Cartoon of the day

Special mention

 

And one more for good measure. . .

Only in America

In the current budget debate, the loudest calls for Social Security cuts are coming from two lobby groups—Fix the Debt and the Business Roundtable—that led by CEOs who will never have to worry about their own retirement security.

According to the Institute for Policy Studies [pdf], the retirement assets of Business Roundtable CEOs average $14.5 million—more than 1,200 times as much as the $12,000 median retirement savings of U.S. workers near retirement age. A retirement fund of $14.5 million, combined with Social Security, would generate a monthly retirement check for these CEOs of $88,576. That’s 68 times what a typical U.S. retiree can expect to receive.

Many of these same CEOs are calling for spending reductions on so-called entitlements (via, e.g., a shift to “chained CPI” and raising the Social Security retirement age), while at the same time accumulating enormous retirement funds for themselves and leading companies that have slashed retirement benefits for their own employees.

Right now,

American workers face a “retirement income deficit” (i.e., the difference between the amount of money needed to maintain one’s lifestyle in retirement and the amount of money saved in retirement accounts) of $6.6 trillion, according to the Center for Retirement Research at Boston College. Six million American workers lived in poverty in 2010. This number is expected to grow by a third – to 8 million – by 2020. Without Social Security, 43.6 percent of all retired Americans would be living in poverty, according to the Center on Budget and Policy Priorities.

Among Americans approaching retirement (age 50-64), the bottom 75 percent by wealth had just $26,395 in retirement assets, on average. This is enough to generate a $156 monthly check to supplement their Social Security. The wealthiest 25 percent of this age cohort is slightly better off with $52,000 in retirement savings, enough for an expected $308 monthly check in their golden years.

As I say, only in America. . .

Cartoon of the day

Special mention

War on entitlements

Thomas Edsall’s essay, “The War On Entitlements,” should be required reading for everyone interested in challenging the elite view that has come to govern the present debate about programs like Social Security and Medicare.

In particular, Edsall pushes back against the two favorite elite strategies for reforming current entitlement programs: means-testing of benefits and raising the age of eligibility.

The idea of subjecting earned income over $113,700 to the Social Security payroll tax and making the Medicare tax more progressive – steps that would affect only the relatively affluent — is largely missing from the policy conversation. . .

Means-testing and raising the age of eligibility as methods of cutting spending appeal to ideological conservatives for a number of reasons.

First, insofar as benefits for the affluent are reduced or eliminated under means-testing, social insurance programs are no longer universal and are seen, instead, as a form of welfare. Public support would almost certainly decline, encouraging further cuts in the future.

Second, the focus on means-testing and raising the age of eligibility diverts attention from a much simpler and more equitable approach: raising the payroll tax to apply to the earnings of the well-to-do, a step strongly opposed by the ideological right.

Third, and most important in terms of the policy debate, while both means-testing and eliminating the $113,700 cap on earnings subject to the payroll tax hurt the affluent, the latter would inflict twice as much pain.

Is it any wonder that elite austerity nuts have been trying so hard to push their preferred reforms to existing entitlement programs?

Fear and loathing in the United States

There are two ways of responding to the charge that the poor are unjustifiably dependent on state handouts.

One is to argue that the rich are also dependent on the state. As Amia Srinivasan explains,

Conservatives champion an ethos of hard work and self-reliance, and insist — heroically ignoring the evidence — that people’s life chances are determined by the exercise of those virtues. Liberals, meanwhile, counter the accusation that their policies encourage dependence by calling the social welfare system a “safety net,” there only to provide a “leg up” to people who have “fallen on hard times.” Unlike gay marriage or abortion, issues that divide left from right, everyone, no matter where they lie on the American political spectrum, loathes and fears state dependence. If dependence isn’t a moral failing to be punished, it’s an addictive substance off which people must be weaned. . .

But if the poor are dependent on the state, so, too, are America’s rich. The extraordinary accumulation of wealth enjoyed by the socioeconomic elite — in 2007, the richest 1 percent of Americans accounted for about 24 percent of all income — simply wouldn’t be possible if the United States weren’t organized as it is. Just about every aspect of America’s economic and legal infrastructure — the laissez-faire governance of the markets; a convoluted tax structure that has hedge fund managers paying less than their office cleaners; the promise of state intervention when banks go belly-up; the legal protections afforded to corporations as if they were people; the enormous subsidies given to corporations (in total, about 50 percent more than social services spending); electoral funding practices that allow the wealthy to buy influence in government — allows the rich to stay rich and get richer. In primitive societies, people can accumulate only as much stuff as they can physically gather and hold on to. It’s only in “advanced” societies that the state provides the means to socioeconomic domination by a tiny minority. “The poverty of our century is unlike that of any other,” the writer John Berger said about the 20th century, though he might equally have said it of this one: “It is not, as poverty was before, the result of natural scarcity, but of a set of priorities imposed upon the rest of the world by the rich.”

The other, as I’ve tried to do before, is to contest the whole idea of dependence on the state.

In particular, why is selling one’s ability to work for a wage or salary any less a form of dependence than receiving some form of government assistance? It certainly is a different kind of dependence—on employers rather than on one’s fellow citizens—and probably a form of dependence that is more arbitrary and capricious—since employers have the freedom to hire people when and where they want, while government assistance is governed by clear rules. . .

While I’m at it, how are the profits that are received by private-equity companies (like Bain Capital), not to mention the multimillion-dollar payouts to CEOs, not themselves a form of dependence on the surplus created by workers in enterprises they invest in and manage? Don’t venture capitalists and other members of the 1 percent feel entitled to receive their large share of the booty society produces—and then to pay lower and lower taxes on their cut?

Cartoon of the day

Special mention

 

Cartoon of the day

Special mention

 

Entitlement society?

The right-wing strategy in the current presidential campaign is now clear: it’s all about attacking the so-called entitlement society.

The terms of the strategy were first announced by Mitt Romney in a December 2011 op-ed piece:

In less than a year, the American people will go to the polls and choose a new president. A matter of great moment is at stake in this election. The question we will decide is this: Will the United States be an Entitlement Society or an Opportunity Society?

In an Entitlement Society, government provides every citizen the same or similar rewards, regardless of education, effort and willingness to innovate, pioneer or take risk. In an Opportunity Society, free people living under a limited government choose whether or not to pursue education, engage in hard work, and pursue the passion of their ideas and dreams. If they succeed, they merit the rewards they are able to enjoy.

Those same terms are repeated in Paul Ryan’s budget proposals and by the Wall Street Journal/American Enterprise Institute (and then invoked as a scare chart by Greg Mankiw).

This is what the world looks like according to those who decry what they perceive to be the dependence of able-bodied, working-age, black and Hispanic Americans on government handouts:

There are at least three issues that need to be raised here.

First, we need to contest the meaning of dependence. In particular, why is selling one’s ability to work for a wage or salary any less a form of dependence than receiving some form of government assistance? It certainly is a different kind of dependence—on employers rather than on one’s fellow citizens—and probably a form of dependence that is more arbitrary and capricious—since employers have the freedom to hire people when and where they want, while government assistance is governed by clear rules.

Second, as I showed yesterday, corporations have been successful in shifting the financing of government assistance programs from their surpluses to workers’ incomes. But the solution to the pressure on current workers’ standard of living is not to cut government programs but to change how they’re financed.

Finally, as the Center on Budget and Policy Priorities has shown, most of the benefit dollars that entitlement and other mandatory programs spend go to assist people who are elderly, seriously disabled, or members of working households—not to able-bodied, working-age Americans who choose not to work.*

These are the main ideas—the meaning of dependence, the financing of government programs, and the recipients of social insurance expenditures (like Medicare, Medicaid, Social Security, and unemployment benefits)—that challenge the terms of the attack on the so-called entitlement society, which the Republican machine doesn’t want us to see or to raise in the existing debate.

*And there’s one other issue that needs to be raised: the distribution of entitlement benefits stands in sharp contrast to the distribution of benefits for tax expenditures, which represent (to use the Republican language) “tax entitlements.” According to the Center for Budget and Policy Priorities, the top fifth of the population receives 66 percent of tax-expenditure benefits (compared to 10 percent of entitlement benefits), while the middle 60 percent of the population receives a little over 31 percent of tax-expenditure benefits (compared to 58 percent of entitlement benefits) and the  bottom fifth receives just 2.8 percent of tax-expenditure benefits (compared to 32 percent of entitlement benefits). The top 1 percent of the population alone receives 23.9 percent of tax-expenditure benefits—more than eight times as much as the bottom fifth of the population, and nearly as much as the middle 60 percent of the population. Who, then, is benefiting from, and contributing to the declining culture of, the so-called entitlement society?

Update

While I’m at it, how are the profits that are received by private-equity companies (like Bain Capital), not to mention the multimillion-dollar payouts to CEOs, not themselves a form of dependence on the surplus created by workers in enterprises they invest in and manage? Don’t venture capitalists and other members of the 1 percent feel entitled to receive their large share of the booty society produces—and then to pay lower and lower taxes on their cut?