NYT hails the safety net: Poor hardest hit
[Posted by Karl]
Today’s big New York Times story is about the alleged expansion of the the “government safety net” and the implied hypocrisy of anyone right of center relying on it:
Older people get most of the benefits, primarily through Social Security and Medicare, but aid for the rest of the population has increased about as quickly through programs for the disabled, the unemployed, veterans and children.
The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year.
And as more middle-class families like the Gulbransons land in the safety net in Chisago and similar communities, anger at the government has increased alongside. Many people say they are angry because the government is wasting money and giving money to people who do not deserve it. But more than that, they say they want to reduce the role of government in their own lives. They are frustrated that they need help, feel guilty for taking it and resent the government for providing it. They say they want less help for themselves; less help in caring for relatives; less assistance when they reach old age.
The NYT never paints wealthy liberals who don’t volunteer extra money to the state as hypocritical and guilty, but that’s no surprise. Moreover, as Tom Maguire notes (and I’m sure he’s not alone), the NYT is continuing the progressive bait-and-switch here: Social Security and Medicare were sold to America as earned benefit programs, not welfare. It’s the “secondary mission” of middle-class vote-buying — and the Boomers heading into retirement — that accounts for most of this story.
The NYT overlooks that the US welfare state contributes to the supposed income inequality problem progressives have been decrying for the past few years. Moreover, compared to other developed countries, the US system is unique only in terms of low upward mobility from the bottom among men (although cross-country comparisons of mobility can be tricky). The left would no doubt argue this means we must have ever-higher taxes and more redistribution, while the right would argue we need lower taxes and less redistribution. However, what seems clear is that the Democrats’ version of the welfare state has been a political boon to Democrats and less beneficial to the poor they claim to champion. Moreover, if the NYT is at least correct that the increase in the safety net is fueling anger at the government, it may be that the political value of the welfare state to Democrats is diminishing as well.
P.S. – Mitt Romney needs to learn these concerns are why conservatives recoil when he says he does not care much about the very poor because they have a safety net.
–Karl
Ding!
Karl (8cdbad) — 2/12/2012 @ 8:41 amDing! think you’d meant to write “Chicago” instead of Chisago…
Colonel Haiku (ba2539) — 2/12/2012 @ 8:44 amNope, my mistake, Chisago it is…
Colonel Haiku (ba2539) — 2/12/2012 @ 8:45 amhttp://thepeoplescube.com/peoples_resource/image/thumb/9865
Colonel Haiku (ba2539) — 2/12/2012 @ 8:58 amObama’s (and the Democrats’) game is all about expanding the reach and control of the State and increasing dependency on the State.
It’s where they derive their power, as their ideas and policies suck.
Colonel Haiku (ba2539) — 2/12/2012 @ 9:02 amthen they cut the FICA tax and sold that as an entitlement
losers
happyfeet (3c92a1) — 2/12/2012 @ 9:13 amever-expanding the reach and control of the State and increasing dependency on the State.
This is what “liberalism” looks like.
Colonel Haiku (b6369f) — 2/12/2012 @ 9:30 amI’ve yet to say of hear anyone on the right question the premise of redistributionism that underlies Social Security and Medicare. Is it morally right for the state, under the pretext of caring for people, to take from them, by force if necessary, the means through which they might care for themselves? If the answer is yes, there’s no difference between conservatives and liberals on the issue; they’re all kleptocrats, and we’re only talking degree.
Diffus (7c4346) — 2/12/2012 @ 9:35 amSocSec may have been sold as an earned benefit program 70 years ago, but nobody now working and paying FICA has ever had it sold to them as anything but another welfare program and a second income tax. Nobody now working has paid a dime of FICA under the impression that he was getting a legal right to anything in return. The public has been on notice since before most of us were born that Congress may alter or abolish SocSec at will, and that paying FICA does not entitle one to anything. So let’s not hear about the lies FDR told our grandparents; they’re as irrelevant as whatever lies Ulysses Grant may have told their grandparents.
And the SocSec lie was exposed before Medicare even started, so nobody had any business believing that it was somehow magically different.
Milhouse (9a4c23) — 2/12/2012 @ 9:42 amthe premise of redistributionism that underlies Social Security and Medicare
of the three Team R candidates, Gingrich is the only one that’s not enthusiastic about means-testing social security and medicare, which will vastly increase the redistributional qualities of both programs
Boehner is hot for mean-testing too.
happyfeet (3c92a1) — 2/12/2012 @ 9:44 amThen you simplyhaven’t been paying attention.
No, it is not. And even if it were moral for states in general to do so, it is unconstitutional for the USA. As Madison said, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”
Milhouse (9a4c23) — 2/12/2012 @ 9:45 amgo, liberal, and wash yourself seven times in the river Potomoc… wash yourself and your mind will be restored and your flesh clean… at least as clean as a liberal’s can be.
Colonel Haiku (b6369f) — 2/12/2012 @ 9:46 amHuh? Means testing would reduce the “redistributional qualities” by reducing the total amount redistributed. If we can’t get rid of this welfare program, at least let’s only give it to those who actually need it.
Milhouse (9a4c23) — 2/12/2012 @ 9:49 ammeans-testing turns social security into welfare no different than food stamps
happyfeet (3c92a1) — 2/12/2012 @ 10:02 amnot even a piteous wretch like Warren Buffett’s secretary qualifies for food stamps
but never fear she’ll *probably* qualify for the sweet sweet Boehner Romney Santorum means-tested social security welfare monies
… at least at first
happyfeet (3c92a1) — 2/12/2012 @ 10:18 amHappyfeet, how do you not understand that that is exactly what it is and has always been? They may have lied about it in your grandparents’ day, but not in yours.
Milhouse (9a4c23) — 2/12/2012 @ 10:36 amyes I know that’s what it is but it becomes what it is vastly more so when the government starts trimming the benefits of people who lived and saved and invested prudently for to give sweet sweet welfare money to pathetic irresponsible losers
happyfeet (3c92a1) — 2/12/2012 @ 10:40 amFeets, just because someone “lived and saved and invested prudently”, how does that entitle them to milk the taxpayer now for sweet sweet welfare money? Just because the taxpayers are already paying for “pathetic irresponsible losers”, why should they also pay for responsible people? If you give a sandwich to a homeless person, does that mean you have to feed everyone else who wants some, whether they need it or not?!
Milhouse (9a4c23) — 2/12/2012 @ 10:51 ampeople deserve to get back what they paid in plus a reasonable rate of return, and nobody deserves to get back more than they paid in plus a reasonable rate of return
happyfeet (3c92a1) — 2/12/2012 @ 11:09 ambut it would be better to scrap the program entirely
happyfeet (3c92a1) — 2/12/2012 @ 11:09 ampeople deserve to get back what they paid in plus a reasonable rate of return, and nobody deserves to get back more than they paid in plus a reasonable rate of return
Yes.
Colonel Haiku (d867e1) — 2/12/2012 @ 11:13 amRe: Chisago.
It was that way in the printed copy of the New York Times this morning, too. I thought the New York Times had made a rare typo. Which I thought made it into an early edition.
But thinking about how it was made – somebody must have entered Chisago into a spelling checker as correct – I looked more, and it’s a real place.
And this is not the first time it is mentioned in the article. I read just about the whole article, but I did skip over the 4th paragraph, and so missed it, and of course here only the 6th, 7th, and 8th paragraphs were quoted.
A geographical place is always by more than just its name or one name in the New York Times, but this is not repeated, any more than a person’s first name is usually repeated, and there is nothing about how unusual the name is.
So, it’s just Chisago in the 5th and 8th paragraphs – the 9th could have topped me off since it mentions caucuses “last week” but I must have skipped that (looks like no news) section too.
It’s Chisago County Minnesota, bordering the St. Croix River, across which is northern Wisconsin. It’s only bout 20 miles northeast of Minneapolis but has a relatively small population.
The story has got people saying they will suffer, but they’re willing to give it up.
It says Social Security actually collects enough in taxes to pay for benefits for an average worker (what it doesn’t collect enough is to take care of a spouse who didn’t pay in or for below average workers, but Medicare’s premiums (if so considered) are too low. It says while Medicaid now costs more than Medicare, later Medicare will (I think they are not factoring in any changes due to Obamacare at all)
The article is about Chisago because it is the home county of a freshman Republican Congressman who defeated a very long serving Democratic Congressman in 2010.
Sammy Finkelman (39761f) — 2/12/2012 @ 11:22 amDeserve in what sense? I mean you can say that of all the taxes people pay, but why specifically the FICA tax? Legally, paying the FICA tax doesn’t entitle you to anything. It’s just another tax, which pays for a government program that may or may not exist when and if you retire, and which you may or may not be eligible for at that time, and any payments you may get from it bear no relation to the taxes you paid. And nobody has ever told you otherwise. If you imagined otherwise it’s your own fault.
Morally, the government takes money from us by force, and we’re entitled to get it back by whatever means we can. I have no problem with taking whatever money the government offers me, and regard it like a mugger who, having taken my wallet, has pity on me and gives me a Metrocard so I can get home. But the FICA tax is no different in this regard than any other tax.
Yes, but this isn’t politically possible. And it wouldn’t be humane to those people who erroneously depended on it, and are now too old to go back to work, and would therefore be left with no means of support. I don’t want to see them thrown on the street, and I see no way to keep feeding them except to keep taking from today’s taxpayers, as little as possible, but enough to keep these people from starving on street corners. But you now say that if I do that I must also take more money from today’s taxpayers, and give it to other people, who won’t be starving without it! How do you justify that? There’s no moral argument, and there’s also no humane argument, so what argument is left?
Milhouse (9a4c23) — 2/12/2012 @ 11:26 amWhy not convert SocSec/Medicare into a Govt Employment program, and RIF the youngsters back into the private sector where they can learn to appreciate “gainful employment”.
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 11:37 amThey the seniors, who are going to be paid anyway, will have something to do to fill their hours.
Think of it as a job-sharing program; plus, if the quality of the output of the “civil service” happens to decline – who would notice?
more….
…who would notice?
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 11:42 amAnd conservatives (generally) would applaud a less-efficient Leviathan as long as National Security was not jeopardized.
Every study about how much people get back relative to how much they paid in shows that within 3 or 4 years at most people’s SSI receipt payouts match their contributions.
There is no trust fund. What you contribute today is paid out to recepients immediately. The feds cover the difference, causing more budget problems as payees’ benefits exceed SSI/FICA receipts.When founded 20+ workers were supporting every beneficiary. That’s now colser to 3 or 4 to 1 and dropping.
It has to be meas tested. The retirement age needs to go up to 68 or 70.
Problem with all these programs is sooner than later you run out of other people’s money. The Socialist and his acolytes in the MFM really believe if only we hunt down enough rich guys and hold them upside down to empy their pockets we can keep this welfare state going.There are n’t enough and there will never be enough.
And borrowing 40 cents of every dollar is not going to work. Greece, make some room.
Bugg (ea1809) — 2/12/2012 @ 11:45 amThe retirement age is already on an escalator, though I’m not aware what the top floor is slated to be under current law.
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 11:49 amProbably what needs to be seriously cutback on is “early retirement”.
I wasn’t aware of this, but it’s what I’ve been advocating for 25 years now. And I think it needs to be sped up, even if it already exists. The idea I came up with 25 years ago was that the retirement age should go up 3 months a year, every year, forever. If it’s now 67 and 3 months, then on next 1-Jan it should go up to 67 and 6 months, and on 1-Jan-2014 it should go up to 67 and 9 months, and so on until there are no new people joining it. That way everyone has plenty of time to plan, and nobody is drastically affected, but there’s an end in sight for the young taxpayers.
Milhouse (862bfe) — 2/12/2012 @ 1:34 pm“…until there are no new people joining…”
Well, that’s a tad harsh!
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 1:45 pmIt would be much more realistic to scale it with the avg age of longevity.
When SS was devised, it is my impression that the retirement age was set at 65 as that was how long people lived (on avg) at the time.
It would be much more realistic to use an escalator that got us to that parity again – and kept us at par.
How is it harsh? Nobody who has joined would ever be kicked off, and people approaching their expected retirement would have plenty of time to plan for the delay. How is it harsh to tell a 30-year-old that this program, which should never have been started in the first place, may as well not exist as far as he’s concerned, because he’ll never be eligible?
Actually, it’s my impression that 65 was a bit higher than average life expectancy.
That just gets it back to the way FDR set it up in the first place, and I thought we agreed that he shouldn’t have done that. If it were politically possible to get rid of it today I’d support that, but I recognise that it’s impossible. Is that a reason why it should go on forever?!
Milhouse (862bfe) — 2/12/2012 @ 1:54 pmNo one asked me for my agreement on anything;
I’m just giving an opinion on how the system should operate to be able to maintain the status quo, and not having the NYT, et al, getting their knickers in a knot over how those cruel, greedy Republicans want to throw Granny under a bus.
That, and the fact that I’ve already reached “Full Retirement” age, means that I just might have a dog in this hunt that I started paying into at the age of 13.
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 2:17 pmIf you’re already getting benefits, then an escalator wouldn’t affect you, though means testing would. And you’ve been “paying in” much more with your income tax than with your FICA; you’re no more entitled to a return from one than from the other. You got ripped off, and now that they’re giving you a partial refund I’m all for your taking it, but it’s got to stop somewhere.
Milhouse (862bfe) — 2/12/2012 @ 2:20 pmGee, Milhouse, thanks for pointing out the obvious to this poor wretched imbecile.
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 2:25 pmThis is more of the pompous crap that keeps getting you slapped down, if you aren’t sentient enough to recognize it on your own.
Good Allah
JD (318f81) — 2/12/2012 @ 2:27 pmJD, is that a statement, or a question?
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 2:28 pmBTW, did you see the post over at Instapundit about OBL advising his family to get out of the jihadi business, and go to Europe or North America and get a real education?
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 2:30 pm…poor hardest hit
Some time the poor hit back, as in this poor village in Mexico that seems to have lost all confidence in the government….
AD-RtR/OS! (c5a18b) — 2/12/2012 @ 2:34 pmhttp://www.borderlandbeat.com/2012/02/mexicans-take-kidnappers-from-jail-beat.html
Comment by Milhouse — 2/12/2012 @ 9:42 am
Your basic facts are correct of course. But you seem to get really ticked off (on this and other previous threads) when people mention how SS was “sold” to people like our parents and grandparents. The original benign “selling” narrative is a very relevant discussion to still have all these years later for two very important reasons:
1. a lot of younger people really do not know the history of SS and how it has morphed and been bastardized through the years by the addition of such non-elder features as SSDI (social security disability insurance).
2. it proves “the government” has been lying/stretching the truth to Americans for generations when it comes to promises made about policy implementation. How the left lied about SS is just one more good reason for everyone to distrust everything about Obamacare, and all the promises and projections being made about it on the left.
The idea of the camel’s nose into the tent is a story that needs to be repeated often and learned from.
elissa (687101) — 2/12/2012 @ 2:45 pmMilhouse, so would you expect new young workers to be paying in to keep solvent a program from which they will never benefit? If not, how would it keep afloat?
carol (b33779) — 2/12/2012 @ 2:50 pmTO: All
RE: THIS Is a Surprise???!?!
The NYT never paints wealthy liberals who don’t volunteer extra money to the state as hypocritical and guilty, but that’s no surprise. — Article cited by Glenn Reynolds
Anyone who expects honest reporting from the NYT is more than the usual ‘fool’.
Regards,
Chuck(le)
Chuck Pelto (73cfe4) — 2/12/2012 @ 3:08 pm[The Truth will out….and the NYT IS the ‘enemy’ of Truth…..]
AD,
Your link is shocking but not surprising in the larger sense. I feel like we’re living next door to Iraq.
DRJ (a83b8b) — 2/12/2012 @ 3:12 pmMoreover, if the NYT is at least correct that the increase in the safety net is fueling anger at the government, it may be that the political value of the welfare state to Democrats is diminishing as well.
Meanwhile, deep within his Fortress of Attitude underneath the White House, Crookback Barry broods and mutters darkly, “Ungrateful Morlock bastards. Didn’t we give them the best programs their money could buy?”
MarkJ (42fe5b) — 2/12/2012 @ 3:12 pmOh good Allah. Not this one again.
JD (5f146b) — 2/12/2012 @ 3:12 pmCongratulations to Karl on the Instapundit link.
DRJ (a83b8b) — 2/12/2012 @ 3:25 pm_______________________________________________
And borrowing 40 cents of every dollar is not going to work. Greece, make some room.
Perhaps sooner than you realize.
Given the sentiments suggested below — and Rasmussen is a fairly accurate, reliable gauge of public opinion — this nation may do exactly what Obama’s former close reverend and adviser said he wanted to see happen to it. IOW, damned by God, or, for all the atheists out there, damned internally by a modern-day version of ancient Rome’s distraction of “bread and circuses.”
Mark (411533) — 2/12/2012 @ 3:46 pmI started working around 1977 and ever since I got my first paycheck SS has been sold to me as a earned benefit. Even back then I didn’t see how it would be substitutable, but the government presented it as something that I would get when I retired. It’s only been the last few years that someone in government admits that there are problems with this model, and even then most claim it only needs a few tweaks to make it healthy again. Which is nonsense, but to claim we have never been told that this is a earned benefit is totally fiction.
buzz (2dbf87) — 2/12/2012 @ 3:47 pmStrange that democrats would only want people who vote for them to accept the money they take from everyone.
Its almost like they rely on vote-buying to win elections…
Evan (90365f) — 2/12/2012 @ 5:06 pmDemocrats love the poor. That is why they make so many of them.
PTL (fcddf8) — 2/12/2012 @ 5:06 pmMilhouse: Huh? Means testing would reduce the “redistributional qualities” by reducing the total amount redistributed.
Obviously you missed the point of “redistribution.” If I give some of the money back to the people who paid in, that is less redistribution than if I give it all to other people.
Gingrich is right on this and the others are robbing savers.
Kevin M (563f77) — 2/12/2012 @ 5:22 pmLet’s take the following examples:
Jane makes a good income and pays the max into social security every year. She also puts the max in a retirement plan every year. She also invests post-tax money in stocks and bonds. At age 65, she can expect $2400/month in SS benefits and quite a bit more from her savings and investments.
Joe makes a good income and pays the max into social security every year. He saves nothing else, spending all his money on a new car every 3 years, lots of vacations and dining out. o invests post-tax money in stocks and bonds. At age 65, he can expect $2400/month in SS benefits and little else.
Joe looks at what Jane has and is pissed. He calls up Congressman Milhouse and complains about the unfairness of it all, that Jane’s getting SS money she doesn’t “need” and he’s having problems making ends meet. Milhouse agrees and sponsors a bill that takes Jane’s SS away and gives it to Joe. President Romney/Santorum/Obama signs it.
Don’t laugh. They pretty much did the same thing in the UK and Canada when it came time to “reform” old age pensions.
Kevin M (563f77) — 2/12/2012 @ 5:31 pmerroneous: “o invests post-tax money in stocks and bonds”
Kevin M (563f77) — 2/12/2012 @ 5:33 pmI started working around 1977 and ever since I got my first paycheck SS has been sold to me as a earned benefit. Even back then I didn’t see how it would be substitutable, but the government presented it as something that I would get when I retired. It’s only been the last few years that someone in government admits that there are problems with this model, and even then most claim it only needs a few tweaks to make it healthy again. Which is nonsense, but to claim we have never been told that this is a earned benefit is totally fiction.
My story exactly, down to the year.
Kevin M (563f77) — 2/12/2012 @ 5:37 pmSomewhere along the line, the purpose of the ‘safety net’ has been hijacked. We are becoming more like Greece every day, as more people expect the government to foot the bill for their retirement. It seems that people no longer worry about some way to afford retirement. We spend every nickel on “stuff” that we think we need, and then wonder why that Social Security check won’t pay for a condo in the Bahamas.
O. Tay (83c29b) — 2/12/2012 @ 6:02 pmGood catch, sir. Anyone else getting the vibe that early drafts of the story were titled “What’s the Matter with Chisago?”
Micha Elyi (57bab2) — 2/12/2012 @ 6:06 pm27. Comment by AD-RtR/OS! — 2/12/2012 @ 11:49 am
The retirement age is already on an escalator,
Two months per year in two separate notches.
http://ssa.gov/retire2/retirechart.htm
This was actually put into the law in 1983, but did not affect anyone born before 1938, when full retirement age would have occurred in 2003. After 5 years, it then stays frozen at 66 for 12 years, where it is now, and begins rising again (in 2021) for people born in 1955 for another 5 years, at which point it is scheduled to stabilize at age 67 in 2027.
This is only standard retirement age – people can collect and have been able to collect reduced benefits starting at age 62, and if they delay their benefit goes up somewhat – 7-8% a year – till age 70. I think that used to be 72. Until age 70 (it used to be 72) there is a retirement test, in which benefits are reduced gradually if someone has more income subject to Social Security tax than X number of dollars. If someone starts collecting and decides it was a mistake they can raise their benefit by paying back every dollar they got to that point, but without interest.
Social Security is relatively simple, aside from the calculation of benefits, and even that’s not too complicated, but there are ways to make it extremely complicated:
http://money.usnews.com/money/retirement/articles/2010/04/26/6-ways-couples-can-maximize-social-security-payouts
There’s something even – I don’t see it there –
involving the case if one member of a couple has reached full retirement age, where it may pay for the spouse to collect spousal benefits and then switch to their own benefits. Maybe it is alluded to here:
http://www.investopedia.com/articles/retirement/08/unusual-social-security-strategies.asp#axzz1mDybl2fk
Sammy Finkelman (39761f) — 2/12/2012 @ 6:21 pmi get so emotional baby every time I think of all the trillion dollar deficits our rapist in chief has racked up
happyfeet (3c92a1) — 2/12/2012 @ 7:28 pmhttp://www.therightscoop.com/sarah-palin-on-fox-news-sunday/#disqus_thread
narciso (87e966) — 2/12/2012 @ 7:55 pmIf someone came a long with the idea of an extra 5% on top of social security as some kind of real investment account I would vote for it. Maybe some part in savings bonds since its Uncle Sam’s brokerage. The reality is most people don’t have pensions, and they do have trouble saving, where they morally should or not. Many don’t even have good 401ks to save into.
john (7ff7e0) — 2/12/2012 @ 8:03 pmhttp://www.bizzyblog.com/2012/02/12/cnn-money-author-says-obama-put-in-place-automatic-401k-enrollment-provision-tracing-back-to-1998/
narciso (87e966) — 2/12/2012 @ 8:17 pmYou people harping on the “Social Security is not an entitlement yes it was sold that way during FDR’s time but now we all know its just another tax are off base. Yes WE may know SS is just a congressional slush-fund generator, but most Americans still believe there is such a thing as a “trust fund” and by god many even believe there is a “lockbox” and by God DEMOCRATS ARE STILL BRAINWASHING OLD AND STUPID PEOPLE EACH AND EVERY DAY TO THIS DAY AND STILL GET ELECTED BY PROMISING VOTERS “THEIR” BENEFIT WILL BE THERE WHEN THEY RETIRE. If it were a capital offense to mischaracterize social security during election campaigns, social security would have been eliminated by now. Just because we are smart doesn’t mean most Americans are. Just because most Americans are raging idiots doesn’t mean it is ok to lie to them and rob them blind.
Manfred (cc8d54) — 2/13/2012 @ 5:34 amEven SugarDaddy haz probs these days:
http://globaleconomicanalysis.blogspot.com/2012/02/china-instructs-banks-to-roll-over-17.html#.TzgvEhuNIU8.twitter
You know its not all going to work. Greece just signed to get their allowance but they have to clean up the basement first.
GLWT.
gary gulrud (d88477) — 2/13/2012 @ 6:50 amIn 1958 when I was 14, the government began taking money from my pay check and making after tax payments into social security. An equal amount was confiscated from my employer, who had also already paid tax. No one gave me the option of buying series E bonds or paying into a savings account. During my 20 years in the military, Congress toyed with making retirees chose between military retirement and social security. As an executive in a defense firm, payments continued. Never was I ever offered or paid a penny in interest on this sizable investment. When I retired, the government sent me a letter calculating my distribution. Simply put, they divided the total paid in by the number of months until I reached 77, my expected life span. If I die before that, my payments stop. Although half my payment is exempt from federal income tax (I’ve already paid), the half my employer paid in is taxed.
Medicare hit my pay check and my employer in 1965. Unlike social security, there is no income cap. My employer and I each paid 1.45% of my earned income. Again, I was never consulted or offered any alternative; it was confiscatory transaction. When I retired, I was told that if I continued to purchase my own health insurance, I would lose my social security. Supplemental insurance is expensive, but I bought it. The major problem with Medicare is that it is micromanaged by the government. After being healthy for 67 years, I discovered that I had Rheumatoid Arthritis. My doctor prescribed Humera, but uninformed government bureaucrats denied it until other tests and medications had been tried. For six months my joints deteriorated and their treatments failed. At one point, I temporarily went blind.
When we hear the demonization of social security recipients as greedy, ask what would be their reaction if we had saved 7.45% of our income rather than troubling the government with keeping our money interest free? As for Medicare, if unpunished, I would opt out in a heart beat.
These programs must be reformed and soon. I would not object to cuts in benefits if I knew that it would fix the system.
Arch (0baa7b) — 2/13/2012 @ 7:04 am55. Correction
The “retirement tests” stops at age 66 (or full retirement age) not age 70 or 72.
Some more interesting twists: A divorced spouse can collect a spousal benefit if the marriage lasted at least ten years and the person is not currently married. Thus, two or more spouses can collect on the same person. If the spouses are currently married, then a spousal benefit cannot be collected unless the spouse whose Social Security is used to calculate the benefit files for Social Security, but that spouse does not need to actually collect the benefit – that spouse can suspend the benefit and see the potential payment rise about 8% a year till age 70. I’m not sure if benefits can be suspended before full retirement age.
For a divorced spouse, what the other spouse is doing does not matter.
The amount of the spousal benefit is reduced is the spouse whose Social Security benefit is used to calculate the payment is below full retirement age. If that spouse is 66 years of age or older, the benefit is 50%, if that spouse is 62 it is 35, and below age 62 there is no spousal benefit, but there is a widow or widowers benefit that can be collected when the widow or widower (not the spouse) is at least 60.
Sammy Finkelman (39761f) — 2/13/2012 @ 7:24 am61. Comment by Arch — 2/13/2012 @ 7:04 am
Medicare hit my pay check and my employer in 1965. Unlike social security, there is no income cap.
Which then creates questions of tax avoidance and tax evasion and work for the IRS.
This is, lets say, when a doctor or a dentist or a lawyer or a businessman (or John Edwards or Newt Gingrich) forms a Chapter S or other corporation, and pays himself partly in salary and partly in dividends. The dividend part is not subject to Medicare tax, which for a self-employed person, or a person who pays both sides of this, is 2.9%. The issue then becomes, what is the minimum salary the person should take, below which it is tax evasion.
Presumably, it is what it would take to hire someone else to do the same job. The problem is, there’s no right answer here.
Now what circumstances are we talking about? This if the person pays himself dividends derived from profits of the business. The person is not required to take a salary. The person is not required to take any income from his practice.
It is just that, up to some indeterminate point, anything paid has to be considered earned income rather than unearned income. If this concerned only Social Security, the issue would be too small to matter, and people anyway generally do not have these corporations unless they are taking in salary the maximum taxable Social Security amount.
The major problem with Medicare is that it is micromanaged by the government. After being healthy for 67 years, I discovered that I had Rheumatoid Arthritis. My doctor prescribed Humera, but uninformed government bureaucrats denied it until other tests and medications had been tried.
This is “death panels” already.
Sammy Finkelman (39761f) — 2/13/2012 @ 7:39 amThe point of programs such as Social Security, Medicare, Medicaid and ObamaCare, is that they are not about the protecting American people; they are instruments of taxation and political control.
Arch (0baa7b) — 2/13/2012 @ 7:57 am“The issue then becomes, what is the minimum salary the person should take, below which it is tax evasion.
Presumably, it is what it would take to hire someone else to do the same job. The problem is, there’s no right answer here.”
Sammy – Presumably the problem works itself out between the taxpayer and the IRS. Since we are only talking about 2.9% of income, it really only becomes an issue for a small number of very high income taxpayers who presumably tax advice on how to avoid becoming audit bait.
daleyrocks (bf33e9) — 2/13/2012 @ 8:01 am“Legally, paying the FICA tax doesn’t entitle you to anything.”
Social Security is an earned benefit, which is earned by paying into it. Further, your earnings from Social Security depend on your average lifetime earnings, and thus your payment into it.
lun (6554f2) — 2/13/2012 @ 8:25 amThe Federal, State and local governments write tax laws, partly to raise revenue and partly to encourage or discourage certain activities. Why should anyone be criticized for reading the law and complying with these incentives?
Romney paid capital gains tax because he profited from wise investments. Having Romney’s money available as capital enabled borrowers to start or expand businesses, creating jobs for new taxpayers. Look at Jack Kennedy, Ronald Reagan and George W. Bush. Every time we cut capital gains and marginal tax rates, government revenue increased. When government increased taxation as under FDR & Jimmy Carter, the economy stagnated.
My personal preference would be to minimize the size and scope of government, eliminate corporate and capital gains, abolish the alternative minimum tax and the earned income tax credit and set a fixed tax rate on income. Deductions could be phased out over a five year basis partially offset by reductions in the flat tax rate.
Government is a necessary evil. With respect to the economy, they need to get out of the way.
Arch (0baa7b) — 2/13/2012 @ 8:41 amArch! Long time.
JD (318f81) — 2/13/2012 @ 8:46 am“Almost half of all Americans lived in households that received government benefits in 2010, according to the Census Bureau.”
And, that’s not even counting people on the government payroll and people making out from corporate handouts, I’ll betcha.
Government spending is now over 40% of GDP…and, that means y’all are paying at least 40% of what you make in taxes, whether you pay it directly or indirectly (in the form of increased prices for good and services).
Hope everyone is enjoying socialism.
Dave Surls (46b08c) — 2/13/2012 @ 8:57 amI’m not
Icy (f65398) — 2/13/2012 @ 9:02 am“Every time we cut capital gains and marginal tax rates, government revenue increased. When government increased taxation as under FDR & Jimmy Carter, the economy stagnated. ”
So to finance the welfare state …. Cut taxes!
lun (6554f2) — 2/13/2012 @ 9:46 amSo, we (maybe) have this 2% discount off of the FICA tax. I have a modest proposal: Bring the rate back up, but have the restored 2% go to a personal account.
Kevin M (563f77) — 2/13/2012 @ 8:05 pm“Bring the rate back up, but have the restored 2% go to a personal account.”
Clever, but in a few years, the GOP presidential candidates will flip out over the “retirement savings mandate” that funds the personal account.
lun (6554f2) — 2/13/2012 @ 8:26 pm