The Business Roundtable is made up of the CEO's of 200 major corporations. They met in Washington this week, and you'll be happy to know that they solved the Social Security problem.
What is that problem? Is it caused by the "babyboom" retirement bulge? No, that problem was solved in the 1980's when a government commission recommended planning for that increased load on the system by increasing FICA payroll taxes beyond the level actually needed in order to produce a surplus in the Social Security trust fund. That surplus would be used to cushion the effect of babyboom retirements.
Yes, Virginia, there was a time in our recent history when our government was capable of recognizing a problem and coming up with a bipartisan solution.
The current problem is that the Social Security trust fund will only be able to pay full benefits for the next two to three decades. If no adjustments are made it will only be able to pay 75% of expected benefits thereafter.
Many people feel that a reasonable solution is to change the maximum wage subject to FICA payroll tax. Right now, the first $110,000 in earnings is subject to the tax. Raising it to the first $220,000 in wages totally solves the problem.
The Business Roundtable disagrees. The members--whose average compensation is $11.3 million per year--claim that this will put a terrible drag on the economy.
Up pops the old "job creator" argument. If they have to pay anything more in taxes, they just won't create jobs. Sorry, that just doesn't wash.
What causes businesses to create jobs is demand. When customers with money in their hands come through the door but leave because the product is unavailable or they have to wait too long for a too small workforce to wait on them, businesses create jobs.
Getting more and more money to CEO's doesn't create jobs, it just increases the size of their yachts.
OK, what solution did the Business Roundtable come up with? Everyone should just work until they're 70 before collecting Social Security. They also thought that this was a great idea for Medicare as well.
After all, they reasoned, people are living longer. That's true, but how much longer depends on where you are on the economic scale. Since the 1970's the life expectancy of someone in the upper 50% of the income continuum has increased by more than 6 years. If you're in the bottom 50%, it's up by barely one year.
I suppose I'd be happy to work into my 70's if my job involved sitting behind a big desk, going to meetings and flying in a private jet all over the world to make deals in expensive restaurants all the while making $11.3 million per year.
Now lets talk about the coal miners, construction/factory workers, waiters, retail clerks and even teachers who find themselves on their feet for most of the workday. Oh, by the way, lots of those folks in their 50's are finding themselves laid off and unable to find work.
Note to Business Roundtable: Something else has increased since the 1970's and it's called "executive compensation." If I read the charts correctly, executive compensation--even corrected for inflation--has literally skyrocketed while real wages for the rest of us have stayed flat in real dollars, or even fallen a bit.
Just put one less gold faucet in the eighth bathroom of your McMansion and pay your fair share!
Saturday, January 19, 2013
Tuesday, January 15, 2013
Should teachers be armed?
I owned a .22 rifle when I was a teenager. It was a gift from my dad. Living in the city of Rochester, however, did not afford many opportunities for firing that weapon. I never hunted. We had to head out to the country to find empty quarries for target practice. I lost track of that rifle when I headed out to college.
That rifle was the only gun I ever owned. I'm one of those people who believes the statistics that show a gun in the home is more likely to kill a resident of that home than an intruder. I was at our summer place a few miles away from Old Forge, NY last summer when a vacationing NY City policemen shot and killed his own son whom he mistook for an intruder trying to get into his motel room.
I don't want to own a gun, but I understand the feelings of those who do. The Supreme Court has recently ruled that irrespective of a "well-regulated militia," the second amendment allows for private ownership of guns. They also said that the second amendment allows for reasonable restrictions on that right. As with the right of free speech--you cannot yell "fire" in a crowded theater--second amendment rights are not absolute.
Almost all of us agree that your neighbor should not be able to own a nuclear ICBM or a drone armed with air-to-ground missiles but--absent mental illness or criminal behavior--should be allowed to own a handgun or hunting rifle. The argument is really where on that continuum we want to be.
To be sure, there are some among us who believe that they need the same level of armament as the government in order to resist the tyrannical intrusion of the government into their lives. Usually their definition of tyranny involves a government chosen in a free election with whose policies they do not agree. What they see as tyranny the rest of us call democracy.
The Newtown school shooting has brought about calls to arm teachers. I spent 33 years in school classrooms, so I thought about whether I would have wanted to be armed.
Certainly no one is suggesting that teachers walk around with pistols strapped to their hips. I can imagine a student altercation in which a muscular student easily gets the handgun from the teacher's holster. We'd have a situation in which the students couldn't get a gun into the school themselves, but several teachers could accomplish that for them.
So we would lock up the guns. What was your desk like at school? How long would it have taken for someone with a tool or two to get to a gun locked in that desk? Would a gun locked in the desk of the Sandy Hook principal have saved the day? Not likely. Her first instinct would have been to go see what all the commotion was about and then it would have been too late to find the key and unlock the gun in her desk.
What if the classroom teachers had been armed? Imagine you are in your classroom when you hear shots from another part of the building. Would you rush to unlock your gun safe and run to the rescue? Not likely.
Firefighters are taught not to run into burning buildings. Those who run in very often make bad mistakes. They are taught to walk in, giving themselves time to size up the situation. Having no body armor or police training I would think that a teacher might not rush to the sound of gunfire like the Lone Ranger coming to save the day.
Personally, I don't believe that I would head out into the hallways. My thoughts would be of my spouse and children. By running down the hallway with only a handgun I am putting my family in danger. They are my primary responsibility. I am not a trained and equipped police officer. I'm staying put in my classroom. I will do my best to protect my life and the lives of the students in my classroom, but I'm not going out looking for a gunfight in which I will most likely be outgunned.
So I'm staying put with my gun aimed squarely at the classroom door.
Which causes another problem. When they arrive, how do the police get people out of the building? Does someone get on the PA and announce that everything's OK. How do those of us hunkered down in our classrooms know that this isn't just a ruse being used to get more shooters into classrooms without opposition? How do we know that they weren't wearing police uniforms to begin with?
Suppose some teachers have engaged the intruders in a gunfight? When the police arrive, how do they tell the "bad" shooters from the "good" shooters? In several of the latest incidents, shooters have dressed in the same black military-style clothing and ski masks that are often worn by police SWAT teams. How will the teachers know that the SWAT team trying to rescue them are not additional killers?
Are we overreacting to Newtown? Shootings occur at movie theaters and malls. Should we arm the clerks, ushers, popcorn vendors and projectionists?
If we do arm all these people, are we causing more problems than we're solving?
That rifle was the only gun I ever owned. I'm one of those people who believes the statistics that show a gun in the home is more likely to kill a resident of that home than an intruder. I was at our summer place a few miles away from Old Forge, NY last summer when a vacationing NY City policemen shot and killed his own son whom he mistook for an intruder trying to get into his motel room.
I don't want to own a gun, but I understand the feelings of those who do. The Supreme Court has recently ruled that irrespective of a "well-regulated militia," the second amendment allows for private ownership of guns. They also said that the second amendment allows for reasonable restrictions on that right. As with the right of free speech--you cannot yell "fire" in a crowded theater--second amendment rights are not absolute.
Almost all of us agree that your neighbor should not be able to own a nuclear ICBM or a drone armed with air-to-ground missiles but--absent mental illness or criminal behavior--should be allowed to own a handgun or hunting rifle. The argument is really where on that continuum we want to be.
To be sure, there are some among us who believe that they need the same level of armament as the government in order to resist the tyrannical intrusion of the government into their lives. Usually their definition of tyranny involves a government chosen in a free election with whose policies they do not agree. What they see as tyranny the rest of us call democracy.
The Newtown school shooting has brought about calls to arm teachers. I spent 33 years in school classrooms, so I thought about whether I would have wanted to be armed.
Certainly no one is suggesting that teachers walk around with pistols strapped to their hips. I can imagine a student altercation in which a muscular student easily gets the handgun from the teacher's holster. We'd have a situation in which the students couldn't get a gun into the school themselves, but several teachers could accomplish that for them.
So we would lock up the guns. What was your desk like at school? How long would it have taken for someone with a tool or two to get to a gun locked in that desk? Would a gun locked in the desk of the Sandy Hook principal have saved the day? Not likely. Her first instinct would have been to go see what all the commotion was about and then it would have been too late to find the key and unlock the gun in her desk.
What if the classroom teachers had been armed? Imagine you are in your classroom when you hear shots from another part of the building. Would you rush to unlock your gun safe and run to the rescue? Not likely.
Firefighters are taught not to run into burning buildings. Those who run in very often make bad mistakes. They are taught to walk in, giving themselves time to size up the situation. Having no body armor or police training I would think that a teacher might not rush to the sound of gunfire like the Lone Ranger coming to save the day.
Personally, I don't believe that I would head out into the hallways. My thoughts would be of my spouse and children. By running down the hallway with only a handgun I am putting my family in danger. They are my primary responsibility. I am not a trained and equipped police officer. I'm staying put in my classroom. I will do my best to protect my life and the lives of the students in my classroom, but I'm not going out looking for a gunfight in which I will most likely be outgunned.
So I'm staying put with my gun aimed squarely at the classroom door.
Which causes another problem. When they arrive, how do the police get people out of the building? Does someone get on the PA and announce that everything's OK. How do those of us hunkered down in our classrooms know that this isn't just a ruse being used to get more shooters into classrooms without opposition? How do we know that they weren't wearing police uniforms to begin with?
Suppose some teachers have engaged the intruders in a gunfight? When the police arrive, how do they tell the "bad" shooters from the "good" shooters? In several of the latest incidents, shooters have dressed in the same black military-style clothing and ski masks that are often worn by police SWAT teams. How will the teachers know that the SWAT team trying to rescue them are not additional killers?
Are we overreacting to Newtown? Shootings occur at movie theaters and malls. Should we arm the clerks, ushers, popcorn vendors and projectionists?
If we do arm all these people, are we causing more problems than we're solving?
Wednesday, January 9, 2013
Quick Quiz: Do you really understand the debt ceiling?
OK, here's the question: If Congress refuses to raise the debt ceiling, will this keep the U.S. from spending more money?
If you said "no," then pat yourself on the back. There's a good chance you just might understand something that most Americans don't.
Regardless of whether you think the USA should spend less, the debt ceiling vote isn't about spending money. Congress has already authorized the spending in bills passed months ago. The debt ceiling vote is about paying those bills.
Why should retired teachers care about this vote? To begin, Republicans will threaten to withhold support for raising the debt ceiling unless there are big cuts in: Social Security, Medicare and Medicaid. Got your attention now?
I know, Social Security has not one damn thing to do with the deficit. It's fully funded by its own FICA payroll tax and--in fact--it runs a surplus. I'm sure that there are a whole lot of Republican Social Security recipients who won't like seeing their cost-of-living increases reduced. Go figure!
Of course, very little makes sense when it comes to Congress, an organization which actually has a lower public opinion rating than cockroaches.
Another reason retired teachers should care about the debt ceiling vote is what refusing to raise the ceiling will do to our economy. Ezra Klein of the Washington Post is my favorite "policy wonk." Here's part of his description of what happens if we default on our debts: "Imagine we hit the debt ceiling Feb. 15. ... federal spending over the next month will be about $450 billion. Federal revenues will be nearer to $277 billion. That means that the government will have to default on about 40 percent of its obligations."
"The choices it will face quickly become stark. It can cover interest on the debt, Social Security, Medicare, Medicaid, defense spending, education, food stamps and other low-income transfers, and a handful of other programs, but doing all that will mean defaulting on everything — really, everything — else. The FBI will shut down. The people responsible for tracking down loose nukes will lose their jobs. The prisons won’t operate. The biomedical researchers won’t be funded. The court system will close its doors. The tax refunds won’t go out. The Federal Aviation Administration will go offline. The parks will close. Food safety inspections will cease."
If you said "no," then pat yourself on the back. There's a good chance you just might understand something that most Americans don't.
Regardless of whether you think the USA should spend less, the debt ceiling vote isn't about spending money. Congress has already authorized the spending in bills passed months ago. The debt ceiling vote is about paying those bills.
Why should retired teachers care about this vote? To begin, Republicans will threaten to withhold support for raising the debt ceiling unless there are big cuts in: Social Security, Medicare and Medicaid. Got your attention now?
I know, Social Security has not one damn thing to do with the deficit. It's fully funded by its own FICA payroll tax and--in fact--it runs a surplus. I'm sure that there are a whole lot of Republican Social Security recipients who won't like seeing their cost-of-living increases reduced. Go figure!
Of course, very little makes sense when it comes to Congress, an organization which actually has a lower public opinion rating than cockroaches.
Another reason retired teachers should care about the debt ceiling vote is what refusing to raise the ceiling will do to our economy. Ezra Klein of the Washington Post is my favorite "policy wonk." Here's part of his description of what happens if we default on our debts: "Imagine we hit the debt ceiling Feb. 15. ... federal spending over the next month will be about $450 billion. Federal revenues will be nearer to $277 billion. That means that the government will have to default on about 40 percent of its obligations."
"The choices it will face quickly become stark. It can cover interest on the debt, Social Security, Medicare, Medicaid, defense spending, education, food stamps and other low-income transfers, and a handful of other programs, but doing all that will mean defaulting on everything — really, everything — else. The FBI will shut down. The people responsible for tracking down loose nukes will lose their jobs. The prisons won’t operate. The biomedical researchers won’t be funded. The court system will close its doors. The tax refunds won’t go out. The Federal Aviation Administration will go offline. The parks will close. Food safety inspections will cease."
"Then, of course, there’s the financial-market chaos. Trillions of dollars in derivatives and other financial products are based on the interest rate that the federal government pays when borrowing. U.S. government debt is, after all, supposed to be the safest investment in the world, and so it’s used to “benchmark” all other sorts of debt. A spike in the Treasury rate would mean a spike in credit card rates and mortgage rates, not to mention all manner of more esoteric financial derivatives. The damage to the economy would be tremendous, and it would occur at every level, from individuals looking for a loan to buy a house to hedge funders trying to play the markets."
And the crazy thing is that this is all self-inflicted. Walter Dellinger, Bill Clinton's solicitor general nails the absurdity of it all in an email to Greg Sargent of the Washington Post: "I understand why the debt ceiling is a problem. What I don’t understand it why it’s Obama’s problem. The debts that will come due are the debts of the United States, not the debts of the Obama family and not even the debts of the executive branch…"
"If the U.S. defaults on loan obligations because of failure to increase the debt ceiling, every single American would be made somewhat poorer by the dead weight loss to the American economy that this would cause. I don’t see why either political party or either branch of government should gain any leverage by threatening economic harm to the United States of America whose financial management is the mutual responsibility of each of them."
"The whole thing reminds me of the great moment in “Blazing Saddles” when Sheriff Bart takes himself hostage by pointing a gun at his own head. The simple townsfolk of Rock Ridge were dumb enough to fall for it. Are we?"
"The whole thing reminds me of the great moment in “Blazing Saddles” when Sheriff Bart takes himself hostage by pointing a gun at his own head. The simple townsfolk of Rock Ridge were dumb enough to fall for it. Are we?"
Sargent concludes: "Yes, apparently we are. You can read through reams of reporting about the debt ceiling and not find anything that explains the most basic facts about the situation. It is widely being reported on as a conventional Washington standoff, in which Dems want a debt ceiling hike, Republicans want spending cuts, and we’re now going to see a game of chicken in which the two will meet somewhere in the middle. This bears no relationship to the reality of the situation, in which Republicans are pretending that in refusing to hike the debt ceiling, they are withholding a concession for which they should ultimately be rewarded. In reality they are demanding that Dems give them something in exchange for agreeing not to do immense damage to the whole country. As Dellinger’s email neatly demonstrates, the situation is profoundly absurd and unbalanced — yet this is completely lost in the business-as-usual coverage."
Stay tuned, you have a real stake in the outcome of this absurd drama.
Saturday, December 29, 2012
I can do it in 30 seconds...
On the 24th, we drove from Fredonia to our daughter's home in Albany for a few days. During the 5-hour drive, we listened to satellite radio for awhile.
One talkshow host had a caller who asked why it was fair that people in his income bracket--above $250,000/year--were being "targeted" for a tax increase. The host--who I am sure makes much more than $250,000 each year--absolutely mangled the reply. It was totally incoherent, and I blew a gasket.
We're on the Thruway going around 70 and I'm yelling at the radio. "I can explain it in 30 seconds," I yelled. I don't have a radio show, but I do have a blog so here goes. Please start the timer:
Let's have a look at how those with your income have done over the last 30 years. Here's a nice little graph:
One talkshow host had a caller who asked why it was fair that people in his income bracket--above $250,000/year--were being "targeted" for a tax increase. The host--who I am sure makes much more than $250,000 each year--absolutely mangled the reply. It was totally incoherent, and I blew a gasket.
We're on the Thruway going around 70 and I'm yelling at the radio. "I can explain it in 30 seconds," I yelled. I don't have a radio show, but I do have a blog so here goes. Please start the timer:
Let's have a look at how those with your income have done over the last 30 years. Here's a nice little graph:
Whoa! Looks like you folks have made out pretty well while the rest of us have gone pretty much nowhere. In fact, the median middle-class household income has gone DOWN by several thousand dollars during the last ten years.
Is this a fair picture? What about after taxes?
Wow, you still made out like gangbusters! And that's why it's fair that your taxes go up before anyone else's.
Sure, when the economy gets back on its feet we will all need to kick in a bit more in taxes. But right now, you are the group who can afford to pay a little bit more. That's why it's fair.
OK, please stop the clock...
First of all, let's note that even though the graphs were published by Mother Jones Magazine, the data is from the non-partisan Congressional Budget Office.
You may hear from me another time or two before we head back to Florida next week. We're at the house we're getting ready to sell for a few days picking up and filling nailholes. It's like camping since most of our stuff has already moved to Florida.
Even the satellite TV service has been cancelled so we're reduced to watching "off the air" TV. This time of the year is particularly bad since most of the shows we would normally watch are on cable or off the air during the holidays. Last night I was reduced to watching an Anne Murray special on a Toronto station hyping her "Friends and Legends" album which was first released in 2007!
Thursday, December 13, 2012
Has democracy turned into a yacht race?
[NOTE: I'm headed north for the holidays, so this will be the last post until after the first of the year.]
Remember Wisconsin? They had an election a couple of years ago and the Republican promise of "jobs, jobs, jobs" carried the day giving that party total control of state government.
And once the election was over, do you remember what became the obsession of Wisconsin state government? Here's a hint: It wasn't "jobs, jobs, jobs." In fact it was something that nobody had bothered to mention during the election campaign: removing the collective bargaining rights of public employees--with the exception of police and firefighters, for a reason to be discussed later.
Remember Ohio? Pretty much the same story. But the citizens of Ohio made use of their ability to cancel legislation by means of a referendum. By a 2-to-1 margin, Ohioans told the Republicans in charge of state government that they were just fine with workers not needing to go by themselves to ask the CEO of a giant corporation for a raise. It seemed a much more balanced system when the union representing ALL of the workers could knock on the CEO's door.
Then there is Michigan. Last week--in a breathtaking show of raw political power--Michigan passed a "right to work" law.
What made it breathtaking was that Michigan governor Rick Snyder had said all along--including during the election--that he thought such a law was too divisive for his state. Then came the 2012 election in which Republicans lost several seats in the state house (the state senate was not up for election in 2012).
Apparently that made things less divisive because at 11 AM one day last week Snyder called a news conference and announced that he now supported a "right to work" law for Michigan. Amazingly, just such a law was introduced into the legislature early that same afternoon and was passed--without any hearings or time for public comment--by 8 PM that same evening. As you might expect, it was then signed by the governor.
Let's understand just what a "right to work" law means. New York is an example of a state that does not have such a law. So, if you take a job in a company whose employees have union representation does that mean you must join the union and pay union dues? No.
It does mean that you must pay an "agency fee" which is the portion of the union dues which actually goes toward negotiating and enforcing the contract under which everybody in that company works.
"Right to work" means that you get to say to the union, "Sure, go ahead and bargain with management on my behalf. I'll be happy to accept any benefits you negotiate, just don't ask me to pay anything to support those efforts on my behalf."
We fought a war over "taxation without representation." Right to work laws amount to representation without taxation.
It's easy to see how this benefits big corporations which make large campaign contributions, but how is this supposed to benefit the average Michigan worker?
In theory, eliminating those pesky unions makes Michigan a more attractive place for companies to build their plants, attracting more jobs to Michigan.
In theory, allowing corporations to dump anything they wanted anyplace they wanted for free should have the same effect. Let's all hold hands and race to the bottom. First one there "wins."
In practice, it doesn't seem to work this way. Research shows that the average wage in "right to work" states is $1500 less than in other states and that there is no "job flow" toward these states.
Even if there were a "job flow," how would that help the nation as a whole with one state stealing jobs from another?
Well, at least Michigan has a procedure allowing the public to overturn laws. Except, budget items. Would you believe that the Michigan legislature attached the "right to work" law to a budget bill? That's exactly what they did!
Which brings me to yacht races. I've been a sailor all my life. I spent summers teaching sailing at the Rochester YMCA camp on Keuka Lake.
There are 3 ways you can win a yacht race. The first is to have the fastest boat in the race. If your boat isn't the fastest, you can still win by having a skipper and crew with outstanding skills.
Failing the first two methods, many yacht races are won by using the rules against the other contestants. If you can force your opponent into a situation where they must violate a rule in order to avoid a collision you can win by having them disqualified.
It seems like government has become like a yacht race. The Constitution says not a word about the filibuster, yet the rules allow a minority to keep something from happening that a majority wants to happen.
And the people of Michigan must now live under a law they never asked for and never got to debate because the rules have been manipulated to keep them from having a say in the matter. How democratic.
Anybody with a brain can see that what happened in Michigan is all about politics not jobs. a lot of the money supporting Democratic candidates comes from union members and many of the people who man phone banks and pound the turf to get out the vote for Democratic candidates are union members.
Why were police and firefighters exempted from the anti-union bills in Wisconsin and Michigan? Simple. Members of these unions most often support Republican candidates.
Remember Wisconsin? They had an election a couple of years ago and the Republican promise of "jobs, jobs, jobs" carried the day giving that party total control of state government.
And once the election was over, do you remember what became the obsession of Wisconsin state government? Here's a hint: It wasn't "jobs, jobs, jobs." In fact it was something that nobody had bothered to mention during the election campaign: removing the collective bargaining rights of public employees--with the exception of police and firefighters, for a reason to be discussed later.
Remember Ohio? Pretty much the same story. But the citizens of Ohio made use of their ability to cancel legislation by means of a referendum. By a 2-to-1 margin, Ohioans told the Republicans in charge of state government that they were just fine with workers not needing to go by themselves to ask the CEO of a giant corporation for a raise. It seemed a much more balanced system when the union representing ALL of the workers could knock on the CEO's door.
Then there is Michigan. Last week--in a breathtaking show of raw political power--Michigan passed a "right to work" law.
What made it breathtaking was that Michigan governor Rick Snyder had said all along--including during the election--that he thought such a law was too divisive for his state. Then came the 2012 election in which Republicans lost several seats in the state house (the state senate was not up for election in 2012).
Apparently that made things less divisive because at 11 AM one day last week Snyder called a news conference and announced that he now supported a "right to work" law for Michigan. Amazingly, just such a law was introduced into the legislature early that same afternoon and was passed--without any hearings or time for public comment--by 8 PM that same evening. As you might expect, it was then signed by the governor.
Let's understand just what a "right to work" law means. New York is an example of a state that does not have such a law. So, if you take a job in a company whose employees have union representation does that mean you must join the union and pay union dues? No.
It does mean that you must pay an "agency fee" which is the portion of the union dues which actually goes toward negotiating and enforcing the contract under which everybody in that company works.
"Right to work" means that you get to say to the union, "Sure, go ahead and bargain with management on my behalf. I'll be happy to accept any benefits you negotiate, just don't ask me to pay anything to support those efforts on my behalf."
We fought a war over "taxation without representation." Right to work laws amount to representation without taxation.
It's easy to see how this benefits big corporations which make large campaign contributions, but how is this supposed to benefit the average Michigan worker?
In theory, eliminating those pesky unions makes Michigan a more attractive place for companies to build their plants, attracting more jobs to Michigan.
In theory, allowing corporations to dump anything they wanted anyplace they wanted for free should have the same effect. Let's all hold hands and race to the bottom. First one there "wins."
In practice, it doesn't seem to work this way. Research shows that the average wage in "right to work" states is $1500 less than in other states and that there is no "job flow" toward these states.
Even if there were a "job flow," how would that help the nation as a whole with one state stealing jobs from another?
Well, at least Michigan has a procedure allowing the public to overturn laws. Except, budget items. Would you believe that the Michigan legislature attached the "right to work" law to a budget bill? That's exactly what they did!
Which brings me to yacht races. I've been a sailor all my life. I spent summers teaching sailing at the Rochester YMCA camp on Keuka Lake.
There are 3 ways you can win a yacht race. The first is to have the fastest boat in the race. If your boat isn't the fastest, you can still win by having a skipper and crew with outstanding skills.
Failing the first two methods, many yacht races are won by using the rules against the other contestants. If you can force your opponent into a situation where they must violate a rule in order to avoid a collision you can win by having them disqualified.
It seems like government has become like a yacht race. The Constitution says not a word about the filibuster, yet the rules allow a minority to keep something from happening that a majority wants to happen.
And the people of Michigan must now live under a law they never asked for and never got to debate because the rules have been manipulated to keep them from having a say in the matter. How democratic.
Anybody with a brain can see that what happened in Michigan is all about politics not jobs. a lot of the money supporting Democratic candidates comes from union members and many of the people who man phone banks and pound the turf to get out the vote for Democratic candidates are union members.
Why were police and firefighters exempted from the anti-union bills in Wisconsin and Michigan? Simple. Members of these unions most often support Republican candidates.
Tuesday, December 11, 2012
Does this make sense?
There appears to be strong Republican pressure building in Washington to raise the Medicare eligibility age from 65 to 67. Some say that this will save the federal government $5.7 billion per year, and that's a good thing. Others see it as a needed "trophy" to keep the Republican base settled down when tax rates on income over $250,000 are raised.
But let's visit the Law of Unintended Consequences for a moment. An easy-to-understand explanation appears in a piece by Austin Frakt published in The Incidental Economist. Here are the numbers:
1) By excluding 66 and 67-year-olds from Medicare, the federal government will save $5.7 billion in 2014.
2) But, those people denied Medicare coverage don't just disappear. They will spend $3.7 billion of their own money to purchase coverage from other sources.
3) Employers will spend an additional $4.5 billion to cover workers who would have been on Medicare if the age remained at 65.
4) Premiums on the new healthcare exchanges will increase because folks at 66 or 67 tend to have higher medical costs than those who are younger.
5) If you are already on Medicare, get ready to kick in! Why? Because--by law--Medicare recipients pay 25% of the cost of the program through their premiums. Excluding the 66 and 67-year-olds from Medicare makes the average age of Medicare recipients increase, and a higher average age means a higher average expense per recipient. Plus, Medicare loses the premiums that these people would have paid. The best estimate of this is a 3% increase in premiums. The monthly Medicare premium is about $100 so a 3% increase would be almost $75/year for a typical retired couple.
6) The combination of 4 & 5 above add up to about $2.5 billion, with the states spending some additional money on 66 and 67-year-olds eligible for Medicaid.
Add everything up and it costs $11.4 billion to save the federal government $5.4 billion. If this sounds like a good deal to you, let's talk about a bridge I own in Brooklyn.
It would be much more effective to talk about allowing Medicare to use its huge weight to bargain with drug manufacturers on price--as the Veterans' Administration is already allowed to do.
Don't hold your breath on that one. Here are some additional interesting numbers:
1) We just went through the most expensive election ever. About $2 billion was spent on TV ads, etc.
2) When Obamacare was being proposed, the insurance and drug companies made it clear that they were willing to spend $10 billion to defeat the bill if it was not to their liking. Just imagine how many 30-second TV ads this would buy, and there would still be plenty of money left over to bribe--excuse me, make campaign contributions to--every politician in Washington.
If you agree with me that this is on the dumb side of stupid, make a call or send an email to your representatives in Washington.
But let's visit the Law of Unintended Consequences for a moment. An easy-to-understand explanation appears in a piece by Austin Frakt published in The Incidental Economist. Here are the numbers:
1) By excluding 66 and 67-year-olds from Medicare, the federal government will save $5.7 billion in 2014.
2) But, those people denied Medicare coverage don't just disappear. They will spend $3.7 billion of their own money to purchase coverage from other sources.
3) Employers will spend an additional $4.5 billion to cover workers who would have been on Medicare if the age remained at 65.
4) Premiums on the new healthcare exchanges will increase because folks at 66 or 67 tend to have higher medical costs than those who are younger.
5) If you are already on Medicare, get ready to kick in! Why? Because--by law--Medicare recipients pay 25% of the cost of the program through their premiums. Excluding the 66 and 67-year-olds from Medicare makes the average age of Medicare recipients increase, and a higher average age means a higher average expense per recipient. Plus, Medicare loses the premiums that these people would have paid. The best estimate of this is a 3% increase in premiums. The monthly Medicare premium is about $100 so a 3% increase would be almost $75/year for a typical retired couple.
6) The combination of 4 & 5 above add up to about $2.5 billion, with the states spending some additional money on 66 and 67-year-olds eligible for Medicaid.
Add everything up and it costs $11.4 billion to save the federal government $5.4 billion. If this sounds like a good deal to you, let's talk about a bridge I own in Brooklyn.
It would be much more effective to talk about allowing Medicare to use its huge weight to bargain with drug manufacturers on price--as the Veterans' Administration is already allowed to do.
Don't hold your breath on that one. Here are some additional interesting numbers:
1) We just went through the most expensive election ever. About $2 billion was spent on TV ads, etc.
2) When Obamacare was being proposed, the insurance and drug companies made it clear that they were willing to spend $10 billion to defeat the bill if it was not to their liking. Just imagine how many 30-second TV ads this would buy, and there would still be plenty of money left over to bribe--excuse me, make campaign contributions to--every politician in Washington.
If you agree with me that this is on the dumb side of stupid, make a call or send an email to your representatives in Washington.
Monday, December 3, 2012
Social Security: Little "tweaks" matter.
It's important for retirees to pay close attention to the current deficit negotiations in Washington because the "big 3" programs of most interest to retirees are chips on the table. These are Social Security, Medicare and Medicaid.
Don't think Medicaid applies to you? If you eventually need longterm care, how will you or your family handle the almost $100,000/year cost? Medicare pays for only 100 days of this type of care. Even if you have longterm care insurance, most policies cover only a set number of years at a set monthly maximum. Almost one of every two Medicaid dollars goes to pay for longterm care for the elderly or disabled, and it's quite possible it will be a program to which you or your family will turn.
Paul Krugman's column, The Big Budget Mumble, in this morning's NY Times provides some information on negotiating positions.
" As his opening bid in negotiations, Mr. Obama has proposed raising about $1.6 trillion in additional revenue over the next decade, with the majority coming from letting the high-end Bush tax cuts expire and the rest from measures to limit tax deductions. He would also cut spending by about $400 billion, through such measures as giving Medicare the ability to bargain for lower drug prices."
"So what are Republicans offering as an alternative? They say they want to rely mainly on spending cuts instead. Which spending cuts? Ah, that’s a mystery. In fact, until late last week, as far as I can tell, no leading Republican had been willing to say anything specific at all about how spending should be cut." [NOTE: I've promised to stay away from politics in these blog posts, except where politics collides with areas of fundamental interest to retirees. If this isn't such an area, I don't know what is!]
"The veil lifted a bit when Senator Mitch McConnell, in an interview with The Wall Street Journal, finally mentioned a few things — raising the Medicare eligibility age, increasing Medicare premiums for high-income beneficiaries and changing the inflation adjustment for Social Security. But it’s not clear whether these represent an official negotiating position — and in any case, the arithmetic just doesn’t work."
Don't think Medicaid applies to you? If you eventually need longterm care, how will you or your family handle the almost $100,000/year cost? Medicare pays for only 100 days of this type of care. Even if you have longterm care insurance, most policies cover only a set number of years at a set monthly maximum. Almost one of every two Medicaid dollars goes to pay for longterm care for the elderly or disabled, and it's quite possible it will be a program to which you or your family will turn.
Paul Krugman's column, The Big Budget Mumble, in this morning's NY Times provides some information on negotiating positions.
" As his opening bid in negotiations, Mr. Obama has proposed raising about $1.6 trillion in additional revenue over the next decade, with the majority coming from letting the high-end Bush tax cuts expire and the rest from measures to limit tax deductions. He would also cut spending by about $400 billion, through such measures as giving Medicare the ability to bargain for lower drug prices."
Krugman goes on to point out that raising the Medicare eligibility age has been looked at by the nonpartisan Congressional Budget Office which found that raising the age from 65 to 67 would save about $113 billion over the next decade. Primarily because people entering Medicare have far lower health costs than the average Medicare participant.
According to the CBO, increasing Medicare premiums for the affluent raises only $20 billion over the next 10 years, and note that they already pay higher premiums than you or I.
And then there's the matter of Social Security. The great "fix" being floated is to reduce Social Security costs by switching from the Consumer Price Index (cpi) to the "Chained Consumer Price Index" (chained cpi) in figuring the annual cost-of-living adjustment for Social Security recipients. This would "save" about $185 billion over the next decade.
Remember, however, that no general tax revenue goes into Social Security. It is totally paid for by the FICA tax on workers and their employers. It is not responsible for a single penny of the deficit. In fact, it runs a surplus!
So why are we even talking about Social Security in terms of reducing the deficit? Welcome to the wonderful world of smoke and mirrors!
But wait, it gets better! The "chained cpi" is supposed to be a more accurate picture of the cost of living since it corrects for consumer responses to price fluctuations. When the price of beef increases, consumers buy more chicken and the chained cpi accounts for this producing a slightly lower cost-of-living figure. It's not a big difference, but here's the thing: over the course of years these small differences act like compound interest and build up. Use the chained cpi for 30 years and your monthly Social Security check will be less by almost 10% compared with using the traditional cpi.
Oh, and there's more! For several years the Bureau of Labor Statistics has been calculating a third cpi specifically designed to reflect the cost of living for those 62 and older. People of this age have greater-than-average healthcare costs which are reflected in the "CPI-E"--the "E" standing for "experimental."
Use of this measure would produce larger cost-of-living adjustments than the current CPI.
It appears, for now, that the White House understands that Social Security is not part of the problem. USA Today reports that " Treasury Secretary Timothy Geithner echoed another White House message to Republicans during a string of Sunday show interviews: no Social Security talks as part of the fiscal cliff negotiations."
"We're prepared to, in a separate process, look at how to strengthen Social Security," Geithner said on ABC'sThis Week. "But not as part of a process to reduce the other deficits the country faces."
"We're prepared to, in a separate process, look at how to strengthen Social Security," Geithner said on ABC'sThis Week. "But not as part of a process to reduce the other deficits the country faces."
This is an area worthy of your attention. Let your representatives in both houses of Congress know your feelings.
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