…the sacrifices necessary…
Beat the Press Dean Baker November 22, 2010 says it well:
The Washington Consensus That Excludes the Overwhelming Majority of the Public
A front page Washington Post editorial * touted the “accord seen in debate over deficit.” It begins by telling readers that: “the sacrifices necessary to achieve those goals are coming into sharp focus.”
Included in the Post’s list of sacrifices are cuts to Social Security. It never mentions the fact that poll after poll continue to show that the vast majority of the public strongly opposes cuts to Social Security. It is only the select group of Washington insiders that the Post chose to cite that is agreeing on the “sacrifices necessary.”
It is also worth noting that the Post did not even mention plans by the Bowles-Simpson and the Pew-Peterson deficit commission to cut the annual cost of living adjustment. This change would reduce benefits by an average of 0.3 percentage point for each year that a worker receives benefits. This means that after 10 years their benefits will be 3 percent lower as a result of this cut. After 20 years the cut will be close to 6 percent. If the average beneficiary receives benefits for 20 years this means that the average benefit cut will be close to 3 percent.For most retirees Social Security is most of their income. For the bottom 20 percent of the income distribution, it is almost their entire income. This means that the change in the Social Security indexation formula proposed by these deficit cutters would have almost as much effect on after-tax income for many retirees as the proposed ending of the Bush tax cuts for high income households, which would increase their tax rate by 4.6 percentage points on income above $200,000. While the Post has devoted endless news stories to the consequence of this change in the tax code, it did not even think it was worth mentioning the proposed cut in Social Security benefits.
It is also worth mentioning that the Post’s consensus on reducing the deficit excludes the proposal from the IMF for more taxes on the financial sector. Insofar as taxes on the financial sector are not being considered it is likely attributable to the fact that financial interests are playing such a central role in the debate. A newspaper would call attention to this fact.
*The article is here.
— Dean Baker
well, in the hope of beating it in:
Social Security has nothing to do with the deficit.
If they do nothing to Social Security it will not affect the deficit.
If they raise the Social Security tax to pay for the expected longer life of retirees, it will not affect the (federal budget) deficit.
The “Washington consensus” is either insanity or a Big LIe. or both.
Dean Baker: “It is only the select group of Washington insiders that the Post chose to cite that is agreeing on the “sacrifices necessary.”
I have always depended upon the suffering of others.
(With apologies to Tennessee Williams.)
Sadly
two prominent defenders of Social Security used their opportunity to appear in the L.A.Times to call for raising the cap.
It is really smart to tell the people who hate taxes and rule the country that they can save Social Security by raising their own taxes 12%.
When workers could keep their Social Security with present benefits and present retirement age by raising their own payroll tax one half of one tenth percent per year … that’s about forty cents per week per year.
i wish someone who has access to LATimes blog would write to them and point out that raising the cap is not needed, and will not work politically,
but once the workers discover that all they need to do to keep their Social Security is raise their own payroll tax one half of one tenth percent per year (forty cents per week for the average worker today), there is some hope they will stop this nonsense.
I am contemplating that the election of Sarah Palin would inflict her and her brood would on the very-deserving Washington establishment and insiders !
Link??
dan
my email machine has died. today’s Los Angeles Times. opinion by Altman and Kingson.
At the end of the third full paragraph, don’t you mean after twenty years it would be 6 percent? (Or 5, or whatever, but not 3 again.)
H-Bob, yeah! Me too! Quite an improvement from the past two years. Dunno, but we might even get some successful economic policy.
War. Sacrifice your SS and leave the kids nothing as all your assets go to end of life medical care.
The war profiteers will be rich.
20% for war, 20% for social security. Another 20% for corporate welfare…………………………….
War profiteers business plan is to raise share of federal outlays as the boomers’ retirement demands more.
War a growth industry, it is only fair.
raising the cap makes some sense to me since the actuarial imbalance is being driven by the $100K+ crowd living longer than everyone else.
one more time from the minneapolis fed’s 1974 annual report:
…we are going to have to accept as fact that we cannot continue to expand consumption (i.e., living standards) as rapidly in the next few years as we have during the past decade. It is important to understand that this conclusion rests basically on the argument that credit-financed expansion, beyond a certain point, leads to instability rather than further expansion. The conclusion does not rest on the dubious premise that the world is running out of resources. It is strongly reinforced, however, by the current drag on potential rates of growth in consumption…
In the past, widespread increases in standards of living in developed countries eased social tensions that otherwise might have been associated with disparities of income and wealth, both within and between countries. If long-nourished expectations of “a better life” (i.e., more goods, services, leisure, etc.) are now going to be frustrated, or at least postponed, as seems inevitable, then there is going to have to be an equitable sharing of the burden of this adjustment. [my emphasis]
The Limping Giant…
Bruce K. MacLaury
January 1974
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=692
The First Great Depression of the 21’st Century
Anwar Shaikh
http://homepage.newschool.edu/~AShaikh/Shaikh%20-%20First%20Great%20Depression%20of%20the%2021st%20Century.pdf
cutting ss payments will, by making the real market still more disproportional, still more top-heavy, work against employment and cutting the deficit……..but, sheesh, that’s so basic it really need not be said.
heywood
i wish you could document that. but i think that the over 100k crowd collects benefits only on the 100k they paid SS taxes on. and their rate of return is marginal on that. it is their excess that pays for the subsidy that low income workers get on their SS.
juan
thanks for this. be interesting to hear more from you.
Heywood, SS benes are computed based on earnings up to the limit. So, suppose you earn $200K, you pay tax on $106K and that’s all that’s posted to your earnings record. What’s on the earnings record is the basis for the benefit computed. NO
Social Security can easily be funded for by lifting the limit on taxible income. According to the CBO Social Security would last as presently constructed for decades. One of the prolems with SS is that money is not reaching those who need it the most, those hovering around and below the poverty line. These individuals and households sadly are likely to spend all their income, stimulating the economy. It is a dangerous mistake to assume that by retirees recieving less that this is an equitable sharing of “sacrifice” There is no reason why those who earn more than $100,000 shouldn’t pay their share. I was under the impression that we have a progressive tax system.