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Socialism 2020

The Times says today: [1]

President Trump has proved himself adroit at creating villains to serve as his political foils. In his State of the Union address on Tuesday, he introduced a new one: socialists.

Right after his calls to support the overthrow of Venezuela’s president, Nicolás Maduro, and condemning the “socialist policies” that have reduced the country “into a state of abject poverty and despair,” he made a quick segue to the home front [2].

“Here in the United States, we are alarmed by new calls to adopt socialism in our country,” the president said, adding, “Tonight, we resolve that America will never be a socialist country.”

Tuesday night’s speech contained more than a few suggestions of what Mr. Trump’s 2020 campaign could look like.

Good. I’m glad he’s going to talk about this. But it needs to be more than scare talk. I heard earlier this week from a friend in Hungary whose family suffered terribly under communism (e.g., her grandfather was tortured by the secret police in Budapest’s infamous House Of Terror). She said that it worries her that conservatives in the US aren’t more focused on income inequality, because that’s the kind of environment that engenders socialism.

Trump is correct to talk about the spectre of socialism, but not if it’s only used as something to frighten voters. Tucker Carlson was all over this point in his now-famous monologue which, if you haven’t seen or read it, go here now.  [3]

As it happens, yesterday I turned in to my literary agent the final proposal for my next book, which will be about the warnings that people who grew up under socialism are sounding now to Americans about where our country is going. As I’ve outlined it, the book is not primarily about economics, but rather about how the overall mentality of our culture, especially in our leading institutions, is preparing the way for socialism. I’ve found that the more you dig down into the literature (fiction and non-fiction) of anti-communist dissidents, the more chilling it is to see what’s happening in this country, and how it is being prepared for what James Poulos calls the “pink police state” [4] — a kinder, gentler version of what my sources endured before defecting or getting out. These people — the emigres from formerly communist countries — see something real that’s happening in America. I’ve been writing about this periodically on this site for the past three or four years, and now I’m going to use all the contacts I’ve made here and in Eastern Europe to write a book about it.

change_me

I believe that the stories they will be telling in my book are very, very important for us to hear now, and if I can find a publisher, I intend to have it in stores by the fall of 2020. I’ll keep you updated. My agent should be taking the proposal out soon. The book is basically like Timothy Snyder’s bestselling On Tyranny [5], except the opposite, in that mine will be written with a specific focus on the prospect of left-wing tyranny. 

UPDATE: I see two dangers. The first is that people who are more or less socially conservative, but drawn to socialist economic ideas because of their economic precarity, will fail to see that with the Democratic Party, you can’t get economic socialism (or semi-socialism) without bringing the entire cultural program in with it.

The second danger is that Trump would use legitimate fear of socialism as a means of defending Mitt Romney-style capitalism. Here’s a very good column by Matthew Walther, about layoffs and corporate responsibility. [6] Excerpts:

Unlike virtually every CEO of a major corporation today, [Henry] Ford believed that his company was simply a means to an end — specifically the end of providing honorable work and a means of earning a living, which in turn made possible the raising of families and all the virtues of society that depend upon the securing of life’s basic necessities. “My ambition,” he said [7], “is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this we are putting the greatest share of our profits back in the business.” But the Michigan Supreme Court sided with the Dodges, ruling that a corporation’s responsibility was only to its shareholders and that Ford’s humane policies were an illegal wealth transfer.

Today the layoff swindlers who argue that taking the earnings away from thousands and thousands of families is necessary always promise the same thing: After the painful but unavoidable disruption, a new revivified company will emerge, one that is more sustainable, a state of affairs more beneficial to everyone involved, including somehow, the people who will not be employed by it. American workers have been told this for three decades now. It was always a lie. What we have gotten instead is a system in which shareholders and consultants make more money than ever and the lives of workers become increasingly precarious. Life after one layoff means, at best, finding another job where the whole cycle will begin anew.

UPDATE.2: A reader’s comment prompts me to clarify something. The Times lede implies that Trump has fashioned a “villain” out of thin air. I do not believe that at all. I believe that socialism — primarily cultural progressivism, built on identity politics — is very much a real and present danger. Whether or not Trump understands this, or is just engaging in rhetorical games, is another question — but the threat is real.

UPDATE.3: Great comments on this thread. Here’s one by Lesley:

If the GOP dropped Reaganomics and would consent to sane market regulations (such as clamping down on the useless, rampant type of financial speculation that was a leading cause of the 2007-08 crash), a more fair tax structure, and negotiating trade deals with an emphasis on what’s good for American workers and not just what’s good for giant transnationals, they would pretty much have my vote forever.

As is, I want no part of unmitigated laissez-faire uber libertarian capitalism and I also want no part of toxic identity politics based tribalism. They are both wildly dangerous.

But if it really comes down to it, my rights to free speech and such are at least supposedly enshrined in the Constitution making them at least marginally harder to disrupt.

I currently have 0 legal or policy defense against having my job automated or sent overseas, being paid starvation wages, being bankrupted or fired because I get sick or injured, etc.

If I’m forced to pick between these, I’ll go with the identity politics harpies.

And here’s what Matt in VA has to say about it:

Here’s the problem. The “pink police state”, so to speak, will primarily exercise power through *Woke Capitalism.* This is the key. This is the concept everybody is going to need to familiarize themselves with.

Companies that play a *huge* role in our social fabric, especially Silicon Valley companies like Facebook, Amazon, and Google, and Twitter, will determine the bounds of acceptable discourse and will deplatform and silence those who they deem intolerable. Online payment processors and credit card companies will blacklist those who challenge the system. Even the companies that handle stuff like domain registration and IP addresses and that sort of thing will start stepping in and ruling certain websites as undeserving of existence.

Basically, the State, itself, won’t need to send secret police out to arrest dissidents, and won’t need to censor samizdat directly. The big corporations (working hand in glove with the political elites, of course) will do it for them. Look at the power Amazon already has over the government and politicians — massive billion dollar subsidies for the world’s richest man (the Amazon deals for the headquarters — why not two new headquarters, right, since each deal means an insane profit taken directly from taxpayers!)

This strategy will be massively effective in no small part because conservative elites are so stupid and short-sighted and dogmatic that they will continue to say “the government has no right to interfere in the Free Market, if Google bans you, well too bad and go start your own search engine!” to its own people until its own people are all wiped from the internet altogether. This will mean economic and social pariah status, and conservative elites will tell their own base that they *deserve* this.

That’s one of the points I’m going to bring out in my book. We are so used to thinking of totalitarianism as imposed top-down from the state. In fact, we’re going to get it chiefly by private institutions — corporations, universities, and the like. Look, for example, at Amelie Wen Zhao. She learned to love Big Brother with exactly zero pressure from the state. She absorbed wokeness entirely on her own. Republicans are so stupid that they can only imagine tyranny coming from the State.

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192 Comments To "Socialism 2020"

#1 Comment By anon On February 10, 2019 @ 1:37 am

“If you’re deducting $10,000 per year in state and local taxes, then you’re doing just fine money-wise, sir.“

In California it’s actually not difficult at all.

I note, unhappily, that you decided not to engage the substance of my post, which is typical, and why young adults see “socialism” as preferable to yet another season of new preferences for the wealthy. For all the concern-trolling about deficits during the Obama years, the silence greeting the Trump deficits is startlingly total.

#2 Comment By Franklin Evans On February 10, 2019 @ 2:31 am

MM,

I’m going to pull the credentials and expertise cards on you. Take that as you wish, your ability to see what you want to see is palpable.

I was a pension actuary for 14 years, professionally expert in ERISA, Social Security and applicable tax and labor statutes and regulations. I was trained in insurance concepts and math — I tutored actuarial students in pensions — and it would take much too long to cover all of the basics here. That, too, you may take as you wish. In short, my knowledge has nothing to do with what I believe or want to believe.

Read about the details of the inception of Social Security, and its evolution over time by design and governed by statutes. It has changed, also by design, to reflect changing demographics… which, if you should decide to read up on it, is the basic definition of actuarial science and its applications.

You cite compensation history and benefits over time, and fail to understand the design behind it. You gather statistics and claim correlation which doesn’t exist. You cite reported wealth, and fail to understand the difference between value and spending.

The OASDI withholding is based on compensation, which has an annual ceiling subject to adjustment under actuarial principles. The benefit is calculated using the same ceiling. The arithmetic that bridges withholding (doubled by the employer portion) and the benefits and their actuarially predicted span of payment is complex, but represents a linear correlation.

In short, citing one person or group of people who get “more” than they “paid” is ridiculous. That is exactly not how it works.

I don’t expect you to believe me, let alone respect the training and experience behind it all. Your position is political, not scientific. I have no interest in debating you on something that is arbitrary, often capricious, and the proven bane of science.

#3 Comment By cka2nd On February 10, 2019 @ 1:51 pm

MM says: “retirees are the wealthiest demographic in America”

Yes, and they used to be the poorest, before 1960’s reforms loosening up eligibility to, wait for it, Social Security and Medicare. Or did that tidbit of history not come up in your research?

MM says: “Since it’s [means testing SS and Medicare] never been tried, pardon me for not taking your prediction seriously.”

Welfare was means tested, and hasn’t kept up with inflation since the 60’s and has been a political football since at least the 70’s. Medicaid is means tested, and is also a political football in a way that Social Security and Medicare are not.

MM says: “To my knowledge, there’s plenty of political support in American today to help those who legitimately need help, and no shortage of money being spent on those programs [EITC, education, housing, welfare, Medicaid].”

Hahahahahahahahahahaha. No shortage of money being spent on EITC, education, housing, welfare and Medicaid. Hahahahahahahahahahaha.

#4 Comment By MM On February 10, 2019 @ 1:59 pm

Evans: “I have no interest in debating you on something that is arbitrary, often capricious, and the proven bane of science.”

Got it, avoid the specific points I make, don’t address the data in any detail, and then declare victory.

That’s about your speed, sir. I’ve noticed that since that discussion we had whereby you denied in the strongest possible terms the culpability of the commander in chief of the U.S. military, former President Obama, when the military under his commend committed war crimes.

Why don’t you just answer the simple question I’ve posed?

My OASDI and Medicare payroll taxes, along with everybody else who works, including the working poor, are taken and spent in part on the wealthiest demographic in the country.

How is that not subsidizing the wealthy? And how does that make economic or moral sense?

Come on, is there a socialist with a brain who can answer that?

#5 Comment By MM On February 10, 2019 @ 2:05 pm

anon: “In California it’s actually not difficult at all.”

I live in California. If you’re paying more than $10,000 in state and local taxes, you’re not in the middle class. There’s no pleading poverty when you have that level of income, sorry.

As to your other points, I really didn’t have anything to comment on. Short-term capital gains are still taxed like regular incomem, that hasn’t changed.

#6 Comment By MM On February 10, 2019 @ 2:17 pm

Evans: “In short, citing one person or group of people who get ‘more’ than they ‘paid’ is ridiculous. That is exactly not how it works.”

That comment with regarding public sector pensions, which taxpayers are on the hook for, until the beneficiaries pass away.

I have no problem if seniors receive more back than they pay in to Social Security, if they need the money. That goes for Medicare as well, it only makes sense to means-test these things.

Again, I guess I’m the only humanitarian around here, as the socialists appear to be completely out to lunch. They won’t even agree to a simple maxim like, the wealthy, retired or not, should not receive any direct government benefits off the backs of workers, period.

But since you are the expert, sir, could you comment in detail on some of these hefty pensions being paid out in my home state?

[8]

How do you justify, financially and morally, annual pensions > $100,000 or $200,000 for life?

I find it very hard to believe that these public employees ever paid in that much while working for the state, even for decades, and even assuming a reasonable rate of return.

I’m all ears…

#7 Comment By Siarlys Jenkins On February 10, 2019 @ 3:04 pm

The new tax law doubled the standard deduction, which will help everyone in my income group and everybody lower, as well.

When the tax law passed the GOP congress, I cautioned exuberant polemicists that I could see a short term benefit to lower income taxpayers, including me. What I’m finding as I fill out my tax return is that the standard deduction is higher, but with the cancellation of the personal deduction, I’m not that far ahead.

One could argue that federal entitlements, public pensions, etc. are the biggest transfers of income, which the wealthy benefit from, in American history.

If you’re a numbers guy, you need to provide some. If you’re talking about paying large corporate farms not to grow rice on their asphalt-paved tennis court (a slight exaggeration from an old National Lampoon spoof on the late congress man Wilbur Mills), of course I’m against that. How does TANF benefit the wealthy? Again, if you’re talking about McDonald’s being subsidized by taxpayers because it pays its employees so badly that many qualify for food stamps, I think we have something worth talking about.

Perhaps employers whose employees qualify for tax-funded transfer income should be taxed the value of that transfer income?

I think we should look into a 100 percent inheritance tax. Let the dead pay the taxes, and let the living keep their hard earned money. The numbers probably don’t add up, but it would take a big chunk out of the annual payment of income tax by live human beings. We could probably simplify what remained.

#8 Comment By MM On February 10, 2019 @ 4:03 pm

cka2nd: “Or did that tidbit of history not come up in your research?”

That’s it, I’m convinced at this point that you have nothing intelligent to contribute. Nowhere have I called for eliminating Social Security and Medicare. Quite the opposite, I’ve specifically supported those programs for seniors WHO NEED FINANCIAL ASSISTANCE, but nobody else, sir.

Regarding welfare, you really don’t your homework before shooting your mouth off. As a means-tested program, such spending should not go up every year, nor be pegged to inflation. It’s for people when they need help, and not when they don’t.

But even if it was supposed to go up, it has sir, quite a bit:

[9]

Federal, state, local spending on means-tested welfare programs has grown from ~ $100 billion to $400 billion, or 300%, in real inflation-adjusted dollars since 1970, while the U.S. poplulation has only grown by 60% since then.

Regarding Medicaid, that political football you mentioned, spending has doubled in the last 10 years:

[10]

And spending is projected to his $1 trillion under current law by 2026.

***

You’ve avoided addressing my overall argument, that the wealthy should not be subsidized via federal entitlements, as well as all the facts and points I’ve brought to bear in support of that argument.

As a socialist, or whatever you call yourself, you’re a complete fraud. The proof of that is, you’ve been given ample opportunities to swallow your pride and agree with the simple maxim that workers should not be coerced into subsidizing the wealthy via payroll taxes.

Ideological arrogance, par excellence…

#9 Comment By MM On February 10, 2019 @ 4:43 pm

Jenkins: “If you’re a numbers guy, you need to provide some.”

This is quite amusing, as I’ve already asked twice now for you to qualify your assertion that our entire economy only exists because of government subsidies with some facts.

No matter, I know what I’m talking about:

[11]

Social Security 2019 budget: $1.1 trillion

[12]

Medicare 2019 budget: $770 billion

Both financed by payroll taxes, from workers to retirees. These two federal entitlement programs ALONE represent 10 cents of every dollar that flows through the economy, as U.S. real GDP when last reported by the BEA was $18.6 trillion.

I’m long past waiting for any honest socialists to agree with me that redistribution in that way, and on that level, when it benefits the wealthy, is economically or morally defensible.

Now, show me your numbers on government subsidies, sir.

Third time asking…

#10 Comment By JeffK On February 10, 2019 @ 5:12 pm

@Franklin Evans says:
February 10, 2019 at 2:31 am

“I don’t expect you to believe me, let alone respect the training and experience behind it all. Your position is political, not scientific. I have no interest in debating you on something that is arbitrary, often capricious, and the proven bane of science.”

Thank you very much for your input and analysis of MM’s constant rant about how SS is such a ripoff to him and everybody that thinks like him. Well done. I have debated him on this topic in the past, but it grew so pedantic and tiring I don’t even bother anymore. He has his opinions. they won’t change. He is as dense as osmium.

#11 Comment By JonF On February 10, 2019 @ 6:55 pm

Re: The Demos are the party of the new rich

No. They’re the party of the white (and pink) collar middle class, and the “socialism: they are talking about is socialism to assuage the fears of the middle class. Universal healthcare and free college education is a far cry from “Workers of the world unite”.

#12 Comment By MM On February 10, 2019 @ 7:46 pm

Gotta keep hammering away at this point. Evans can talk about actuarial tables all he wants, that’s fine, and I accept that the SS benefits calculation is complicated.

That’s beside the point. Should wealthy retirees receive SS benefits at all? Should they have their Medicare subsidized by workers, even if they can afford it themselves?

All cka2nd can even bring to this discussion is that seniors used to be very poor. We’re living in the present, 75+ years since Social Security was enacted, and there is very good data from the IRS on how much even poorer retirees depend on Social Security for income:

[13]

“Peter Brady of the Investment Company Institute and Jessica Holland and Kevin Pierce of the IRS used tax data to examine how households’ incomes changed as they transitioned from work into retirement… Even for the poorest fifth of retirees, Social Security benefits made up only 51% of total retirement incomes.”

Please, socialists of TAC, stop embarrassing yourselves and just go to the heart of the matter.

I’m waiting to be convinced, financially as well as morally, why millions of wealthy retirees need their entitlement benefits financed by workers…

#13 Comment By MM On February 10, 2019 @ 8:39 pm

JK: “I have debated him on this topic in the past.”

And not very well, I’ll add.

Also, neither here nor in any other discussion have I argued that Social Security was ripping me off completely.

I’m happy to subsidize retirees who need the money. But that doesn’t describe people like you, you’re the poster boy the illustrates my main point.

#14 Comment By MM On February 10, 2019 @ 8:44 pm

Jenkins: “I think we should look into a 100 percent inheritance tax.”

Have you ever heard of something called an incentive?

The state announces that once you die, all of your assets will be appropriated by the state.

What do you think people, knowing that in advance, will do with their assets before they die?

These discussions have been very enlightening, what with entitlements benefitting the rich, etc. There are many definitions of socialism, but I think I just found a new one here at TAC:

Economic incoherence. Period.

#15 Comment By MM On February 10, 2019 @ 8:50 pm

JonF: “No.”

Vox disagrees:

[14]

The Democratic Party receives a LOT of money from millionaires and billionaires.

And I recall reading that the party received the majority of PAC and dark money in the 2018 midterms.

Might want to take off your rose-colored glasses.

#16 Comment By MM On February 10, 2019 @ 9:04 pm

And because JK has a habit of lying about other peoples’ stated positions, this is for the record:

When poor and middle class workers have payroll taxes taken, which are in turn spent in part on Social Security and Medicare benefits for wealthy retirees, that IS a rip off of their labor.

I see no financial or moral justification for doing so.

#17 Comment By Siarlys Jenkins On February 10, 2019 @ 10:27 pm

MM does indeed know what he’s talking about… what he doesn’t know is what the real life facts are. But in his universe, it all makes sense. There’s a widely respected proverb which restrains me from saying more.

#18 Comment By MM On February 10, 2019 @ 11:09 pm

Jenkins: “What he doesn’t know is what the real life facts are.”

Still waiting for any facts from you, sir.

But I accomplished my goal. I got socialists here at TAC to defend, or avoid the issue of, income redistribution to the wealthy via payroll taxes.

And for merely laying out the basic truth of how entitlements are financed, I was called a liar and propagandist. I consider that a badge of honor. 🙂

#19 Comment By JonF On February 11, 2019 @ 9:11 am

MM, the GOP also receives a lot of money from the 1%. A smart plutocrat would be bribing both sides. However there’s a limited number of rich people and I am talking about how people vote, which is still, even in these corrupt days, how people actually obtain office. And yes, it is a fact that the GOP electorate skews wealthier than the US meadian.

#20 Comment By JonF On February 11, 2019 @ 9:14 am

MM, wealthy people receive less, peportionally, from SS than they pay in. Liquid income people receive proportionally more. Tbe program is mildly redistributive, and from upper income people to lower.

#21 Comment By Franklin Evans On February 11, 2019 @ 12:00 pm

MM,

The detailed rebuttal to your argument requires hundreds of words and expansion of terms and their definitions.

The short rebuttal to your claim that the wealthy are receiving benefits to which they are not “entitled” is simple: the law defines the revenue for and expenditure from the Social Security trust. It doesn’t state any form of testing, means or otherwise. It simply establishes a link between the required withholding and the benefit which each person is to receive.

Take two people whose benefit hits the maximum (defined by the ceiling amount). One person’s actual average compensation is a few thousand dollars above the maximumn. The other person’s actual average compensation is a few million dollars above the maximum. They both receive the same benefit amount.

The Forbes report you cite is an interesting replay of the same “argument” over the last several decades. It avoids a simple calculation from the other side: if SSA income is about 50% of the total income of a retiree, what sort of life would that retiree have if it was suddenly taken away?

Social Security was created 80+ years ago because elderly people were starving, their children were nearly starving, and there was no other recourse.

Until shifts in both corporate attitudes and demographics (starting around 35 years ago), qualified pension plans — those regulated by ERISA — were responsible for reducing the proportion of retirees at every level who went from full-time employment to at or below the poverty line. Prior to ERISA, that proportion was much more affected by the SSA benefit, mainly because before ERISA employers could raid their employee plans at will.

That’s a taste of the complexity you ignore. That’s why your argument is political, not actually cogent to the numbers.

I’m waiting to be convinced, financially as well as morally, why millions of wealthy retirees need their entitlement benefits financed by workers…

You won’t be convinced of anything until you understand the core structure of pension plans, and of Social Security. It’s based on the insurance concept of the risk pool. Everyone is in it. Everyone is by law entitled to a benefit from it. Everyone “finances” it. The calculations apply to everyone.

#22 Comment By Franklin Evans On February 11, 2019 @ 12:10 pm

MM, the distribution of wealth to the already wealthy starts at the employment relationship. The inequities of taxation are based upon it, they are a secondary effect of it.

The Employee Retirement Income Security Act of 1974 — ERISA — was and remains the most successful response to that distribution inequity. It has suffered sabotage and setbacks, especially in recent years. The reason my career in pensions stopped at 14 years was Congress passing changes to it every six months during the 80s, political maneuvering to benefit corporations who “lost” the ability to raid their employees retirement money. I, and others, simply burned out trying to keep up with it all.

Do you know why certain plans are called “401(k)” plans? They are defined in that section of ERISA. Do you know why we have Individual Retirement Accounts (IRA)? Because ERISA established them. Do you know why corporations can’t raid plans? Because ERISA guarantees benefits to plan participants, and failure to pay them can result in criminal prosecution under ERISA.

#23 Comment By Noah172 On February 11, 2019 @ 1:18 pm

JonF wrote:

MM, the GOP also receives a lot of money from the 1%

Lazy response. MM didn’t say Democrats get all the donations from billionaires and the multiest of multi-millionaires. He was talking about proportions.

A smart plutocrat would be bribing both sides

But most of them don’t. Most individual plutocrat big donors are partisans (even if plutocrats collectively play both sides). George Soros, Sheldon Adelson, Haim Saban, the Pritzker family, Tom Steyer, and other names I could name which would not ring a bell for you (since you define “billionaire” as the Kochs and the Waltons, the Waltons and the Kochs), play one side individually. Larry Ellison could be said to play both sides. The Kochs supported a Democratic Senator up for re-election last autumn (Heitkamp, who lost).

Your point might have more validity if you meant non-campaign spending (which you probably didn’t): lobbying, think tanks. The Kochs, e.g., lobby both parties hard for open borders. Ditto Big Tech.

However there’s a limited number of rich people and I am talking about how people vote

Which people? If you mean “top X% of income” or “income over $X,000”, the data from 2016-18 show the Democrats winning and gaining with that segment. Manhattan’s Upper East Side, the hedge fund and insurance exec towns of Fairfield County, Connecticut, the swankiest precincts of Frisco, Palo Alto, West LA and Malibu, Georgetown, DC, and a thousand other places I could name — Democratic bastions almost unanimously, either of longstanding or recently due to upper-class backlash against Trump. (Don’t embarrass yourself with some dumb comment like you’ve made before about how all the rich love Drumpf because of the tax bill.)

it is a fact that the GOP electorate skews wealthier than the US meadian

Both parties’ voters will skew above median income because non-voters (~40% of eligible adult citizens) skew below median.

If your point is that the Republicans get majorities among people with incomes in the high five digits or low six digits (say, 75-150k):

first, that may not be true anymore under Trump;

and, second, and far more importantly, if it is still true, SO WHAT? People at that level are not plutocrats, not individually (versus collectively) politically influential, and have their own economic difficulties (chief among them the exorbitant cost of housing next to other middle-class white people in many metro areas, because Diversity).

#24 Comment By MM On February 11, 2019 @ 3:20 pm

Evans: “It’s based on the insurance concept of the risk pool. Everyone is in it.”

Social Security and Medicare are not like private sector insurance pools, and they’re not like retirement funds either. They are not invested in the market, and there is no trust fund. The government borrowers any excess payroll taxes and issues bonds as IOUs. And once people retire and qualify, their SS benefits are fixed for life. Medicare is a whole different story, and payroll taxes HAVE NOT covered all expenditures over the past 10 years. And most importantly, workers paying into these entitlements are not the same people who are directly benefitting from them. And the government can decide whether to increase or decrease benefits, via the legislative process.

Nice try, though.

Since my central argument and supporting evidence on this issue have either been dismissed for no good reason, or completely ignored, which is validation of sorts, any further comments are unworthy of addressing. There is no profit to be found in debating those who do not hold themselves to the same standard as they demand of others.

In review, anyone* who describes how federal entitlements are literally financed, including calling them subsidies, observing that wealthy retirees do benefit from them, and noting some, perhaps most, wealthy retirees benefit more than they ever paid in, is tantamount to dirty, rotten lies and propaganda, in the opinion of some here at TAC.

* That would be myself, as well as right-wing think-tanks such as Pew Research and the Urban Institute, among others:

Expected Present Value of Lifetime Social Security and Medicare Benefits and Taxes
[15]

Table 11: Married one-earner couple with high earnings ($83,000 in 2018 dollars), age 65 in 2020
– First year Social Security benefit received: $39,600
– Lifetime Social Security benefits received: $712,000
– Lifetime Social Security taxes paid: $479,000
– Lifetime Medicare benefits received: $498,000 (net of premiums)
– Lifetime Medicare taxes paid: $129,000

Table 12: Married one-earner couple with maximum taxable earnings ($127,200 in 2018 dollars), age 65 in 2020
– First year Social Security benefit received: $48,100
– Lifetime Social Security benefits received: $866,000
– Lifetime Social Security taxes paid: $710,000
– Lifetime Medicare benefits received: $498,000 (net of premiums)
– Lifetime Medicare taxes paid: $192,000

How any socialist or progressive or liberal can you defend or ignore this with a clear conscience is beyond me…

#25 Comment By MM On February 11, 2019 @ 3:35 pm

“if SSA income is about 50% of the total income of a retiree, what sort of life would that retiree have if it was suddenly taken away?”

SS income was 50% of the total income of the *poorest* 1/5 of retirees. Good grief, I literally quoted that verbatim. And I spent all this time arguing in FAVOR of entitlement benefits for retirees who need financial assistance, not for those who don’t.

Why even bother? No amount of new information will ever change some peoples’ minds. Boomers especially…

#26 Comment By MM On February 11, 2019 @ 4:42 pm

Noah: JonF routinely shoots from the hip, and in my experience does little or no research before doing so.

According to 2016 exit polls, the results were decidedly mixed:

[16]

– Trump won voters with incomes of $100K to $200K, barely, by 48% to 47%
– Clinton won voters with incomes of $200K to $250K, also barely, by 49% to 47%
– Trump and Clinton split voters with incomes over $250K, 46% each

No slam dunk either way. Not sure how that compares to past presidential elections, but it’s pretty clear that wealthy voters do change their party preferences over time.

If Bloomberg and/or Schultz jump in next year’s race, who knows how they’ll vote…

#27 Comment By Franklin Evans On February 12, 2019 @ 3:16 am

MM,

Your willful ignorance is palpable, your grasp of actuarial mathematics is non-existent, and your dismissive tone is worthy of the same.

I’ll just point out that the entire point of Social Security is that the employer pays in as much as each employee. The rest is insurance math 101, and that you don’t understand the definition and application of risk pool means you’ll never speak or write intelligently about either Social Security or Medicare.

BTW, the entire reason Congress is able to “borrow” from the SSA trust — something that actually exists — is because Lyndon Johnson decided to make SSA a general budget line item. Trust funds by law cannot be invested in any manner you allude to. The reasons for that are likely beyond your desire to understand.

#28 Comment By JonF On February 12, 2019 @ 9:49 am

Noah, data from the 2016 election shows that Trump voters skewed higher on the income scale than Hillary voters did. Why do you continue these contortions to ignore this fact? Copying and posting links on a phone is more laborious than I care to try, but a simple search for “income breakdown of Trump voters 2016” should provide a plethora of sources. (And the incomes of noncitizens is irrelevant to this discussions, unless you want us to go tiptoeing into the fever stamps where tinfoil hats are de rigueur: those people aren’t part of the electorate.) No, those Trump voters may not be plutocrats, but they are middle to upper middle class. Tbe Trump coalition is pretty much the plain old GOP coalition of long standing; it is not a coalition of the woe begone downtrodden.

#29 Comment By Noah172 On February 12, 2019 @ 12:36 pm

the incomes of noncitizens is irrelevant to this discussions, unless you want us to go tiptoeing into the fever stamps where tinfoil hats are de rigueur: those people aren’t part of the electorate

Read what I wrote before you mouth off ignorantly and obnoxiously, as you constantly do, about “tinfoil hats”:

Both parties’ voters will skew above median income because non-voters (~40% of eligible adult citizens) skew below median

I was talking about citizens who choose not to vote, who tend to be lower-income. Voters on the whole skew more affluent than non-voters.

Why do you continue these contortions to ignore this fact?

I know what I am talking about, and you don’t. I’ve looked at precinct maps, exit polls (from 2016/18 and previous elections for comparison), other surveys, and other evidence. You cling to a simple-minded, quasi-religious belief that the left is The Poor and the right is The Rich. Reality: Trump got the white poor, Clinton the colored. As any glance at election maps of rural and urban America could instantly tell you.

BTW, the 2016 exit poll showed Trump and Clinton even among the highest income bracket (>250k), versus Romney +13 in 2012; and Clinton doing much worse than Obama 2012 with the lowest bracket (<30k), +13 versus +28.

#30 Comment By MM On February 12, 2019 @ 1:10 pm

Evans: “Blah, blah, blah.”

I’m glad to see my expectations continue to be met by those who have chosen to avoid my economic and moral argument entirely.

I’ll also thank Mr. Evans for not even admitting that he misquoted me, probably intentionally, when I quoted from the Forbes article on retiree income and Social Security.

MM: “Why *should* poor and middle class workers subsidize wealthy retirees via payroll tax income redistribution?”

Answer (paraphrased): “This is how Social Security and Medicare are structured. The wealthy have paid in and get something back when they retire. That’s the way the system works.”

I’ll note that “is” and “ought” are purposefully conflated. This is a political justification, indeed the kind of excuse arch-conservatives make for not wanting to change policies they like. It’s not an economic or moral justification at all, because it makes no sense to tax relatively poorer workers in order to subsidize wealthier retirees.

And the excuse put forth to do nothing to change how entitlement benefits are allocated to retirees regardless of their income and wealth is 180 DEGREES in opposition to the stated position of liberal, progressives, and socialists, which I always heard was to help workers and not hurt them.

How hard is it to agree that at least incrementally, we should stop extracting 9% of their labor via payroll taxes in part to subsidize the wealthiest demographic in America?

Funny, the same people who routinely argue that entitlements can be shored by raising payroll taxes or removing payroll tax caps, ONLY, are the very same people who have no problem redistributing income to wealthy retirees, and want to continue that process as the worker/retiree ratio continues to drop.

That’s best example of the Donkey with its head up its rear end in modern American politics.

And it does put me to the left of so-called leftists around here. Well, so be it…

[NFR: I think y’all’s exchange has reached a dead end. Please stop. — RD]

#31 Comment By MM On February 12, 2019 @ 1:20 pm

JonF: “Wealthy people receive less, preportionally, from SS than they pay in.”

I don’t expect you to respond, sir, and the Urban Institute data I cited shows that some wealthy retirees will receive more than they pay in.

Just answer a simple question, which everybody to my left around here is conspicuously avoiding:

* When wealthy people retire, why should they receive any direct taxpayer financed benefits, if financially they don’t need them?

What’s the economic and moral justification for that?

#32 Comment By cka2nd On February 12, 2019 @ 7:09 pm

MM says: “All cka2nd can even bring to this discussion is that seniors used to be very poor. We’re living in the present, 75+ years since Social Security was enacted,”

Actually, my comment about the poverty of seniors “before 1960’s REFORMS LOOSENING UP ELIGIBILITY to, wait for it, Social Security and Medicare [emphasis added].” was not the core of my argument but just a brief response to you accurate statement that the elderly demographic is the wealthiest in the country.

MM says: “cka2nd: ‘Or did that tidbit of history not come up in your research?’ That’s it, I’m convinced at this point that you have nothing intelligent to contribute. NOWHERE HAVE I CALLED FOR ELIMINATING SOCIAL SECURITY AND MEDICARE [emphasis added].”

And nowhere did I imply, let alone state, that you did. I added emphasis to that portion of my above comment because it was SPECIFICALLY responding to YOUR comment about reforms loosening up eligibility for Social Security over time, taking it from a relatively narrowly targeted and means-tested program at its start to the universal and non-means tested program we know today. And by the way, if YOU are allowed to discuss the history of Social Security and Medicare, I would appreciate the courtesy of allowing me to do the same without your making snarky comments about “We’re living in the present.”

The CORE of my argument was “Social Security and Medicare survive because they are UNIVERSAL (or nearly so) programs supported by the vast majority of the population. If MM’s idea of means testing was implemented, said popular support would crater and the two programs would be cut, and we would quickly start seeing calls to “end Social Security and Medicare as we know it” or for work requirements for recipients.” YOUR response to that was “Your argument about popular support for or against these massive programs is CRAP, pure and simple” and to mention all of the federal safety net programs that are means tested, and then dismiss, out of hand, the idea that Social Security and Medicare enjoy unique levels of popular support – I really should have mentioned that whole “Third Rail of Politics” thing – compared to such means-tested programs.

I have come to the conclusion that you are considerably younger than me. A college or graduate student, perhaps, or, more likely, an intern or junior analyst at a conservative think tank. I’ve come to that conclusion because, while you are an able researcher in the bowels of government reports and legislative history, to dismiss as “CRAP” the idea that the universality of these programs is the reason WHY they enjoy uniquely massive popular support, you must be painfully ignorant of the POLITICAL HISTORY of efforts to reform Social Security and health care (“Keep your government hands off my Medicare!”) over the last 40 years. The distinction between universal and means-tested safety net programs has featured heavily in the analysis of that history by supporters of the programs, especially after Bill Clinton signed off on welfare reform 20+ years ago. I suggest that you immerse yourself, youngster, in that political history and analysis for a while.

The political history of these debates, by the way, was why I mentioned “small p” politics in my first comment on this topic, which was actually directed not at you but at the folks getting lost in technocratic debates with you. If you want to get into a technocratic debate about the “fairness” of means testing vs. universal programs, I am sure there are interns and junior analysts at liberal and progressive think tanks who would be happy to cross swords with you (fyi, you would find allies in your cause among the junior staff and interns at centrist, New Democrat-style think tanks with folks like the Clintons on their boards), perhaps while ya’ll are bar crawling through Georgetown some night. I am not interested in such a debate with you because of the “small-p” politics that to be means-tested would be the death of Social Security and Medicare. Before you call that idea “CRAP” again, youngster, I suggest you expand your historical horizons on the topic.

#33 Comment By cka2nd On February 12, 2019 @ 10:39 pm

MM says: “When poor and middle class workers have payroll taxes taken, which are in turn spent in part on Social Security and Medicare benefits for wealthy retirees, that IS a rip off of their labor.”

Do you also consider it a rip off of their labor when poor and middle class workers have their jobs eliminated, pay cut, insurance premiums increased, and defined benefit pension plans converted to defined contribution pension plans so that corporate executives compensation packages and shareholder value are increased, ABSENT ANY CHANGE IN THE OPERATIONS OF THE BUSINESS? In other words, management and shareholders have not achieved any greater success for the company, invested no new funds in R&D, but have simply shifted compensation from workers to executives and shareholders.

MM says: “When wealthy people retire, why should they receive any direct taxpayer financed benefits, if financially they don’t need them? What’s the economic and moral justification for that?”

For the Bill Gates and Jeff Bezos of the world, none whatsoever. For the couple that ended their careers making a combined income of $500,000 per year between them, because it they weren’t included in the system, they would pitch and moan about the undeserving poor mooching off of them and their taxes, and the system would be stigmatized as just another welfare system, and would gradually be bled to death. Them’s the politics of the situation, and if you think they aren’t, then you need to educate yourself about the POLITICAL history of welfare and other means-tested programs.

#34 Comment By JonF On February 13, 2019 @ 9:33 am

MM, it would be possible for someone to succeed handsomely in their late working years, retire, and live to be 100, yes. But overall high income do receive less proportionally, than lower income people do. I don’t know why you are so bothered by any of this. If a trust fund brat wraps Daddy’s BMW around a tree, your and my insurance premiums will help pick up that bill. Is that an injustice? And if Daddy’s mansion catches fire, your and my tax dollars pay the firemen’s salary.

#35 Comment By Franklin Evans On February 13, 2019 @ 11:44 am

I agree with Rod, though my phrase of choice is that MM is a lost cause, a troll, or both.

#36 Comment By MM On February 13, 2019 @ 12:07 pm

JonF: Could you please address my question, directly, as well as the Urban Institute data I cited?

* When wealthy people retire, why should they receive any direct taxpayer financed benefits, if financially they don’t need them?

#37 Comment By MM On February 13, 2019 @ 12:09 pm

cka2nd:

Thank you, sir, for reiterating the same political excuse for why wealthy retirees should continue to be subsidized.

And thank you also, sir, for providing absolutely no economic or moral justification for that income redistribution.

That was my original question, and that’s the one you and your left-wing friends CANNOT or WILL NOT address.

🙂

#38 Comment By MM On February 13, 2019 @ 12:41 pm

JonF: “Is that an injustice?”

When a wealthy person crashes a car, or their house burns down, their insurance rates will go up, just like everybody else. And if they’re found to be at fault, their insurance rates will go up a lot, just like everybody else, and the claim may not even be paid.

I’m talking about federal entitlements for retirees, financed by taxing workers’ labor, NOT based on financial need or adverse circumstances.

Thank you, again, sir, for intentionally avoiding the core issue of *INCOME* redistribution to the wealthy through payroll taxes.

#39 Comment By MM On February 13, 2019 @ 1:18 pm

O.K. as the troll who knows nothing about entitlements. I’ll defer to academic researchers in order to illustrate this point one more time. Note that this was 10 years ago, so the share of wealthy retirees has only grown since then:

[17]

According to researchers at George Washington University, “47,535 millionaires received Social Security benefits in 2010, totaling $1.438 billion.”

Forget deadweight losses to the economy, that’s a given with any kind of income or payroll tax. This system, by government design, literally extacts 9% of every workers’s labor, via OASDI + Medicare taxes, including poor and middle class workers, and redistributes a portion to millionaires and billionaires merely because they’re retired and qualify for benefits. Not to mention that NBER researchers have concluded that Social Security as a whole is slightly regressive in nature.

Question waiting to be answered:

* What is the economic and moral justification for the government redistributing workers’ income in this way?

#40 Comment By Franklin Evans On February 13, 2019 @ 3:04 pm

MM, what you refuse to know is basic arithmetic. Your question is unanswerable, because it has no rational meaning. You could as well ask me if I’ve stopped beating my dog yet. I don’t have a dog.

It’s not “redistribution”. It’s benefit payments from a general trust fund into which every worker (and their employers!) has paid.

I’ll make an illustration simple.

Persons A and B both receive $1,000 per month from Social Security. Person A dies after one year. He received $12,000. Person B enjoys good health and is up to 10 years and counting. So far he has received $120,000.

For ease of argument, both Persons contributed exactly the same amount via OASDI withholding.

So, was Person A’s money redistributed to or subsidizing Person B? False, no more so than the thousands of people who live into the next calendar year having done so to pay the insurance benefits of those who died.

“Oh my gosh, look! Person B is stealing money from Person A!”

Unadulterated BS.

By the way, I sincerely suggest you take your moral component objections to your representatives in Congress, and demand that they pass a law which denies “those who don’t need it” any benefit from their contributions to Social Security. Prepare to be laughed at.

#41 Comment By MM On February 13, 2019 @ 5:22 pm

Evans: “It’s not ‘redistribution'”

Let’s see, 7.65% of my salary is deducted in the form of payroll taxes every 2 weeks and remitted to the IRS, which in turn remits most of that to the SSA and the rest to HHS. My employer remits another 7.65% of my salary, as well.

SSA and HHS then spends those remitted taxes on currently retired and other qualifying beneficiaries according to statutory formulas and regulations, most of whom are wealthier than I am. Any taxes collected in excess of expenditures are lent to the federal government in exchange for treasury bonds, and are in turn spent from the general fund by other departments.

And that’s not redistribution…

#42 Comment By MM On February 13, 2019 @ 9:51 pm

[NFR: MM, stop posting on this thread. — RD]