Excuse me, Mr. Donohue, WHO is “Taking from the Young”?!!

grandfatherNo.  Just…no.

As a parent, I am absolutely revolted by Tom Donohue’s apparent attempt to incite a political war between the generations.

Yes, I understand that as America’s top business lobbyist, he would prefer the federal government to cut spending on Social Security and Medicare.

And yes, if the federal government spends less money taking care of our senior citizens, there will be more money available for corporate handouts.

But from my own perspective, the federal government already spends enough money on corporate handouts.  The average American family is now paying $6,000 a year in subsidies to big business.

Yet, based on yesterday’s speech, it looks to me like Mr. Donohue is willing to pit children against their grandparents, in order to get even more.

wealth share 1983-2010Mr. Donohue: it’s not our senior citizens who are “taking” wealth away from the next generation.

Look at what’s happened to the distribution of wealth since Ronald Reagan was President. 

Sixty percent of households LOST wealth… while those at the top of the economic ladder gained massively.

Look at what’s happened to annual income since Ronald Reagan was President.

income gains 1986-2008All the growth went to the richest 10%, while incomes for the bottom 90% declined.

The pattern holds true even during the current economic “recovery”.  According to economist Emmanuel Saez, “The top 1% captured 95% of the income gains.”

So yes, Mr. Donohue, it looks like this next generation will end up with a lot less than their grandparents had.

But no, Mr. Donohue.  It’s not our senior citizens who are “taking” that wealth away.

And you’re not going to start an inter-generational political war, to distract us from what’s really going on.

GOP in Congress: Keeping — or BREAKING? — Promises

Crossed fingers ICan someone please explain to me… how can the GOP be simultaneously

What, exactly, is the big difference?  For Social Security and Medicare, people have paid money into the system, with the expectation that they would receive an agreed-upon return (benefits) at a later date.  Just the same way that bondholders have loaned money, with the expectation that they would receive an agreed-upon return (principal plus interest) at a later date.

Would bondholders be happy if House Budget Committee Chairman Paul Ryan suggested trimming bond repayments between 15% and 45%?  So why should people who have paid into Social Security accept those kinds of cuts?

Let’s see… if Ryan reduced federal bond payments by 15%, wouldn’t that free up about $54 billion a year?  Wait… wouldn’t that more than cover the $40 billion of cuts to the Supplemental Nutritional Assistance Program that Republicans want to make?

Pediatricians at the Boston Medical Center have studied the interaction between hunger and health, and yesterday announced that SNAP was “one of America’s most cost-effective and successful public health programs in the country” and by improving children’s health, SNAP actually “saves society money.”  Except that Republicans want to cut children’s health insurance, too.  At this point, you halfway expect House leadership to start quoting Jonathan Swift.  But I digress.

Or if Ryan reduced bond payments by 45%, wouldn’t that free up about $162 billion a year?  Which would more than cover the revenue cost of not returning to Clinton-era tax rates.

But the GOP isn’t suggesting that bondholders should absorb those sorts of cuts…oh, no, that would be unthinkable.  So why would they think that Social Security recipients are fair game?

You pay your money in, you expect to get it back as promised.

Here’s what I think will happen, during the next few weeks of government shutdown/debt-limit crisis.  I think the Republicans will stop using Obamacare as their line in the sand/can’t compromise issue.  I think they will switch to insisting on some sort of “Entitlement Reform” in exchange for not driving our economy totally off the cliff.  And “Entitlement Reform” is Tea Party lingo for making cuts to Social Security, Medicare and Medicaid.

At one level, I guess it’s fair to lump Social Security and Medicare into the category of “entitlements” – you pay your money in, you’re entitled to get it back as promised.

Just like the US Treasury’s bondholders are entitled to get their money back as promised.

I’m wondering how the GOP is going to explain the difference between those promises, over the next few weeks.  Can’t imagine what rhetoric they will come up with, to justify holding bondholders harmless while trying to cut Social Security benefits.

 

The Tea Party’s ‘Penny Plan’: is it really to cut $1 trillion from seniors?

Teabaggers Descend on WashingtonRemember the health care Town Halls a few summers ago?  Remember all the Tea Party followers carrying “Keep Government Out of Medicare” picket signs?  Welcome to Round Two of the Craziness.

Tea Party leaders in the Senate are rolling out their “Penny Plan” to reduce the federal budget deficit.

The lawmakers are pitching the plan in the simplest terms — cutting a penny from every dollar the government spends so that spending will soon equal revenue.  “Everybody should be able to live with one percent less in order to help bring this country back from the brink of catastrophic failure,” bill sponsor and Wyoming Republican Sen. Mike Enzi said in submitting the legislation just before August recess.

And gosh, doesn’t that just sound totally reasonable?  Families all across America have been “making do” with a little less (sometimes a LOT less) lately.  So why can’t the federal government do the same?

Well, for starters, because the federal government already IS.  Remember the Sequester? That wasn’t just a one-time thing – it’s a 10-year schedule of increasingly tough budget cuts.  So, as the government plans for the next decade:

Already built into Congressional Budget Office assumptions is essentially a freeze in all government programs other than Social Security, Medicare, Medicaid, and the other entitlements. That means that the 15 major executive departments and all of the independent agencies will be spending about 20 percent less after adjusting for inflation and population growth than they are spending now. As a result, we are already facing significant cutbacks in government services, ranging from food safety to law enforcement, air traffic control and national defense.

And now Tea Party legislators want to add their “Penny Plan” on top of the Sequester cuts.  That’s another trillion out of the federal budget.  Where do you suppose it’s going to come from?

If the FBI, the federal judiciary, the Federal Aviation Administration, NASA, the veterans medical program, the State Department, Customs and Border Patrol, the National Parks, cancer research, aid to local schools, and every other activity of every other department and independent agency of the government outside of defense was eliminated

… that would only account for about 60% of the cuts that would be required by the Penny Plan.

Don’t know about you, but I’m not going to hold my breath waiting for Tea Party legislators to cut defense spending.  [See 70 years of US defense spending, in one chart, here.]  Which leaves – yes, that’s right – “entitlements”.

Shiny Penny 2001 D Macro April 30, 20101The folks pitching the plan just talk about pennies.  But the bill itself singles out three programs that help senior citizens:  Social Security, Medicare and Medicaid.  (Remember that more than two-thirds of all nursing home/long-term care costs are paid by Medicaid, not Medicare or private insurance.)

I wonder what a trillion dollar cut to senior citizens would look like.  (Would it maybe look like all those “death panels” everyone was so worried about, a few years back?)

Here’s another reality check: the Penny Plan already has strong support among Republican legislators.  According to one count, 16 Senators and 65 Representatives support the Plan.  The list of Senators includes at least a couple of guys who want to run for President…

… and Senate Republicans have – at least so far – blocked efforts to appoint conference committee members to negotiate with the House regarding the FY14 budget.   The FY13 budget expires in five weeks.

And the Senate still has the filibuster.

It’s going to be an interesting next few months.  I hope that, this time around, the Tea Party’s followers are able to see beyond the “just a penny” rhetoric, to all the very real damage that this Plan would cause.

———

My phrase of the day is “ginning up”.  It means

  1. To create or arouse strong feelings in (someone); move or excite.
  2. To fabricate, invent or concoct (something), typically with deceitful intent.
  3. To quickly create something where time, not careful attention to detail, is of the essence.

Synonyms include: stir up, goad, whip up, fan the flames of, provoke, incite, and ignite.

Did you attend any of those health care Town Halls?  If so, you probably already know what this term means.

 

 

Social Security: 78 years (and counting)

Seventy-eight years ago today, President Franklin Roosevelt signed the Social Security Act with this statement:

“Today a hope of many years’ standing is in large part fulfilled. The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.”

That was almost eight decades ago. Now, almost 90% of Americans age 65 or older receive Social Security. Almost half of those people would be living in poverty, if they did not receive Social Security benefits.

“This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future Administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.”

Today, the Social Security Trust Fund has $2.7 trillion in assets. The “Old Age and Survivors Insurance” program is expected to have an annual surplus at least through 2020 (and only after 2020 would it need to dip into the Trust Fund to pay benefits).

The irony here is that President Roosevelt expected Social Security to “lessen the force of possible future depressions” and prevent the federal government from having to go “deeply into debt to furnish relief to the needy” during economic crises.

But instead, the program was used to help the federal government absorb the cost of the Bush tax cuts.

Today, we are at the decision-making point that Alan Greenspan predicted 10 years ago: either the Bush tax cuts need to (finally) end, or the government is going to have to “cover the $1 trillion price [of the tax cuts] by trimming future benefits in Social Security and other entitlement programs.”

Today, the Social Security program is under attack like never before. (Watch for my next post, about the GOP’s revived “Penny Plan”.)

And President Roosevelt’s assumption that the federal government would go “deeply into debt to furnish relief to the needy” during “possible future depressions”?

Looks to me like that’s just history.

————

Really worth reading, if you have a few more minutes: Tax attorney Paula Singer’s column “Social Security is a model, not a failure, for Washington budgetmaking.”

Why the economy doesn’t work for the 99%

Today’s New York Times has a really good picture of what’s happened to America’s economy over the past 50 years.

Please take a few minutes to look at it, and pay particular attention to what’s happened since the Bush tax cuts started going into effect in 2001.

  • Corporate profits are at their highest level ever.  After-tax corporate profits were 5% when the Bush tax cuts started taking effect — now they’re at 9.7%.
  • Wages are at their lowest level level ever.  When the Bush tax cuts started taking effect, 46.7% of the gross domestic product was paid to workers as wages — now it’s 42.6%.
  • Corporate taxes are at almost-record lows.  Corporations paid 30% of their profits as taxes, when the Bush tax cuts started taking effect — now they pay 21.6%.
  • Personal taxes have also dropped.  Taking all taxpayers together (the 1% as well as the rest of us), individuals paid 17.8% of their incomes as taxes when the Bush tax cuts started taking effect — now, it’s 14.1%.

Remember, the Bush tax cuts were supposed to be temporary.  They were supposed to “stimulate the economy” and then expire in 2011.

Instead, the Republicans in Congress have used one fiscal crisis after another to keep most of those tax cuts in place.

Top Tax Rates 1952-2008And now they’re talking as if those Bush-era tax rates are a ceiling, not a floor.  (Read “Corporate Tax Cuts are almost twice the Sequester cuts” here.  Read about the $161 billion annual cost of the dividend and capital gains tax cuts here.)

Republicans in Congress keep agitating about the federal debt — but they’re not willing to raise revenues by returning to historical tax levels.  No, the GOP keeps insisting that the only way to address the debt is by cutting “entitlements”.

Let’s use real words, here, so everyone knows what the choice comes down to.  Translated from GOP-speak, “entitlements” are Social Security, Medicare and Medicaid.  (Remember, you have paid into the Social Security and Medicare trust funds with every paycheck, for as long as you’ve been working.)

So here’s the choice:

  1. Congress can continue to let the federal debt grow.
  2. Congress can return taxes to historical levels.
  3. Congress can cut Social Security, Medicare and Medicaid.

Congress is going to be making this choice over the next two and a half months.  The current federal budget expires on September 30th — about the same time that the federal government will hit the debt limit (again).

Go back and look at those New York Times “what happened to the economy” charts again.

Don’t you think it’s time to finally end the Bush tax cuts?

 

Fiscal Cliff: Who is “entitled” to what?

Something else to remember, as you’re watching news coverage of the Fiscal Cliff negotiations:

The tax rates that GOP Congressional leaders are trying so hard to defend are relatively recent – and the public has never supported them.

Washington Post Poll September 11 2001Just months after the first round of tax cuts was passed, in 2001, a Washington Post poll found that 57% of Americans wanted to roll back the tax cuts in order to preserve the federal budget surplus. (Yes, we had a surplus, back then.)

There’s more:

President Bush’s budget director had just warned congressional Republicans that “it was likely the government would tap the Social Security surplus this year, contradicting what he had been saying only a few weeks earlier.”

That same Washington Post poll found that “an overwhelming 92 percent of those surveyed said they opposed using Social Security funds” for things other than retirement benefits.

That was in 2001. Two years later, it was clear that the first round of Bush tax cuts hadn’t “jump-started” the economy – so the White House pushed through another round. This time, the bill had so little support it almost didn’t pass the Senate. GOP stalwarts John McCain, Lincoln Chafee and Olympia Snowe all voted against it. The Senate split 50-50 – and Vice President Dick Cheney cast the deciding vote.

That’s right… Dick Cheney was responsible for passing the tax cuts that House Speaker John Boehner is now trying so hard to defend.

“Entitlements”?

In recent weeks, Speaker Boehner has been talking about tax cuts for the wealthy as if they’re somehow sacred. He doesn’t seem to care what he has to sacrifice, to protect those high-income taxpayers.

Speaker Boehner is insisting on cuts to “entitlement programs” such as Social Security, Medicare and Medicaid – before he will agree to any fiscal cliff “compromise”.

And if taxes are going to be raised – well, guess who Speaker Boehner expects to pay the price? Here’s Senate President Harry Reid’s analysis of Speaker Boehner’s latest proposal, earlier today:

“Their proposal would raise taxes on millions of middle-class families,” Reid said on the Senate floor. “Their plan to raise $800 billion in revenue by eliminating popular tax deductions and credits would reach deep into pockets of middle-class families.”

Speaker Boehner wants to cut “entitlements”?!

The working families of America have paid into the Social Security system for decades, expecting to get benefits back when we retire.

High-income taxpayers owe their low tax rates to former Vice President Dick Cheney.

Who, exactly, should be entitled to what?

Read more about the fiscal cliff here.

Two Things to Remember

Sample Social Security CardAs our country heads toward the fiscal cliff, Republican Congressional leaders are going to be talking a lot about “entitlement reform”.  Their position: they believe any “compromise” they make on tax revenues should be matched by deep cuts to “entitlement” programs.

Two things to remember, as you listen to Karl Rove and his buddies try to sell their position to the American public:

  1. For more than a decade, our country has borrowed from the Social Security Trust Fund to pay for tax cuts for the wealthy.
  2. The Social Security system has already turned the corner.  On average, working families will receive less in Social Security benefits than we have paid into the system in taxes.  “A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85.”

Just how much more do they want us to “compromise”?

Looking Over the Fiscal Cliff

Congress returns to Washington DC today – but “fiscal cliff” negotiations aren’t expected to resume until next week.

The delay may allow Congressional GOP leaders to bring a different position to the bargaining table.

Immediately following Election Day, GOP leadership seemed stuck in their “no new taxes” campaign rhetoric.

Since then, several prominent Republicans have questioned the wisdom of sticking with Grover Norquist’s infamous “pledge”.

Over the decades, Norquist’s “pledge” has not been a fiscally-conservative position.  It works like a ratchet wrench: things can only go in one direction; taxes can only go down.  And taxes have gone down – considerably – since Norquist started agitating.

Right now, the federal tax burden – tax revenues as a percentage of the economy – is at one of the lowest points in modern history.

Much of the decline was caused by cuts to corporate taxes.

Next week’s “fiscal cliff” negotiations need to be framed by this reality.  Particularly in a down economy, Congress can’t just cut its way to a balanced federal budget.  (They have tried that in Europe; it’s not solving anything.)

America’s working families know that you can’t balance the budget if revenues keep declining.  We’ve tried to keep our own books balanced despite declining wages.  Too many families have ended up doing just what the federal government has done: borrow money to make ends meet.  And that doesn’t work out very well, over the long term.

As the “fiscal cliff” negotiations continue, keep an eye on your Social Security and Medicare benefits.  It’s just like what happened with the NH Retirement System: the politicians want to cut our benefits, after we spent decades paying into the system.

Right now, even the politicians who are forswearing Norquist’s “pledge” are insisting on “entitlement reforms” in exchange for “new revenue”.  But that’s a false choice.  They are simply trading one way of ratcheting-down taxes for another.

Returning tax revenues to their previous (pre-Norquist) levels would go a long, long way toward solving our country’s debt crisis.

 

[Tax revenues shown above do not include Social Security, Medicare or other retirement program revenues.  Data is from Table 2.3 of http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist.pdf.]

Promises, promises…

A lot of promises were made, back when the Bush tax cuts were first enacted.

Back in 2001, the Heritage Foundation projected that:

  • “Under President Bush’s plan, an average family of four’s inflation-adjusted disposable income would increase by $4,544 in fiscal year (FY) 2011, and the national debt would effectively be paid off by FY 2010.”
  • “The plan would save the entire Social Security surplus and increase personal savings while the federal government accumulated $1.8 trillion in uncommitted funds from FY 2008 to FY 2011.” (“Uncommitted funds” is a fancy way of saying “surplus”.)

Did your family’s disposable income increase by $4,544 last year? (Wondering how the top 1% are doing? Browse through “How to Spend It” here.)

Has the national debt been paid off?
Is the Social Security surplus “safe”?
Has your family been able to increase your savings?

What happened to the $1.8 trillion federal surplus that was supposed to appear, after the tax cuts stimulated the economy and the “job creators” created jobs?

Lots of promises were made, back when Republican Leadership was forcing the Bush tax cuts through Congress. [Historical footnote: both the 2001 tax cuts and the 2003 tax cuts were passed in a way that made them exempt from Senate filibuster. In 2003, the Senate vote was 50-50 after Republican Senators John McCain, Lincoln Chafee and Olympia Snowe voted “nay”; and Vice President Dick Cheney cast the deciding vote to enact the bill.]

Those promises never panned out. But now, Republican leaders in Congress are acting as if high-income taxpayers are somehow entitled to the low tax rates they have been enjoying for the last decade

What’s up with this idea of “entitlement”?

Millions of American workers have paid into the Social Security system for decades, based on the promise that we would get Social Security benefits when we retired. Isn’t it reasonable for all of us workers to think we’re entitled to the benefits we contributed to? But now, Congressional Republicans are insisting on “adjustments to eligibility and benefits in the Social Security and Medicare programs.”

One man – Dick Cheney – cast the deciding vote to give the wealthy their tax cuts; but now Congressional Republicans think those tax cuts are somehow sacred. Just two days ago, Senate Minority Leader Mitch McConnell told a hometown newspaper that any “fiscal cliff” deal “must not raise taxes on wealthy.”

Sense of “entitlement”?

“Gifts” from the government?

The Bush tax cuts were supposed to “jump-start” our economy. They were supposed to “trickle down” and enrich working families. They were supposed to eliminate the country’s debt. They didn’t do any of that – but now Congressional Republicans want us to pay the price, through cuts to our Social Security and Medicare benefits.

Didn’t they get the memo? Romney-Ryan lost.