that the US is spending there should be spent on improving the lives of American citizens. The military-industrial complex budget should be cut in half. The US spends more on its military than all the rest of the world combined. It has over 1000 military bases located in just about every country in the world. This money is being wasted because defense contractors have some of the strongest and most prolific lobbyists on Capitol Hill. According to Prophets of War, Lockheed Martin and the Making of the Military-Industrial Complex by William D Hartung: Lockheed Martin "spent $15 million on lobbying and campaign contributions in 2009 alone. Add to that its 140,000 employees and its claim to have a prescence in forty-six states, and the scale of its potential influence starts to become clear. And while its current political activities are perfectly legal, the company has also been known to break the rules: It ranks number one on the database on contractor misconduct maintained by the Washington-based watchdog group Project on Government Oversight (POGO); according to POGO, Lockheed Martin has '50 instances of criminal, civil or administrative misconduct since 1995.'" So the military-industrial complex of which Lockheed Martin is the leading exponent uses its poltical influence in Washington to make sure it keeps its profits high as Wall Street demands. Again Wall Street is implicated as it demands the highest possible profits for its investors in the military-industrial complex.

Instead of overspending on the military-industrial complex, the US should adopt the model that was successfully used recently in Libya. Military goals were accomplished by joining with NATO partners to spread the cost, and not one American life was lost. Does anyone think the powerful defense contractor lobby will back down, and American taxpayer money will be spent primarily on benefitting the American people instead of trying to control and dominate the world without a revolution?

The social contract which implied that, if you studied hard, obtained a college degree and tended to your knitting, you would be rewarded with a good job has completely broken down. Corporations have no responsibility to provide anyone with a job. Instead their only allegiance at the behest of Wall Street is to their bottom line. Wall Street demands that they increase profits. They do so not by providing American jobs but by outsourcing jobs to wherever in the world labor is cheapest. Then they turn around and demand that their taxes be lowered and regulations be gutted, and say disingenuously that that is the only way they will hire more people. But they continue to outsource jobs even though their taxes are the lowest of any historical period since the Great Depression and they are sitting on $2 trillion in cash that they prefer not to use employing people. Instead they buy back their own stock and gamble on Wall Street.

So what is a college education worth these days? Not much. It does not represent the promise of a happy future but instead a burden of debt which may last a life time. The education industry goes on an advertising binge to convince potential students that the only way they will have a promising future is to matriculate and borrow money. Hopefully, students are waking up to this sham. A college diploma used to be a ticket of admission to employment with a corporation. Certainly most college diplomas do not prepare one to become self-employed, only  employed by others. If a person seeks to be self-employed, they do not need a college diploma in most cases. They don't need a ticket of admission to the corporate world in order to start their own business. Steve Jobs had no college diploma. Bill Gates has no college diploma. Larry Ellison has no college diploma. These are billionaires in the world of high tech. They do, however, want their employees to have college diplomas, and it matters little to them whether these employees come from the US, India, China, Korea or someplace else. In fact they prefer overseas college graduates because they will work cheaper. Most contractors and tradesmen do not need college diplomas, and the work they do for the most part is localized and can't be exported. A word to the wise ...

Each and every public space and institution is under attack by Republicans. Public schools, public parks, public libraries are being defunded as are public teachers, park rangers, librarians, police and firemen. Republican goals are to diminish public spaces and the jobs supporting them so that they can "drown them all in the bathtub" as Grover Norquist wants. Public spaces are being impoverished at the same time private wealth is being enhanced by every means available. Public America is being turned into poverty while private America gains. And when public spaces and public jobs are diminished, the poor and middle class suffer because the rich only use private spaces - private resorts, private universities, private security companies, private libraries, private schools. A country can be rich in private wealth but poor and in debt with respect to public wealth. Such is the fate of the US under Republican rule.

The Occupy Wall Street movement is joining with movements all over the world in waking up to the fact that Wall Street is at the heart of the world's problems. They are wise not to particularize their demands because then they would be offered some sham, watered down solution which would do nothing to curtail Wall Street's power and its dominance over not only America's but Europe's political systems. Neither the US nor the euro zone has the guts to stand up to Wall Street and its extensions in Europe because this might lead to another recession. Instead, they put bandaids on the present system in the hopes that they will be able to normalize things even though "normal" means the impoverishment and the indenturization of the majority of the people.

You'll Never Hear a Republican Mention the $2.5 Trillion in the Social Security Trust Fund

by John Lawrence

Republicans want to "reform" social security. They say social security is broke. Not so. There's $2.5 trillion in the Social Security Trust Fund (SSTF). The way the funding for social security works is this. Workers pay a payroll tax otherwise known as a FICA tax. The rate is 7.65% of gross earnings up to $106,000 for employees. Employers pay a similar amount. Any money earned above $106,000. is not subject to the FICA tax. 6.2% goes to social security and 1.45% goes to Medicare. In 2011 the rate was temporarily lowered to 5.65% for employees to spur the economy. If you're self-employed, you pay both the employee's and the employer's shares which amounts to 15.3% of your gross earnings which is more than what a hedge fund manager pays. They pay the capital gains rate of 15%. There are no deductions or exemptions for the FICA tax. So no matter how poor you are, there's no escaping paying 7.65% if you're other-employed or 15.3% if you're self-employed. Even if your income is so meager that you pay no income tax at all, you still pay FICA tax.

In 1983 and 1984 President Ronald Reagan conspired with Alan Greenspan to raise the FICA tax and reduce benefits ostensibly to protect the long term security of social security. They made social security benefits taxable income for one thing. This resulted in more money coming in in FICA taxes than was being paid out to social security recipients. Reagan and Greenspan took the balance of the money, after social security recipients were paid, and put it in the General Fund along with income tax receipts. They then put a similar amount in the form of a non-marketable, "special" Treasury bond in the SSTF. The ostensible rationale was that, when payouts exceeded FICA receipts at some later date, the SSTF would simply cash in those Treasury bonds as any investor would and use the money to make up the difference between FICA receipts and payouts to recipients. These "special" Treasuries supposedly had the "full faith and credit" of the United States Government. Only in reality they didn't. The reality is that Reagan raised taxes on the poor so that he didn't have to raise progressive income taxes on the rich. There is no $106,000. limit on income taxes. You pay income taxes on the full amount of your income not just the first $106,000. of it.

Well, the time is here when social security payouts exceed what is collected in FICA taxes. So the SSTF should simply be cashing in those "special" Treasuries to make up the difference, right? So why are Republicans in a tizzy about reducing social security benefits? Because the Reagan/Greenspan plan was a scam from the beginning. It was a Ponzi scheme on top of a fraud. They knew that at some later date Republicans could raise Holy Hell about social security and the American people would be too dumb to demand their benefits based on the $2.5 trillion that still exists in the SSTF. Instead they paid their regressive FICA taxes for years only to reach the point where those "special" Treasuries were supposed to be cashed in to continue paying out to social security recipients at the same rate. But what happens when the "special" Treasuries are cashed in? Why that amount has to be paid out of the General Fund back into the SSTF so that it can make payments to recipients. That means that the government either has to raise income taxes or other forms of revenue or has to borrow the money which is to say that it has to issue marketable Treasury bonds to investors which it has to pay interest on. These marketable Treasuries then get added to the deficit and the national debt whereas they weren't counted as part of the debt as long as they existed in the SSTF in the form of "non-marketable" Treasury bonds.

So the government either has to issue marketable Treasuries to investors or raise taxes to pay back the SSTF when it cashes in its Treasury bonds in order to make up the difference. But you will never hear Republicans mention the fact that there is $2.5 trillion in the SSTF which has the "full faith and credit" of the US government. Instead, they have their panties in a wad over the fact that taxes would have to be raised or the national debt would have to be increased every time the SSTF cashes in some of the Treasuries it holds. So Republicans want you to believe that social security needs to be "reformed", that benefits must be reduced in order to keep taxes low and reduce the deficit. They want you to watch the movie over here while ignoring the reality over there. I have explained all this in a previous blog.

So all that would be necessary is for Americans to demand their rights based on the fact that they have paid into social security with the understanding that the money in the SSTF would be paid out to social security recipients and, until that money is depleted, there should be no reason to lower social security payouts or benefits, just as Reagan and Greenspan promised and under the "full faith and credit" of the American government. But here is the shocker. As it turns out a Supreme Court decision (Flemming vs Nestor) determined that no individual American has a claim on the funds in the SSTF even if he or she paid into it over their whole working career. Furthermore, Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." So all that would be necessary to do away with social security altogether is for Republicans to gain control of all three branches of government. They then could just abolish social security completely and legally. Think it couldn't happen. Consult the Tea Party crowd and the rabid right wing libertarians and the Ayn Rand acolytes.

I maintain that Reagan and Greenspan knew exactly what they were doing. They created a regressive tax on the American poor and lower middle class that they knew could be scammed at a later date when payouts exceeded what was paid in or in other words when the regressive tax had lost its usefullness as a supplement to the General Fund. With all the concern about the debt crisis today and all the anxiety over whether or not the US will default on its debts, no one is the least bit worried over whether the US will default on its "special" Treasuries held in the SSTF. The default on Treasuries in the SSTF is not even on anyone's radar - least of all the bond market's. The rating agencies are not the least bit concerned about downgrading the US AAA credit rating because of default on the "special" Treasuries. Why? Because it knows that Congress can simply change the rules at any time either by reducing benefits or by raising FICA taxes to guarantee that these non-marketable "special" Treasuries will never be converted into marketable Treasuries! So the Reagan/ Greenspan plan consisted of a fraud on top of a Ponzi scheme. All that would have been necessary to guarantee the legitimacy of the bonds in the SSTF in the first place would have been to make them marketable Treasury bonds. In a previous comment Art a Layman said that the SSTF actually did have the right to purchase Treasuries and other securitites on the open market. If so, why didn't they do it? They simply could have purchased Treasuries and other securities on the open market when FICA taxes exceeded payouts. But then that money couldn't have been transferred into the General Fund and used for Federal expenditures! However, the bonds held by the SSTF would have been redeemable or salable just like any other investor owned Treasury. The SSTF would then have had enlarged fiduciary reponsibilities to invest and manage their investments wisely. This is what most countries which have sovereign wealth funds actually do. Norway's sovereign wealth fund which provides pensions for Norwegians actually invests in the open market in a basket of securities. But Reagan and Greenspan knew what they were doing when they didn't reform social security in this way. They knew that they were essentially raising taxes on the poor and lower middle class in lieu of raising taxes on the rich.

The Federal receipts from FICA taxes are almost the same as the Federal receipts from income taxes - both FICA taxes and income taxes constitute approximately 40% of Federal revenue receipts. This was the plan all along. Now when the Democrats want to raise taxes on the rich, Republicans call this heresy. They won't stand for raising taxes on the rich, but they didn't have a problem when regressive taxes on the poor were raised by Reagan and Greenspan, and these have been in effect for over 30 years. And the American public is not even aware. Again it's watch this movie over here and ignore that reality over there. Congressman and Tea Partier Joe Walsh doesn't want to have his children have to pay off the national debt, but the fact that he's over $100,000. behind in child support payments doesn't seem to bother him at all.

I am not against social security reform, only the kind of social security reform Republicans would bring us which amounts to cutting benefits on the poor and middle class and raising regressive FICA taxes. Instead, what I propose is a drawdown of the "special" Treasuries in the SSTF. This would provide benefits at current rates for the next 25 years or so. At that point social security FICA taxes could be enhanced very simply by raising the cap which presently is $106,000. By taxing the rich on their whole income instead of just the first $106,000., social security could be made solvent into the indefinite future. Any positive balance in the SSTF at that time should be invested in marketable securities including but not limited to US Treasury bonds. Furthermore, benefits could be reduced for the rich while enhancing benefits for the poor. People with retirement incomes over $100,000. don't need an additional $1000. a month in social security benefits. This money would be better spent enhancing the incomes of those with little or no retirement income other than social security. However, social security should still be there if for some reason the retiree with $100,000. in retirement income suddenly lost that income. So increasing benefits for the elderly poor while reducing benefits for the elderly rich would be a social security reform that I would endorse. Not all social security reform is bad, just social security reform brought to you by Republicans. Democrats should embrace social security reform based on democratic principles not simply reject any and all reform out of hand.

But again Republicans are demagoguing and being their usual duplicitous selves when they say social security is in trouble. It's not. They want you to watch their movie over here while ignoring the reality over there. Granted their movie is more entertaining than the reality, and American consumers would have to exert some effort to find out what the reality actually is. They might have to pull themselves away from their reality shows and football games to do some research. What! Should the average American be expected to do "research" instead of relying on the "research" conducted by Fox so-called News and Rush Limbaugh? And as this movie is being played out, the reality is that the Republicans in Congress just want to reneg on the "full faith and credit" of the American government when it comes to the Treasuries in the SSTF while the bond market could care less because after all those Treasuries represent money owed to the American people, not to wealthy investors.

The Only Social Security Reform Worth Considering: Raising the Ceiling on Income Subject to It

by Robert Reich

Friday, July 22, 2011

The very idea that Social Security might be on the chopping block in order to pay the ransom Republicans are demanding reveals both the cravenness of their demands and the callowness of the opposition to those demands.

In a former life I was a trustee of the Social Security trust fund. So let me set the record straight.

Social Security isn’t responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.

Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.  

But why should there even be a problem 26 years from now? Back in 1983, Alan Greenspan’s Social Security commission was supposed to have fixed the system for good – by gradually increasing payroll taxes and raising the retirement age. (Early boomers like me can start collecting full benefits at age 66; late boomers born after 1960 will have to wait until they’re 67.)

Greenspan’s commission must have failed to predict something. What?

Inequality.

Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation.

Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission’s fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.

It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved.

So there’s no reason even to consider reducing Social Security benefits or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling.

[This post is drawn from one I posted in February — before Social Security was as on the chopping block]

Congrats to the Gang of Six, the Powerful, the Wealthy, and Multinational Corporations

Published on Thursday, July 21, 2011 by CommonDreams.org

by Bernie Sanders

If there was ever a time in the modern history of America that the American people should become engaged in what's going on here in Washington, now is that time. Decisions are being made that will impact not only our generation but the lives of our children and our grandchildren for decades to come, and I fear very much that the decisions being contemplated are not good decisions, are not fair decisions.

There is increased understanding that defaulting for the first time in our history on our debts would be a disaster for the American economy and for the world's economy. We should not do that.

There also is increased discussion about long-term deficit reduction and how we address the crisis which we face today of a record-breaking deficit of $1.4 trillion and a $14 trillion-plus national debt.

One of the long-term deficit reduction plans came from the so-called Gang of Six. We do not know all of the details of that proposal. In fact, we never will know because a lot of the decisions are booted to committees to work out the details.

It is fair to say, however, that Senators Coburn, Senator Crapo and Chambliss deserve congratulations. Clearly, they have won this debate in a very significant way. My guess is that they will probably get 80 percent or 90 percent of what they wanted. In this town, that is quite an achievement, but they have stood firm in their desire to represent the wealthy and the powerful and multinational corporations. They have threatened. They have been smart. They have been determined. And at the end of the day, they will get almost all of what they want. That is their victory, and I congratulate them.

Unfortunately, their victory will be a disaster for working families in this country, for the elderly, for the sick, for the children and for low-income people.

Based on the limited information that we have, I think it is important to highlight some of what is in this so-called Gang of Six proposal that the corporate media, among others, are enthralled about.

Some may remember that for a number of years, leading Democrats said that we will do everything that we can to protect Social Security, that Social Security has been an extraordinary success in our country, that for 75 years, with such volatility in the economy, Social Security has paid out every nickel owed to every eligible American. I heard Democrats say that Social Security has nothing to do with the deficit. That is right because Social Security is funded by the payroll tax, not by the U.S. Treasury. Social Security has a $2.6 trillion surplus today. It can pay out every benefit owed to every eligible American for the next 25 years. It is an enormously popular program. Poll after poll from the American people says don't cut Social Security. Two and a half years ago when Barack Obama, then a senator from Illinois, ran for president of the United States, he made it very clear if you voted for him there would be no cuts in Social Security.

What Senators Coburn, Crapo and Chambliss have managed to do in the Gang of Six is reach an agreement where there will be major cuts in Social Security. Don't let anybody kid you about this being some minor thing. It is not. What we are talking about is that Social Security cuts would go into effect virtually immediately. Ten years from now, the typical 75-year-old person will see their Social Security benefits cut by $560 a year. The average 85-year-old will see a cut of $1,000 a year. Now, for some people here in Washington, maybe the big lobbyists who make hundreds of thousands a year, $560 a year or $1,000 a year may not seem like a lot of money, but if you are a senior trying to get by on $14,000, $15,000, $18,000 a year and you're 85 years old, the end of your life, you're totally vulnerable, you're sick -- a $1,000 per year cut in what you otherwise would have received is a major, major blow.

So I congratulate Senator Coburn, Senator Crapo, Senator Chambliss for doing what president Obama said would not happen under his watch, what the Democrats have said would not happen under their watch.

But it's not just Social Security. We have 50 million Americans today who have no health insurance at all. Under the Gang of Six proposals, there will be cuts in Medicare over a 10-year period of almost $300 billion. There will be massive cuts in Medicaid and other health care programs. There will be caps on spending, which mean that there will be major cuts in education. If you are a working-class family, hoping that you're going to be able to send your kid to college and thinking that you will be eligible for a Pell grant, think twice about that. Pell grants may not be there. If you're a senior who relies on a nutrition program, that nutrition program may not be there. If you think it's a good idea that we enforce clean air and clean water provisions so that our kids can be healthy, those provisions may not be there because there will be major cuts in environmental protection.

Some people think that's not so good, but at least our Republican friends are saying we need revenue and we're going to get $1 trillion in revenue. But wait a minute,. If you read the proposal, there are very, very clear provisions making sure that we are going to make massive cuts in programs for working families, for the elderly, for the children. Those cuts are written in black and white. What about the revenue? Well, it's kind of vague. The projection is that we would raise over a 10-year period $100 billion in revenue. Where is that going to come? Is it necessarily going to come from the wealthiest people in this economy? Is it going to come from large corporations who are enjoying huge tax breaks? That is not clear at all. I want middle-class families to understand that when we talk about increased revenues, do you know where that comes from? It may come from cutbacks in the home mortgage interest deduction program, which is so very important to millions and millions of families. It may mean that if you have a health care program today, that health care program may be taxed. That's a way to raise revenue. It may be that there will be increased taxes on your retirement programs, your I.R.A.'s, your 401(k)'s. But we don't have the details for that. All we have is some kind of vague promise that we're going to raise $1 trillion over the next 10 years, no enforcement mechanism and no clarity as to where that revenue will come from.

That is why it is so terribly important that the American people become engaged in this debate which will have a huge impact on them, on their parents and on their children. The American people must fight for a fair deal. At a time when the wealthiest people in this country are doing phenomenally well and their effective tax rate is the lowest on record, at a time when the top 400 individuals in this country own more wealth than 150 million Americans, at a time when corporate profits are soaring and in many instances corporations, these same corporations, pay nothing in taxes, at a time when we have tripled military spending since 1997, there are fair ways to move toward deficit reduction which do not slash programs that working families and children and the elderly desperately depend upon.

This senator is going to fight back. I was not elected to the United States Senate to make devastating cuts in Social Security, in Medicare, in Medicaid, in children's programs while lowering tax rates for the wealthiest people in this country.

Bernie Sanders (I-Vt.) was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest serving independent member of Congress in American history. Elected Mayor of Burlington, Vt., by 10 votes in 1981, he served four terms. Before his 1990 election as Vermont's at-large member in Congress, Sanders lectured at the John F. Kennedy School of Government at Harvard and at Hamilton College in upstate New York. Read more at his website.

Majority of Dutch Parliament MPs Support AOW (Social Security) Refo

by Frank Thomas

 

The Dutch three-tier pension system -- state AOW (Social Security) Pension, Supplementary Pensions based on terms of employment between employers and employees, and Supplementary Personal Pensions anyone can buy from insurance firms, companies or banks --  are reputed to be the best in the world. At the end of 2009, total assets of Dutch pensions funds were $745 billion or 130% of GDP -- the highest of all OECD countries by far. This enormous sum is invested in bonds and stocks and is thus sensitive to volatility in the financial markets. During the years 2001-2003 preceeding the bubble, the Dutch very wisely reduced significantly the level of  pension fund investments in stocks while sharply increasing investments in bonds. Result? Modest exposure to plummeting stock markets in 2007-09.  

                                                                                                                                                                                         

Still, the Netherlands is no exception to the rising pressures being placed on pensions (and health care) as a result of the financial and economic crises, low interest rates, and particularly the aging population, increasing life expectancy, and recourse to expensive high-tech medical services.  So, true to Dutch pragmatism of timely confronting changing macro-economic realities head-on -- unlike the enduring systemic political squabbling and paralysis on such serious matters in the U.S. -- last Friday, a majority of Dutch Parliament MPs announced their support of a reformed state AOW pension deal agreed to among unions, employers, and ministers. The reforms still have to be approved by individual union members and some influential union members have said they will vote no. 

 

The main reform points of the state AOW (Social Security) pension agreement include:

• The pension age will go to 66 in 2020 and probably rise again to 67 in 2025.


• The pension will increase by 0.6% plus inflation per year from 2013 to 2028.


• The pension of people who stop working earlier will be cut by 6.5% per year. Those who work longer than 67 will receive 6.5% more for each extra year.

 

The main reform points on corporate pensions include:

• Corporate pensions will not work with nominal guaranteed payouts but will vary with stock exchange developments. The effect of changes will be spread over a maximum of 10 years, removing the need for quick fixes. Details have to be worked out. One alternative for the current nominal contract may be a "hybrid contract" composed of two layers -- one layer of lower accrual but with a large degree of nominal security and a second layer that is fully performance-dependent (profit sharing). A second alternative may be a completely flexible contract.   

 

• Companies and employers can determine the balance between risk and security in terms of the corporate pension fund investment mix.

 

• Premiums will be split between workers (one-third) and employers (two-thirds) and employers will no longer have to top up the fund if it runs into trouble.

No final conclusion has been reached on how to handle accrued pension rights: freeze them and set them apart or bring them under the enforcement of the new rules. The second option is unlikely and probably not even possible. Trade unions are vocal in pressuring officials to respect accrued pension rights.

 

And here we are in America constantly spreading lies and fear-mongering stories about how our Social Security system is near bankruptcy. Actually it has been and is in a SOLID financial state  -- punctuated by fact that over the years our Federal Government has borrowed substantially from the surplus funds built up in the Social Security Trust Fund. All that needs to be done to preserve the fund's financial integrity and solvency over the next 30 years is to do (in some appropriate way) exactly just what the Dutch have timely done, namely, set the policy for raising the qualifying retirement age from 65 and 67 (or higher) as dictated by the fiduciary math calculations.

                                                   

SIMPLE? Actually YES! ...  but NOT SIMPLE in our broken down political system where everything's about getting re-elected, being ideologically pure to self-interests rather than serving the national interest.

 

Instead, populist fundamentalists with tunnel vision are popularized as they patronize the libertarian drumbeat of privatization of everything governmental to truly enjoy the greater "benefits-freedom-equality" (better said, "excesses") of unregulated capitalism!  This axiomatic thinking leads to stupid flights of fancy, for example, to claim government intervention never does any good overall for society as opposed to the effects of the market. If accepted, this fools' dogma would be the deathknell of affordable Social Security and Medicare for older generations to come.

                                                                                         

Meanwhile, in a spirit of solidarity, the Netherlands like other mature European countries are promptly, painfully, fairly, cleverly restructuring the financial imbalances in their social-economic models ... while not throwing out that overriding, long-standing European value, "WE ARE ALL IN THIS LIFE TOGETHER."  

AARP Tells Members They Won't Fight Social Security Benefit Cuts

Published on Friday, June 17, 2011 by CommonDreams.org

by Roger Hickey

The front page of today's Wall Street Journal features an article [Key Seniors Association Pivots on Benefit Cut] reporting that AARP "is dropping its longstanding opposition to cutting Social Security benefits." The piece is based on a conversation with AARP policy director John Rother. This is a big deal - not because AARP was ever such a strong force against proposed benefit cuts (other groups are doing that much more effectively), but because the mainstream media is now full of headlines like this from ABC News: AARP Appears to Switch Stance on Social Security Cuts and this column by David Von Drehle, from Time Online: Victory! The Grey Goliath Gives Way on Social Security.

AARP members across the country are outraged. Some are burning their membership cards. The timing of this front page story couldn't be worse. Conservatives have fixated Congress and the White House on deficits and spending cuts that will kill jobs -- even though most Americans care more about jobs than deficits. Most Americans were heartened when Paul Ryan's plan for dismantling Medicare was decisively rejected by the very Republican voters of New York's 26th Congressional District - after Ryan got almost every Republican in the Congress to vote for it. Democrats were starting to re-learn how to campaign as defenders of Medicare and Social Security. And now this - from a top level AARP leader - a real momentum killer.

Now, this obviously well-planned article in the Wall Street Journal, timed just as Joe Biden's deficit reduction talks are moving to "the difficult stuff," gives aid and comfort to conservatives and New Democrats who are on a jihad to make Social Security cuts a focus of deficit reduction - even though America's largest retirement program has its own source of funding and can't contribute to the deficit.

It is well-known that Obama administration officials would like to have a deal on Social Security which changes the index by which benefits are raised each year (a big benefit cut) and which raises the retirement age (another big benefit cut) and also the lifts the cap which limits the percentage of their income that richer people pay in Social Security taxes (a revenue increase). So far, that's been a non-starter with Republicans, who can't support tax increases on the wealthy. But with the press now trumpeting AARP's dramatic move toward benefit cuts, Republicans might come under pressure to make a deal. The irony here would be the White House using the AARP to leverage a deal that cuts benefits - while doing nothing to reduce the federal deficit! Their answer if they could pull this off: It will reassure the bond markets.

This just in: The AARP has just issued a statement by their CEO, A. Barry Rand, entitled AARP Has Not Changed Its Position on Social Security. In it, Rand calls the WSJ piece inaccurate and misleading, but doesn't clarify what they think was inaccurate.

In the Journal article, John Rother was clear that he's willing to support SS benefit cuts. AARP in its statement just reiterates its commitment to "solvency" of the program. I believe SS can be made solvent without benefit cuts. John Rother disagrees. Where does the AARP as the largest organization claiming to represent seniors stand? They are not clear.

The AARP statement claims to oppose including Social Security in the deficit discussions. If they really mean that, the group that promotes itself as the most powerful defender of seniors in America should get their vaunted citizen's lobby in gear - to make sure Social Security doesn't become the sacrificial lamb of this dangerous season of budget cutting blood on the floor.

Baby boomers are now beginning to retire - and we have many fewer retirement assets (no pensions, devastated savings, unconventional work histories) - and we are going to depend on Social Security even more than previous generations. We know we didn't join for the movie discounts. If we can't depend on AARP to fight for decent Social Security benefits, maybe we need a more activist organization that will.

Roger Hickey is Co-Director of the Campaign for America’s Future. He was a leader of the campaign to stop the privatization of Social Security, and he is a founder and member of the steering committee of Health Care for America Now. In the late 1980s he and Jeff Faux created the Economic Policy Institute.

The Rich Get Richer While Nurses, Teachers, and Firefighters Get Trounced

Published on Tuesday, March 29, 2011 by Huffington Post

The Deficit Hawks Target Nurses and Firefighters

by Dean Baker

Many people might think that the country's problems stem from the fact that too much money has been going to the very rich. Over the last three decades, the richest one percent of the population has increased its share of national income by almost 10 percentage points (Excel spreadsheet). This comes to $1.5 trillion a year, or as the deficit hawks are fond of saying, $90 trillion over the next 75 years.

To put this in context, the size of this upward redistribution to the richest one percent over the last three decades is roughly large enough to double the income of all the households in the bottom half of the income distribution. The upward redistribution amounts to an average of more than 1.2 million dollars a year for each of the families in the richest one percent of the population.

And this upward redistribution was brought about by deliberate policy. We pursued a trade and high dollar policy that was intended to put downward pressure on the wages of manufacturing workers. The Federal Reserve Board deliberately kept unemployment higher than necessary in order to weaken workers bargaining power. We extended patent monopolies to allow drug companies to jack up prices, raking in hundreds of billions a year. And, we gave the Wall Street banks the benefit of "too big to fail" status so they can borrow with a government subsidy.

These policies and others fueled this enormous upward redistribution. But the deficit hawks don't want us talking about any of these things.

The deficit hawks insist that we have to cut Social Security and Medicare benefits now! They are busy hyperventilating over the enormous deficits, the result of the economic collapse, which was in turn the result of their economic mismanagement. (Wait, we are not supposed to talk about that.)

And the deficit hawks have clear ideas on how they want to deal with the costs of Social Security and Medicare over coming decades. And, it does not involve taking money from the tiny group of wealthy people who have profited enormously at the expense of the middle class over the last three decades.

Nor are the deficit hawks interested in reining in the drug companies, the insurance companies or the doctors. The bloated prices and exorbitant pay of these actors is the main reason that U.S. health care costs are so wildly out of line with health care costs in other wealthy countries.

But deficit hawks don't get paid to go after rich people or the health care industry. Deficit hawks get paid to go after the benefits of middle-income people. This is why we were treated to a Washington Post column by finance industry executive Robert Pozen telling liberals that they should support his plan for raising the retirement age and cutting Social Security benefits for higher-income earners.

When Pozen talks about cutting benefits for higher-income earners he is not thinking of people like Peter Peterson or Robert Rubin. He has his gun sights on people earning $40,000 to $80,000 a year. In other words, Pozen wants to cut benefits for workers like schoolteachers, firefighters and nurses.

These are workers that definitely enjoy somewhat higher pay and a higher standard of living than most of the workforce, but only in Washington deficit hawks' circles are these people living lavish lifestyles that need to be cut back. These workers are quite explicitly the target of the Washington deficit hawk gang.

The deficit hawk crew will even shed some crocodile tears for the poor who earn near the minimum wage and live near the poverty level. They would raise their benefits if not for those greedy plumbers and mechanics who insist on getting the Social Security benefits that they paid for.

In the next few weeks we will be treated to an endless parade of budget experts who will be yapping about "entitlements" and insisting that middle-income workers are living too lavishly. While all these experts have really impressive credentials it is important to remember that these credentials did not prevent this highly paid crew from overlooking the largest asset bubble in the history of the world.

If this group had paid a tenth as much attention to the housing bubble as they are now paying to the deficit projections, we would not be sitting around with 25 million who are unemployed, under-employed or out of the workforce altogether. The deficit hawks are very good when it comes to whining about the deficit and demanding sacrifices from middle-class workers. They just aren't very good when it comes to understanding the economy.

© 2011 Huffington Post

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.

more Dean Baker

When Republicans Take Over the House, the Senate and the Presidency in 2012, What Happened in Wisconsin Will Happen on the National Level Only Worse

by John Lawrence

With the stroke of a pen Republican Governor Scott Walker of Wisconsin ended collective bargaining rights for workers in Wisconsin. How is it possible that 50 years worth of hard fought for rights can be ended with the stroke of a pen? Well, the Republicans control both houses of the bicameral legislature and the Governorship in Wisconsin. They can do whatever they want. If tomorrow they wanted to sell off state owned assets to their cronies, they could do it. In fact that's already in the budget bill that they're getting ready to pass next. The only reason that any of this has even come to national attention is that the 14 Democratic Senators, one of whose prescence was required to establish a quorum, left the state so that the original budget bill couldn't be passed. Now that they're back, Republicans have their quorum and can proceed to pass whatever they want. If tomorrow they want to pass a bill declaring that the moon is made of green Wisconsin cheese, they can do it.

These same battles are being fought out in every state in which Republicans have control of the political structure - namely, Ohio, Michigan, Florida and New Jersey among others. Voters, are you happy now? Governor Walker's bill also gives power over the state's Medicaid system known as BadgerCare to a political appointee taking it away from the legislature where it currently resides. Poor people kiss your health care good-bye in the state of Wisconsin. Other states will seek to follow suit. A little talked about provision of Walker's bill is that it would cut off $834 million in funding to the public school system. This would effectively cripple public schools already underfunded and double class sizes. Voters, are you happy now? But wait there's more. 

The Walker Budget bill expands the school voucher program to rich kids who want to attend private school and have the state government pay for part of their tuition. The voucher program was a poison pill started ostensibly to help poor black kids get a better education. But Walker's bill would let anyone regardless of income get a government voucher for private school tuition at the same time he is defunding the public school system. This is from the Milwaukee Wisconsin Journal Sentinel:

Voucher advocates have made clear for more than 20 years that their goal is to replace public education with a system of universal vouchers that includes private and religious schools. The heartbreaking drama currently playing in Milwaukee - millions of dollars cut from the public schools while vouchers are expanded so wealthy families can attend private schools in the suburbs - may be coming soon to a school district near you. ... The voucher program started in 1990, billed as an altruistic effort to help a few struggling community schools serving mostly poor black kids. There were only seven schools and 300 students, with the program costing $700,000. To most legislators, it seemed a worthwhile effort, sort of like throwing a few dollars in the church missionary basket. Even then, however, backers, such as Milwaukee's Bradley Foundation, envisioned a full-scale voucher program. Michael Joyce, the late head of the foundation, made no secret of his belief that public schools were akin to socialism. Vouchers were his free-market alternative. Bit by bit, budget by budget - as part of a long-term strategy - the program grew. The expansions always were couched in fine-sounding rhetoric that cloaked the program's harm to public education. This year, taxpayers are paying $131 million for the private school tuition of 21,000 students - making vouchers, in essence, one of the state's largest school districts, on par with Madison, Racine, Kenosha and Green Bay. With the expansion, vouchers will become the state's second-largest district, just behind Milwaukee. All along, hard-core voucher proponents were using poor black kids as pawns in their voucher chess game. More than a decade ago, a strategy paper for the Milton and Rose D. Friedman Foundation likened vouchers for low-income children to a "viable beachhead," a way "to win and hold new ground in the long march to universal school choice." Today, in Milwaukee, that long march is just about over. Vouchers are to be open, eventually, to any Milwaukee family, no matter how rich, to attend a private school anywhere in the county. The children of Milwaukee millionaires could conceivably receive $6,442 next year to help pay the $20,423 high school tuition at the private University School. The Walker budget goes out of its way to help voucher schools and harm Milwaukee Public Schools. While voucher funding will increase, with no limit on how much, MPS faces untold millions in budget cuts. Some of those cuts are directly due to vouchers, which reduce the amount of state aid MPS otherwise would receive. Milwaukee taxpayers, meanwhile, are forced to pick up the tab for more than a third of the voucher bill; already they pay $50 million a year. Overall, Walker is cutting $834 million in public education - eliminating state funding for school nurses, Advanced Placement courses, alternative education and children at-risk programs. There are also significant cuts in programs such as the school breakfast program, Head Start and bilingual aid. Funding for special education and other essential programs is flat, with no additional money even if need increases. ... Taken as a whole, the Walker budget is a blueprint for expanding private schools and destroying public schools. And there's nothing to stop this tragedy from spreading to the entire state. Unless, of course, legislators do the right thing and protect the American dream of a free and public education for all children.

So in addition to busting unions and privatizing the state's power plants, Walker's stealth plan includes defunding public schools and using the state's supposedly limited resources to fund an unlimited voucher program that pays part of a wealthy kid's tuition at a private school. Of course, poor kids will hardly be able to take advantage of Walker's Brave New World voucher program as they won't be able to afford the rest of the tuition. They will have served their purpose as "beachhead establishers." Again government taxpayer funds are used to help the wealthy at a time in which there is supposedly a budget crisis. But wait there's more. Walker's ginned up, phony "financial crisis" was brought on in the first place by his having given $140 million in tax cuts to corporations just after taking office. Then like Chicken Little he rushed out to announce that there was a $137 million budget deficit and draconian measures including busting unions, privatizing power plants and the public school system, screwing with BadgerCare and making elected state officeholders political appointees would of necessity have to be taken. Er, Walker you could rescind those tax breaks to your cronies... Just a thought.

Well, what does all this have to do with my main theme that Walker's power play of union busting and privatizing will look like child's play compared to what will happen on a national scale after Republicans win big in 2012? Simply this: if with a stroke of a pen Walker could reverse 50 years of progress in workers' rights, with the stroke of a pen the new Republican President backed by a Republican House and Senate (not to mention a Republican Supreme Court) can with a stroke of a pen put an end to Social Security and Medicare. The precedent has already been established that, despite a worker's having paid into social security over a lifetime, he or she has no constitutionally protected right to any of that money. Congress has the right to change the laws governing Social Security and Medicare at any time that they so choose.

This is from the Supreme Court's ruling in the Flemming vs Nestor case:

"The fact that workers contribute to the Social Security program's funding through a dedicated payroll tax establishes a unique connection between those tax payments and future benefits. More so than general federal income taxes can be said to establish 'rights' to certain government services. This is often expressed in the idea that Social Security benefits are 'an earned right.' This is true enough in a moral and political sense. But like all federal entitlement programs, Congress can change the rules regarding eligibility--and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.

"There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled 'RESERVATION OF POWER,' specifically said: 'The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.' Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

"In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not contractual right."

So these rights could go out the window with a stroke of a pen regardless of whether or not it had even been an issue in the campaign. And, although it is unthinkable to the average middle class American, Social Security benefits could be abruptly ended for everyone including current recipients with the stroke of a pen. It's not unthinkable, and the thinkable is definitely possible. Did Scott Walker make union busting a campaign issue? Of course not. The plan was to bust the unions, privatize the power plants and school system on a stealth basis before anyone knew what hit them. Thanks to the 14 Democratic Senators who absconded from Wisconsin, it didn't quite turn out that way. But that will not prevent Republicans from abolishing Social Security and Medicare when they gain control over the national governmental apparatus in 2012.

So voters and Tea Partiers, I ask again will you be happy then? After you have given total control of the US government to Republicans and they have ruined the public education system, privatized everything they can get their hands on and ended Social Security and Medicare? Of course they will be happy because Rush Limpballs, Glenn Beck, Fox News and assorted hate mongers will tell them that they have practically entered the Promised Land of Low Taxes and Small Government (except for the military-industrial complex). The billionaire Koch brothers will use their billions to run ads convincing voters of how happy they will be if only they will elect a Republican President in 2012 along with Republican majorities in the House and Senate. And like lemmings, Tea Partiers will follow them off the cliff. And all those mooches on taxpayer's money - the welfare queens, seniors and poor people - forget them. They are losers who should go out and get a job.

Social Security Taxes Fall Unfairly on the Poor Self-Employed

by John Lawrence

Ever since Ronald Reagan, on Alan Greenspan's advice, raised social security (FICA) taxes on the self-employed by 50% in 1984, the poor self-employed, while having enough deductions and exemptions to pay no income tax have been stuck with paying 14.1% of their business income on FICA taxes no matter if they were below the poverty line or not. Take my own case as an example. Here are my FICA taxes for years in which I paid no income tax:

Year	Business Income	Income Tax	FICA Tax	Poverty Line
1998	$3358.	0	$474.	$8050.
2002	$6995.	0	$988.	$8860.
2004	$3666.	0	$518.	$9310
2005	$1764.	0	$249.	$9570.
2007	$16350.	0	$2310.	$10,210.

As can be plainly seen for four of the five years, I was clearly below the poverty line for an individual, yet I paid 14.1% of my income in FICA taxes. Self-employed people pay both the employer's and employee's share of FICA taxes. They pay at a nominal 15.3% rate, but the IRS in its infinite wisdom multiplies business income by 0.92 before taking the 15.3% making the FICA tax rate effectively 14.1%.

Fortunately, I have other income besides my self-employment income which brings me up way above the poverty line, but for the poor slobs with income and tax statistics such as the above and with no other source of income, they are paying through the nose in FICA taxes even if they have enough other tax write-offs and expenses to bring their net income tax down to zero. This is an example of how onerous and regressive FICA taxes really are for the self-employed. And Republicans claim they are supportive of small business. Phooey! Small business starts out with the self-employed and they are taxed to the hilt thanks to Alan Greenspan and Ronald Reagan.

Here is what Dr. Ravi Batra had to say:

The other reason [why George W Bush has destroyed 3 million manufacturing jobs] is a huge rise in taxes on small business. The Republicans are right when they say raising taxes kills the economy and jobs, but they forget that they are the ones who raised such taxes. This perhaps comes as a shock to you. What! The Republicans raising tax rates, and that too on small business? Nobody would believe that. Aren't they the party of tax cuts? They are, indeed, but only for the wealthy. They have crippled the small business person with the largest tax rise that occurred on self employment under President Reagan.

This is a good example of how tax money is redistributed from the poor to the wealthy. It would be one thing if all that money was going into the Social Security Trust Fund to be used when the baby boomers retired which was the advertised purpose. But no, that money taken from the poor was used to reduce taxes on the wealthy while not accruing as much of a deficit as would have accrued otherwise. Now that the baby boomers are actually starting to retire, the Republicans, instead of using all that money in the trust fund to pay their social security benefits, want to privatize social security on the grounds that the government can't afford to pay it any more especially if taxes have to be raised on the wealthy in order to pay it. So Americans have been bamboozled, and the self-employed in particular have been taken for a ride and carjacked!

Anyone below the poverty line should pay no FICA taxes at all! It is literally money taken out of the pockets of the poor which they cannot afford to pay. On a $7000. self-employment income the poor self-employed pay $1000 or one seventh of it to FICA taxes, and then there is no assurance that they will ever receive a payout in terms of social security especially if they are young, or they won't receive a payout until they are 70 or 75. They keep raising the retirement age, don't you know. So there is no respect for the fact that poor people have been paying this regressive tax for years in order that the rich can have their tax breaks. There is no social contract. Instead the poor are screwed in terms of the money they have to pay in and then they are screwed by being threatened with no social security in their old age.

The poor have been screwed with regressive taxes for 30 years or more. Now that it is coming time to pay the piper in terms of raising taxes on the wealthy to provide for the fact that money needs to be taken out of the social security trust fund to pay retirees, the deficit hawks don't want to raise taxes on the wealthy in order to do it. Why starting this year is social security adding to the deficit? Because the money coming into social security in terms of FICA taxes is less than the money being paid out to recipients. Until this year more money was coming in than was being paid out, and this excess was "borrowed" in order to reduce taxes on the wealthy. It just was used in the general fund instead of being put in a "lockbox" as Al Gore wanted to do. In place of the amounts borrowed special non-negotiable Treasury bonds (basically worthless IOUs) were placed in the social security trust fund to be redeemed, supposedly, when the payouts to recipients exceeded the income in terms of FICA taxes. That day has now arrived and, instead of Republicans gladly being willing to redeem those special Treasury bonds backed, supposedly, by the "full faith and credit of the American government," they want to privatize social security. In other words, as far as Republicans are concerned, the "full faith and credit of the American government" is a farce when it comes to the redemption of the $2.5 trillion in the social security trust fund. They used the excess when more was coming in than was going out to reduce taxes on the welathy; now they want to reneg, when more is going out than is coming in, because that would either increase the deficit or mean that taxes on the wealthy would have to be raised. It's that simple.

And court cases have established that American citizens have no direct claim on the monies they have contributed to the social security trust fund. This makes it possible that Republicans, by changing the rules on social security payouts, can bypass the necessity for ever paying out one dime of the monies in the social security trust fund that are backed (supposedly) by the "full faith and credit of the American government."

Former Trustee: Why Social Security Isn’t a Problem

Published on Thursday, February 17, 2011 by RobertReich.org

Budget Baloney (1): Why Social Security Isn’t a Problem for 26 Years, and the Best Way to Fix It Permanently

by Robert Reich

New Jersey Governor Chris Christie, a Republican presidential hopeful, says in order to “save” Social Security the retirement age should be raised. The media are congratulating him for his putative “courage.” Deficit hawks are proclaiming Social Security one of the big entitlements that has to be cut in order to reduce the budget deficit.

Social Security isn’t responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government. Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.

This is all baloney.

In a former life I was a trustee of the Social Security trust fund. So let me set the record straight.

Social Security isn’t responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.

Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.

But why should there even be a problem 26 years from now? Back in 1983, Alan Greenspan’s Social Security commission was supposed to have fixed the system for good – by gradually increasing payroll taxes and raising the retirement age. (Early boomers like me can start collecting full benefits at age 66; late boomers born after 1960 will have to wait until they’re 67.)

Greenspan’s commission must have failed to predict something. But what? It fairly accurately predicted how quickly the boomers would age. It had a pretty good idea of how fast the US economy would grow. While it underestimated how many immigrants would be coming into the United States, that’s no problem. To the contrary, most new immigrants are young and their payroll-tax contributions will far exceed what they draw from Social Security for decades.

So what did Greenspan’s commission fail to see coming?

Inequality.

Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation.

Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission’s fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.

It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved.

So there’s no reason even to consider reducing Social Security benefits or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling.

Not incidentally, several months ago the White House considered proposing that the ceiling be lifted to $180,000. Somehow, though, that proposal didn’t make it into the President’s budget.

© 2010 Robert Reich

The Social Security Flim Flam

by John Lawrence

We have blogged before about social security being like the blind men and the elephant, and how it depends on which part of its anatomy which blind man is touching. President Obama's deficit commission was touching the part that admits that the General Fund will have a $45 billion deficit this year just attributable to the amount that represents the difference in what is taken in by the government in FICA taxes and the amount that is paid out in benefits to retirees. Other blind men have pointed out that the Social Security Trust Fund (SSTF) has a surplus of $2.5 trillion in special Treasury bonds some of which it can cash in to cover the $45 billion gap. 

Which blind man is right? Why, both, naturally. Ever since Reagan in 1983 upped the amount that FICA taxes bring in every year so that more was brought in than paid out, the General Fund has been feasting off the surplus thereby reducing the deficit in terms of money borrowed from the Chinese. The amount borrowed by the General Fund from the Social Security Trust Fund was then made up by the "special" Treasury bonds deposited into the Social Security Trust Fund. So if the national debt is considered to be the amount outstanding of Treasury bonds plus the amount in the Social Security Trust Fund of "special" Treasury bonds, the national debt remains the same whether or not some of the "special" Treasury bonds are cashed in and converted to regular Treasury bonds by selling this amount of debt to the general public (think Chinese). Both are backed by the "full faith and credit of the American government." But not really.

The difference is that bonds sold to the general public are marketable and must be paid back some day or, if you prefer, one investor is paid back by floating another bond to another investor. The bonds in the Social Security Trust Fund are bonds owned, not by the people, but by the US government and need never be redeemed if Congress takes appropriate action. Let me explain. A court case has set the precedent that American citizens have no direct claim to the money in the Social Security Trust Fund even though they've paid into it their entire working life. The saving grace of the whole mess is that the Social Security Trust Fund can go straight to the Treasury Department when it needs to redeem one of the "special" Treasury bonds. It doesn't need Congressional authorization. As we know, the budget has to be authorized by the House of Representatives. They wield authority over the US government's annual budget except for the amount redeemed by the Social Security Trust Fund.

However, the US Congress can vote at any time to (1) alter the amount that social security recipients get every month; (2) to give or not to give COLAs; and (3) to do away with social security as presently constituted altogether. The only reason they don't do any of these things is that social security is so popular and the Democrats defend it. Republicans would get rid of social security in a heartbeat, given the chance, and provided they can convince the American epeople that they would be better off if the program were privatized.

But the biggest rip-off of the American public was perpetrated by Ronald Reagan in his Social Security Amendments of 1983:

The National Commission on Social Security Reform (NCSSR), chaired by Alan Greenspan, was empaneled to investigate the long-run solvency of Social Security. The 1983 Amendments to the SSA were based on the NCSSR's Final Report.[53] The NCSSR recommended enacting a six-month delay in the COLA and changing the tax-rate schedules for the years between 1984 and 1990.[54] It also proposed an income tax on the Social Security benefits of higher-income individuals. This meant that benefits in excess of a household income threshold, generally $25,000 for singles and $32,000 for couples (the precise formula computes and compares three different measures) became taxable. These changes were important for generating revenue in the short term. Also of concern was the long-term prospect for Social Security because of demographic considerations. Of particular concern was the issue of what would happen when people born during the post–World War II baby boom retired. The NCSSR made several recommendations for addressing the issue.[55] Under the 1983 amendments to Social Security, signed into law by President Ronald Reagan, a previously-enacted increase in the payroll tax rate was accelerated, additional employees were added to the system, the full-benefit retirement age was slowly increased, and up to one-half of the value of the Social Security benefit was made potentially taxable income.[56][57] The 1983 Amendments also included a provision to exclude the Social Security Trust Fund from the unified budget (In political jargon, it was proposed to be taken “off-budget.”[citation needed] Yet today Social Security is treated like all the other trust funds of the Unified Budget.[citation needed] It is a political way of using a cash budget instead of the more appropriate accrual budget (for all the budgets in the U.S. government), and a way of disguising total debt.[58] This provision also provided for the exemption of Social Security and portions of the Medicare trust funds from any general budget cuts beginning in 1993.[46] This change was one way of trying to protect Social Security funds for the future. As a result of these changes, particularly the tax increases, the Social Security system began to generate a large short-term surplus of funds, intended to cover the added retirement costs of the "baby boomers." Congress invested these surpluses into special series, non-marketable U.S. Treasury securities held by the Social Security Trust Fund. In other words, Congress borrowed the surpluses from the Social Security system; the Treasury securities held by the S.S. Trust fund are U.S. government "I.O.U.s". Under the law, the government bonds held by Social Security are backed by the full faith and credit of the U.S. government. Because the government had adopted the unified budget during the Johnson administration, this surplus offsets the total fiscal debt, making it look much smaller.[citation needed] There has been significant disagreement over whether the Social Security Trust Fund has been saved, or has been used to finance other government programs and other tax cuts.

So none other than Alan Greenspan was responsible for upping the amounts paid into social security on the theory that "some day" the amounts paid out by social security would be there for the baby boomers. These excess amounts were immediately "stolen" by the General Fund in order to make the deficit smaller than it otherwise would have been and so that taxes on the wealthy would not have to be raised. Now that it's time to pay the piper by paying the amounts back into the SSTF, the Republicans, debt conscious as they are, don't want to do it. It would result in non-marketable Treasury bonds which the government owes to itself (hence I.O.Us.) being converted into marketable Treasury bonds that the government owes increasingly to foreigners.

Now the insidious part of this whole mess is that Alan Greenspan's suggestion for increasing the long term solvency of the SSTF in 1983 was that it was to be done on the backs of the poor. Social security is a regressive tax to begin with. There are no deductions and no exemptions. Many poor people pay more in FICA taxes than they do in income tax. Reagan's social security tax increases of 1983 hit the self-employed very hard, particularly the one man or one woman self-employed. All of a sudden they were responsible for paying both the employee's and the employer's share of FICA taxes. The self-employed's FICA taxes went from 9.35% in 1983 to 14% in 1984, an increase of 50%. Thank you, Ronald Reagan. And to top this indignity off, the self-employed do not collect any more upon retirement than they would have if they had made the same amount over the course of their lifetime as an employee even though they've paid twice as much in. Talk about Republican support of small business! So in effect the General Fund raised taxes on the poor in order that it didn't have to raise income taxes on the rich in order to pay routine government expenditures. Now that the poor have been milked sufficiently for 27 years, Republicans don't want to honor the monies borrowed from the SSTF by paying out money from the General Fund which would mean either increasing the national debt or raising taxes. Evidently, Republicans don't count the "special" Treasuries in the SSTF as part of the national debt. The "off budget" non-marketable "special" Treasury bonds owned by the SSTF would have to be converted to "on budget" marketable Treasury bonds and sold to the general public (Chinese).

The way Republicans (not the government) are attempting to do this is not by renegging on the "full faith and credit of the American government." No, they are even more crafty than that. What they would like to do is to change the rules altogether regarding social security which is entirely within their purview. If they are successful at doing this, they will have accomplished two things: 1) they will have successfully paid government expenditures for 28 years partially with a regressive tax on the backs of the poor, particularly the self-employed; and (2) they will have avoided raising taxes on the wealthy to pay back into the SSTF the amounts promised and guaranteed by "the full faith and credit of the American government". They will have finessed the "full faith and credit of the American government," and the IOUs in the SSTF could sit there in perpetuity without ever having to be redeemed! Paying back the "special" Treasuries would be moot! To summarize, this is due to the fact that no American citizen has a legal claim on the social security funds and that Congress has the legal right to change the rules at any time.

So this is why you hear all the talk about privatization and how social security cannot afford to pay recipients in the future. It is because Republicans effectively want to reneg on the "full faith and credit of the American government" but do so in a way that is entirely legal. As a by-product they could rejoice in the fact that they've ripped off the poor for 27 years (thanks to Alan Greenspan, Ayn Rand's protege) and they wouldn't have had to raise taxes on the rich. Extending the Bush tax cuts for the wealthy, which Obama agreed to do, has just perpetuated the rip-off and added fuel to the fire of those clamoring to get rid of or privatize social security.

On a personal note, I paid FICA taxes for most of my life as a self-employed person. That means that I pay both the employee's and the employer's share which amounts to 15.3%, more than Warren Buffett pays on his capital gains taxes. Because there are no deductions or exemptions on FICA taxes, I pay a lot more in FICA taxes then I do in income taxes. I also collect social security and have been doing so for the last eight years even though I continue working. That means that I continue paying FICA taxes even though I'm almost 70 years old and collecting social security. Not only that but I pay taxes on my social security income. I'm supposed to get a "raise" on what I receive in social security each year because I'm continuing to pay into it each year, but that "raise" doesn't amount to a can of dogfood per month, and, I believe, there are some years where I haven't even gotten that. Maybe it's tied into the COLA department. Last year social security recipients notably did not even receive a COLA. You might note that Republicans are very interested in doing away with COLAs altogether for social security recipients. To sum up, even though I'm almost 70 years of age and still working, I pay social security taxes at the rate of 15.3% which is more than the 15% capital gains tax that Warren Bufett and other rich people pay. And, since I receive social security payments, I pay taxes on them too! And because I continue to pay through the nose in FICA taxes, I receive a can of dogfood a month (one or two dollars) as a "raise" almost every year. How about this for a rule change: once a person starts to collect social security and is still working, he or she shouldn't have to pay into it any more. Here's another: self-employed people who have paid double in FICA taxes should receive double in benefits once they start collecting social security. And of course a simple rules change that would "save" social security would be to raise the cap on the amount of income on which FICA taxes are paid. Right now it's around $100,000. Simply raising it to $200,000. would guarantee payouts ad infinitum. But Republicans only want to raise taxes on the poor and redistribute wealth upward. It's not that they don't want government to use the tax system to redistribute wealth. It's just that they are not in favor of redistributing it from rich to poor; that would be socialism. It's only capitalism when wealth is redistributed from poor to rich.

What President Obama Shouldn't Say in the State of the Union Address

Published on Monday, January 24, 2011 by The Nation

by John Nichols

The great guessing game in official Washington – and the surrounding punditocracy – this week goes to the question of whether President Obama will use his State of the Union Address to open a discussion about making changes to Social Security that would undermine the retirement guarantee the federal government has maintained for three quarters of a century.

"Nobody knows what the president is going to do on Social Security,” says Roger Hickey, co-director of the Campaign for America’s Future. “It’s a huge question for people like me who are strong supporters of Social Security.”

Hickey’s right. No one outside the White House knows for certain what the president will say.

 But Hickey and others who are involved with the more than 200 groups (including the AFL-CIO, AFSCME, SEIU, National Women’s Law Center, USAction and MoveOn.org) that have formed the Strengthen Social Security Campaign know what they fear the president could say. 

The co-chairs of Obama’s deficit commission have already outlined a plan for reining in the federal deficit by reducing Social Security benefits and schemes for “supplementing” the program, which is a polite language for “privatization.” The Republican who will respond to Obama’s speech, House Budget Committee chairman Paul Ryan, R-Wisconsin, has a roadmap for going even further.

If Obama is in the mood for some political triangulation, this State of the Union speech – which sets the tone for his 2012 reelection campaign – would be the place to establish his deficit-buster credentials with a jab at Social Security. The problem, of course, is three-fold: 

1. Attacking stable programs such as Social Security, Medicare and Medicaid, buys into the absurd arguments of conservatives who are far more interested in killing off federal programs than fiscal responsibility – let alone societal good. To the extent that Social Security faces any challenges, they can be addressed with modest tweaks to payroll taxes and benefits. Radical restructuring and privatization are unnecessary. 

2. Accepting the argument that Social Security must be changed in any substantial way buys into the broader argument that entitlements that serve working Americans are the cause of fiscal instability, as opposed to endless wars, bank bailouts and ever-expanding tax breaks for billionaires. 

3.  If a Democratic president starts arguing for serious changes in Social Security, Medicare and Medicaid, that legitimizes Republican positions on entitlement issues and pushes the debate to the right. That creates internal tension within the Democratic Party, not just between the White House and Democrats in Congress, but between Democrats in Washington and Democratic governors, legislators and local officials who are struggling to maintain an economic safety net.

These are the sorts of concerns that prompted Vermont Senator Bernie Sanders to write Obama about “worrisome reports” that the president might use the State of the Union address to propose cuts in Social Security. “I hope that information is wrong and that you will stand by your campaign promises to strengthen Social Security,” read the letter from Sanders. “I urge you once again to make it clear to the American people that under your watch we will not cut Social Security benefits, raise the retirement age or privatize this critical program.”

The message is being echoed by labor unions, senior groups and religious organizations as the State of the Union Address approaches.

“Let’s get one thing straight right at the beginning: Social Security is not responsible for the deficit – the program actually has been running surpluses for decades, to the tune of $2.6 trillion total,” reads a message from Sojourners, the Christian social justice group that champions programs to address poverty.

“Social Security is based on a promise: If you pay into the system with your payroll taxes, then you earn the right to guaranteed benefits. It is a system that reflects our values as a nation – values also found in scripture. There is no trust more sacred to biblical faith than the injunction to care not only for our families but also for those in need. Social Security is not just for the elderly – it also helps low-income children, widows and widowers, those with disabilities, and children without parents,” the Sojourners message continues. “In fact, without the 75-year-old program, nearly half of elderly Americans would be in poverty; with it, only 10 percent are.”

On the political side, Progressive Democrats of America has launched a “Keep Your Promise” campaign urging President Obama to use the State of the Union Address to restate past commitments to preserve Social Security.

“Nearly all Americans depend on Social Security at some point in their lives. Many are retirees. But millions are disabled workers, widows and widowers, and children who have lost a loved one. We need to keep the promise alive for all of us,” notes PDA. “Fortunately, President Obama has supported our position in the past--no benefit cuts, no raising the retirement age, no cuts in the COLA and no privatization. In a 2007 newspaper editorial, Obama said, ‘I do not want to cut benefits or raise the retirement age. I believe there are a number of ways we can make Social Security solvent that do not involve placing these added burdens on our seniors.’” 

Along with the Strengthen Social Security Campaign, PDA is circulating a review of Obama’s past statements that places them in the context of the current debate.

“In blaming Social Security for the deficit, politicians and pundits like to claim that Social Security is on the brink of bankruptcy. In fact, Social Security currently has a $2.6 trillion surplus. But with an aging population, it will inevitably start to feel the strain. President Obama addressed that, too, in an October 2008 campaign video: ‘The best way forward is to first look to adjust the cap on the payroll tax. ... Ninety-seven percent of Americans will see absolutely no change in their taxes under my proposal. ... What it does allow us to do is to extend the life of Social Security without cutting benefits or raising the retirement age.’ And candidate Barack Obama responded to candidate John McCain's suggestion that the way to keep the pressure off of Social Security would be to cut cost-of-living adjustments or raise the retirement age, ‘I will not do either.’”

PDA and other groups want to hear those words once more on Tuesday.

“President Obama's State of the Union address will be on January 25,” the groups says, while urging progressives to: “Let him know that he must state in no uncertain terms that he supports Social Security and will veto any threats to its integrity. Tell him you support Social Security and want to see it strengthened, not weakened.”  

© 2011 The Nation

John Nichols is Washington correspondent for The Nation and associate editor of The Capital Times in Madison, Wisconsin. A co-founder of the media reform organization Free Press, Nichols is is co-author with Robert W. McChesney of The Death and Life of American Journalism: The Media Revolution that Will Begin the World Again and Tragedy & Farce: How the American Media Sell Wars, Spin Elections, and Destroy Democracy. Nichols is also author of Dick: The Man Who is President and The Genius of Impeachment: The Founders' Cure for Royalism.