Berstein: On avoiding a 25% benefit cut to Social Security: "Its avoidance will require both benefit cuts and tax increases." It actually could be avoided with just tax increases.
A current bill in Congress , the Medicare and Social Security Fair Share Act, would eliminate the cap on wages subject to the SS tax starting at earnings above $400,000 and add an additional 1.2% Medicare tax for those with incomes above $400,000, which would make Social Security and Medicare solvent for 75 years or more.
Taxing the wealthy to make Social Security and Medicare solvent is extremely popular among both Democrats and Republicans. There is no good policy or political reason to cut benefits.
1. Capitalism with rules, over anything goes, and with real accountability, ending corporate welfare
2. Fair tax laws throughout the economy, with real accountability
The above would do much to solve many problems, while affording a reasonable social safety net for those in need, and healthy profits for business at all levels.
Real accountability involves funding agencies like the IRS enough to do it. Democrats try, republicans cut the funding. Red areas keep supporting republicans because they only get maga news. Now republican control of news is getting dramatically worse, as oligarch republicans buy out national news. If we wish to maintain accountability we need to address this huge obstacle.
bleed “ by international creditors purchasing US debt instruments
for all of the reasons cited. But ,
can’t a slow bleed develop into a sudden death spiral?
Turning our backs on our allies and embracing hegemony in South America is going to disrupt the norm when it comes to currency stability and debt transactions.
I’ve always contended that the engine of growth was the fostering of a strong middle class . GDP may well increase- but if it represents National Income - and all the growth ends up in the hands of the top few percent- it should be no surprise that we can’t grow ourselves out of the deficit problem that way .
I’m still waiting for all that “ growth “
to trickle down to society at large -
I believed in the Tooth Fairy ( once upon a time as well ) and it’s not promising to expect a visit to Mr.
Orange Scrooge from the ghost of Christmas future to shock him out of his greed and corruption.
It's just not fair that I can get $200K income in retirement and maximum Scoil Security while others struggle. The payouts need to be reallocated for fairness.
Many nations increased their foreign currency reserves after the Asian Financial Crisis. If the value of the USD continues to fall, particularly if the next Fed Chair slashes rates to <1%, then is the alternative to the USD for foreign reserves to simply hold less foreign reserves?
Foreign-reserve buffers are often built up after crises as a form of insurance against the next shock (and own-currency depreciation, capital outflows). In terms of fiscal policy risks, dollar dominance is of course very helpful in borrowing to finance our debt. Should a reckless Fed undermine that dominance, it would raise risk and term premia.
That said, fading $ dominance is way far down on my watchlist.
" Before inequality took off, just 10% of benefits were above the cap; now, it’s 17%"
I can remember a discussion with you many many years ago on your then blog (or wherever you were posting) about the Greenspan commission setting the income cap for Social Security taxes to capture 90% of income and, if not for inequality the cap would capture 90% and therefore Social Security would be fully funded.
"reducing the benefits that go to the wealthiest recipients also should be on the table"
That's not a good negotiating or political strategy. Perhaps that's where we'll end up, but there's no reason to start by suggesting it's a fair solution, especially in light of inequality being the reason Social Security needs more funding now.
Thanks for the link to Ms. Reidl's paper. It was helpful, particularly here Table 1, which gives some idea how much money can be raised by various tax options.
In Ms. Reidl's plan, I caught this, which was not caught in Mr. Bernstein's little footnote on his objections:
I call this a direct sabotaging of the ACA:
"Congress should first address the 90% long-term federal reimbursement rate for the newly eligible population of nondisabled, working-age adults with higher incomes that was implemented as part of the Affordable Care Act (ACA) in 2014. States should continue to be allowed to include these newly added adults in their Medicaid programs; but no rational explanation exists for Washington subsidizing nondisabled, higher-earning, working-age adults on Medicaid with a much higher reimbursement rate than children, the elderly, and the disabled. Congress should repeal this higher reimbursement rate."
(Thus, states were encouraged to expand Medicaid, and thus include people from below 138% of Federal Poverty Level (FPL) without asset restriction, and above the dirt-poor in both income and assets of traditional pre-ACA Medicaid, by providing a 90% reimbursement for those new covered people. Currently, 40 states have expanded. https://www.kff.org/medicaid/status-of-state-medicaid-expansion-decisions/ It was 30 at ACA outset in 2014.)
Numerous states will stop being part of the expansion if they have to pay 50% of medical expenses, rather than 10%, for the expansion population! (Thus leaving lots of people: people 100% FPL down to above dirt-poor in both income and assets with no coverage. 100% is not a mistake. Rather than 138% is due to an ACA detail I will leave out.)
Further, if we do want the ACA to continue, and in fact be improved to eventually take us up to 100% coverage like the rest of the developed world, Ms. Reidl's plan requires the states to pick up the funding not supplied by the federal government. I don't see passing the financial problem onto the states as any kind of solution!
Otherwise, note with the ACA, we have substantial subsidies to people with on-exchange plans, which are needed, and which are paid for by the federal government only. I imagine she and her other colleagues will soon attempt to take apart on-exchange ACA with the same propagandistic sophistry as she has there "but no rational explanation exists for Washington subsidizing some nondisabled, higher-earning, working-age adults on ACA exchanges (getting > 50% subsidies) with a much higher reimbursement rate than children, the elderly, and the disabled on standard Medicaid (getting 50%)."
(The last bit of quoted text is a standard Republican manipulation technique. It's also being used to justify not extending the expanded subsidies, and keeping the 400% FPL "subsidy cliff", which is the thing that has people with incomes of say $88,000 a year having their premiums jump to $40,000 a year for the cheapest plan from $6,000 a year--say a 62 year old couple in Wyoming is one such case. Republican pols have framed this as "why should poor working-class people living paycheck to paycheck have to pay taxes to subsidize a retired person with an income of $88,000 a year? Obvious propagandistic framing, since so much money has been moved from everyone to high earners and the wealthy by Republicans with the recent tax-cut extension, and is being left out of the framing.)
I know it's considered bad civics behavior, and part of the recent problem with the democracy to use negative terminology about those that one disagrees with, but let me say that this seems like another case of you have to watch out for tricks from the Republicans!)
Really, I can think of an alternate way to put it, is that you have to watch out for people who really don't understand certain details of various things, such as universal health coverage, and also don't share that goal, and want us to go in the opposite direction. Clearly, Ms. Reidl is such a person.
But what if everybody is so scared of what you will do :Think Venezuela, that they will extend your credit forever, in fact PAY you whatever you want, to keep you from invading them and taking over their country.
Berstein: On avoiding a 25% benefit cut to Social Security: "Its avoidance will require both benefit cuts and tax increases." It actually could be avoided with just tax increases.
A current bill in Congress , the Medicare and Social Security Fair Share Act, would eliminate the cap on wages subject to the SS tax starting at earnings above $400,000 and add an additional 1.2% Medicare tax for those with incomes above $400,000, which would make Social Security and Medicare solvent for 75 years or more.
Taxing the wealthy to make Social Security and Medicare solvent is extremely popular among both Democrats and Republicans. There is no good policy or political reason to cut benefits.
https://www.whitehouse.senate.gov/news/release/whitehouse-boyle-reintroduce-legislation-to-extend-social-security-and-medicare-solvency-indefinitely/
1. Capitalism with rules, over anything goes, and with real accountability, ending corporate welfare
2. Fair tax laws throughout the economy, with real accountability
The above would do much to solve many problems, while affording a reasonable social safety net for those in need, and healthy profits for business at all levels.
Real accountability involves funding agencies like the IRS enough to do it. Democrats try, republicans cut the funding. Red areas keep supporting republicans because they only get maga news. Now republican control of news is getting dramatically worse, as oligarch republicans buy out national news. If we wish to maintain accountability we need to address this huge obstacle.
There may indeed be a “ slow
bleed “ by international creditors purchasing US debt instruments
for all of the reasons cited. But ,
can’t a slow bleed develop into a sudden death spiral?
Turning our backs on our allies and embracing hegemony in South America is going to disrupt the norm when it comes to currency stability and debt transactions.
I’ve always contended that the engine of growth was the fostering of a strong middle class . GDP may well increase- but if it represents National Income - and all the growth ends up in the hands of the top few percent- it should be no surprise that we can’t grow ourselves out of the deficit problem that way .
I’m still waiting for all that “ growth “
to trickle down to society at large -
I believed in the Tooth Fairy ( once upon a time as well ) and it’s not promising to expect a visit to Mr.
Orange Scrooge from the ghost of Christmas future to shock him out of his greed and corruption.
It's just not fair that I can get $200K income in retirement and maximum Scoil Security while others struggle. The payouts need to be reallocated for fairness.
Many nations increased their foreign currency reserves after the Asian Financial Crisis. If the value of the USD continues to fall, particularly if the next Fed Chair slashes rates to <1%, then is the alternative to the USD for foreign reserves to simply hold less foreign reserves?
Foreign-reserve buffers are often built up after crises as a form of insurance against the next shock (and own-currency depreciation, capital outflows). In terms of fiscal policy risks, dollar dominance is of course very helpful in borrowing to finance our debt. Should a reckless Fed undermine that dominance, it would raise risk and term premia.
That said, fading $ dominance is way far down on my watchlist.
" Before inequality took off, just 10% of benefits were above the cap; now, it’s 17%"
I can remember a discussion with you many many years ago on your then blog (or wherever you were posting) about the Greenspan commission setting the income cap for Social Security taxes to capture 90% of income and, if not for inequality the cap would capture 90% and therefore Social Security would be fully funded.
"reducing the benefits that go to the wealthiest recipients also should be on the table"
That's not a good negotiating or political strategy. Perhaps that's where we'll end up, but there's no reason to start by suggesting it's a fair solution, especially in light of inequality being the reason Social Security needs more funding now.
Thanks for the link to Ms. Reidl's paper. It was helpful, particularly here Table 1, which gives some idea how much money can be raised by various tax options.
In Ms. Reidl's plan, I caught this, which was not caught in Mr. Bernstein's little footnote on his objections:
I call this a direct sabotaging of the ACA:
"Congress should first address the 90% long-term federal reimbursement rate for the newly eligible population of nondisabled, working-age adults with higher incomes that was implemented as part of the Affordable Care Act (ACA) in 2014. States should continue to be allowed to include these newly added adults in their Medicaid programs; but no rational explanation exists for Washington subsidizing nondisabled, higher-earning, working-age adults on Medicaid with a much higher reimbursement rate than children, the elderly, and the disabled. Congress should repeal this higher reimbursement rate."
(Thus, states were encouraged to expand Medicaid, and thus include people from below 138% of Federal Poverty Level (FPL) without asset restriction, and above the dirt-poor in both income and assets of traditional pre-ACA Medicaid, by providing a 90% reimbursement for those new covered people. Currently, 40 states have expanded. https://www.kff.org/medicaid/status-of-state-medicaid-expansion-decisions/ It was 30 at ACA outset in 2014.)
Numerous states will stop being part of the expansion if they have to pay 50% of medical expenses, rather than 10%, for the expansion population! (Thus leaving lots of people: people 100% FPL down to above dirt-poor in both income and assets with no coverage. 100% is not a mistake. Rather than 138% is due to an ACA detail I will leave out.)
Further, if we do want the ACA to continue, and in fact be improved to eventually take us up to 100% coverage like the rest of the developed world, Ms. Reidl's plan requires the states to pick up the funding not supplied by the federal government. I don't see passing the financial problem onto the states as any kind of solution!
Otherwise, note with the ACA, we have substantial subsidies to people with on-exchange plans, which are needed, and which are paid for by the federal government only. I imagine she and her other colleagues will soon attempt to take apart on-exchange ACA with the same propagandistic sophistry as she has there "but no rational explanation exists for Washington subsidizing some nondisabled, higher-earning, working-age adults on ACA exchanges (getting > 50% subsidies) with a much higher reimbursement rate than children, the elderly, and the disabled on standard Medicaid (getting 50%)."
(The last bit of quoted text is a standard Republican manipulation technique. It's also being used to justify not extending the expanded subsidies, and keeping the 400% FPL "subsidy cliff", which is the thing that has people with incomes of say $88,000 a year having their premiums jump to $40,000 a year for the cheapest plan from $6,000 a year--say a 62 year old couple in Wyoming is one such case. Republican pols have framed this as "why should poor working-class people living paycheck to paycheck have to pay taxes to subsidize a retired person with an income of $88,000 a year? Obvious propagandistic framing, since so much money has been moved from everyone to high earners and the wealthy by Republicans with the recent tax-cut extension, and is being left out of the framing.)
I know it's considered bad civics behavior, and part of the recent problem with the democracy to use negative terminology about those that one disagrees with, but let me say that this seems like another case of you have to watch out for tricks from the Republicans!)
Really, I can think of an alternate way to put it, is that you have to watch out for people who really don't understand certain details of various things, such as universal health coverage, and also don't share that goal, and want us to go in the opposite direction. Clearly, Ms. Reidl is such a person.
But what if everybody is so scared of what you will do :Think Venezuela, that they will extend your credit forever, in fact PAY you whatever you want, to keep you from invading them and taking over their country.