Respectfully submitted by Lawrence E. Rafferty (rafflaw)- Guest Blogger
We have all heard the cries that so-called entitlement programs like Social Security need to be cut in order to “save” them from extinction. Now that I am 62 years of age, I have become more interested in the issue of Social Security’s solvency.
CEO’s have gotten involved in the process through the now infamous Fix the Debt campaign initiated and funded by Billionaire Pete Peterson and the parallel campaign started by the Business Roundtable. Both of these campaigns are supported by big business and CEO’s of large corporations with no concern where their retirement funds are going to come from.
“In the current budget debate, the loudest calls for Social Security cuts are coming from two lobby groups led by CEOs who will never have to worry about their own retirement security.
The report, titled Platinum-Plated Pensions: The Retirement Fortunes of CEOs Who Want to Cut Your Social Security,
points out that two organizations, Fix the Debt, a PR and lobby machine launched in 2012 and led by more than 135 CEOs of major corporations, and the Business Roundtable, a 40-year-old association made up of about 200 CEOs of Americas largest corporations, are involved in a protracted campaign aimed at cutting, and ultimately, gutting Social Security.
Platinum-Plated Pensions, written by Sarah Anderson, the Director of the Global Economy Project at the Institute for Policy Studies, and Scott Klinger, Director of Revenue and Spending Policies at the Center for Effective Government, found that the CEOs belonging to Fix the Debt and Business Roundtable are sitting on massive nest eggs of their own.” Bill Berkowitz
Maybe I am an exception, but I was amazed to read the report linked above to see just who is claiming that the only way that Social Security can be saved for us mere peons is by raising the retirement age and reducing benefits. Many of the CEO’s making this claim have millions in their own pension or retirement accounts.
“According to Platinum-Plated Pensions, The average Business Roundtable CEO has $14.5 million in his gilded nest egg, more than 1,200 times as much as the $12,000 median retirement savings of U.S. workers who are within 10 years of retirement.
Ten CEO members of the Business Roundtable (four of whom are also members of Fix the Debt) have corporate retirement plans valued at more than $50 million. Of these, three have retirement assets of more than $100 million.” Bill Berkowitz
Now, in all fairness, just because someone has no need for their Social Security benefits, it doesn’t automatically disqualify their opinions on the subject of improving Social Security for all of us. However, these CEO’s do not have a real stake in what happens to Social Security because if it exploded tomorrow, they still have millions in their own accounts.
The ideas that Fix the Debt and the Business Roundtable have offered do nothing to make it more equitable or make Social Security work better for all retirees. Their idea of a “fix” is to delay benefits and force poor and middle class workers to stay in the work force even longer.
They even claim that raising the minimum retirement age to 67 is necessary because we are all living longer. Even that claim is suspect. One economic expert has brought some sunlight to the living longer claim.
“Before I get there, however, let me briefly take on two bad arguments for cutting Social Security that you still hear a lot.
One is that we should raise the retirement age — currently 66, and scheduled to rise to 67 — because people are living longer. This sounds plausible until you look at exactly who is living longer. The rise in life expectancy, it turns out, is overwhelmingly a story about affluent, well-educated Americans. Those with lower incomes and less education have, at best, seen hardly any rise in life expectancy at age 65; in fact, those with less education have seen their life expectancy decline.
So this common argument amounts, in effect, to the notion that we can’t let janitors retire because lawyers are living longer. And lower-income Americans, in case you haven’t noticed, are the people who need Social Security most.” Paul Krugman
While I am hoping Mr. Krugman is correct that lawyers are living longer, his evidence seems to suggest that the Fix the Debt and Business Roundtable people are all wet. Could those millionaire and Billionaire CEO’s have some ulterior motive? Could the CEO’s efforts and money spent pushing their Fix actually be an attempt to prevent the country from taxing the wealthy on all of their income or reducing or eliminating many of their tax benefits that harm the economy and fatten their wallets?
I have often wondered why millionaires don’t have to pay Social Security taxes on all of their income like the rest of us who make less than the $113,700 maximum for 2013. When a CEO makes $20 million a year, that CEO pays Social Security taxes on the first $113,700. When someone makes $60,000 a year, they pay Social Security taxes on their entire income. Why shouldn’t Social Security taxes be paid on all income, no matter what the sources? Wouldn’t that be more equitable?
Mr. Krugman also suggests that part of the problem seniors are facing is that the 401k accounts that many of their employers intitiated have not earned what was necessary to retire on due to the market crash and employer greed and employees making poor financial decisions.
“Today, however, workers who have any retirement plan at all generally have defined-contribution plans — basically, 401(k)’s — in which employers put money into a tax-sheltered account that’s supposed to end up big enough to retire on. The trouble is that at this point it’s clear that the shift to 401(k)’s was a gigantic failure. Employers took advantage of the switch to surreptitiously cut benefits; investment returns have been far lower than workers were told to expect; and, to be fair, many people haven’t managed their money wisely.” New York Times
What do you think is needed to strengthen Social Security for all workers? Paul Krugman and many Senators like Sen. Elizabeth Warren agree that we should be talking about strengthening Social Security and not cutting it. Some of the CEO’s mentioned above who have millions in their own retirement accounts have actually run up deficits in their own employees retirement accounts, but yet they still claim cutting benefits and extending the minimum retirement age are the way to go.
“While gilding their personal pensions, many Roundtable CEOs have allowed massive deficits to grow in their employee retirement funds:
- Of the Business Roundtable CEOs whose firms provide pension funds for their workers, 10 have deficits in these funds of between $4.9 billion and $22.6 billion.
- The Roundtable CEO with the largest deficit in his companys worker pension fund is Jeffrey Immelt of General Electric, with $22.6 billion. Immelts personal retirement fund is worth more than $59 million, the sixth-largest among Roundtable CEOs.” Bill Berkowitz
Are these CEO’s merely doing an end run in an attempt to steer Social Security funds into the private sector? Are they trying to steer the discussion away from taxing more income to strengthen Social Security? What do you think and who do you believe?
bigfatmike:
“I think there is an even stronger argument that it is immoral not to provide some kind of social safety net.
It seems to me the best solution is not to shut down Social Security, but rather to get the economy performing at a high enough level that it is relatively easy for workers to pay for Social Security and still have enough discretionary income to save for retirement.”
I dont disagree with what you say. I think we ought to help those who truly need help. I would prefer it to be private charity though.
We do need a thriving economy in which labor can sell itself to the highest bidder but part and parcel of the welfare state/big government is a restricted economy. Are progressives willing to give up control of all aspects of our lives in order to have prosperity? I think it is either or based on the history of the last 100 years.
Entropy has nothing to do with waste in a human system, the inefficiencies are a result of human error or neglect. There is no reason to husband tax dollars, there are more of those where they came from or so people in government believe.
Morality is found in the private sector much to the chagrin of progressives who seem to think that government employees have the monopoly in ethical action. From what I have seen, many [in government] are corrupt and have no regard for how hard people work to afford them a job and benefits. We see examples of waste on a daily basis. A government should have a higher standard than a corporation which receives its revenue on a voluntary basis [people can choose not to deal with a wasteful private business], unless of course it is a government monopoly like a utility company.
Bron: You can claim your disability and retire any time you want, and read novels all day, and surf the net, and eat and drink on the proceeds. Just like the guy you claim is playing golf. We do not put restrictions on people, once they are eligible for benefits, with what they have to do with their time. I do not know why you resent somebody on benefits having fun, as you yourself claim, they either (A) more than paid for their benefits, or (B) are actually disabled, like you, but have no skill or intelligence to exploit, or (C) are committing a crime and enjoying the fruit thereof. I disregard (C) because I do not judge a program invalid just because some people get away with crimes against it. Consider an extreme, we do not stop investigating, prosecuting, and punishing murderers just because some people get away with murder for profit and enjoy their ill-gotten gains.
Simply enjoying life, even if disabled, is not a crime.
SS is not morally wrong, you are.
Bron says: Or why should I pay for a person who worked for 40 years but was irresponsible and didnt put money aside for their retirement?
But if they paid their social security tax they were responsible, that is how they ensured their retirement. You aren’t “paying” for their retirement; they are collecting on their “compact” with Society; they responsibly paid their fair share and are entitled to receive their fair share.
Recipients aren’t ripping anybody off, just because people do not act the way you want them to act does not make their action a crime or rip off. You don’t get to be a tyrant and dictate to the rest of us what is right and wrong. Or more accurately, you (like anybody) are entitled to claim you know, but WE will decide, collectively, if we agree with you, and we decide what shall be legal and illegal.
Tony C:
I have done that calculation many times, the average benefit is much more than SS pays. Are you accounting for the employers portion?
The other benefit is that you can live off the interest and have the principle available to pass on to your children, a charity, etc., SS does not come close to matching that and you can retire whenever you have enough money, you dont need to wait.
Will you please explain to me why I, who can barely move but still work, should have to pay 12% plus of my income so an able bodied person who claims a disability can play golf every day? Or why should I pay for a person who worked for 40 years but was irresponsible and didnt put money aside for their retirement?
It seems to me the responsible people are subsidizing a segment of society who refuses to carry their weight. Granted there is a small portion who, by virtue of biology, need societies help but that is a very small segment.
SS is morally wrong. It really doesnt matter whether it works or not. Mugging works too but it isnt right.
And worst of all you are taking money from the young who are just starting out and could invest that money in a good retirement account for 40 years or even 30 and retire early so they still have some good years left to enjoy their lives.
@Bron ” responsible people are subsidizing a segment of society who refuses to carry their weight. … SS is morally wrong. It really doesnt matter whether it works or not
I think you have made some good points. But I don’t think I can agree with your conclusions.
I am sure you are correct that there are some people collecting benefits who do not deserve them and further that some of those actively cheated to accomplish that.
But it seems to me you are claiming that the solution to cheating is to shut down the system.
Every system includes the possibility that someone will successfully cheat. If we shut them all down those systems we would be back in the wilderness; cold, hungry, and fearful of our neighbors. That can’t be the right solution.
I would argue that a better solution is to take measures to reduce cheating to a reasonable level. ‘Reasonable level’ can often be determined by calculating the cost of enforcement and the estimated amount of loss to cheating. It is troubling hat some cheating will likely go undetected. But every machine, every system, even thermodynamics itself has some level of waste and inefficiency – entropy.
I think there is an even stronger argument that it is immoral not to provide some kind of social safety net.
It seems to me the best solution is not to shut down Social Security, but rather to get the economy performing at a high enough level that it is relatively easy for workers to pay for Social Security and still have enough discretionary income to save for retirement.
There is nothing contradictory or unattainable about those two goals.
bigfatmike wrote: “I think there is an even stronger argument that it is immoral not to provide some kind of social safety net.”
Social Security has gone far beyond a safety net.
I have a sister-in-law that worked for a company. She had a surgery recently and also has some problems with diabetes from being overweight. She is 63. Her doctor told her she will not be returning to work. So her insurance company at work hires lawyers to get her Social Security Disability. Now the taxpayers pay her some $1800 a month. I’m not a doctor, but from my perspective, she can easily work. The “safety net” she enjoys is nice. I’m happy for her. But if she didn’t have it, the insurance company at work would be paying her instead of the taxpayer, or she would continue working.
Bron wrote: “SS is morally wrong. It really doesnt matter whether it works or not. Mugging works too but it isnt right.”
Yup. The time has come for us to progress beyond the past chains of taxes. Repeal the 16th Amendment and have the federal tax system be like it was prior to 1913. We also need to evolve government toward being independent with a system of voluntary taxes based upon societies’ evaluation of their performance. The change in the economy would be like night and day. The number of jobs suddenly increased would be stupendous. Wages would go up as businesses compete to get the better employees.
@ davidm2575 1, November 25, 2013 at 12:31 pm “In 1950, there were 16 workers per retiree. Now there are 3. The government’s projection is there will be 2 in 2030 and without changes the system will be bankrupt. ”
This does sound dire. But a little thought and analysis will prove that the number of workers who support each retiree is irrelevant to the success or failure of Social Security.
Consider one worker. Either the economy provides a high enough standard of living that he can save an amount sufficient to provide for his retirement or it does not.
The standard of living, is roughly, per capita GNP, that is the amount of goods and services the economy provides to each person.
If, overall, the economy does not provide enough goods and services to provide for retirement then it is difficult to see how Social Security could work.
But if the economy does produce enough goods and services to provide for retirement of its citizens then Social Security can be made to work – regardless of the number of workers.
In particular if it is economically possible for each worker to provide for his own retirement the there is no reason those funds could not be used for Social Security. Therefore, Social Security could work with a ratio of one worker for each retiree so long as each worker has a wage that allows the worker to provide for retirement.
It is clear that the fundamental fact that determines viability of Social Security is the general level of income in the economy not the number of workers or the ratio of workers to retirees.
As a concrete example consider an economy with one worker. We will call this single worker Warren Buffett. Warren invested wisely and now owns all income producing property in the US. Early on Warren realized that he can work more efficiently than everyone else in the economy so he fired them all.
Warren’s income last year would have been about 17 trillion dollars. Of course there still would be approximately 60 million retirees on Social Security.
The question is then what if anything changes regarding Social Security? Well, we would have to raise the income level that is taxable for Social Security.
But other than that nothing changes. There are still 17 trillion dollars income available to be used to support 60 million retirees. All we would have to do is find the tax rate and level of income to apply to Warren’s situation that would produce the same tax revenue as when there were, say, 120 million workers. That is not a hard calculation. And, fortunately for us there would be no bad economic effects – for example, on investment.
The fact is that we would have the same level of income in the economy, we would take the same amount as tax revenue, and we would use that revenue to support the same number of retirees. Nothing would have to change except the amount of Warren’s income that is subject to Social Security tax.
Clearly, what determine the viability of Social Security is the level of income in the economy not the number of workers.
bigfatmike wrote: “Therefore, Social Security could work with a ratio of one worker for each retiree so long as each worker has a wage that allows the worker to provide for retirement.”
I’m not sure what you are thinking about here. That one worker would have to earn more than 8 times the amount that the retiree is hoping for in his retirement because the worker only pays 6.2% with a matching 6.2% from his employer (if self employed or an owner of an S Corporation, he is paying the whole amount). Add in the disabled people that money also goes toward, and he would have to earn even more.
bigfatmike wrote: “It is clear that the fundamental fact that determines viability of Social Security is the general level of income in the economy not the number of workers or the ratio of workers to retirees.”
But government programs like Social Security hurt the general level of income in the economy.
bigfatmike wrote: “Warren’s income last year would have been about 17 trillion dollars.”
What? Nobody makes that kind of money.
bigfatmike wrote: “There are still 17 trillion dollars income available to be used to support 60 million retirees. All we would have to do is find the tax rate and level of income to apply to Warren’s situation that would produce the same tax revenue as when there were, say, 120 million workers. That is not a hard calculation. And, fortunately for us there would be no bad economic effects – for example, on investment.”
Wow. So one man can just pay all these retirees. That sure is nice. Just have Warren Buffett write a check to Social Security and bam! everything is fixed. I nominate you to talk to Warren about this plan.
bigfatmike wrote: “Nothing would have to change except the amount of Warren’s income that is subject to Social Security tax.”
Amazing. Why didn’t anybody think of this plan before? Are you sure you have accurately worked out all the math on this?
Look, I get your overall point that a progressive tax structure would find additional money to keep the system afloat, eliminating the need for new individuals to be found, but my position is that the progressive tax structure only delays the inevitable collapse. You are treating the symptoms of not having enough money rather than the source of the symptoms, which is that the system does not bolster the economic activity necessary to support itself.
DavidM says: Profit is a financial gain. Income is money received on a regular basis. Your whole analogy has fallen apart, so now you pretend profit and income are the same thing.
Oh, I see, that is why we call it “profit tax” instead of “income tax” …. Oh wait, that isn’t true, and you are just making stuff up.
DavidM says: You were the one who started comparing it to a business and saying it is identical to that. When I show it to be a failed business model, then you change your tune and drop your original analogy.
No, I was comparing it to insurance and saying it works on the same model; that insurance is also not an account, and relies upon the model of using premiums this year to pay claims this year. That an ideal insurance company would have monthly premiums that, over the long term, exactly matched the average monthly claims. That is what social security does, with a 1% additional cost of overhead in administration.
DavidM says: You have presented Social Security as an investment in one’s future retirement, making it look like buying a pension plan when it is not. That is fraudulent.
No I did not, I claimed, and stand by my claim, that if the average person invested their SS tax in the average market for the average 40 year work span with average inflation and the average economy, they would end up with approximately the same benefits after that time as they get from Social Security. All of that is hypothetical, nobody is precisely average, the economy fluctuates, market returns fluctuate, inflation fluctuates.
Social Security has the ability to even those things out and, like insurance, produce the average outcome. I do not claim, and Social Security itself does not claim, it is any kind of annuity or investment. They go out of their way to explain it is not.
I also do not claim SS is a business. And it doesn’t need to earn a profit, or to expand to survive, but all that profit talk is a red herring, even a legitimate business does not need to earn a profit or expand to pay its people and its owner’s salaries.
DavidM: A few quotes from the Social Security Administration, in their brochure for the public, “Understanding Your Benefits.”
1) Social Security replaces about 40 percent of an average wage earner’s income after retiring, and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably.
2) The current Social Security system works like this: when you work, you pay taxes into Social Security. The tax money is used to pay benefits to:
a) People who already have retired;
b) People who are disabled;
c) Survivors of workers who have died; and
d) Dependents of beneficiaries.
The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social
Security trust funds, not a personal account with your name on it.
3) Where Your Social Security Tax Dollars Go
When you work, 85 cents of every Social Security tax dollar you pay goes to a trust fund that pays monthly benefits to current retirees and their families and to surviving spouses and children of workers who have died.
The other 15 cents goes to a trust fund that pays benefits to people with disabilities and their families. From these trust funds, Social Security also pays the costs of managing the Social Security programs. The Social Security Administration is one of the most efficient agencies in the federal government, and we are working to make it better every day. Of each Social Security tax dollar you pay, we spend less than one penny to manage the program.
4) Your Social Security taxes
The Social Security taxes you and other workers pay into the system are used to pay for Social Security benefits.
You do not know the meaning of Ponzi Scheme; David. The central fraud in a Ponzi scheme is telling investors their capital is invested and earning a profit, which is what they are receiving. They think their capital is safe; when in fact it is being depleted to zero.
You do not know the meaning of a Pyramid Scheme, David. The central fraud in a pyramid scheme is that it relies so heavily on recruitment for its revenue (with some form of cost to new recruits) and profits that it must collapse when recruitment dries up. Social Security does not recruit anybody.
In short, you don’t know what you are talking about. More in the next post.
Tony C wrote: “The central fraud in a Ponzi scheme is telling investors their capital is invested and earning a profit, which is what they are receiving. They think their capital is safe; when in fact it is being depleted to zero.”
It is ridiculous for you to think that investors think their capital is safe. They are not putting their investment into a federally insured bank. Most investors understand there is risk when they invest, and they could lose it all. However, they expect the money to be used to fund a business and it is not.
The central characteristic of the Ponzi Scheme is that investors are paid a return from the investments paid by subsequent investors. There is no real economic activity going on in the form of selling products or services to people at a profit. Social Security is like this in that previous taxpayers (investors) are paid from new taxpayers (investors).
Granted, there is the difference that Social Security participants are not being told that if they invest now they will earn a very high return later in the year. However, there is still a fraudulent nature to Social Security because it is represented like normal investment products in the business sector, with payouts based upon what is paid in. People develop a sense that they are entitled to a return from what they paid into the system over many years. Most people in the U.S. do not understand that it is a pay as you go system. The information is plainly there on the website of the Social Security Administration, but there is enough misinformation out there without clear corrections that most people think of Social Security as an investment in their future retirement.
So there you have it. Social Security is a quasi-Ponzi scheme.
DavidM says: My point was that when you design something to earn a profit, you build into you business plan a viable method of producing income.
That is just talking in circles. How is “profit” different from “income”? You are saying “if you design for income your plan has a way of producing income.” Is there a point to your point?
DavidM says: My primary point was that a business needs a healthy income stream, not a profit, but designing it toward earning a profit helps build a healthy income stream.
If by “income” you mean “revenue,” then a business plan can be designed for enough revenue to meet its expenses without being designed to earn a profit. In fact it can be specifically designed to never earn a profit and to break even, precisely.
DavidM says: What Social Security does is simply take money from people to pay what it needs now. That is how a pyramid scheme works.
No, it isn’t. A pyramid scheme works specifically by recruiters selling recruits something and then getting a percentage of the profits generated by their recruits. Nobody recruits anybody in Social Security, nobody gets a share of profits of other social security recipients. Your analogy is worthless, you just want to call it a pyramid scheme to suggest it is a fraud when it is not a fraud at all; it delivers real benefits and real insurance. Ask anybody getting it if they think their checks are worthless.
DavidM says: But from the perspective of a business ensuring you an income for retiring, there must be a mechanism in place, and that mechanism is an investment that will pay an annuity.
Except it isn’t a business, it is the government, and they have a perfectly valid mechanism in place, the power given to them by Society to tax income and businesses and borrow money to pay the benefits as promised. There is nothing more secure than that; including an annuity.
DavidM says: They present it fraudulently as if you do, but the truth is that it is a pay as you go system.
They do nothing of the kind, anybody that cares to look into Social Security knows exactly what you know, what I know, what virtually anybody that wants to know can know: It is a pay as you go system. There is no fraudulent presentation whatsoever.
DavidM: You keep comparing it to fire insurance, but it is nothing like that.
It is exactly like that; current premiums pay current claims. There is a reserve in case claims exceed premiums, which is restored when premiums exceed claims. You are just lying, both work identically to pay current claims out of premiums received.
The system is not going to fail; the government knows they can’t let it fail, and they will simply make it succeed, because it is easy to do. Projections that it will fail only serve to motivate correction, they aren’t ever going to come true.
You write with extreme naivety when you pretend the US Government is some sort of business.
Tony C wrote: “That is just talking in circles. How is “profit” different from “income”?”
Profit is a financial gain. Income is money received on a regular basis. Your whole analogy has fallen apart, so now you pretend profit and income are the same thing.
Tony C wrote: “Except it isn’t a business, it is the government,”
You were the one who started comparing it to a business and saying it is identical to that. When I show it to be a failed business model, then you change your tune and drop your original analogy.
Tony C wrote: “It is a pay as you go system. There is no fraudulent presentation whatsoever.”
You have presented Social Security as an investment in one’s future retirement, making it look like buying a pension plan when it is not. That is fraudulent.
bettykath,
corporations with employees do pay the employer share of Social Security taxes. However, I do like your concept. Maybe they should pay SS of their own!
bigfatmike: We can imagine a business with zero profits that develops an innovative technique, puts that product into production, beats the competition, and continues to expand – all with no profits.
Agreed; and a route to expansion I did not mention.
I will also point out that many startup companies do not declare any profit for many years, because they roll all their excess revenue (beyond current expenses) which might normally be considered “profits” into opening new stores and marketing to increase their customer base, which counts it as a business expense, and therefore eliminates any profits. So while their internal “profit margin” might be significant, they are basically growing exponentially (and income-tax free), at least until they saturate their market.
@Tony C. “P.S. That is why they call profit the “bottom line,” it is the final line on the income statement, what is left over after all deductions from Revenue, all other business expenses. It is the residue, the excess.”
The claim has been made here that business must either make a profit or borrow money and eventually go out of business.
Actually, to remain viable, a business must generate enough revenue to pay all expenses. That is all.
It has been claimed that without profits there can be no business development or expansion. In fact, the costs for activities like research, development, and construction of a new production line are also expenses to the business.
We can imagine a business with zero profits that develops an innovative technique, puts that product into production, beats the competition, and continues to expand – all with no profits.
A key question for financial executives is if, when and under what circumstances to recognize profit.
All that is necessary for a business to continue is that the business generate enough revenue to pay all expenses.
This is an important concept in its own right. But it is also important to understand that profits are irrelevant to viability because the misconception that profits are necessary has been used to confuse the question of stability of Social Security.
There are many reasons why Social Security might have problems in the coming decades or fail. Failure to generate profit is not one of them
MJM: How do you know this? Can you prove it, or cite some kind of documentation or report that this is true? It seems anything an illegal immigrant can “command” would be equally available to a US Citizen.
Besides, illegal immigrants, by definition, are breaking the law by working here. Almost universally at below minimum wage and under the table, which is also lawbreaking by those that employ them. It should not be “amazing” to you that criminal activity might result in unfair income and benefits. That is why we make it against the law, right?
Way up thread someone indicated that the Greeks were self-infecting with HIV. It was reported but it is NOT true. http://www.theguardian.com/world/2013/nov/26/who-apologises-hiv-infections-greece-self-inflicted
A suggestion that should please or irate everyone: Increase the minimum wage so the poorest workers can pay in more!
Michael, the increased need for food stamps is directly related to the insufficient minimum wage and the tactic of corporations that use lots of minimum wage workers to limit their hours in order to not pay benefits. Increase to minimum wage to between $15 and $20 per hour to match the value of the minimum wage in the 60’s and the need for food stamps would drop dramatically. We’d also see the poverty numbers drop. It won’t happen b/c those with the power don’t want to see the wealth gap narrowed.
Illegal Mexican workers command $15.00 / hour plus food stamps, free health care courtesy of the US taxpayers and free or subsidized education.
It’s amazing that American citizens are mandated to have or purchase health insurance acceptable to the government but there is no such mandate for illegal aliens of all stripes.
bettykath wrote: “It won’t happen b/c those with the power don’t want to see the wealth gap narrowed.”
How do you know that this is the reason or that this is how corporations think? I thought you did not believe that corporations are people, yet here you are talking about corporations as if they were evil people.
Haven’t read the comments yet but expect another great lesson from Tony.
The Social Security fund is still taking in more than it sends out. It is overfunded but changes are needed to keep it that way. Two suggestions:
1. Everyone making more than poverty level wages should be contributing to Social Security for the entire amount of their income whether from wages or capital gains or deferred interest or whatever.
2. In light of corporations-are-people, I think all corporations should be paying into the Social Security fund. Since they don’t retire, they wouldn’t be taking anything out. Seems fair that they have responsibilities in addition to privileges.
I’d like to see it expanded to include many who currently don’t qualify, example: stay at home moms who get divorced from deadbeats. They don’t qualify for anything until he dies.
bettykath wrote: “Haven’t read the comments yet but expect another great lesson from Tony. The Social Security fund is still taking in more than it sends out.”
You and Tony are drinking the same Kool-Aid. Social Security has taken in LESS than it is bringing in since 2010. The SSA projections show it will fail under its current structure.
“Neither Medicare nor Social Security can sustain projected long-run programs in full under currently scheduled financing, ”
“Social Security’s total expenditures have exceeded non-interest income of its combined trust funds since 2010, and the Trustees estimate that Social Security cost will exceed non-interest income throughout the 75-year projection period.”
A SUMMARY OF THE 2013 ANNUAL REPORTS
Social Security and Medicare Boards of Trustees
http://www.ssa.gov/oact/trsum/
bettykath wrote: “I think all corporations should be paying into the Social Security fund.”
They do.
P.S. That is why they call profit the “bottom line,” it is the final line on the income statement, what is left over after all deductions from Revenue, all other business expenses. It is the residue, the excess.
Bron: I don’t just “believe” it, profit is excess money by definition. that is the whole point of profit, you can do with it whatever you want, including blowing it at Vegas. You can use it to expand your business, pay yourself much more than you would ever pay a person hired to do your job, or use it to buy yourself a bigger house, but it is always what is left over after all expenses. Excess money.
Bron: The government is not in business to expand, it should only be as large as it needs to be to serve citizens. The point, for government, is not to increase assets, as it is for business. They should never be “in business” to get bigger, they should be exactly the size they need to be to provide the benefits demanded from the government by their employer, Society. Society should determine if services are expanded or contracted.
As for an actual business, the funds to expand for a break-even business can come from loans, or bonds with a fixed interest return (not a percentage of the non-existent profits). Remember the break-even point is after all expenses — including loan payments or bond payments. There will always be some rate at which people will buy the bonds or make the loans; this is essentially the way large Sovereign Wealth Funds invest billions in a single check toward projects like toll roads or hydroelectric dams in foreign countries; they don’t get a percentage of profits, they (with very lengthy contracts) make a loan secured by a future revenue stream (and insurance in case the project cannot be completed). Sometimes a perpetual interest-only loan.
But stop mistaking Government for a Business, only a corrupt government operates like a business with a growth or profit motive, or even a competitive motive with private businesses. The motive of a governmental program should only be to perform the services demanded by Society (no more, no less) at the minimum cost it can. Not to compete, but because efficiency is also demanded by Society; we don’t like waste, fraud and abuse. If that efficiency and low cost put private business out of business, so be it; the Society decided that by not frequenting the private business.
It doesn’t always: Norway has free health care, and private for-profit hospitals, clinics, doctors and other health care practitioners (like physical therapists and nurses) still have successful businesses in Norway. Not everybody thinks price is everything, they can compete with free.
Just like, in our country, for-profit Ivy League colleges compete successfully with at-cost (and even subsidized) state level colleges that have much lower tuition than Harvard or Princeton (and even much lower average tuition per student).
The only similarity between Government and private business is that both should seek efficiency. Heads of both (CEOs or Program Directors) should see themselves as servants of the owners that demand greater efficiency, fewer errors, better quality, greater safety, less fraud and waste and abuse.
The CEO does that in the name of profit. The Government Program Director does that in the name of reducing taxes for Society; which is their form of “profit” in an arena that cannot earn a profit without creating an inherent conflict of interest between serving the people and keeping more money for themselves.
DavidM:
if a business breaks even and makes no profit, how does it expand? If it only pays salaries and overhead, where does the money to expand come from?
Can you explain why Tony C thinks that profit is only excess money? that is the same as subsistence farming. Just enough seed to eat and sow for the next year.
dAVIDM: