At Work

In my humble opinion, here’s what’s wrong with America

You can think what you will of the political parties and individuals who lead them, but the most dangerous people are individuals who mislead and create class envy. They are closely followed by uninformed Americans who want to believe and feel others should pay for what they want or believe they deserve.

Let’s keep our perspective. There are roughly 400 billionaires in the US, not that earn a billion dollars, but have a net worth mostly in stocks and real estate, mostly earned through their own efforts creating or growing businesses. There are about 1,400,000 American household taxpayers who fall in the top 1% and who earn an average $1.2 million. There are 6.7 million in the top 5% and they earn on average $418,218 and they pay 58% of all income taxes.

So, we agree, 0.33% of all Americans should be responsible for paying to increase Social Security benefits for everyone else? Keep in mind that you only need to earn about $160,000 a year to be in the top 5%.

The Social Security system was designed to be paid for by participants and their employers with the eventual benefit based on earnings and years of participation. In addition, the formula that provides the monthly benefit favors lower income workers by providing a higher benefit relative to Social Security taxable earnings. In other words, higher income Americans subsidize lower income.

The only thing wrong with Social Security is the failure of every Congress in the last twenty years to meet its obligation to keep the program sustainable by making minor changes over the years to adjust for the changing population, life expectancy, etc. Every member of Congress knows the facts and has seen the urging of the Trustees to take action.

If Americans want a higher future Social Security benefit they should all be willing to pay a bit more during their working years rather than expecting others to fund it thereby turning Social Security into another form of welfare.

And while we are on this topic, how much more Social Security is enough? What does increasing benefits mean exactly? 5%, 10% more, giving Americans 70% of their pre-retirement income?

It’s nice to throw around buzzwords like “more,” “increase,” “wealthy,” “fair share,” “free” and the like. It’s quite another thing to live in the real world and be honest with people.

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32 replies »

  1. Let’s see, taking money from those who earned it (in various ways) and giving it to others “deemed” necessary, needy, and assumed they are owed this is called “Socialism” I believe.

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  2. RD, I think it is great that a person can make 6 figure income and save for retirement or have a company pension, but get real, they earned it. Maybe they did maybe they did not. We all know that the people at the top of any company are figure heads and the people below them do most all the work. I found this to be true in the USAF, when I made MSGT at 13 years of service my number of meetings and paperwork increased, but I was told that I could no longer work on the electronic equipment. My actual workload decreased, but I was responsible for 130 workers and 45 million dollars of electronic equipment.

    My 88 year old mother gets $770 per month SS and $93 in SNAP and every time she gets a COLA her SNAP benefit goes down, so much for helping the poor.

    Melton Friedman called Social Security the biggest wealth transfer scheme to the rich ever devised. Billions of dollars in debt to the rich who do not need it to stay out of poverty or to live well in retirement.

    I am not anti rich, but I realize that the lower paid in our society provide the labor to make them rich and we should make sure that no retiree should live a substandard life in retirement, no matter what their income was while they were working, even as a stoker at Walmart.

    So if means testing comes to SS so be it. My guess is the payroll tax will be increased to cover the coming shortage and we will just make the current workers and employers pay for it, just as it has always been.

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    • There is work and there is work. To say those at the top don’t work is not fair or accurate. The folks below them could not work or perhaps wouldn’t have jobs if it were not for the people who create, plan, fix strategies, raise financing, create marketing plans, etc. and the people at the top could not succeed without the day to day workers. Labor does not make people rich, their creativity does. When it comes to anything manual I am incompetent, but I managed 45 people and $200 million in benefit plans, negotiated union contracts, etc. at the same time I realize I could do none of that without the skills of the union workers. I started out at the very bottom and over fifty years got close to the top, I paid SS benefits for over sixty years. The notion I should not receive a benefit based on what I paid in taxes is alien to me, sorry.

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      • I did not say those at the top do not work, I said their ability to make money relies on the labor of lower paid workers. I realize that there is no free lunch, but if SS needs to be fixed the ones at the top of the economic ladder should take the biggest cut, as they are in a much better position to maintain their standard of living.

        No one has paid for their SS benefit, the money we paid in payroll was spent on the retirees that left the workforce. Any extra was spent by the government. The SS trust fund bonds do earn interest (paid by the government) but as they are cashed to pay benefits the government has to borrow money, making future generations poorer. This needs to be fixed so SS is truly self funded by taxes and any extra should be invested in the stock market so we do not continue to add to the national debt.

        Liked by 1 person

      • There is no need for any cuts. There are many easy fixes to make the program sustainable. If congress had done its job gradually over the last 20 years it wouldn’t even be an issue. In an upcoming post I outline one was to fix it, but there are many combinations.

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      • I have no faith in Congress and the cuts are coming if they do nothing. I am a realist when it comes to Congress
        You know the Ds will cut the program for the richest retirees and get uninformed voters to vote for them. Those evil Rich that the Ds want to blame for all our problems.

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      • You made HUNDREDS of thousands of dollars per year (or MILLIONS) and you want us to believe you DESERVE Social Security benefits which people who earned 5 to 15 dollars an hour get 1k a month while you made that much in an HOUR!

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      • RD – Your theory that raising the minimum wage will result in higher prices and reduced welfare benefits is flawed. Every worker should be paid a wage that gets rid of a need for a welfare system for the employed worker and his family. We are the richest country in the world and companies should pay their workers wages that put every family above the poverty level. Getting people off welfare is a good thing. If raising wages causes inflation, then no one should ever get a pay increase, then we would not have as much inflation.

        View story at Medium.com

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      • I think you misunderstand my point. What I said was is if the MW is simply raised to $15 and those workers stay in their jobs they are no better off because their cost of living goes up as well. If we define poverty and means tested benefits at a certain level, won’t that level rise if the minimum wage is increased by over 100%? The poverty line keeps moving higher does it not?It’s like saying I’m giving you a $100 a month raise and I’m increasing your health insurance premiums by $100. Are you any better off? On the other hand, if you get a better job and receive a $200 raise you are ahead of the game. The real key is a better job and/ or improved productivity. You can’t simply pay higher wages and expect to get anywhere because inflation will eat up the gain. You can only get rid of welfare if you have a skilled, productive workforce and the jobs to keep them busy and, of course, the assumption each workers wants a productive job.

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      • RD – Inflation does not move up the same as the minimum wage increase, as the article I posted shows. I know it is not going to happen, but let us say a minimum wage worker goes from making $7.25 per hour to $15 per hour, over 100% gain. Inflation is not going to go up 100% the next year, so the worker is way better off than when he was making $7.25. And when he is able to get SS benefits it will be way more than if he had stayed at $7.25 even if he loses some welfare benefits. He might even now be able to put 10 to 20 % into an IRA, not going to do it at $7.25.

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      • Of course it’s not going up the next year, if the minimum wage doubles and that person now makes over $30,000 a year do you think all the measures for food stamps, Obamacare subsidies, etc will or should stay at today’s levels? No, they will adjust to reflect the new minimum income. And what will happen with say teachers who now make $17.00 and hour, will they be happy staying at $17.00 while the dishwasher now makes $15.00 and not $7.25. Over time the $15 simply becomes the old $7.25 and the unskilled worker is no better off.

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      • “Jratt, your posts are all over the place, are you on the left or right side of the political spectrum?”

        f4j7 – Why do you have to put everyone in a Left or Right box? I am liberal when it comes the RIGHTS of our citizens and conservative when it comes to spending. I never made more than $25,000 during my working years. I retired from the USAF in 1995, I have an Avionics background working on F-106 and F-15 Jet Fighters and retired from the workforce in 2006 at the age of 50. The last 2 years of work I delivered news papers in Montana -27 below temps during the winter. I do not blame anyone for my lot in life, I have never missed a meal or owned more than one car at a time. Raised four children without any welfare assistance.

        I was lucky to grow up in Southern California in the 60s and 70s, but could not afford to live there today. I learned the skills to work on cars from my father, who was a automotive body shop / mechanic. I do all the repair work needed to keep my car going. I have not had a car payment since 1984, always saving up and paying cash for used cars.

        The biggest problem I see in our society is low wage retail work is not valued correctly.
        As long as the employee is making money for their employer they should be paid a good wage. $15 per hour should be the minimum wage, or are the wage increases only for the boss and middle management. Minimum wage has been held low by big business. No raise in the federal minimum wage since 2009 proves it. Since 1995 the federal minimum wage has gone up 42%, but price inflation has gone up 60.84%.
        The government should not need to have a welfare system in a country as rich as the USA, to subsidize billion dollar companies like Walmart, Amazon and others.
        Why is there more corporate welfare spending in the federal budget, than welfare spending on the poor?

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      • Jratt, I could care less what you want to say your party affiliation is, but it’s important to be honest which way you “lean”, if you believe 7$ is too low for the minimum wage you “lean left” if you believe gun buyers should have to pass a background check you “lean left”, if you don’t think any type of abortion should be legal, you “lean right” The problem with being socially liberal but fiscally conservative is there is NO candidate that will fill both of those needs, end of story. If you never made more than 25k, you should lean left because you should have empathy for Americans making 5 to 15$ an hour. My gosh you RETIRED at FIFTY? Most Americans who make 25k arent’ even offered persions or 401k with their employment and most will probably NEVER be able to retire, let alone at 50! I agree that customer service, retail, and restaurant work is not valued or paid a fair wage. Your position of being for 15$/hour minimum wage is a VERY liberal position FYI. And tying the minimum wage is also a liberal position (though I also agree with you on that) Since you don’t believe in welfare due to employers underpaying their employees, what do you feel about healthcare? Should we offer all Americans a “Public Option” to “buy in” to the Medicaid program? Also, many people don’t know this, but most jobs that pay 5 to 15 dollars an hour don’t offer any paid time off or any other benefits.

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      • f4j7 – You have a comprehension problem and assume way to much. The employers not paying a living wage has caused the creation of the welfare system. I think that is what big business wanted all along. After all, look who got bailed out in 2008, not the homeowner.

        I am not against it, in today’s economy. I am for business to pay their employees more so we no longer need a welfare system. The welfare system is nothing but a feel good jobs program, for the lucky few who administer the program. I applied for food assistance in 2015 with income of less than $20,000 and was told I have $50 too much per month, because my home is paid off. They told me if I had $100 in medical expense per month they could give me $15 per month food assistance, CRAZY! I only applied because I had read an article that if you were 60 there was no work requirement and I was 2 years away from getting Social Security.

        Now with my Military Pension and Social Security, I have more monthly income than I ever had while working, sort of. The truth is because of inflation my $36,504 annual income in 2019 equals about the same buying power of my $16,840 1988 income. Inflation is really hurting the low income family, that is why minimum wage should be indexed to inflation.

        I read an article recently that the Social Security System was started and big business went along with it because they thought it would run the small guy out of business. That is why the self employed had to pay the whole FICA tax, they thought workers would chose to work for an employer rather than pay the Whole FICA tax.

        As far as abortion – it is murder plain and simple.

        Healthcare should be provided by the employer with tax deductions for providing it and subsidies to small employers to help them offer the same plan to everyone. But until we have truth in what any healthcare service really cost, the system is SNAFU no matter Who pays for it.

        “The problem with being socially liberal but fiscally conservative is there is NO candidate that will fill both of those needs, end of story.”

        That is your and many peoples problem thinking the government politician is going to do anything to make our lives better, they are not.

        We are no longer a government of by and for the people, we are a government of by and for the corporations, special interest and political elite. We have the worst government money can buy.

        I do not rely on the government to do anything to make my life better, that is my job.
        Too many of our problems are caused by government and you think the crooks in DC are going to fix this mess anytime soon, that is a fool’s errand. More government = less freedom, period.

        I hope this clears things up for you, Have A Merry Christmas and Happy New Year.

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      • Did you read my theory that merely raising the MW will not make any difference for unskilled workers because everything will adjust to that wage including eligibility for government programs.

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  3. The cliche that demographics is destiny is exaggerated, but uncomfortably true. Social Security worked well when it was introduced, when there were 12 paying in, for every one taking out. Then, it still worked well for decades when there were 7 paying in, for every one taking out. Now? I believe it is 3 paying, for every one taking out. And that is decreasing to 2 as the bottom half of the baby boom generation qualifies for Social Security.

    What is past is not prologue.

    The system will both by financial necessity and political expediency be more wealth transfer and less “fair retirement” for all.

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  4. Since Social Security is a welfare program, then lets get rid of the payroll taxes and get rid of qualifying for Social Security and just raise everybody’s income taxes to cover the increase in welfare costs. We should also stop calling it Social Security and call it the Old People’s Welfare Fund.

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    • The payroll tax is not ever going away. Employers would love it. It would save them 6.2 % of payroll costs. If the Congress was smart, since they just gave business the biggest tax cut in history, they should raise the payroll tax on employers to cover the coming shortage.

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      • All it would take even now is for the payroll tax to increase 2.78% half paid by employer and worker. Imagine if that had been done gradually over 20 years. Actually the percentage would have been less.

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  5. the formula that provides the monthly benefit favors lower income workers by providing a higher benefit relative to Social Security taxable earnings. In other words, higher income Americans subsidize lower income.

    Not exactly true – Since no one has paid for their total SS benefits, a more correct statement would be current workers are paying for everyone’s SS benefits and the trust fund and taxes on SS benefits make up any shortage.

    I would like to see the SS system fixed, but I am not sure Congress will do it.
    Means testing is coming, there is no reason that someone with $100,000 per year in retirement income should get a SS check, no matter how much was paid in taxes. Of course if income changes they would be able to get a SS benefit.
    Since no one has paid enough in taxes to equal what they will receive in over a 20+ year retirement.

    I know a lot of people do not think that is fair, but the SS system was started to keep retirees out of poverty, not provide a windfall to the rich.

    Also, if Congress fails to act by 2034 we can all just take a cut in SS benefit and then apply for any of the other programs the State and Federal governments have for the poor.

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    • You are mixing up two different things. The fact is that when calculating the benefit the formula gives a higher benefit at the low end of the income amount. They are called bend points. If most of a persons average income for SS purposes is above the bend points they get a lower percentage in the calculation.

      If a person has paid SS taxes all their life and perhaps most of it at the maximum amount, why shouldn’t they receive their full earned benefit? What has any other income to do with it? They paid their fair share and more into the system even in retirement they pay via income taxes. Do you seriously think SS should be turned into a gigantic welfare program? You have a unique view of “fair” and what windfall may be. I have paid into SS since 1955 and still do today. I think I earned my share regardless of what other income I also earned.

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      • Other income has everything to do with it. SS was set up to keep retirees out of poverty not provide a windfall to workers who made several times more than what the average worker made during their working careers.

        Not everyone can be a CEO or VP – There just are not enough of those jobs.
        Many companies no longer provide a pensions for workers. But workers that are covered by a pension should get a lower SS benefit.
        Should self employed who pay both halves of the SS tax get a bigger check, maybe.

        I would be taking a cut in my SS benefit, but i believe the best thing Congress could do is change SS so each worker gets the same check each month.

        Yes I do believe for the nations workers SS should be and has always been a Welfare System
        that is just called a retirement system. Benefits are earned after just 10 years of work and there are survivors benefits, you cannot really call it a retirement system any longer.

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      • Why? Should SS now move from an earned benefit to welfare? Regardless of income the benefit is based only on the amount taxed and then the formula to calculate the benefit is skewed to provide a higher proportional amount to lower income workers.

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      • you’re too busy thinking about your own shoes instead putting yourself in those that made 5 to 15 dollars an hour, it’s not just that they were drastically under paid by their employers, it’s than the less you’re paid, the more likely you are not given ANY benefits with your employment, which includes pension and 401k. So not only are poor and low income people suffering with a minimalistic existence now, they will if they go on SSDI or SS.

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    • JRATT – I agree that Social Security was originally meant to keep widows from dying in the streets. If one assumes that Social Security is only meant to lift one out of poverty (or the street) then nobody should need more than $12,140 / year for a widow and $16,460 for a retired couple. This figure is based on what the US poverty income is for 2018. I realize that most retirees would be forced from their homes and could not afford their Medicare co-pays, but that is the government’s figure for poverty.

      The $12k figure is the only thing that is fair. That was the promise of paying into Social Security was all about. Would it be fair to make an income test based on that and only getting the amount money you need to be lifted out of poverty even after paying in all those years?

      Giving money via means testing is pure welfare. Paying into a program with a promise of getting something back is a contribution program which was why you have to qualify for Social Security. Welfare you just prove that you are poor.

      Why should a person who paid more into the program get nothing under your suggestion? Since Congress has messed up the original intent of Social Security with COLAs and expanded benefits, using a means test would only change the program to a welfare tax on the rich to give to the poor and therefore you do not need to qualify to be taxed.

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      • Dwayne, we all pay taxes that support the government, but may not see any direct benefit.

        “Why should a person who paid more into the program get nothing under your suggestion?”

        Because they have other retirement income their SS benefit should be less or no more than the average amount, not more. SS is a welfare system period, as know one has paid for their total benefit.

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      • And how did they get that other retirement income. Perhaps working for it, saving, taking risk? I just don’t get the idea that (except poor and otherwise truly needy and unable to do for themselves) other Americans are entitled to more from those who have earned their money fair and square.

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      • Dwayne, you DO realize the bottom FIFTY percent make 15$ an hour or LESS, right? Which means even IF their employers offer 401k’s they can NOT afford to participate in those programs because their income is TOO LOW to have room in their budget to contribute, which means they are 100% DEPENDENT on what their social security check will be!

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