For years we have been told that American public education has fallen behind its global competitors and must be fixed. Programs like "No Child Left Behind" and "Race to the Top" were designed to fix the system's shortcomings. We were informed the United States had no hope of competing in the global marketplace without an educated populace.
But now... across the United States tens of thousands of teachers are being laid off as beleaguered states and municipalities confront unmanageable budget deficits. Funding for public schools and colleges is being slashed to the bone.
Teaching is labor-intensive. It involves long hours trying to interest pupils in something besides I-Tunes, YouTube, texting, trolling the mall and watching television. Not all teachers are created equal. Some few can stimulate the most obstreperous youngsters. Others can bore the pants off the most eager students. Most fall somewhere in between. The larger the class size, the more difficult the challenge.
The nuns at the parochial school I attended in the 1950s proved it is possible to teach large classes. They were able to create an atmosphere of rigid discipline. If you acted up in the line to lunch (military precision was expected), you probably got a not-so-gentle tap from the "clacker" every nun carried. For a classroom breach of behavior, you might be sent to stand at attention in the hall for 15 minutes, then submit to a tongue-lashing that flayed your soul. If misbehavior persisted, you would be sent to "Sister Superior." In class you could be held up to your classmates' ridicule and contempt. If all else failed? You were expelled and sent to the public school system, which had to accept you.
Public educators do not have access to such methods. They are expected to handle larger and larger classes and handle discipline problems without effective tools and with precious little support from either their administrators or communities.
Teachers pay a lot for their education - tens of thousands of dollars, much of it at public colleges. If there are no jobs, students are not going to make that sacrifice to enter the field.
So, as more and more teachers are laid off and the unions that support those that remain are weakened, we will experience further deterioration of public education.
Do we have an alternative? It's difficult to see one at this point. If the funds are not there, they are not there. In a society that no longer makes anything and in which minimum wage jobs and high unemployment have become the norm, the tax revenues do not support the costs.
Are we in deep doodoo? You betcha.
Here's what I think...
Saturday, February 19, 2011
Thursday, February 17, 2011
Budget B-S
Any self-proclaimed fiscal conservative who loudly proclaims we must cut taxes is either disingenuous or far too stupid to hold a policy-making position.
The original intent of tax cuts was to "starve the beast." If government revenues were limited, the theory went, government size must shrink as government expenditures were decreased. An excellent concept that did not work for one reason. Government expenditures did not shrink - they increased - as revenues declined - and were put on the national credit card. This combination is destroying us.
The reluctance of fiscal conservatives to place more revenue in the hands of irresponsible officials is understandable. Will those revenues be used to attack the deficit or provide more excuses for excessive, unaffordable spending? If recent history is any indicator, the answer to that question is not reassuring.
The hard fact is that combination of the Great Recession's loss of millions of private-sector jobs and the Bush and Obama era tax cuts for those who have weathered the recession unscathed have accelerated the growth of the national debt.
Fiscal liberals proclaim that times of economic distress call for increased government spending to provide relief and prime the pump of economic expansion. They conveniently ignore the uncomfortable reality that the coffers are empty.
The rich blame the poor for the fiscal mess in which we find ourselves. The poor blame the rich. The middle class blame both. The blame game works well during an election season. Unfortunately blame does not produce solutions. If anything, it inhibits constructive action.
Special interest groups fight tooth and nail to protect their turf. The more well-heeled they are and the more members they can claim, the more powerful their input into the process.
How did we get to a point in this country where no one seems willing to carry their share of the burden and everyone wants someone else to tote the load?
The original intent of tax cuts was to "starve the beast." If government revenues were limited, the theory went, government size must shrink as government expenditures were decreased. An excellent concept that did not work for one reason. Government expenditures did not shrink - they increased - as revenues declined - and were put on the national credit card. This combination is destroying us.
The reluctance of fiscal conservatives to place more revenue in the hands of irresponsible officials is understandable. Will those revenues be used to attack the deficit or provide more excuses for excessive, unaffordable spending? If recent history is any indicator, the answer to that question is not reassuring.
The hard fact is that combination of the Great Recession's loss of millions of private-sector jobs and the Bush and Obama era tax cuts for those who have weathered the recession unscathed have accelerated the growth of the national debt.
Fiscal liberals proclaim that times of economic distress call for increased government spending to provide relief and prime the pump of economic expansion. They conveniently ignore the uncomfortable reality that the coffers are empty.
The rich blame the poor for the fiscal mess in which we find ourselves. The poor blame the rich. The middle class blame both. The blame game works well during an election season. Unfortunately blame does not produce solutions. If anything, it inhibits constructive action.
Special interest groups fight tooth and nail to protect their turf. The more well-heeled they are and the more members they can claim, the more powerful their input into the process.
How did we get to a point in this country where no one seems willing to carry their share of the burden and everyone wants someone else to tote the load?
Thursday, February 10, 2011
Social Security is Cash Flow Negative
Blame the Boomers
We have known for decades this day would come. The population explosion following World War II known as the Baby Boom meant that as the population aged, the number of retirees would exceed the number of workers. Social Security was designed to support current recipients with current contributions.
During their working years, Baby Boomers paid far more into the fund than it paid out. The Social Security Trust Fund was created to save the excess contributions against the day when payouts began to exceed contributions. Special government bonds were purchased for the fund. The problem? When the government issues bonds of any kind, it is borrowing money. Add to the mix the government's propensity of borrowing to support virtually all its operations and you have a disaster in the making.
Time has Come Today
As long as inflows exceeded outflows, Social Security remained self-supporting and elected officials could ignore the looming catastrophe. After all, that is what our policy makers do (just research global climate change policy; the real estate bubble; the financial industry destruction of global financial stability).
In 2008 we entered The Great Recession. Millions of Americans lost their jobs. Millions of Americans and their former employers were no longer paying 12.4% of earned income into Social Security. As the unemployment rate stubbornly remained around 9% and millions of the long-term unemployed fell off the unemployment rate radar screen, Social Security Tax receipts were hard hit.
In December 2010 the Obama/McConnell tax bill cut contributions to Social Security by the currently employed 2%. Social Security Tax receipts once again were hit hard.
Despite Social Security System incentives to continue working late into their 60s, unemployed persons 62 and over began to collect Social Security early - yet another hit to the system.
Repaying National Debt Principle
Sound like a Perfect Storm? A few days ago it was announced that Social Security had turned "cash flow negative" 4-7 years before government projections. This called into question even the most conservative estimates of the long-term solvency of Social Security.
The estimates rely on tapping the Social Security Trust Fund. Tapping the Social Security Trust Fund, until it is exhausted means paying down the national debt - paying the interest on it, but also repaying the principle ($2.5 TRILLION).
There is only one way to accomplish that. Increase government revenues while cutting government services to the bone. Time to take another look at the Simpson/Bowles deficit reduction plan.
We have known for decades this day would come. The population explosion following World War II known as the Baby Boom meant that as the population aged, the number of retirees would exceed the number of workers. Social Security was designed to support current recipients with current contributions.
During their working years, Baby Boomers paid far more into the fund than it paid out. The Social Security Trust Fund was created to save the excess contributions against the day when payouts began to exceed contributions. Special government bonds were purchased for the fund. The problem? When the government issues bonds of any kind, it is borrowing money. Add to the mix the government's propensity of borrowing to support virtually all its operations and you have a disaster in the making.
Time has Come Today
As long as inflows exceeded outflows, Social Security remained self-supporting and elected officials could ignore the looming catastrophe. After all, that is what our policy makers do (just research global climate change policy; the real estate bubble; the financial industry destruction of global financial stability).
In 2008 we entered The Great Recession. Millions of Americans lost their jobs. Millions of Americans and their former employers were no longer paying 12.4% of earned income into Social Security. As the unemployment rate stubbornly remained around 9% and millions of the long-term unemployed fell off the unemployment rate radar screen, Social Security Tax receipts were hard hit.
In December 2010 the Obama/McConnell tax bill cut contributions to Social Security by the currently employed 2%. Social Security Tax receipts once again were hit hard.
Despite Social Security System incentives to continue working late into their 60s, unemployed persons 62 and over began to collect Social Security early - yet another hit to the system.
Repaying National Debt Principle
Sound like a Perfect Storm? A few days ago it was announced that Social Security had turned "cash flow negative" 4-7 years before government projections. This called into question even the most conservative estimates of the long-term solvency of Social Security.
The estimates rely on tapping the Social Security Trust Fund. Tapping the Social Security Trust Fund, until it is exhausted means paying down the national debt - paying the interest on it, but also repaying the principle ($2.5 TRILLION).
There is only one way to accomplish that. Increase government revenues while cutting government services to the bone. Time to take another look at the Simpson/Bowles deficit reduction plan.
Wednesday, February 9, 2011
Social Security Trust Fund is Empty Because It was Raided
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.
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.
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
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