“We Can’t Afford To Weaken Social Security”: President Obama Just Changed The National Debate On Social Security
Speaking in Elkhart, Indiana, President Obama made a significant policy statement, one that may get lost in all the talk of the campaign to replace him. He argued that Social Security not only shouldn’t be scaled back, as many believe, but that it should be expanded.
You can look at this as a move to the left. But here’s a better way to see it: as more like a digging in, a resistance to a decades-long effort to lay the groundwork for significant cuts to the program.
Now that Obama has taken this position, it makes it much more likely that most or all Democrats will adopt it as well, which could truly change a debate that up until now has been dominated by an alliance of Republicans and supposedly centrist advocates whose mission is to scale back the most successful social programs America ever created.
Here’s what Obama said in his speech:
But look, let’s face it — a lot of Americans don’t have retirement savings. Even if they’ve got an account set up, they just don’t have enough money at the end of the month to save as much as they’d like because they’re just barely paying the bills. Fewer and fewer people have pensions they can really count on, which is why Social Security is more important than ever. We can’t afford to weaken Social Security. We should be strengthening Social Security. And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous, and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned. And we could start paying for it by asking the wealthiest Americans to contribute a little bit more. They can afford it. I can afford it.
Here’s why this is important. For a long time now, the way you’ve shown you’re a Very Serious Person about fiscal matters is to gravely intone that Social Security is “going broke” and say that we must cut back benefits, either by reducing retirees’ payments or raising the retirement age. There’s an entire industry of think tanks and advocacy groups whose mission is to create the intellectual and political environment that will make such cuts possible.
Liberals have only been pushing back against that coalition in a serious way for a few years now. There are some high-profile voices debunking the myth that Social Security is “going broke,” most notably Paul Krugman’s (I won’t bother to go over again why it’s a myth, but if you’re interested I explained it here). But they’ve been hampered by the fact that so many Democratic politicians want to communicate that they too are Very Serious, so they accept some of the premises of the other side’s argument, ceding half the battle over the existence of the program.
And make no mistake: it is a battle over the existence of the program. Despite their assurances that they only want to “strengthen” Social Security, many Republicans would like nothing more than to see it disappear, for two reasons. The first is that they’re simply opposed to large social programs on ideological grounds. The second is that by virtue of its success and popularity, Social Security is an ongoing rebuke to conservative arguments about government. It’s awkward to say, “Government can’t do anything right and should be cut back as much as possible” to a voter who has health care because of Medicare and isn’t eating cat food because of Social Security — and thinks both programs are terrific.
So the political situation is this. Republicans can’t mount a direct assault on the program because it’s spectacularly popular, particularly with those who get checks every month (and who vote in large numbers). At the same time, their campaign against it has been extremely successful in shaping public opinion. Large portions of the public have been convinced that the program is in crisis and is about to go broke, and young people in particular think Social Security won’t exist by the time they retire. The hope of the anti-entitlement forces is that if they can convince enough people of that, when they propose a specific plan to cut back the program, people will say, “Sure, whatever — it’s going broke anyway, so we might as well.”
Until recently, the debate around Social Security consisted of one side saying it was going broke and needed to be slashed, and the other side not disputing those basic assertions too strongly, but saying that we shouldn’t do anything rash. What we are moving toward, however, is the Democratic side saying not only that the program is essentially healthy, but that instead of cutting it we should be expanding it. That’s a profoundly different debate, one that produces an entirely different set of policy options.
Right now you have the president of the United States taking that position, as well as the two leading Democratic presidential candidates. Hillary Clinton has proposed some targeted expansions of Social Security benefits, for widow/ers facing a benefit cut when a spouse dies and for those whose benefits are smaller because they spent time out of the workforce raising children or caring for other family members. Bernie Sanders advocates an increase for all recipients: “expand benefits by an average of $65 a month; increase cost-of-living-adjustments; and lift more seniors out of poverty by increasing the minimum benefits paid to low-income seniors.”
With the exception of Donald Trump, all the Republican presidential candidates this year signed on to some form of Social Security cuts, either through increasing the retirement age or cutting benefits. Trump, however, said we just shouldn’t touch it. In one debate, he said, “It’s my absolute intention to leave Social Security the way it is. Not increase the age and to leave it as is.” Trump doesn’t say how he’d pay for the program, which should undercut the idea that his position somehow challenges conservative orthodoxy; in reality, all Trump is saying is that he’ll make everyone so rich that we won’t have to make tough choices about such things.
By contrast, Democrats feel an obligation to explain how they’re going to pay for the benefits they propose. Obama described “asking the wealthiest Americans to contribute a little more.” That isn’t very specific, but there are a couple of ways you could do that, the most obvious of which is to raise the payroll tax cap. Right now you pay Social Security taxes only on the first $118,500 of your income, which means that beyond that level the wealthy pay a lower portion of their income than poor and middle-class people do.
Hillary Clinton says she would pay for increased benefits by “asking the highest-income Americans to pay more, including options to tax some of their income above the current Social Security cap, and taxing some of their income not currently taken into account by the Social Security system.” That would probably mean applying payroll taxes to investment income and not just wage income as it is now. Sanders wants to do that too, and is more specific about the cap: he would remove it entirely, though he would include a doughnut hole between the current cap of $118,500 and $250,000; you wouldn’t start to pay more payroll taxes until you reached that higher income.
Unfortunately, it’s a little hard to tell exactly how much in greater benefits we could afford with these kinds of measures, because how much the system takes in is heavily dependent on things we can only guess at, like what income growth, inflation, and immigration levels are going to be 10 or 20 or 50 years from now. But now that the most prominent Democrats in the country all agree that we should be expanding Social Security and not cutting it back, we could have a whole new debate on the issue.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, June 2, 2016
“Kindred Spirits”: Trump Lies So Much Less To NY Mega-Rich
The crowd outside stretched far across 42nd Street, and police lined the sidewalk as if preparing for an invasion. The protesters called him a racist and held signs that read BEAT UP TRUMP and NO FUCKING FASCIST! Dozens of them were arrested.
But inside the Grand Hyatt hotel, the man they were raging against was hard to find.
In the ballroom, its ceiling opulently outfitted with copper-colored glass, the New York Republican Party was holding its annual gala, and Donald Trump, the first of the three presidential candidates to speak, was on his best behavior.
Maybe it was the tux.
“You know, I thought I’d do something a little different,” Trump began.
As the audience of 800 drank wine and picked at their salads, which had cost them each $1,000 and required that they go through metal detectors in their gowns and dinner jackets, Trump opted out of his usual stump speech—a haphazard string of insults, poll numbers, and tirades against the media—and instead talked for 23 minutes about the New York City he helped shape.
“I love speaking at the Grand Hyatt,” he said, “because I built it.”
Forty-second and Lex was once home to the Commodore Hotel, which opened in 1919 and had, by 1976, seen better, more profitable days.
“It was a mess,” Trump told the crowd. “They had a spa called ‘Relaxation Plus,’ but nobody ever got into what the ‘plus’ meant.”
Trump bought the property and transformed it into a shiny glass behemoth—his first of many such structures in this city. (He was bought out of the building in 1996).
At another point, Trump reminisced about buying a building downtown in the throes of “the depression—literally a depression” in the early 1990s (there was no economic depression in the 1990s). “When I opened, it was like the world had changed,” he said.
Private construction is not the first topic that comes to mind when you imagine a presidential candidate’s speech. But for Trump, his buildings are evidence that he can get things done, and the context doesn’t much matter. In order to achieve success, in Trump’s view, you need to be able to measure it in stories.
Which is not to say that he shied away from politics completely.
Trump enjoys 65 percent favorability in New York, according to a Public Policy Polling poll released April 12, and a 31.9 percent lead on John Kasich—53.8 to 21.9—in the Real Clear Politics average.
The audience at the Hyatt laughed with Trump and applauded for him, but they also just seemed to understand who he is. And he understands them, which seems like the best explanation for why he did away with his usual shtick and talked to them as equals.
At one point, he did mock poor Jeb Bush, who isn’t even a candidate anymore, by saying he should move to New York City to improve his low energy, but the schoolboy humor was kept to a minimum.
Later, Trump spent some time discussing “New York values,” that unfortunate phrase Ted Cruz, his central rival for the nomination, chose to deploy as an insult against him a few months back.
“I want to just talk, just for a second, about New York values,” Trump said.
The crowd cheered.
“It’s just one of those things,” he said.
But he didn’t need to remind the audience to dislike Cruz.
When the Texas senator arrived onstage in a tux with a lopsided bow tie, some people just left.
Others talked loudly over him and clanked their silverware as they ate their entrees.
A few stared down at their phones.
“I will admit to you,” he said, “I haven’t built any buildings in New York City.”
By: Olivia Nuzzi, The Daily Beast, April 15, 2016
“Privilege, Pathology And Power”: What Happens To A Nation That Gives Ever-Growing Political Power To The Super Rich?
Wealth can be bad for your soul. That’s not just a hoary piece of folk wisdom; it’s a conclusion from serious social science, confirmed by statistical analysis and experiment. The affluent are, on average, less likely to exhibit empathy, less likely to respect norms and even laws, more likely to cheat, than those occupying lower rungs on the economic ladder.
And it’s obvious, even if we don’t have statistical confirmation, that extreme wealth can do extreme spiritual damage. Take someone whose personality might have been merely disagreeable under normal circumstances, and give him the kind of wealth that lets him surround himself with sycophants and usually get whatever he wants. It’s not hard to see how he could become almost pathologically self-regarding and unconcerned with others.
So what happens to a nation that gives ever-growing political power to the superrich?
Modern America is a society in which a growing share of income and wealth is concentrated in the hands of a small number of people, and these people have huge political influence — in the early stages of the 2016 presidential campaign, around half the contributions came from fewer than 200 wealthy families. The usual concern about this march toward oligarchy is that the interests and policy preferences of the very rich are quite different from those of the population at large, and that is surely the biggest problem.
But it’s also true that those empowered by money-driven politics include a disproportionate number of spoiled egomaniacs. Which brings me to the current election cycle.
The most obvious illustration of the point I’ve been making is the man now leading the Republican field. Donald Trump would probably have been a blowhard and a bully whatever his social station. But his billions have insulated him from the external checks that limit most people’s ability to act out their narcissistic tendencies; nobody has ever been in a position to tell him, “You’re fired!” And the result is the face you keep seeing on your TV.
But Mr. Trump isn’t the only awesomely self-centered billionaire playing an outsized role in the 2016 campaign.
There have been some interesting news reports lately about Sheldon Adelson, the Las Vegas gambling magnate. Mr. Adelson has been involved in some fairly complex court proceedings, which revolve around claims of misconduct in his operations in Macau, including links to organized crime and prostitution. Given his business, this may not be all that surprising. What was surprising was his behavior in court, where he refused to answer routine questions and argued with the judge, Elizabeth Gonzales. That, as she rightly pointed out, isn’t something witnesses get to do.
Then Mr. Adelson bought Nevada’s largest newspaper. As the sale was being finalized, reporters at the paper were told to drop everything and start monitoring all activity of three judges, including Ms. Gonzales. And while the paper never published any results from that investigation, an attack on Judge Gonzales, with what looks like a fictitious byline, did appear in a small Connecticut newspaper owned by one of Mr. Adelson’s associates.
O.K., but why do we care? Because Mr. Adelson’s political spending has made him a huge player in Republican politics — so much so that reporters routinely talk about the “Adelson primary,” in which candidates trek to Las Vegas to pay obeisance.
Are there other cases? Yes indeed, even if the egomania doesn’t rise to Adelson levels. I find myself thinking, for example, of the hedge-fund billionaire Paul Singer, another big power in the G.O.P., who published an investor’s letter declaring that inflation was running rampant — he could tell from the prices of Hamptons real estate and high-end art. Economists got some laughs out of the incident, but think of the self-absorption required to write something like that without realizing how it would sound to non-billionaires.
Or think of the various billionaires who, a few years ago, were declaring with straight faces, and no sign of self-awareness, that President Obama was holding back the economy by suggesting that some businesspeople had misbehaved. You see, he was hurting their feelings.
Just to be clear, the biggest reason to oppose the power of money in politics is the way it lets the wealthy rig the system and distort policy priorities. And the biggest reason billionaires hate Mr. Obama is what he did to their taxes, not their feelings. The fact that some of those buying influence are also horrible people is secondary.
But it’s not trivial. Oligarchy, rule by the few, also tends to become rule by the monstrously self-centered. Narcisstocracy? Jerkigarchy? Anyway, it’s an ugly spectacle, and it’s probably going to get even uglier over the course of the year ahead.
By: Paul Krugman, Op-Ed Columnist, The New York Times, January 1, 2016
“Cronyism Causes The Worst Kind Of Inequality”: Friends Of The Rulers Appropriating Wealth For Themselves
Economic inequality has skyrocketed in the U.S. during the past few decades. That has prompted many calls for government policies to reverse that trend. Defenders of the status quo argue that rising inequality is a necessary byproduct of economic growth — if we don’t allow people the chance to become extremely rich, the thinking goes, they will stop working, investing, saving and starting businesses. A receding tide will then cause all boats to sink.
Critics of the status quo have responded with the claim that inequality doesn’t help growth, but instead hurts it. This view was given ammunition by a number of recent studies, which have found a negative relationship between how much income inequality a country has and how fast it grows. One example is an International Monetary Fund study from 2015:
[W]e find an inverse relationship between the income share accruing to the rich (top 20 percent) and economic growth. If the income share of the top 20 percent increases by 1 percentage point, GDP growth is actually 0.08 percentage point lower in the following five years, suggesting that the benefits do not trickle down. Instead, a similar increase in the income share of the bottom 20 percent (the poor) is associated with 0.38 percentage point higher growth.
A similar 2014 study from the Organization for Economic Cooperation and Development concluded the same thing. Interestingly, the negative correlation between inequality and growth is found even when controlling for a country’s income level. This isn’t simply a case of wealthier countries growing more slowly and also being more unequal.
So the evidence is pretty clear: Higher inequality has been associated with lower growth. But as with all correlations, we should be very careful about interpreting this as causation. It might be that countries whose growth slows for any reason tend to experience an increase in inequality, as politically powerful groups stop focusing on expanding the pie and start trying to appropriate more of the pie for themselves.
The IMF and OECD list some channels by which inequality might actually be causing lower growth. The most important one has to do with investment. When poor people have more money, they can afford to invest more in human capital (education and skills) and nutrition. Because these investments have diminishing marginal returns — the first year of schooling matters a lot more than the 20th — every dollar invested by the poor raises national productivity by more than if it gets invested by the rich. In other words, the more resources shoring up a nation’s weak links, the better off that nation will be.
That’s a plausible hypothesis. But there might also be other factors contributing to the correlation between inequality and growth. It could be that there is something out there that causes both high inequality and low growth at the same time.
The obvious candidate for this dark force is crony capitalism. When a country succumbs to cronyism, friends of the rulers are able to appropriate large amounts of wealth for themselves — for example, by being awarded government-protected monopolies over certain markets, as in Russia after the fall of communism. That will obviously lead to inequality of income and wealth. It will also make the economy inefficient, since money is flowing to unproductive cronies. Cronyism may also reduce growth by allowing the wealthy to exert greater influence on political policy, creating inefficient subsidies for themselves and unfair penalties for their rivals.
Economists Sutirtha Bagchi of the University of Michigan and Jan Svejnar of Columbia recently set out to test the cronyism hypothesis. They focused not on income inequality, but on wealth inequality — a different, though probably related, measure. Concentrating on billionaires — the upper strata of the wealth distribution — they evaluated the political connections of each billionaire. They used the proportion of politically connected billionaires in a country as their measure of cronyism.
What they discovered was very interesting. The relationship between wealth inequality and growth was negative, as the IMF and others had found for income inequality. But only one kind of inequality was associated with low growth — the kind that came from cronyism. From the abstract of the paper:
[W]hen we control for the fact that some billionaires acquired wealth through political connections, the effect of politically connected wealth inequality is negative, while politically unconnected wealth inequality, income inequality, and initial poverty have no significant effect.
In other words, when billionaires make their money through means other than political connections, the resulting inequality isn’t bad for growth.
That’s a heartening message for defenders of the rich-country status quo. If cronyism is the real danger, it means that a lot of the inequality we’ve seen in recent decades is benign. Eliminate corrupt connections between politicians and businesspeople, and you’ll be safe.
But Bagchi and Svejnar’s finding cuts two ways. It also means that plain old inequality isn’t beneficial for growth, as its defenders have claimed. That removes one of the big objections government policy makers face in talking steps to reduce inequality — and that doing so is unlikely to hurt economic growth.
By: Noah Smith, Bloomberg View, Bloomberg Politics, December 24, 2015
“How Pathetically Low Diversity Is On Capitol Hill”: The US Senate: The World’s Whitest Deliberative Body
In the last couple of years racial politics have dominated our political discourse. Regardless of party affiliation or racial identification, most Americans have probably grown to agree on at least one thing: There are no easy policy solutions for solving America’s racial discord and the inequality that fuels it. But I would go a step further and say this is even truer with the current Congress we have in place. While lack of bipartisanship gets most of the credit, or rather blame, for the ineffectiveness of the American Congress, new data highlight another culprit: lack of diversity among senior Senate aides.
A new report out from the Joint Center for Political and Economic Studies found that “(p)eople of color make up over 36 percent of the U.S. population, but only 7.1 percent of top Senate staffers.” While the numbers are not good for any ethnic minority population, they are abysmal for black Americans. According to the report, “African-Americans make up 13 percent of the U.S. population, but only 0.9 percent of top Senate staffers.” This is particularly troubling given how lacking in diversity the Senate already is. There are currently two African Americans serving in the U.S. Senate (Cory Booker of New Jersey and Tim Scott of South Carolina), one Asian American (Mazie Hirono of Hawaii), and two Hispanic Americans (Marco Rubio of Florida and Ted Cruz of Texas.)
But lack of racial diversity isn’t the only problem plaguing Congress. Last year, for the first time in history, the majority of members of Congress reported being millionaires. This in an age in which the median wealth of America’s middle class is just over $44,000.
Now I’m not here to argue that white millionaires should be excluded from Congress. But I am here to argue that they shouldn’t comprise most of Congress.
Why?
Well for starters, ideally we should have a legislative body reflective of the people it represents. But beyond idealism, there is a very real policy deficit we face as a country when we have people who have never experienced problems firsthand, tasked with crafting solutions for those problems.
For instance, for years there has been little done at a federal level to address the issue of racial profiling or police brutality. The reason is not hard to understand: For a white member of Congress who has likely been treated with respect and deference by most members of law enforcement he or she has come into contact with, it’s easy to fathom that he would not consider this a serious or prevalent issue.
Thanks to camera phones, now many elected officials know what black Americans have known all along: There are great members of law enforcement, but there are also far too many who abuse their power and position. Just think for a moment how many lives may have been saved if elected officials, either from their own experiences, or the experiences of their senior aides, had known to prioritize this issue years ago. It is not a coincidence that a black senator, Tim Scott, has been a driving force behind efforts to secure additional federal funding for body cameras for law enforcement to help address this issue.
Similarly, it is not a coincidence that President Obama has made college accessibility and affordability legislative priorities during his time in elected office. Neither he nor his wife came from wealthy backgrounds, and financial aid enabled them both to attend elite universities that allowed them entrée into the halls of power in which they now reside. Is it possible that another president could have been knowledgeable on this issue? Sure. But consider this: Gov. Mitt Romney, President Obama’s opponent in the last presidential election, came from a wealthy and prominent family, so he never endured the hardship of not knowing whether he would graduate college because of his financial status—something I and millions of other Americans have endured.
To be clear, the issue of diversity, or rather lack thereof, within the Senate is not party specific. The Joint Center report notes that while African Americans vote overwhelmingly Democratic, black Americans comprise just .7 percent of top Democratic Senate posts. It could be argued that lack of diversity among Senate aides is even more problematic than lack of diversity among elected officials because senior aides do much of the heaving lifting when it comes to actually writing legislation. So what can be done to change things?
For starters, elected officials and the parties that support them need to make a concerted effort to diversify their internship pools. As someone who started her career as an intern, I speak from experience when I say it is not uncommon to see the most plum internships for prominent candidates and in prominent offices become a resting place for the children of political donors and their friends. These internships can often serve as a pipeline to jobs in the Senate or the White House down the road.
Additionally, both major parties need to begin setting aside some of the money they reserve for attack ads on each other for money to be spent on well-paid racial and class diversity fellowships. Very few young people, except the children of wealthy donors or the wealthy period, can afford to work on campaigns for next to nothing and live with the financial instability early campaign life provides.
But I would say the real responsibility falls into the hands of those of us who claim we’re fed up with our do-nothing Congress. If we’re not happy with them, simply threatening to throw them out during the next election cycle is not enough. We should be asking them the right questions while they’re there representing us. But how many of us bother to ask who our elected officials hire once they get in office? And whether those people are representative of us and have our best interests at heart? In the same way we demand our elected officials keep us updated on their legislative accomplishments, why don’t we demand more regular transparency on who they are surrounding themselves with?
For anything to really change, more of us fed up non-millionaires need to be willing to run for office, or encourage someone we trust to. Or at the very least we need to tell as many bright, young people from underrepresented groups that we can that if they really want to make a difference instead of just expressing outrage on social media, they should become a Senate aide.
By: Keli Goff, The Daily Beast, December 27, 2015
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