Today Dr. Reich is more incoherent that usual. If he didn't have his bumper sticker slogans handy he would be completely unintelligible.
He wants to "save" Social Security for the umpteenth time. It's been saved before, but because rich people do bad stuff it needs saving again. And this time only more taxes will save SS. Tax increases always make things better.
Friends,
One of my goals in this daily letter to you is to give you the facts and analysis you need to make informed decisions, especially political ones — and equip you to spread the word to others. So here goes on social security.
During a typically rambling and incoherent interview last week, Trump admitted he would cut Social Security and Medicare if reelected. “There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and the bad management of entitlements.”
Trump has tried to walk back the remarks, saying that when he used the word “cutting” he didn’t actually mean “cutting,” and that Social Security has a lot of waste. (In fact, Social Security is well managed, and theft or fraud is rare.) (!!! The source of CRFB's information is the Social Security Administration itself. That's like asking Tony Soprano if he reports all his income to the IRS.
But there’s no question Trump and his Republican allies want to cut Social Security and Medicare. (This accusation has been trotted out every election season for the past 75 years. But the only ones who have actually cut SS are the Democrats. They are the ones who passed legislation to tax retirement benefits, they raised the age to receive full benefits, and they are the ones who increased payroll taxes.)
Here’s why. At the heart of their economic agenda — at least the portion they’re sharing with their super-wealthy backers — is another giant tax cut for the super-wealthy and big corporations. (Yet another talking point trotted out every election season. These inane bumper sticker slogans must work on some of their more brain-dead followers but we can't imagine the average person believes them.)
The problem is that this tax cut would cause the federal budget deficit to explode — as did their last tax cut for the wealthy — (No, the deficit [which Dr. Reich doesn't really care about anyway], explodes because government spends more than it takes in. It's always a spending problem. Always.)
And by the way, leftists continually remind us that Social Security is independent of the general operations of government. How is it possible for the rich to benefit by a Social Security cut?)
Last week, Daily Wire founder and professional bloviator (Pot, meet kettle.)
I want to be clear with you about Social Security. (No, he doesn't. He has already lied and misrepresented SS several times. He has no intention of being clear.)
So follow this little remark. He want to increase SS taxes on high wage earners. That helps him get his SS payments. In essence, he want the money of people who are richer than himself to pay him.)
So what did the trustees fail to anticipate in 1983 when they raised the retirement age for collecting full benefits? (Wait, they failed? What? We thought they were brilliant.)
At the same time, a much larger chunk of the nation’s total income is going to the top than was expected decades ago.
Here’s the thing: Income subject to the payroll tax is capped. Not a single dollar of earnings in excess of the cap is subject to Social Security payroll taxes. This year’s cap is $168,600.
Which means, for example, that Jeff Bezos finished paying all his Social Security payroll taxes due this year at around 7 minutes into January 1.
The Social Security cap is adjusted every year for inflation, but the adjustment is tiny compared to what’s happened to incomes at the top. (Hmm. The cap is the point at which a worker doesn't have to pay SS tax. So Dr. Reich says that the cap should have been raised much faster. But that would have taxed the higher end of the middle class a lot more. Which suggests that Dr. Reich believes the program is in trouble because the cap didn't go up faster and the middle class didn't pay enough tax...)
As the rich have become far richer, (Notice again how Dr. Reich mixes up "the rich" with high wage earners.)
Friends,
One of my goals in this daily letter to you is to give you the facts and analysis you need to make informed decisions, especially political ones — and equip you to spread the word to others. So here goes on social security.
During a typically rambling and incoherent interview last week, Trump admitted he would cut Social Security and Medicare if reelected. “There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and the bad management of entitlements.”
Trump has tried to walk back the remarks, saying that when he used the word “cutting” he didn’t actually mean “cutting,” and that Social Security has a lot of waste. (In fact, Social Security is well managed, and theft or fraud is rare.) (!!! The source of CRFB's information is the Social Security Administration itself. That's like asking Tony Soprano if he reports all his income to the IRS.
Further, the link discusses only one problem: Improper payments to people who are either dead or over the age of 112. This is an administrative problem, not necessarily fraud or abuse of the system. Isolating this one thing serves to suggest that problems with SS are minimal. But what about illegal activities? Scams? ID theft? false claims?
Further, not all Social Security problems are about the Social Security program itself, but they do descend from the existence of the program, like scammers posing as SS representatives, for example.
Further, Dr. Reich unfortunately cited a reference without realizing it refutes his premise. The CRFB tells us that Social Security must be cut to survive. The website's first statement:
The Social Security Trustees estimate that reducing benefits to restore solvency would require an immediate 16.4 percent benefit cut – the equivalent of reducing benefits this year by more than $150 billion.
Which ironically means Trump is assessing the situation the same as the very website Dr. Reich cites against Trump.
But worst of all, the SS trust fund is in fact completely empty, containing nothing but IOUs. Even if fraud, mismanagement, and abuse happen to be exactly zero, and SS taxes are substantially increased, the program is still utterly bankrupt.)
But there’s no question Trump and his Republican allies want to cut Social Security and Medicare. (This accusation has been trotted out every election season for the past 75 years. But the only ones who have actually cut SS are the Democrats. They are the ones who passed legislation to tax retirement benefits, they raised the age to receive full benefits, and they are the ones who increased payroll taxes.)
Here’s why. At the heart of their economic agenda — at least the portion they’re sharing with their super-wealthy backers — is another giant tax cut for the super-wealthy and big corporations. (Yet another talking point trotted out every election season. These inane bumper sticker slogans must work on some of their more brain-dead followers but we can't imagine the average person believes them.)
The problem is that this tax cut would cause the federal budget deficit to explode — as did their last tax cut for the wealthy — (No, the deficit [which Dr. Reich doesn't really care about anyway], explodes because government spends more than it takes in. It's always a spending problem. Always.)
unless Social Security and Medicare are cut. (The Social Security Administration says it has to be cut. It has been cut by Democrats. When exactly are we supposed to panic about regarding what Republicans are supposedly planning to do when Democrats have already done it?
(Remember that as president, Trump repeatedly included cuts to Social Security and Medicare in his official budget proposals.)
This is why Trumpers have been ramping up calls for cuts in Social Security (or raising the age of eligibility, which is the same thing). (Sigh. He just keeps going on and on...)
This is why Trumpers have been ramping up calls for cuts in Social Security (or raising the age of eligibility, which is the same thing). (Sigh. He just keeps going on and on...)
Last week, Daily Wire founder and professional bloviator (Pot, meet kettle.)
Ben Shapiro — oblivious to the fact that millions of Americans do hard work that takes a toll on their bodies (Yes, of course. Shapiro is oblivious. Somehow Dr. Reich is privy to all of Shapiro's thoughts and life experiences. The obvious fact that physical work is hard on a person's body must be a surprise to Shapiro, right? It never occurred to Shapiro that working hard is, well, hard. Because Dr. Riech sez so.)
— urged that the retirement age be raised. “No one in the United States should be retiring at 65 years old. Frankly, I think retirement itself is a stupid idea unless you have some sort of health problem.” Turning Points USA founder Charlie Kirk echoed Shapiro: “I’m not a fan of retirement. I don’t think retirement is biblical.” (Hmm. What's the problem here? Dr. Reich objects to things the Democrats have already done.)
I want to be clear with you about Social Security. (No, he doesn't. He has already lied and misrepresented SS several times. He has no intention of being clear.)
(I was once a trustee of the Social Security Trust Fund, so I know about this issue.) (He's made this claim before, but we were unable to document it. If in fact it is true, it still doesn't mean he's going to tell the truth.)
Even without another Trump Republican tax cut for the rich, (We are sure getting tired of the ad nauseum repetition of these slogans... )
Even without another Trump Republican tax cut for the rich, (We are sure getting tired of the ad nauseum repetition of these slogans... )
America still faces a pending problem financing Social Security. (Medicare is less problematic because the rise in health care costs has slowed, probably due to the Affordable Care Act.) (Ahh, so the truth finally oozes out. Just a little. So Trump's right. Social Security is in heap big trouble, and Dr. Reich agrees.)
That’s because the American population is aging, with a rising ratio of retirees receiving Social Security benefits to workers paying into Social Security.
The Congressional Budget Office expects that over the next 20 years, spending on Social Security and Medicare will rise by about 3 percentage points of GDP. (Um, sir. Sir? Excuse me, sir? 3% of GDP? What is that in dollars? Sir?)
In their annual report, the trustees of the Social Security Trust Fund said that Social Security will be able to pay full benefits for another decade but thereafter faces a significant funding shortfall. Unless something changes, after 2034 it will be able to pay only about 80 percent of scheduled benefits. (Sounds like trouble. I wonder what the solution will be? More taxes? Dr. Reich?)
But this pending problem in no way requires cuts to Social Security benefits or increases in the retirement age. (80% of benefits sounds like a cut to us.)
In sharp contrast to Trump, Biden correctly asserts in his new budget that Social Security (and Medicare) can remain solvent by raising taxes on high incomes rather than by cutting benefits. (...aaaand there we have it. No problem is too big where a tax increase won't solve it. There are no systemic problems with SS that a tax increase won't take care of. The system is perfect, it just needs more funding. Trust Biden.
That’s because the American population is aging, with a rising ratio of retirees receiving Social Security benefits to workers paying into Social Security.
The Congressional Budget Office expects that over the next 20 years, spending on Social Security and Medicare will rise by about 3 percentage points of GDP. (Um, sir. Sir? Excuse me, sir? 3% of GDP? What is that in dollars? Sir?)
In their annual report, the trustees of the Social Security Trust Fund said that Social Security will be able to pay full benefits for another decade but thereafter faces a significant funding shortfall. Unless something changes, after 2034 it will be able to pay only about 80 percent of scheduled benefits. (Sounds like trouble. I wonder what the solution will be? More taxes? Dr. Reich?)
But this pending problem in no way requires cuts to Social Security benefits or increases in the retirement age. (80% of benefits sounds like a cut to us.)
In sharp contrast to Trump, Biden correctly asserts in his new budget that Social Security (and Medicare) can remain solvent by raising taxes on high incomes rather than by cutting benefits. (...aaaand there we have it. No problem is too big where a tax increase won't solve it. There are no systemic problems with SS that a tax increase won't take care of. The system is perfect, it just needs more funding. Trust Biden.
As a side note, if raising SS taxes on "high incomes" [different than "the rich," by the way] means they won't receive a commensurate increase in their future benefit, that represents a cut in benefits.)
The problem isn’t that the giant baby-boom generation is sucking up too many Social Security benefits. The Social Security trustees anticipated the boom in boomer retirements. This is why Social Security was amended back in 1983, to gradually increase the age for collecting full retirement benefits from 65 to 67. (Waaait. Dr. Reich writes approvingly of the work done back in 1983 to cut benefits. They anticipated this way back then by raising the retirement age.
The problem isn’t that the giant baby-boom generation is sucking up too many Social Security benefits. The Social Security trustees anticipated the boom in boomer retirements. This is why Social Security was amended back in 1983, to gradually increase the age for collecting full retirement benefits from 65 to 67. (Waaait. Dr. Reich writes approvingly of the work done back in 1983 to cut benefits. They anticipated this way back then by raising the retirement age.
They fixed it. With benefit cuts. Except the SS tax rate was increased in 1984 anyway. Huh? What?
So we need to fix it again. Yeah, that's it. They fixed it, but we need to fix it. And we will probably need to fix it again in a few years. But we don't need to cut benefits like they did in their great wisdom 40 years ago. No, we need to increase the Social Security tax on high wage earners [or is it the rich?].
That will make this insolvent system solvent. Just like tax increases lowers the national debt. Same thing. More taxes always are a better thing. Yeah.)
That change is helping finance the retirements of boomers (like me). (Oh. As long as Dr. Reich gets his share, we're good.
So follow this little remark. He want to increase SS taxes on high wage earners. That helps him get his SS payments. In essence, he want the money of people who are richer than himself to pay him.)
So what did the trustees fail to anticipate in 1983 when they raised the retirement age for collecting full benefits? (Wait, they failed? What? We thought they were brilliant.)
Answer: the degree of income inequality in 21st century America. (Oh. Income inequality. Which has increased under every president, including Obama and Biden. The rich are making too much money, and increasing taxes will fix it.
But boomers made a boatload of income over their working careers, the most prosperous generation we have ever seen. "Income inequality" has nothing to do with SS revenues, because boomers paid in handsomely.
Since 1984 annual SS revenues have increased by about 6% on average. This of course means that well before the baby boomers started retiring the SS trust fund was accumulating way more money than was needed at a rate higher than inflation. 6% is not as good as the S&P 500, but we're talking about retirement money, not investment money.
Dr. Reich deceives us.)
Put simply, a big part of the American working population is earning less than the Social Security trustees (including me) (What? Um, Sir. Excuse me, sir? You're a multi-millionaire making a quarter million a year from UC-Berkeley, plus you charge a $40,000 speaking fee.
Put simply, a big part of the American working population is earning less than the Social Security trustees (including me) (What? Um, Sir. Excuse me, sir? You're a multi-millionaire making a quarter million a year from UC-Berkeley, plus you charge a $40,000 speaking fee.
You were earning less? Because of income inequality? What? Sir?)
anticipated decades ago — and therefore paying less in Social Security payroll tax. (Wait, what? Regular earners aren't paying enough SS taxes? Because rich people are good at making money? What?)
Had the pay of American workers kept up with what had been the trend decades ago — and kept up with their own increasing productivity — their Social Security payroll tax payments would have been enough to keep the program flush. (Um, no. It's been decades since SS has been flush. The government owes the SS trust fund over $5 trillion. The trust fund borrowing has been enough to keep things going, at least on paper. But for the past few years the trust fund has been operating in the deficit. Yet government just keeps adding IOUs to the trust fund.
Had the pay of American workers kept up with what had been the trend decades ago — and kept up with their own increasing productivity — their Social Security payroll tax payments would have been enough to keep the program flush. (Um, no. It's been decades since SS has been flush. The government owes the SS trust fund over $5 trillion. The trust fund borrowing has been enough to keep things going, at least on paper. But for the past few years the trust fund has been operating in the deficit. Yet government just keeps adding IOUs to the trust fund.
They aren't going to pay it back. Be sure of that. It's bankrupt. Right now.)
At the same time, a much larger chunk of the nation’s total income is going to the top than was expected decades ago.
Here’s the thing: Income subject to the payroll tax is capped. Not a single dollar of earnings in excess of the cap is subject to Social Security payroll taxes. This year’s cap is $168,600.
Which means, for example, that Jeff Bezos finished paying all his Social Security payroll taxes due this year at around 7 minutes into January 1.
The Social Security cap is adjusted every year for inflation, but the adjustment is tiny compared to what’s happened to incomes at the top. (Hmm. The cap is the point at which a worker doesn't have to pay SS tax. So Dr. Reich says that the cap should have been raised much faster. But that would have taxed the higher end of the middle class a lot more. Which suggests that Dr. Reich believes the program is in trouble because the cap didn't go up faster and the middle class didn't pay enough tax...)
As the rich have become far richer, (Notice again how Dr. Reich mixes up "the rich" with high wage earners.)
more and more of the total income earned by Americans has become concentrated at the top. Therefore, more and more total income escapes the Social Security payroll tax.
The obvious solution to Social Security’s funding shortfall, therefore, is to lift the cap on income subject to the Social Security payroll tax, so the super-rich pay more in Social Security taxes. ("Obvious." Tax increases are always "obvious" to leftists.
The obvious solution to Social Security’s funding shortfall, therefore, is to lift the cap on income subject to the Social Security payroll tax, so the super-rich pay more in Social Security taxes. ("Obvious." Tax increases are always "obvious" to leftists.
Currently, SS taxes are keyed to the potential benefit. The income cap is in place because earning money above the cap doesn't increase one's future benefits. Thus it seems quite equitable for a person to not pay for something he will not benefit from.
But if such a person paid more SS tax for which he doesn't receive the potential benefit, this would change SS to a wealth transfer scheme. Then SS would be nothing more than a tax that funds a government handout program.)
To make sure it’s the super-rich — and not the upper-middle class — who pay, (But... Dr. Reich said a few sentences ago that the cap didn't go up fast enough. Now he says he doesn't want the upper middle class to pay more tax. Which is it? Sir? Sir?)
To make sure it’s the super-rich — and not the upper-middle class — who pay, (But... Dr. Reich said a few sentences ago that the cap didn't go up fast enough. Now he says he doesn't want the upper middle class to pay more tax. Which is it? Sir? Sir?)
it makes sense to eliminate the cap altogether on earnings in excess of, say, $400,000. (Um, sir. Sir? You want a cap at $400,000, but you want to "eliminate the cap altogether?" Sir? How is that possible?
Dr. Reich wants to tax earnings above $400,000, which means he doesn't want to eliminate the cap, but rather wants to reverse it from a cap on SS tax to a cap on what a person is allowed to earn before he is taxed. We can't be sure, because Dr. Reich himself has likely not thought it through.
What, exactly, is Dr. Reich proposing?)
As it happens, Biden’s plan does exactly this.
So there you have it: Trump and his regressive mouthpieces want to cut Social Security (Hmm. Dr. Reich said he was a Social Security trustee and benefits were cut. So does that mean Dr. Reich was regressive back when he was a trustee? But he represented the trustee's efforts as prescient and clever. Yet they engaged in what he calls "regressive" behavior. We wish Dr. Reich would make up his mind.)
As it happens, Biden’s plan does exactly this.
So there you have it: Trump and his regressive mouthpieces want to cut Social Security (Hmm. Dr. Reich said he was a Social Security trustee and benefits were cut. So does that mean Dr. Reich was regressive back when he was a trustee? But he represented the trustee's efforts as prescient and clever. Yet they engaged in what he calls "regressive" behavior. We wish Dr. Reich would make up his mind.)
so they can give another giant tax cut to the super-rich. (Again he mixes the super-rich with high wage earners.
And as we mentioned, leftists continually remind us that Social Security is independent of the general operations of government. How is it possible for the rich to benefit by a Social Security cut?)
Biden wants to save Social Security by having the super-rich — who have become far richer over the past several decades — pay more Social Security taxes.
The contrast couldn’t be more obvious or more important. Please help get the word out.
Biden wants to save Social Security by having the super-rich — who have become far richer over the past several decades — pay more Social Security taxes.
The contrast couldn’t be more obvious or more important. Please help get the word out.
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