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Millennials Play A Key Part In Our Elections. Why Is Fosters Trying To Scare Them?

Money ('PT Money' ptmoney-com)
Money ('PT Money' ptmoney-com)

Image via ‘PT Money’ at ptmoney.com

Republicans and Democrats are actively trying to court “millennials” to vote for them. Of course the Republicans are at a big disadvantage in this fight because they are stigmatized by the fact that many feel the GOP is nothing but a party of old rich white guys.

It does not help when you see editorials like this one (Another day older and deeper in debt) from the ultra-conservative editors at Fosters Daily Democrat. They are trying to push millennials into voting against Senator Shaheen because she wants to help reduce their student loan debt, and they say that could raise taxes on, “your parents”. Say what?

“Democrats such as U.S. Sen. Jeanne Shaheen would like to offer you lower interest rates, at the expense of raising taxes on, perhaps, your parents.”

This is complete garbage. Senator Shaheen is pushing for a bill authored by Senator Elizabeth Warren, which would allow students to refinance their student loans from interest rates of 6-8% to less than 1%.

Fosters does get a few things right:

  • The average college graduate in New Hampshire leaves school with $33,000 in student loan debt.
  • The federal government is making money off of your student loans.

These are absolute true, and I think it is appalling. The federal government made upwards of $66 billion dollars in profit off of student loans between 2007 and 2012. Senator Elizabeth Warren essentially said that if banks can borrow from the government at .75% then our students should be given the same deal as the big banks.

So what would happen to the federal budget if they cut out the $66 billion dollars in profits from student loans? Fosters wants you to believe that this will result in a tax increase on your parents. This is completely untrue. None of these changes would increase taxes on the middle class families of New Hampshire.

The tax increase that Senator Warren suggested has been dubbed “the Buffet rule” after billionaire Warren Buffet. The tax increase would only effect the ultra-wealthy 1% of America. Warren Buffet has said in many different ways that it is absolutely wrong that he pays a lower effective tax rate than his own secretary. He suggested that the ultra-wealthy 1% could, and should, be paying a higher tax rate.

I agree with Fosters that the national debt is a problem. We must find a way to reduce our national debt that helps to build a stronger economy and a better community. The editors at Fosters and I disagree on the ways we need to address this problem. They want to follow the GOP rhetoric that we must reduce the size of government and force draconian cuts to all federal programs (except for anything surrounding the DOD). I disagree with this. If you look back at history, it was government investment through work programs (building roads and bridges), increasing the minimum wage, a strong manufacturing base and strong unions that pulled us out of the Great Depression. At the same time we created “Social Security” to help our seniors retire with dignity.

Next we need to raise our gross domestic product. We need to increase manufacturing here at home and start reducing our debt by changing our trade deficit to a trade surplus. The more we make right here at home, the more people have jobs. The more jobs we have, the more money is spent in our local communities. It starts by looking for the “made in the USA” label!

Next to reduce government spending and reduce our national debt, we must start by increasing the minimum wage. Too many Americans are working one, two or even three jobs and can barely afford to pay their rent and feed their children. By increasing the minimum wage, to a real living wage, full time workers would be making enough to take care of their family without any assistance from the government.

Of course there are other solutions that none of the “Tea Party” conservatives want to talk about. One is placing a .5% tax on Wall Street. The tax would take a fraction of a penny on every transaction. This “Robin Hood Tax” would generate upwards of $350 billion dollars a year. $350 billion would cover the loss in revenue from the student loan interest, restore some of the cuts made to social programs, and still have plenty more to begin to repay our national debt. This would also have the added benefit of slowing down Wall Street and encouraging corporations to invest more of their profits in workers and the longevity of their company, not inflating their stock prices.

Ultimately it is about ensuring that corporations and the millionaires and billionaires are paying their fair share in taxes.

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One last thing, Fosters tossed in this line about Social Security which is another attempt to scare millennials into believing that Social Security will be extinct by the time they reach retirement.

“According to Pew Research, 90 percent believe Social Security benefits will be reduced (39%) by the time you become eligible or won’t exist at all (51%).” (Emphasis added)

This statement is nothing more than proof that the majority of Americans do not understand what is really happening to Social Security. These numbers are the results of a poll where people believe that Social Security will completely fall apart.

As the AFL-CIO laid it out, “Social Security is not going broke. It will always be able to collect payroll tax revenue to fund benefits. According to the Trustees, Social Security can pay 100% of promised benefits until 2033. Without any changes at all, Social Security can pay three-fourths of promised benefits indefinitely after that.

The Social Security Trust Fund collects money from payroll taxes. By increasing the minimum wage, it would automatically increase the revenues collected through the payroll tax therefor strengthening Social Security, and adding to its fully funded longevity.

Many elected leaders like Sen. Elizabeth Warren and Sen. Bernie Sanders think that minor adjustment to the Payroll Tax would strengthen Social Security and would allow for higher benefits for retirees. They just want to remove the Social Security cap forcing the ultra-wealthy to pay into Social Security Trust Fund like all the rest of us. Problem completely solved!

 

Using Retirement Funds to Balance the Budget

treasury


Up here in New Hampshire, we have some experience with politicians trying to use public workers’ retirement funds to balance the budget.

Back when Craig Benson was Governor, he wanted to use money from the public employee retirement system to balance the state budget.

But up here in New Hampshire, the public didn’t let him get away with that.  In 1984, Granite State voters amended our state Constitution to protect our employees’ retirement benefits.  New Hampshire Constitution Article 36-a [Use of Retirement Funds] provides:

“The employer contributions certified as payable to the New Hampshire retirement system … shall be appropriated each fiscal year … All of the assets and proceeds, and income there from, of the New Hampshire retirement system … shall be held, invested or disbursed as in trust for the exclusive purpose of providing for such benefits and shall not be encumbered for, or diverted to, any other purposes.”

Down in Washington DC, the federal government hasn’t been quite so careful.  Down in DC, public employee retirement funds are regularly used to balance the budget.

In fact, when the federal government hit the debt ceiling in May 2011, public employee retirement contributions were used to keep the federal government going for more than two months (until Congressional Republicans finally agreed to increase the debt limit).

At last report,

  • more than $800 billion of the federal debt was owed to the federal employees’ retirement system;
  • more than $600 billion of the federal debt was owed to military employees’ retirement programs;
  • more than $45 billion of the federal debt was owed to the Postal Service Retiree Health Benefits Fund.

State and local employees also own a significant chunk of the federal debt.  At last report, pension systems for state and local government employees held almost $190 billion in Treasury securities.

Adding it all up, the nation owes about $1.6 trillion to the various public employees’ retirement systems.  (That’s direct debt – not including unfunded liabilities.)

That’s only slightly more than what tax cuts for the wealthiest 5% have cost the Treasury since 2001.

Should we really be surprised that right-wing Republicans are trying so hard to “reform” public pensions?

The business lobbying group ALEC (“American Legislative Exchange Council”) has led the crusade.  “Taxpayers are no longer willing to bear the increasing cost of these plans… They are demanding reforms that will bring these plans into line with pension and OPEB benefits offered in the private sector.”  (What an interesting comparison!  Federal law generally prohibits private sector pension plans from loaning money to the company that sponsors the plan.)

As Chairman of the House Budget Committee, Rep. Paul Ryan followed ALEC’s lead – almost word-for-word.

Up here in the Granite State, we believe that government should fulfill the promises it has made to its employees.  We even amended our state constitution to ensure that public employees’ retirement funds would be used only to pay retirement benefits.

It’s time for the country to stop using public employee retirement funds to pay the cost of extending tax cuts for the wealthy.

It’s time for Congressional Republicans to stop trying to weasel out of their obligations to federal employees.

It’s time to keep the country’s promises.  (Now that’s a conservative value.)

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Wait!  That $45 billion borrowed from the Postal Service Retiree Health Benefits Fund deserves a closer look.

The Post Office is losing money.  Most of that deficit is being caused by Congressionally-mandated payments to the Postal Service Retiree Health Benefits Fund.   That mandate dates back to the Postal Accountability and Enhancement Act of 2006.

Guess what else happened in 2006?  Just months before Congress decided to have the Postal Service pre-fund retiree benefits (and loan that money to the US Treasury), the country had hit the debt ceiling, and had borrowed from the federal employees’ retirement system to pay the bills.

(No, by the time 2006 rolled around, the Bush tax cuts hadn’t “jump started” the economy or started to erase the federal debt.  So Congress used federal employees’ retirement contributions as a Rainy Day Fund.)

Kind of convenient, isn’t it?  The country needs to borrow money, and suddenly there’s a new Fund to borrow from.

Only now, that Fund is drowning the Postal Service in debt.

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