The Social Security Trust Fund
Guess what. All those Social Security Taxes that were supposed to go into the Social Security Trust Fund to prepare for the day draws on the system exceeded contributions HAVE BEEN SPENT! The federal government borrowed and spent them and now Congress DOES NOT want to pay them back.
According to NPR, the tipping point has arrived - 4 years before anticipated - and demands will now be made on the general fund to make up the difference. [Click on this post's title for the story.]
The 2 percent decrease in employee contributions since the Obama/McConnell tax bill became effective was NOT mentioned as a contributing factor in the premature arrival of this day.
Our elected officials appropriated these funds from the people they represented. In addition to borrowing trillions from foreign countries, they borrowed the entire Social Security Trust Fund. Referring to the debt they owe the American people as an "unfunded entitlement," they are taking it a lot less seriously than the debts they owe China, Saudi Arabia and other domestic and foreign institutions.
So when politicians begin talking about the need to cut into "unfunded entitlements like Social Security" they are blithely IGNORING the TRILLIONS of dollars that should be bolstering up the system but instead disappeared in the frenzy of spending on two wars and tax cuts we could not afford.
If we let them use this spin to dismantle/cripple Social Security, we will finally be actively complicit in our own destruction.
Here's what I think...
Wednesday, February 9, 2011
Monday, February 7, 2011
Why I Love Local Public Radio
So... I listen to WAMC Northeast Public Radio A LOT. One of my favorite programs is Harry Shearer's (Spinal Tap and The Simpsons fame) Le Show, broadcast Sundays at 1 p.m. WAMC is conducting its most ambitious fund drive EVER. Proactively responding to a ground swell of national budget cutting of "discretionary" spending which loudly includes resistance to support of public radio and television stations, WAMC is determined to raise $1 million from its mid-market audience and maintain its viability and independence.
I try to "put my money where my mouth is" in supporting WAMC and made a specific donation during Harry Shearer's time slot. However, I was very unhappy about the manner in which this time slot was introduced by the radio station and emailed an (if I do say so myself) elegantly worded complaint.
In LESS THAN 24 HOURS, Alan Chartock, the President/CEO of WAMC (in the midst of what has to be one of the most stressful fund-raising campaigns he has ever waged) responded to my email, after unsuccessfully attempting to reach me by PHONE! Does he agree with my complaint? I don't think so. Does he consider my opinion important? A big, resounding YES!
Why is this public radio station so incredibly important to me personally? The call-in shows (Vox Pop) during which I have an "equal" opportunity to express my opinions and concerns about important issues of the day; the invaluable local and NPR programming that informs my mind and stimulates my brain; the riveting interviews with local, state and national personalities; the once-a-month poetry hour during which listeners call in and read or recite their favorite poems; the conviction that WAMC is "my" station.
If WAMC discontinues broadcasting Le Show, I will be crushed. I will NOT stop supporting this extremely valuable public resource.
I try to "put my money where my mouth is" in supporting WAMC and made a specific donation during Harry Shearer's time slot. However, I was very unhappy about the manner in which this time slot was introduced by the radio station and emailed an (if I do say so myself) elegantly worded complaint.
In LESS THAN 24 HOURS, Alan Chartock, the President/CEO of WAMC (in the midst of what has to be one of the most stressful fund-raising campaigns he has ever waged) responded to my email, after unsuccessfully attempting to reach me by PHONE! Does he agree with my complaint? I don't think so. Does he consider my opinion important? A big, resounding YES!
Why is this public radio station so incredibly important to me personally? The call-in shows (Vox Pop) during which I have an "equal" opportunity to express my opinions and concerns about important issues of the day; the invaluable local and NPR programming that informs my mind and stimulates my brain; the riveting interviews with local, state and national personalities; the once-a-month poetry hour during which listeners call in and read or recite their favorite poems; the conviction that WAMC is "my" station.
If WAMC discontinues broadcasting Le Show, I will be crushed. I will NOT stop supporting this extremely valuable public resource.
Wednesday, February 2, 2011
State Bankruptcies?
I hear and read more and more chatter about enabling states to declare bankruptcy. If this happens, I have a pretty good idea who will be hurt, but am trying to figure out who will benefit.
State Pension Funds
We are discovering that many states ignored their constitutional requirement to fund their pension funds. I guess they thought tax revenues would just keep going up and up while expenses remained static - oops. To make matters worse they used smoke and mirrors to balance their budgets - selling off income-producing assets for one-time cash injections. Now pundits and politicians are proclaiming that hugely expensive, underfunded pension programs are responsible for the states' financial meltdowns.
Because of their government-funded pension plans, unless they moonlight in private-sector jobs, public-sector workers do not pay Social Security taxes and are not vested in the Social Security system.
If states are allowed to declare bankruptcy, they will want to shed their pension liabilities. Retired state workers could be confronted with the loss or devaluation of their pensions and no fall-back position. Who will be affected? Teachers, firemen, policemen, garbage collectors, highway workers, the folks who worked for motor vehicles, tax collection, licensing, the courts, among others.
Bond Holders
States issue bonds to finance infrastructure. Many states have relied heavily on bond issues to keep current expenditures within budget. As a result, they now carry huge debt loads. Bankruptcy would enable them to unload a good portion of that debt. Bonds have been an important part of many folks savings and investment strategies. The modest returns were offset by their supposed safety. The pain of defaults would be widespread and crippling to the general economy.
Vendors
One of the ways states have remained "cash flow positive" has been by dragging out their Accounts Payable. This is a ploy that works best with local governments, school districts and small businesses. The big guys (corporations like GE, Exxon, Verizon and AT&T) are far less likely to tolerate it and have much greater bargaining clout. While waiting months for payment, vendors are forced to drag out their own payables and to borrow to maintain operations and pay current expenses. In bankruptcy reorganization many of these debts would be abandoned with a rippling effect all the way down the line.
Conclusion
It is easy to see who would be hurt by state bankruptcies. The growing "chatter" about making it available to the states really makes me wonder - who will benefit? Taxpayers is an obvious answer but is it the correct one? Won't the inevitable financial disruption, loss of vital services and accelerated infrastructure decay be far more damaging than any hypothetical tax relief such action brings?
State Pension Funds
We are discovering that many states ignored their constitutional requirement to fund their pension funds. I guess they thought tax revenues would just keep going up and up while expenses remained static - oops. To make matters worse they used smoke and mirrors to balance their budgets - selling off income-producing assets for one-time cash injections. Now pundits and politicians are proclaiming that hugely expensive, underfunded pension programs are responsible for the states' financial meltdowns.
Because of their government-funded pension plans, unless they moonlight in private-sector jobs, public-sector workers do not pay Social Security taxes and are not vested in the Social Security system.
If states are allowed to declare bankruptcy, they will want to shed their pension liabilities. Retired state workers could be confronted with the loss or devaluation of their pensions and no fall-back position. Who will be affected? Teachers, firemen, policemen, garbage collectors, highway workers, the folks who worked for motor vehicles, tax collection, licensing, the courts, among others.
Bond Holders
States issue bonds to finance infrastructure. Many states have relied heavily on bond issues to keep current expenditures within budget. As a result, they now carry huge debt loads. Bankruptcy would enable them to unload a good portion of that debt. Bonds have been an important part of many folks savings and investment strategies. The modest returns were offset by their supposed safety. The pain of defaults would be widespread and crippling to the general economy.
Vendors
One of the ways states have remained "cash flow positive" has been by dragging out their Accounts Payable. This is a ploy that works best with local governments, school districts and small businesses. The big guys (corporations like GE, Exxon, Verizon and AT&T) are far less likely to tolerate it and have much greater bargaining clout. While waiting months for payment, vendors are forced to drag out their own payables and to borrow to maintain operations and pay current expenses. In bankruptcy reorganization many of these debts would be abandoned with a rippling effect all the way down the line.
Conclusion
It is easy to see who would be hurt by state bankruptcies. The growing "chatter" about making it available to the states really makes me wonder - who will benefit? Taxpayers is an obvious answer but is it the correct one? Won't the inevitable financial disruption, loss of vital services and accelerated infrastructure decay be far more damaging than any hypothetical tax relief such action brings?
Tuesday, February 1, 2011
Define Not Paying Taxes Please
Assertion: millions of Americans do not pay taxes...
Over and over again my conservative friends argue that a huge swath of lower-income Americans pay no taxes at all. This is one of their strongest arguments for tax cuts for the wealthy and cutting back on or eliminating social programs.
I take issue with this claim. For private-sector employees, Social Security and Medicare taxes are non-negotiable. With the exception of those subject to the Railroad Retirement Tax Act, which provides a separate system of contributions for railroad employees, Social Security taxes are deducted from every paycheck until the ceiling of $106,800 is reached - 4.2% for 2011, 6.2% for previous years. Medicare is deducted from every paycheck, period - 1.45%.
Self Employment Taxes
If you are self-employed, you pay the full shot of Social Security and Medicare (15.3% in 2010; 13,3% in 2011). You can deduct half of the Social Security payments from your Adjusted Gross Income. This does NOT exempt you from paying Social Security taxes. It does permit you to deduct the payments from your income subject to Federal Income Tax liability. In other words, you are allowed to "expense" that portion of Social Security that an employer would pay, just like other employers do.
The self-employed are allowed a deduction for what they pay for health insurance. This deduction is taken into consideration in calculating their net income from self employment. It is NOT deducted from their tax liability. Again, health insurance is treated as an "expense," as it would be by your employer if you worked for someone else.
So What?
Well, for every $100 dollars you earn, you pay $5.65 in employment taxes. Your employer pays $7.65 on that same $100. If you are self-employed, you pay $12.85 on every $100. Sounds like paying taxes to me.
Perhaps because I am a liberal elitist, it appears to me that accusing folks who pay these taxes of being lazy freeloading tax dodgers is disingenuous (dishonest).
Do I resent paying these taxes? Absolutely not. It is a price I am willing to pay for the safety net that has enabled my 88 year old mother-in-law and my 95 year old mother to retain their independence and which will (hopefully) enable me and my husband to avoid being burdens on our children in our elder years.
Note on Public-Sector Employees
Civil Service employees are exempt from Social Security Taxes because they have government pensions. Additionally, if you receive a pension from a government job in which you did not pay Social Security taxes, some or all of your Social Security spouse's, widow's or widower's benefits may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset, or GPO. For more information refer to: http://www.socialsecurity.gov/pubs/10007.html
Over and over again my conservative friends argue that a huge swath of lower-income Americans pay no taxes at all. This is one of their strongest arguments for tax cuts for the wealthy and cutting back on or eliminating social programs.
I take issue with this claim. For private-sector employees, Social Security and Medicare taxes are non-negotiable. With the exception of those subject to the Railroad Retirement Tax Act, which provides a separate system of contributions for railroad employees, Social Security taxes are deducted from every paycheck until the ceiling of $106,800 is reached - 4.2% for 2011, 6.2% for previous years. Medicare is deducted from every paycheck, period - 1.45%.
Self Employment Taxes
If you are self-employed, you pay the full shot of Social Security and Medicare (15.3% in 2010; 13,3% in 2011). You can deduct half of the Social Security payments from your Adjusted Gross Income. This does NOT exempt you from paying Social Security taxes. It does permit you to deduct the payments from your income subject to Federal Income Tax liability. In other words, you are allowed to "expense" that portion of Social Security that an employer would pay, just like other employers do.
The self-employed are allowed a deduction for what they pay for health insurance. This deduction is taken into consideration in calculating their net income from self employment. It is NOT deducted from their tax liability. Again, health insurance is treated as an "expense," as it would be by your employer if you worked for someone else.
So What?
Well, for every $100 dollars you earn, you pay $5.65 in employment taxes. Your employer pays $7.65 on that same $100. If you are self-employed, you pay $12.85 on every $100. Sounds like paying taxes to me.
Perhaps because I am a liberal elitist, it appears to me that accusing folks who pay these taxes of being lazy freeloading tax dodgers is disingenuous (dishonest).
Do I resent paying these taxes? Absolutely not. It is a price I am willing to pay for the safety net that has enabled my 88 year old mother-in-law and my 95 year old mother to retain their independence and which will (hopefully) enable me and my husband to avoid being burdens on our children in our elder years.
Note on Public-Sector Employees
Civil Service employees are exempt from Social Security Taxes because they have government pensions. Additionally, if you receive a pension from a government job in which you did not pay Social Security taxes, some or all of your Social Security spouse's, widow's or widower's benefits may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset, or GPO. For more information refer to: http://www.socialsecurity.gov/pubs/10007.html
Sunday, January 30, 2011
The Burden WILL NOT be Shared
The rich and powerful insist that taxing THEM stifles the economy. The only alternative is forcing the rest of us to carry an increasingly heavy burden with fewer and fewer social supports.
The Obama/McConnell tax bill guaranteed that whoever must bear the burden of cutting government spending and balancing the budget, it WILL NOT be the folks who make up less than 1 percent of our population yet who grab 37% of the money - among them those who caused the financial meltdown in the first place.
These folks will continue to reap their huge bonuses and pay low taxes on them. These folks do not have to worry about medical costs - they can afford (and get) the very best of care.
These folks do not have to worry about decaying inner cities - their ivory tower penthouses are isolated and protected from them.
These folks continued to stockpile their wealth while the rest of us saw our home values sink below the mortgages on them; our pensions plans disappear into the nether mist as companies cleansed themselves of their obligations in Chapter 11 reorganizations; our savings and bond holdings languish in zero interest accounts for years on end; our 401Ks evaporate in employer selected and managed mutual funds.
These folks run the corporations that control every cent we earn, pollute our water, air and food and transport our jobs to cheaper labor markets overseas at the same time they swallow up billions in corporate welfare.
The folks who push us into crushingly expensive military conflicts and then put the cost on the credit card - ours not theirs.
No those who will bear the budget balancing burden will be the "small people" - the folks who don't go to Davos, Switzerland to decide the economic fate of the planet. The folks who struggle to get by on less and less.
The Obama/McConnell tax bill guaranteed that whoever must bear the burden of cutting government spending and balancing the budget, it WILL NOT be the folks who make up less than 1 percent of our population yet who grab 37% of the money - among them those who caused the financial meltdown in the first place.
These folks will continue to reap their huge bonuses and pay low taxes on them. These folks do not have to worry about medical costs - they can afford (and get) the very best of care.
These folks do not have to worry about decaying inner cities - their ivory tower penthouses are isolated and protected from them.
These folks continued to stockpile their wealth while the rest of us saw our home values sink below the mortgages on them; our pensions plans disappear into the nether mist as companies cleansed themselves of their obligations in Chapter 11 reorganizations; our savings and bond holdings languish in zero interest accounts for years on end; our 401Ks evaporate in employer selected and managed mutual funds.
These folks run the corporations that control every cent we earn, pollute our water, air and food and transport our jobs to cheaper labor markets overseas at the same time they swallow up billions in corporate welfare.
The folks who push us into crushingly expensive military conflicts and then put the cost on the credit card - ours not theirs.
No those who will bear the budget balancing burden will be the "small people" - the folks who don't go to Davos, Switzerland to decide the economic fate of the planet. The folks who struggle to get by on less and less.
Thursday, January 27, 2011
Cutting Entitlements
Entitlements equal Social Security and Medicare
We hear a lot of talk about lowering the deficit these days, usually from the same folks who vehemently push for lower taxes. With only 12 percent of the federal budget devoted to "discretionary" spending, we are informed "everything" must be on the table.
"Everything" usually DOES NOT include military spending. "Everything" means "entitlements." Eliminating "entitlements" is an integral component of the push to achieve smaller government. The first step will be a decrease in the benefits.
"Entitlements" mean Medicare and Social Security. We are informed these are the biggest slices of the budgetary pie (aside from military spending and interest on the debt that is).
Until the Obama/McConnell tax bill passed, if your annual salary was $40,000, you and your employer paid $4960 into Social Security. If your annual salary was $106,800, you and your employer paid $13,243 into Social Security. In both cases the annual contribution was 12.4 percent of the employee's salary. If your annual salary was $1 million, the annual contribution totalled $13,242 or .013 percent of your salary. (You are also entitled to the same annual payments as anyone else who has paid the maximum into the system ($106,800 and up)).
That is because Social Security was designed to be paid from the contributions made into it. It is an entitlement because we are entitled to it.
The tax bill reduces employees' 2011 contributions to 4.2 percent of their income up to $106,800. Employers' contributions remain unchanged. For someone paying in the maximum, this is a decrease of $2136. On $53,000, it is a decrease of $1060. This is money that will never be placed into the fund. The tax bill provides for shortfalls to be made up from the "general fund." This is a dangerous precedent. Instead of being self-funding, Social Security could become dependent upon general tax revenues - and far more vulnerable to the arguments of budget-busting legislators.
Retirement Age
Raising the retirement age is another important ploy of the anti-entitlement crowd. If you have worked at a white collar job during your employment years and are in good health, retiring at 70 may not be a pleasant prospect, but it is probably doable. If your work involved hard, physical labor, your body's natural aging will make continuing difficult. And if the wear and tear on your body caused by intense physical labor is substantial, it could be impossible.
Keep your eyes on Washington. Do NOT let them destroy the program that may be the only thing separating hundreds of millions of Americans from destitution in their senior years.
We hear a lot of talk about lowering the deficit these days, usually from the same folks who vehemently push for lower taxes. With only 12 percent of the federal budget devoted to "discretionary" spending, we are informed "everything" must be on the table.
"Everything" usually DOES NOT include military spending. "Everything" means "entitlements." Eliminating "entitlements" is an integral component of the push to achieve smaller government. The first step will be a decrease in the benefits.
"Entitlements" mean Medicare and Social Security. We are informed these are the biggest slices of the budgetary pie (aside from military spending and interest on the debt that is).
Until the Obama/McConnell tax bill passed, if your annual salary was $40,000, you and your employer paid $4960 into Social Security. If your annual salary was $106,800, you and your employer paid $13,243 into Social Security. In both cases the annual contribution was 12.4 percent of the employee's salary. If your annual salary was $1 million, the annual contribution totalled $13,242 or .013 percent of your salary. (You are also entitled to the same annual payments as anyone else who has paid the maximum into the system ($106,800 and up)).
That is because Social Security was designed to be paid from the contributions made into it. It is an entitlement because we are entitled to it.
The tax bill reduces employees' 2011 contributions to 4.2 percent of their income up to $106,800. Employers' contributions remain unchanged. For someone paying in the maximum, this is a decrease of $2136. On $53,000, it is a decrease of $1060. This is money that will never be placed into the fund. The tax bill provides for shortfalls to be made up from the "general fund." This is a dangerous precedent. Instead of being self-funding, Social Security could become dependent upon general tax revenues - and far more vulnerable to the arguments of budget-busting legislators.
Retirement Age
Raising the retirement age is another important ploy of the anti-entitlement crowd. If you have worked at a white collar job during your employment years and are in good health, retiring at 70 may not be a pleasant prospect, but it is probably doable. If your work involved hard, physical labor, your body's natural aging will make continuing difficult. And if the wear and tear on your body caused by intense physical labor is substantial, it could be impossible.
Keep your eyes on Washington. Do NOT let them destroy the program that may be the only thing separating hundreds of millions of Americans from destitution in their senior years.
Monday, January 24, 2011
Cuomo's Property Tax Ceiling Could Force Municipalities to Cut Services
The Register Star, my local newspaper, reported today that city officials fear revenue shortfalls if Governor Cuomo's push for statewide property tax limits is successful. Hudson Treasurer Eileen Halloran urged the city's Finance Committee to begin picking the areas in which cuts can be made and how to do them. Her suggestions included cutting back weekly trash collection to every other week, picking up recycling once a month, instead of weekly and reconfiguring the way snow removal is conducted.
[Click on this post's title for the Register Star article.]
Hudson already assesses a user's fee on residents for garbage collection in the form of city trash bags. Large bags cost $3.00 each; smaller ones are $1.50. No mention was made of increasing bag cost. Water and sewage fees also are levied on residents.
Proposing cuts in the snow removal program at a time when every week seems to bring another major snow storm and crews are struggling to keep up with clearing the streets and snow removal is almost guaranteed to incite widespread public anger.
Although the article does not discuss the school district, which assesses its own real estate taxes and the county, which shares a revenue base with the city, presumably they also will be affected. The fact that all three entities are burdened by "unfunded mandates" makes balancing budgets a much tougher job.
It would not be the first time the state pushed the pain of fiscal austerity down the road to localities. And who will be blamed for services cuts? The localities, of course.
[Click on this post's title for the Register Star article.]
Hudson already assesses a user's fee on residents for garbage collection in the form of city trash bags. Large bags cost $3.00 each; smaller ones are $1.50. No mention was made of increasing bag cost. Water and sewage fees also are levied on residents.
Proposing cuts in the snow removal program at a time when every week seems to bring another major snow storm and crews are struggling to keep up with clearing the streets and snow removal is almost guaranteed to incite widespread public anger.
Although the article does not discuss the school district, which assesses its own real estate taxes and the county, which shares a revenue base with the city, presumably they also will be affected. The fact that all three entities are burdened by "unfunded mandates" makes balancing budgets a much tougher job.
It would not be the first time the state pushed the pain of fiscal austerity down the road to localities. And who will be blamed for services cuts? The localities, of course.
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