Social Security

The Republican Long Game

Published by Anonymous (not verified) on Thu, 07/12/2017 - 8:48am in

It isn’t easy watching the country you love fall down a black hole from which it is not likely to emerge, but that is precisely what happened this past week with the Senate passage of the so-called “tax reform” bill. Bernie Sanders spoke for many when he said it will “go down in history as one of the worst, most unfair pieces of legislation ever passed.” Continue reading

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Current Taxes And Tax Reform Undermine Social Security & Medicare

Published by Anonymous (not verified) on Fri, 27/10/2017 - 2:00am in

Above Photo: (Photo: 401(K) 2012/Flickr) If You Want to Collect Social Security, Trump’s Tax Plan Is an Outrage You probably pay about four times more of your income to Social Security than millionaires, who want to cut their taxes and your benefits. How much did your paychecks total last year? You know the answer, of course. So does the Social Security Administration. The totals for every American’s paycheck income are sitting in Social Security’s computers. Once every year, Social Security does a serious data dump out of those computers to let us know just how much working Americans are actually making. The latest totals — covering 2016 — have just appeared. Most of us, the new numbers show, are simply not making all that much. In fact, nearly half of our nation’s employed — 49.3 percent — earned less than $30,000 in 2016. A good many of these Americans lived in poverty. In 2016, families of four that earned less than $24,339 ranked as officially poor. We don’t have an “official” figure for middle class status. But the Economic Policy Institute has calculated the costs of maintaining a no-frills middle class existence in various parts of the United States. In Houston, one of our nation’s cheaper major cities, a family of four needed $62,544 in 2016 to live a bare-bones middle class lifestyle. Nationally, according to the new Social Security payroll income numbers, over three-quarters of working Americans — 76.4 percent — took home less than $60,000 in 2016. Some Americans, on the other hand, took home a great deal more. The Social Security Administration counts 133,119 Americans who pocketed over $1 million in paycheck income last year. Now which of these two groups — the millionaires or the under-$60,000 crowd — do you think paid a greater share of its income in Social Security taxes? The millionaires could certainly afford to pay the bigger share. But they didn’t. Individuals who took home $1 million in 2016 had $16,265 deducted from their paychecks for Social Security and Medicare. Those deductions totaled a meager 1.6 percent of their paycheck income. Working Americans making $60,000 last year, by contrast, had 7.65 percent of their take-home deducted for Social Security and Medicare. In other words, Americans making $60,000 paid over four times more of their income for Social Security and Medicare than Americans who made $1 million. How could that be? Our tax code currently has a ceiling on earnings subject to the Social Security tax. That ceiling this year rests at $127,200. All paycheck income up to that level faces a 6.2 percent tax for Social Security and a 1.45 percent tax for Medicare. Income above that ceiling faces no Social Security tax at all. Until the Obama years, income above the earnings ceiling faced no payroll tax for Medicare either. But President Obama succeeded in getting that changed. Individual income over $200,000 now faces an additional 0.9 percent Medicare tax. If all income over $200,000 faced a Social Security tax as well, we’d have enough new revenue to significantly improve Social Security benefits. The Trump administration is moving in the opposite direction. Earlier this year, the White House tried and failed to get the Obama Medicare tax on the rich repealed. Now the administration is pushing a tax “reform” that totally ignores the unfairness of the current Social Security payroll tax and instead hands America’s wealthiest a stunningly generous assortment of tax giveaways. If this Trump tax plan passes, Americans making $60,000 will still be paying over four times more of their income in payroll taxes than Americans who make $1 million. And America’s millionaire-packed top 1 percent will get 80 percent of the new Trump tax cuts, the Tax Policy Center calculates. The Trump tax plan, in other words, makes the U.S. tax code even more millionaire-friendly than the current code. The White House calls that “reform.” The rest of us ought to call it an outrage.

Chris Sterry Reblogs Article in Autism Magazine on How American Parents Can Get Help

Published by Anonymous (not verified) on Wed, 27/09/2017 - 1:23am in

One of the great commenters on this blog, 61chrissterry, also blogs himself about disability issues. Looking briefly at his site just now, I found an article he’d reblogged from Autism Parenting, an American magazine for the parents of children with Autistic Spectrum Disorders. These disorders cover autism, which can vary greatly in terms of severity, and Asperger’s, which is now increasingly seen as simply high-functioning autism. It’s a condition that affects many children. The current policy is to include autistic children, except when severely disabled, in mainstream schools, and teacher training now includes course on special needs children. These include autistic, dyslexic and children with Attention Deficit Disorder. The article in the magazine discusses ways parents can get help. It talks about the social security budget and the available funding for children with autism, and Medicaid. The article is about a course the writer attended in South Carolina.

I don’t know if this will be any help to anyone over the other side of the Pond with an autistic child, or has friends or relatives that do. But I mention it because it might, and it may interest British and European readers, who want to keep informed about what is going on internationally in the way autistic people are being treated by the state.

Strange bedfellows

Published by Matthew Davidson on Sat, 26/08/2017 - 4:43pm in

Via MacroBusiness, here's the TL;DR of the Business Council of Australia's submission to a 2012 Senate inquiry into social security allowances:

  • "The rate of the Newstart Allowance for jobseekers no longer meets a reasonable community standard of adequacy and may now be so low as to represent a barrier to employment.
  • "Reforming Newstart should be part of a more comprehensive review to ensure that the interaction between Australia’s welfare and taxation systems provides incentives for people to participate where they can in the workforce, while ensuring that income support is adequate and targeted to those in greatest need.
  • "As well as improving the adequacy of Newstart payments, employment assistance programs must also be reformed to support the successful transition to work of the most disadvantaged jobseekers."

Not only did the BCA's confederacy of Scrooges suffer unaccustomed pangs of sympathy, the Liberal Party senator chairing the inquiry also agreed that Newstart is excessively miserly. However, he failed to recommend raising the allowance, saying:

"There is no doubt the evidence we received was compelling. Nobody want's [sic] to see a circumstance in which a family isn't able to feed its children, no one wants to see that in Australia. But we can't fund these things by running up debt."

Sigh. (Here we go…) There is no need to "fund these things", whether it be by "running up debt" or any other means. The Federal Government creates money when it spends. We, as a country, run out of the capacity to feed our children when we run out of food. We cannot run out of dollars, since we can create the dollars without limit.

The government does however, at the moment, have a purely voluntary policy of matching, dollar-for-dollar, all spending with government bond sales. There's no good reason for this; as Bill Mitchell says, it's just corporate welfare. Even so, selling bonds is not issuing new debt. Bonds are purchased with RBA credits (or "reserves", if you prefer). The purchasing institution simply swaps a non-interest-bearing asset (reserves) at the RBA for an interest-bearing one (bonds), still at the RBA. It's just like transferring some money from a savings account to a higher-interest term deposit account at a commercial bank; do we say that this is a lending operation? Of course not.

There is no fiscal reason why the government should punish the unemployed to the extent that they become an unemployable underclass. Even if we are generous and assume the good senator and his colleagues on the inquiry are just ignorant about how the economy works, we are still bound to conclude that there must be some (not so ignorant) people in government, who do want to see people suffering for no just reason.

Galbraith: Is This the End for the Deficit Drones?

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Public opinion is turning on those who seek to cut our social safety net.

In wars, sometimes there comes a moment when the tide turns. The collapse of Ludendorff's offensive in 1918 presaged the Armistice;  failure in the Ardennes meant the end for Germany in 1944.  

Today we have two drone wars in a similar state. One is mainly in Pakistan. Built on a gee-whiz technology that can't do what it promised, this war has claimed too many victims for too little effect. It is a diplomatic disaster and its days are numbered, almost surely, for that reason.

The other drone war is in Washington. The drones are in groups with names like the Committee for a Responsible Federal Budget and Campaign to Fix the Debt. They drone on, and on, about the calamities that await unless we cut Social Security, Medicare and Medicaid.

That the goal of the deficit drones is to cut Social Security, Medicare and Medicaid has been plain for years to anyone who looks at where the money comes from. It comes largely from Peter G. Peterson, a billionaire former secretary of Commerce under Nixon, who is Captain Ahab to Social Security's Moby Dick. And when one trick, such as privatization, falls flat, his minions always have another, whether it's raising the retirement age or changing the COLA. But a cut by any other name is still, and always, just a cut.

Peterson's influence is vast; practically the entire DC mind-meld has bought his line to some degree.   

The other day I was on CNBC, supposedly to discuss the debt ceiling, but the topic was Social Security all the way. My host, Andrew Ross Sorkin, was very blunt: “If now isn't the time to cut entitlements,” he asked, “when would be?” My answer – in a word, never – is not one he seemed to have thought possible before.

Yet there is no good reason to cut Social Security, Medicare or Medicaid. These are insurance programs. They keep the elderly, their survivors and dependents, and the disabled, out of dire poverty. We can afford this. There is also no financing problem; if there were, investors would not be buying 20-year US bonds at 3 percent. These days when some economists say that cuts are needed, they say it's only for show – to establish “credibility.” Old-timers may remember, that's what DC insiders once said about the war in Vietnam.

And like Vietnam, this war is getting old. We're beginning to realize, we don't need it. If the United States really faced some sort of deficit or debt crisis, something would have happened by now. Simpson and Bowles – those brave men who were going to lead us toward budget balance – who remembers them? The super-committee? The fiscal cliff? All gone. Yet Social Security, Medicare and Medicaid are still here. The economy is still stable. And interest rates are still low. The debt ceiling? On that, the president stood up and the Republicans gave way.

It's true that the sequesters and the continuing resolution lie ahead. But if you are going to refuse blackmail over the debt ceiling, why yield to it on anything else? The blackmailers must know by now which side the public will take.

And then on Monday we heard from President Obama. As part of his great speech, which settled so many questions, he gave a little economics lesson. Here's what he said:

“The commitments we make to each other — through Medicare, and Medicaid, and Social Security — these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.”

This is exactly right. Social Security, Medicare and Medicaid are not merely a transfer from the young. They are part of the fabric of our lives. They free us all – every single one of us, young and old  – to be less worried, less fearful, a bit more independent, and a little less cautious than otherwise. Certainly old people are better off when they have a regular income and health insurance. But working people are also better off, directly and indirectly, every day.

There are some, like Mr. Peterson and his allies, who don't like this. Their motives are plain. But now the president seems to have made his choice. The word he used was “commitment.” Again, exactly so. That's what Social Security, Medicare and Medicaid are. President Obama  took a great step, when he said so.

Now it's time for Congress to stand with him, to say no to blackmail, no to fake fixes, no to disguised cuts, no to fear -- and no to those deficit drones.  

James K. Galbraith is the author of “Inequality and Instability:  A study of the world economy just before the Great Crisis.”   He teaches at the University of Texas at Austin.

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6 Reasons the Fiscal Cliff is a Scam

Published by Anonymous (not verified) on Fri, 23/11/2012 - 3:53am in

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The so-called "fiscal cliff" is a mechanism for rolling back Social Security, Medicare and Medicaid.

Stripped to essentials, the fiscal cliff is a device constructed to force a rollback of Social Security, Medicare and Medicaid, as the price of avoiding tax increases and disruptive cuts in federal civilian programs and in the military.  It was policy-making by hostage-taking, timed for the lame duck session, a contrived crisis, the plain idea now unfolding was to force a stampede.

In the nature of stampedes arguments become confused; panic flows from fear, when multiple forces – economic and political in this instance – all appear to push the same way.  It is therefore useful to sort through those forces, breaking them down into separate questions, and to ask whether any of them justify the voices of doom.

First, is there a looming crisis of debt or deficits, such that sacrifices in general are necessary?  No, there is not.  Not in the short run – as almost everyone agrees.  But also: not in the long run.  What we have are computer projections, based on arbitrary – and in fact capricious – assumptions.  But even the computer projections no longer show much of a crisis. CBO has adjusted its interest rate forecast, and even under its “alternative fiscal scenario” the debt/GDP ratio now stabilizes after a few years.

Second, is there a looming crisis of Social Security, Medicare and Medicaid, such that these programs must be reformed?  No, there is not.  Social insurance programs are not businesses. They are not required to make a profit; they need not be funded from any particular stream of tax revenues over any particular time horizon.  Reasonable control of health care costs – public and private – is necessary and also sufficient to keep the costs of Medicare and Medicaid within bounds.

Third,  would the military sequestration programmed to start in January be a disaster?  No, it would not be.  Military spending is set in any event to decline – and it should decline as we adjust our military programs to our national security needs.  The sequester is at worst harmless; at best it's an invitation to speed the process of moving away from a Cold War force structure to one suited to the modern world.

Fourth, would the upper-end tax increases programmed to take effect in January be a disaster?  No, they would not be.  There is no evidence that the low tax rates on the wealthy encourage them to spend or invest, no evidence that higher tax rates would deter the spending and investment that they might otherwise do.

Fifth, would the middle-class tax increases, end of unemployment insurance and the abrupt end of the payroll tax holiday programmed for the end of January risk cutting into the main lines of consumer spending, business profits and economic growth?  Yes, over time it would.  But the effects in the first few weeks will be minimal, and Congress could act on these matters separately, with a clean bill either before the end of the year or early in the new one.

Sixth, what about all the other cuts in discretionary federal spending?  Yes, some of these would be very damaging if allowed.  Simple solution: don't allow them.

In short, Members of Congress: if you can, just pass the President's bill on middle-class taxes, and, if you can, eliminate the domestic sequester. Then, please go home.  Enjoy the holidays. Come back in January prepared to extend unemployment insurance, to phase out the payroll tax holiday gradually, to restore stable funding to necessary programs and to start dealing with our real problems:  jobs, foreclosures, infrastructure and climate change.

James K. Galbraith is the author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too, and of a new preface to The Great Crash, 1929, by John Kenneth Galbraith. He teaches at the University of Texas at Austin.

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