Tag Archives: Social Security

When Voters Can’t Connect The Dots…

Thousands–probably, millions–of words have been written about Republicans’ religious devotion to anti-tax beliefs. Unfortunately, that dogma is matched by a pervasive lack of understanding of how tax dollars are spent, and what citizens get for our money.

There are plenty of. wasteful programs, of course, not to mention subsidies that have long outlived whatever merit they may once have had. These wasteful and unnecessary programs allow politicians to make the case that all taxes are theft. It then follows that any and all efforts to reduce taxes are by definition laudatory.

Which brings us to Donald Trump’s recent plan to end or defer the payroll tax.

 As a number of media sources have explained, payroll taxes support Social Security and Disability Insurance. Social Security’s Chief Actuary, Stephen C. Goss, evaluated the Trump proposal; he concluded that it would end Disability Insurance in mid-2021 and destroy Social Security by mid-2023.

When those of us who are fortunate enough to still be employed look at our pay stubs, we see hefty deductions for FICA.  Most of us have undoubtedly thought about how nice it would be to have those dollars right now.  Reasonably informed adults,  however, who realize that they will need Social Security at some point, understand that deferring instant gratification is in their long-term best interests. (It’s true that some small portion of the population would be able to invest on their own behalf, but since most people couldn’t or wouldn’t, massive poverty among the elderly would result.)

Those who don’t know what the payroll tax deduction pays for see it as just another tax to attack.

I understand that tax policy can be complicated. When I pontificate about Americans’ lack of civic literacy, I’m not suggesting that we all need to know the ins-and-outs of the various ways government assesses us to pay for services–but it would  be helpful if people recognized that we need to pay for services that are widely popular and obviously needed at the local, state and federal levels.

Actually, it would be more than helpful if Americans could agree on the essential components of both our physical and social infrastructure. At the  local level, there’s a public outcry if streets,  roads  and bridges aren’t properly maintained. Whatever our concerns about policing, a vast majority expect local government to provide for public safety.  Most of us think cities should provide public transit, garbage and snow removal, and a variety of other services. 

Survey research leaves no doubt about the popularity of federal social welfare programs like Social Security and Medicare. Survey research also tells us that far too many Americans fail to connect the dots between the taxes they pay and the services they demand.

Should thoughtful and competent individuals  and organizations monitor government. programs to ensure that our tax dollars are being wisely and appropriately spent? Absolutely. Are there programs that should be eliminated? You betcha! But ensuring the efficiency of public administration is a far cry from across-the-board anti-tax dogma–and a very far cry from uninformed and dangerous efforts to keep today’s dollars by selling the future short.

As usual, Trump and his administration are counting on the ignorance of his supporters. And to be fair, eliminating the payroll tax is (marginally) less dangerous than drinking bleach…

 

 

Kicking Them When They’re Down

A few days ago, I referenced President Obama’s efforts to console family members of the worshippers gunned down during bible study in Charleston, and said I found it impossible to imagine Trump trying to comfort anyone.

Not only does he not console– or even empathize with–people who are suffering, Trump’s instinct is to kick them when they’re down. Just as he insisted that John McCain wasn’t a hero “because he got caught,” he considers Americans who are disadvantaged “losers” –his favorite epithet. And “losers” have absolutely no claim on his sympathies (assuming, in the absence of any evidence, that he has the capacity for sympathy) or on government largesse. To the contrary.

Time Magazine recently reported on the difficulties disabled poor people are experiencing buying groceries during the pandemic. As the story noted, it can be difficult getting to the store in normal times, but in some states–where “stay at home” orders keep the elderly and “medically fragile” residents from venturing out, it has become a huge problem– because unlike other Americans, recipients of the Supplemental Nutrition Assistance Program (SNAP) aren’t permitted to use those benefits for grocery delivery in most states, including Indiana.

Speaking of food stamps, Vox and a number of other media outlets recently reported on the administration’s effort–in the middle of a pandemic that has triggered massive unemployment–to cut over 3 million people from the rolls.

The Trump administration is proposing bumping 3.1 million people off of food stamps (about 8 percent of the total program) through the federal rule-making process — cutting out Congress.

The rule cracks down on “broad-based categorical eligibility,” or BBCE, a policy that enables states to enroll people in food stamps (formally called the Supplemental Nutrition Assistance Program or SNAP) if they’ve already applied for other benefits limited to low-income people, most notably Temporary Assistance for Needy Families (TANF). The claim (which doesn’t have much basis in evidence) is that this provision is easy to game and keeps benefits from going to the neediest people.

In fact, Trump and his administration seem to be mounting a positive vendetta against Americans who have the nerve to be disabled and/or needy. Another recent proposal from the Social Security Administration would cut $2.6 billion dollars over the next decade from the two programs that anchor the disability safety net: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

Recipients of these safety net programs aren’t exactly living high on the hog: the maximum amount that SSI will provide to a disabled beneficiary is just 74 percent of the federal poverty level — currently $12,490 for an individual– and the average for SSDI was just $14,855 per year.

Speaking of vendettas, Trump is clearly intent upon destroying the nearly 250-year-old Postal Service, evidently because he is convinced that the post office delivers Amazon purchases at a loss. (That–like so much of what Trump believes–is demonstrably untrue.) And he hates Jeff Bezos, who also owns the Washington Post.

Trump blocked a bipartisan plan to provide $13 billion to the post office, which was already struggling due to a 2006 Congressional requirement that it pre-fund employee retirement obligations to the tune of several billion dollars a year. Trump has now appointed a crony with no postal experience to be the new postmaster general, and is demanding a hefty raise in postal rates.

The Post Office employs 600,000 workers. It supports a $1.6 trillion mailing industry that employs close to another 7 million. (It also employs black workers at double the rate of the overall workforce.) Only someone as clueless–or heartless– as Donald Trump would try to throw another seven and a half million Americans out of work at a time when unemployment is at an all-time high.

The post office is also critical to American healthcare: in 2019 alone, it delivered 1.2 billion prescriptions, including almost 100 percent of those ordered by the Department of Veterans Affairs.

Those who are inclined to minimize the importance of the postal service might take a look at its performance during the current pandemic. Letter carriers are delivering much-needed items and at much lower cost than services like FedEx or UPS–everything from masks to stimulus checks. As states have migrated to vote-by-mail primaries, they’ve delivered the ballots. In fact, it isn’t much of a stretch to attribute the attack on the post office to Republican efforts to defeat vote-by-mail.

SNAP recipients, disabled people, poor folks, postal workers–to Trump, they’re all “losers” who can be kicked to the curb.

I think it was Maya Angelou who said “When someone shows you who they are, believe them.”

“Trumped Up” Social Welfare Crises

There are two utterly incompatible approaches to the maintenance of social safety nets–and beliefs about the obligation of a society to its most vulnerable members.

On one side are those who recognize the obligation, who see the payment of taxes to support social programs and government services as the “dues” we owe to the “club” we call America. On the other side are those who reject that obligation, who insist that individual citizens (including, presumably, children, the elderly and the disabled) must be personally responsible for their own needs, and to the extent they are unable to do so, that private charity should fill the gap (despite copious evidence that charity is grossly insufficient to the task).

Those in the first category have legitimate differences about how we discharge our obligations to each other, about the efficiency of programs put in place, about the evidence we can reasonably require in order to separate out the truly needy from the merely greedy. But they understand that no society that ignores its neediest citizens can be “great” or even good–let alone stable.

Those in the second category tend to be financially comfortable (or better). Their incentive to ignore reality and the plight of others is rooted in their desire to keep more of what they have and their insistence that they have “earned” their good fortune and other folks could too if they really wanted to.

They are the ones who have controlled Congress. And as Robert Reich has written,

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.

Since any overt attack on these programs would be politically suicidal, the Republicans have decided to do nothing–aggressively– to refrain from the “fixes” and accommodations to economic changes that all such programs require from time to time.

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.

As Reich points out,  the CEO of a big company making $15 million dollars a year pays Social Security taxes on just $128,400 of that, while the nurse practitioner taking home  $100,000 pays Social Security taxes on every dollar of his or her income.

Reich’s second “fix” addresses a situation that most of us find outrageous:

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

Every other country negotiates these prices; that we do not is an unconscionable gift to big Pharma, which already benefits from the immense amounts through which taxpayers subsidize research. (Pharma already spends more on advertising, marketing, and lobbying than it does on research, so protests that lower profit margins would curtail research are disingenuous at best.)

Reich’s third “fix” is the least intuitive–and the most intriguing.

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.

I have previously reported on the multiple benefits conferred by immigration; this is another.

If you belonged to a club in which some members refused to pay the dues that maintained the facility and its amenities, you’d terminate their membership. We can’t terminate the citizenship of people who are unwilling to pay their fair share, but we can save Social Security and Medicare. As Reich says,

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.

 

 

 

Let’s Make a Deal

Let’s talk about dealmaking, crony capitalism style. The Atlantic reports

Between 2007 and 2012, GE secured more than $16 billion worth of federal contracts, which might have something to do with the fact that it spent $150 million on lobbying during that period.

According to the article, the Sunlight Foundation recently examined the activities of 200  politically active for-profit corporations between the years 2007 and 2012.  Between lobbying and campaign contributions, those 200 companies spent $5.8 billion to influence government. In return, they got more than $4.4 trillion in federal business and support. (It may have been more; according the the Foundation, federal record-keeping isn’t as precise as we might wish.)

For comparison’s sake, $4.4 trillion is more than the amount that Social Security paid out to roughly 50 million beneficiaries over the same six-year period.

It’s interesting. So-called “deficit hawks” like Paul Ryan are constantly looking for ways to cut “entitlements”– social programs that benefit large numbers of American citizens. There is a lot of discussion of the costs of those programs. There is  far less discussion about the amount of taxes that most Americans have paid toward those costs, about  whether ordinary Americans should be able to expect a reasonable return on that tax “investment,” and what such a “reasonable return” might look like.

There is even less discussion of the appropriate “return on investment” for monies spent on campaign contributions and lobbying, or about the possibility that the tax dollars paid under the government contracts secured by campaign contributors exceed the value of the services being rendered.

When Social Security was established, it was sold as insurance. That “deal” was simple: Workers would pay taxes on their earnings, those taxes would be invested and kept safe, and government would pay them a monthly income in their old age. We can argue about the sufficiency of that income, the fairness of the tax, the mandatory nature of the program, whether social security is really an insurance program or welfare…all sorts of things. But lawmakers chosen by We the People bickered and argued and ultimately voted to make that deal.

I don’t remember a similar vote on the appropriate level of  “quid pro quo” payable for campaign contributions….

 

 

Words and Meanings

I regularly use this space to take right-wingers to task, but those on the Left deserve similar treatment when they engage in similar behaviors.

Ever since reports that Obama’s budget included a “chained CPI” for Social Security, liberals have been screaming about proposed “cuts” to Social Security. My inbox has been flooded with pleas to sign this or that petition, to call my Senators and Congressional Representatives, and generally to make it known that these “cuts” cannot be justified.

As I understand it, what the President has proposed is changing the metric currently used to calculate Social Security cost of living raises. The CPI index being used has been criticized as an inaccurate indicator, resulting in larger raises than are needed to keep up with a rising cost of living. This change in the yardstick for calculating those raises will result in lower Social Security “bumps” or increases going forward.

That is not a “cut”–at least, not in my vocabulary. It is a recalculation that will result in smaller increases in the future–lower expectations for growth.

Now, I am not an economist, and I don’t play one on TV. I have no independent ability to evaluate arguments about the relative merits of the indexes involved, although several people whose judgment and expertise I respect appear to agree that the current index is inaccurate. If they and the President are wrong, then critics have a perfect right to object to the proposed change on that basis. But advocates of the status quo do themselves no favor by mischaracterizing the proposal and mounting a hysterical assault.

When NRA supporters refuse to consider background checks because that is “really” the first step toward a registry that will then be used in an effort to confiscate all the guns, we rightly accuse them of irrational behavior. When progressives respond to a suggestion to change the way we calculate benefits by characterizing it as a hard-hearted assault on old people and the first step in dismantling the social safety net, we engage in similarly overwrought behavior–and risk being dismissed for the same reason.

Argue for or against the use of the new metric, but leave the hyperbole at home.