Skip to main content

Mistake About Social Security Distorts Sunday New York Times Budget Exercise

The facts: In 2015, the Social Security trustees' latest report projects program outlays will exceed Social Security payroll tax revenues slightly. But Social Security has two other dedicated income streams. In 2015 one source -- taxes on the benefits received by high earners -- just about cancels that difference. The third stream -- interest on money borrowed by the Treasury from the Social Security Trust fund -- would add $154 billion in revenues. So, official projections for 2015 show Social Security generating a surplus of $151 billion.

Social Security Static

(Note:  the above charts do not include our debt interest payments which, if we do not pay down our debt, are simply unsustainable over time.  It's worth noting.)

Congress lies.  Media lies.  The Cat F'd Commission blatantly lies.

Tweet, twitter, facebook, email and spread the truth

Proof that SS and Medicare ISN'T the deficit problem, tax cuts are.

The extended-baseline scenario (also known as "current law" projections) assumes that  the 2001 and 2003 tax cuts will expire at the end of this year as scheduled;

The alternative scenario includes extension of 2001 and 2003 tax cuts (except for the top two income tax brackets*);

*If tax cuts for the highest earners do not expire, the alternative scenario will be even worse!

The US cannot afford to extend all the tax cuts.  

Social Security Static

The real issue is who should pay:

The 71% that are barely getting by, the elderly, or the higher earners who can afford to.

Here's a chart that demonstrates the impact on the deficit with and without the tax cuts.  

The Congressional Budget Office blatantly blames the Bush II tax cuts for the deficit:

Deficits Affect of Tax Cuts

Furthermore, when the cost of all legislation enacted since 2001 is considered,

the tax cuts are found to cost more than all program increases combined, including increases in military expenditures, homeland security, and education spending.

THIS IS THE REALITY.  The CBO research didn't find that Social Security and/or Medicare are the deficit problems.  

So why is Congress, the media, and the Cat F'd Commission attacking Social Security and Medicare?   Because they can IF we do not really, really fight back NOW.

At a glance, it's easy to see that Social Security and Medicare, both paid by FICA NOT tax revenues are NOT the problem.  The Unending Wars impact the deficit, but the tax cuts ARE THE CULPRIT:

Deficit Caused Mostly by Bush

For some reason, The Cat F'd Commission and media are not talking enough about reality.

Instead, both are broadcasting the same Peter G Peterson - Milt Friedman neoconservative - privatize everything - destroy FDR's social safety net - billionaires decades old attempts to strip Social Security and Medicare:

They insist that Entitlements are the problem.

The facts clearly demonstrate that Entitlements are are not the problem.

We need to keep broadcasting these facts.  Will we?  Will you help?

 

Tax Cuts and Deficits are like Siamese Twins:

They are and always have been inseparable.  It's not rocket science.  

We all know that if our income decreases and our expenses don't, that we are at risk of not having enough money to cover our expenses.  It's that simple.

For some reason, since 1980, the Republicans don't care about this reality.  And now they are screaming about deficits.  Have they really forgotten that they have caused the deficits?  Really?

We simply can't afford to continue the tax cuts.  It's simply a harsh reality.  It was irresponsible for Reagan and especially Bush II's Rubber Stamp Congress to have cut taxes:  The Revenue the US needs to pay it's bills.

These charts proves the point.  Reagan cut taxes, the deficit increased.  Bush I and Clinton increased taxes, the deficit decreased.  Bush II cut taxes, the deficit increased (Bush II also launched two unfunded wars and a $500 billion Medicare program)

Nat'l Deficit Graph

Deficits are the Disease, not the Cure.  Odd title for the above graph, btw.  We have no choice.  Tax revenues must increase if deficit reduction is truly that high a priority.

WHO  SHOULD PAY THE TAX REVENUES REQUIRED TO REDUCE THE DEFICIT?

71% of Americans who earn less than $45,000/year?

50% of families who earn less than $50,000/year, thus barely getting by?  

The elderly by reducing their Social Security and Medicare benefits?  

The unmarried who pay a disproportionatly higher tax rate, half of whom earn less than $30,000/year?  

The higher earners?  

Or the uber earners?

PROBABLY ALL OF THE ABOVE;

HOWEVER, TAX RATES MUST NOT FURTHER IMPOVERISH THE MAJORITY OF AMERICANS THAT BARELY MAKE A LIVING WAGE.

Cuts or Not:  Congress needs to pass an "IRS Fair Tax Adjustment Law" to ensure that hard working Americans, who haven't seen an increase in wages for 30 years are protected, not punished by the present disproportionate tax rates.

This chart is proof of flat wages for decades.Median income is a more real wage estimate; however, even median income projects a higher income than the reality on the street for millions of Americans, because higher wages are included in the estimate with only the outliers removed.  Don't let the media or anyone get away with reference to Average Income, it's not close to reality for most Americans, sadly:

Tax Average Median Wage

Here is a clear picture of just how many Americans are earning barely enough to survive:

Taxes Median Income

The percentage of wages taxes must be changed with our without the tax cuts continuing or sunsetting.  This is the conversation we need to have.  

Please review the two tax tables.

Here are the two tax tables.

Note how unfair the rates are for all who are not married.  This is another issue, but one we can demand be addressed:  Why are tax rates punitive for young, old, divorced, separated, and/or gay citizens?  Compare the rates to see for yourselves.

The first is for 2010, which include the Bush/GOP tax cuts for all.  The second is the tax table for 2000 which, if they are allowed to expire and remain unchanged, will be the tax table for 2011:  

Taxes-  2010 Tax Rates

Tax Rates:  2000 Pre-Cut Rates

Why are the earners barely getting by asked to pay 25%/28% plus 7.5% FICA, while the uber wealthy only have to pay 35%-39.6%?

That is disproportionate and it has been since 1949, especially for unmarrieds.

From 1912-1949, everyone paid the same tax rates on income.  In 1950 that changed.

You can review the entire history, from 1913 - 2010,  tax rate tables here.

And to be fair in the analysis, there are other considerations as well:  

There are some other sunset considerations.  It will be political suicide for either the DEM or the GOP to allow the following to sunset.  Especially because so many have lost their jobs/health insurance and forced to work for even lower wages and even part-time.

Marriage-Penalty Relief & Child Tax Credit

Both sunset in 2010.

More relief for married parents -- and single parents as well -- can be found in the acceleration of the child tax credit to $1,000 from $600 for tax years 2003 and 2004. After 2004, the rules revert to levels enacted in prior legislation: a $700 tax credit for calendar years 2005 to 2008; an $800 credit in 2009; a $1,000 credit in 2010, after which the credit disappears.

Because the cost of these breaks to the government coffers is nominal compared with the rest of the package, CCH's Mr. Luscombe believes it's likely the provisions will be re-enacted for years 2005 and forward.

It's been a long time since I had to play with Child Tax Credits.  But here is the pertinent portion of the table:  It is too large to display the entire 2000-2012 table here.

Taxes-  Child Tax Credits

Here are the IRS deduction rules for 2010:

You will find that uberly higher income earners have traditionally paid between 50% and 70% income tax rates.  It's sounds harsh, but they are still left with a huge income and remain happily wealthy.  Today, 1% earn more than the 99%.  That's a bit out of balance:

Top 1% Income Gains Highest Since 1920s

And, oddly, tax rates for the uberly wealthy in 1929 and now were the two lowest rates for the entire history of tax rates:  25% in 1929 and 35% now.

To prove that the majority of American earn under $45,000 you can go here for the tables.  It's really quite jaw dropping:

Wage Statistics for 2009, November 15, 2010

_____________________________________________

TWO PETITIONS IF YOU HAVE A MOMENT:

PLEASE SIGN THE PETITION TO EXTEND UNEMPLOYMENT

President Obama: FIGHT Bush tax cuts for millionaires!

Thank you.

Originally posted to War on Error on Mon Nov 15, 2010 at 11:31 AM PST.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Another terrific diary, (8+ / 0-)

    and I hope it gets the attention it deserves.  Thanks, War on Error.  Now I'm off to sign the petitions.

    Ptoomey: the greatest cause of hairballs in humans. gag, hack, spit. repeat.

    by Youffraita on Mon Nov 15, 2010 at 11:51:25 AM PST

  •  wow those numbers make you really think (4+ / 0-)

    I went to that last chart and it is scary to learn I am in the top 84%   from disability payments from the VA and SSD     I know I am not rich  far from it I do know I am comfortable and  don't have to worry about where my next meal is coming from   anymore   but  we my wife and I  live within our means we don't live on  credit cards and  take exotic vacations    one I can't take the travel due to  physical problems   but I can't really afford  much travel   except low budget and camping just doesn't fit my medical conditions   although it might be kewl to drive my power chair over the cliffs of the Grand Canyon     that would be an awesome way to go    film at 11  rofl

    •  NO Cliff Diving!!! (6+ / 0-)

      All most Americans want is a quiet, dignified life.  Modest, but able for a few treats now and then.

      What the chart shows, is that most Americans can barely afford to survive, forget about treats.

      Thank you for your service, testvet6778.

      And all diaries contribute.  So, please keep writing, K?

      10.2.10 March On Washington ROCKED http://www.onenationworkingtogether.org/pages/march-details

      by War on Error on Mon Nov 15, 2010 at 12:54:37 PM PST

      [ Parent ]

      •  of course the computer is my window to the world (4+ / 0-)

        and allows me to speak out   the issues I write about do not even come close to the depth of this diary and people like slinkerwinks, the NY girl that writes about healthcare  nyceve I think  I have a real problem with memory issues    it started after my stroke in April 1992  my occipital and parietal lobes were affected  the docs can't explain why I remember stuff from the late 50s and can't remember yesterday

        but it saves me a lot of money on books and movies I like   I can  see them and 6 months from now they are just like brand new ones to me   lol

        I do appreciate your support  my area is helping veterans and their families with dealing with the VA and other govt agencies  I didn't expect to become a veterans advocate  my medical issues pushed me in that direction and I know I have helped quite a few  along with others like LLbear  and  many other Dkos members  so I know I am doing some good    many write to me thru my e mail  and  not put it out there in the diaries and that is fine too  I don't help them for bonus points I do it because I have the experience and I can    it does help to feel useful to people   it gives me a reason to keep waking up

        thanks

  •  Great job putting this all together....gotta (1+ / 0-)
    Recommended by:
    War on Error

    bookmark it so I can print out parts and get my clipboard ready to go forth and educate those who will listen.

    "I think it is much more interesting to live not knowing than to have answers that might be wrong." Richard Feynman

    by leema on Mon Nov 15, 2010 at 08:34:35 PM PST

  •  End the Job Tax (0+ / 0-)

    Social Security tax is 12.4% plus 2.9% Medicare .8% Fed unemployment and at least 2% state unemployment.  That 18.1% tax rate starts at the first dollar earned flipping burgers and fades away at $105,000.
    If you tax something it less of it is produced - so the Job Tax reduces jobs.

    Keep the first $20,000 you earn.  Pay 25% tax on the rest - all of it.  No FICA or SUTA or FMED. No single or married. No kids, no deductions, no tax free muni or enterprise zones or Capital Gains.  No exceptions for clergy or seniors or anyone. No depreciation allowance. No IRS.  

    One Country One Rate

    •  That's a bit harsh, isn't it? (0+ / 0-)

      71% earn less than $42,000 in this country.

      50% of Households earn less than $45,000 which, at 25% would leave them only $33,750 to live on including expenses for health care.

      Progressive tax rates are the Right Thing to do, they have become punitive for all but marrieds, and the high earners are paying the lowest rates in history except for a couple of periods

      1935 for an example:

      apply to all taxpayers. apply to all taxpayers. apply to all taxpayers.

      4.0% $0 $4,000*
      8.0% $4,000 $6,000  
      9.0% $6,000 $8,000
      10.0% $8,000 $10,000
      11.0% $10,000 $12,000
      12.0% $12,000 $14,000
      13.0% $14,000 $16,000
      15.0% $16,000 $18,000
      17.0% $18,000 $20,000
      19.0% $20,000 $22,000
      21.0% $22,000 $26,000
      23.0% $26,000 $32,000
      25.0% $32,000 $38,000
      28.0% $38,000 $44,000
      31.0% $44,000 $50,000
      34.0% $50,000 $56,000
      37.0% $56,000 $62,000
      40.0% $62,000 $68,000
      43.0% $68,000 $74,000
      46.0% $74,000 $80,000
      49.0% $80,000 $90,000
      54.0% $90,000 $100,000
      56.0% $100,000 $150,000
      57.0% $150,000 $200,000
      58.0% $200,000 $300,000
      59.0% $300,000 $400,000
      60.0% $400,000 $500,000
      61.0% $500,000 $750,000
      62.0% $750,000 $1,000,000
      63.0% $1,000,000

      Most made under $4,000

      Today, the poor pay 10% w/tax cuts, and will go back to paying between 20% and 28%.

      It's too high.

      Whereas the rich only pay 35% w/cuts, and will pay a max tax of 39.6 without the tax cuts.

      Since Reagan, the rich have paid the lowest tax rate in history, other than 1929 when they only paid 25%

      1929

      apply to all taxpayers. apply to all taxpayers. apply to all taxpayers.

      1.5% $0 $4,000
      3.0% $4,000 $8,000  
      5.0% $8,000 $10,000
      6.0% $10,000 $14,000
      7.0% $14,000 $16,000
      8.0% $16,000 $18,000
      9.0% $18,000 $20,000
      10.0% $20,000 $22,000
      11.0% $22,000 $24,000
      12.0% $24,000 $28,000
      13.0% $28,000 $32,000
      14.0% $32,000 $36,000
      15.0% $36,000 $40,000
      16.0% $40,000 $44,000
      17.0% $44,000 $48,000
      18.0% $48,000 $52,000
      19.0% $52,000 $56,000
      20.0% $56,000 $60,000
      21.0% $60,000 $64,000
      22.0% $64,000 $70,000
      23.0% $70,000 $80,000
      24.0% $80,000 $100,000
      25.0% $100,000

      35% w/cuts and 39.6% w/o cuts on the higher and Federal Individual Income Tax Rates History
      Income Years 1913-2010
      highest earners is an historic low tax rate, except for

      1913 - 1916

      1919

      1925 - 1931 (25%)

      FDR upped it to 63%

      You can view the tax rates for 1913 - 2010 here  

      10.2.10 March On Washington ROCKED http://www.onenationworkingtogether.org/pages/march-details

      by War on Error on Mon Nov 15, 2010 at 09:51:26 PM PST

      [ Parent ]

      •  Missed the point (0+ / 0-)

        With the First $20000 exempt from all taxes and the elimination of regressive payroll taxes, families earning $40,000 a year would pay less in taxes than they do now.
        Remember Payroll taxes are a combined 18.1% tax starting on the first dollar of income.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site