I have yet to read all of the contents, but one thing I did notice is that the proposal for federal employees to “contribute” more to their pensions is really a giveback of salary (because of the operation of the Civil Service Retirement and Disability Fund). I guess “Third Way” got its way in part (1.2% rather than 5.8%). But knowing how this town works another time that the media whips up the public about federal employees, watch for the so-called contribution to increase. [With all of the givebacks and pay freezes, federal salaries may never keep up with the cost of living in this expensive country.]
Will the plan get a majority vote and get a expedited vote in Congress? I do not know. Maybe some of the very bitter provisions can be tolerated if (very big “if”) every income class participates in addressing the lack of revenue problem.
A decade ago, September 11, 2001, the day was at first a very beautiful late-summer day. I was downtown in an office. As I started to work (about 8:45), I noticed that I could not get on the Internet. The management of the business did not inform the employees of any external problems, and so I figured something was wrong with the company’s Internet connection. It was not until mid-morning that a colleague had said planes had hit the World Trade Center in New York City. I later found out that the Pentagon was struck by an airplane as well. There were rumors that another plane was in the air heading for another target, rumors of other places that were hit, and other confusing rumors.
It was an unusual feeling; the workday was over. I was able to get in touch with family (some of whom lived in the New York City metropolitan area), and I e-mailed friends who had just moved to the New York City area (they were fine).
Later in the morning, I was able to get on the Internet and was able to see the terrible extent of the damage done by the airplane hijackers that day—people jumping out of the top floors of the burning World Trade Center towers to certain death, damage to the Pentagon, a plane crash in Pennsylvania, workers at the Capitol running out of its buildings. Rumors lessened and facts increased. I was dismissed from work at about 1:00 p.m.
When I left the office, the roads were tranquil. (I had missed the earlier traffic jams as people sought to leave the city at the same time.) As I took the subway (basically empty), I was able to see the smoke from the Pentagon from the windows of the subway car.
Ten years on, many things have happened, yet I still remember the events of that day relatively clearly.
President Barack Obama’s proposal to extend the Federal Insurance Contributions Act (FICA) tax cut harms the idea that FICA is a special-purpose tax to fund Social Security and Medicare. I feared the President’s proposal last year, knowing that his further proposals to extend would happen. Currently, the Congress requires the Treasury to arrange for an equivalent amount of cash to go to FICA-funded programs, which makes up for the “loss” due to the FICA tax cut. [P.L. 111-312, sec. 601(e)]. This tax cut seems to be a neat way of having the increase (not much ($934 on yearly average)) of cash to the citizenry, while having the Treasury ensure that the contributions to the FICA-funded programs are not reduced.
However, what the President has done is introduce the idea that the FICA tax is not a special-purpose tax for Medicare and Social Security, but rather the notion that FICA can be used for general current-revenue purposes. This change is subtle but very dangerous. While the current President can be said to support Social Security and Medicare, this very same FICA tax cut could be used to force cuts or substantially change both programs (by a future President who can be said to be opposed to FICA-funded programs). Therefore, I became seriously concerned when the so-called Democratic President used a GOP talking point to attempt to shame GOP congressional members to support an extension of the FICA tax cut (emphasis below mine).
Pass this jobs bill, and the typical working family will get a $1,500 tax cut next year. Fifteen hundred dollars that would have been taken out of your pocket will go into your pocket. This expands on the tax cut that Democrats and Republicans already passed for this year. If we allow that tax cut to expire — if we refuse to act — middle-class families will get hit with a tax increase at the worst possible time. We can’t let that happen. I know that some of you have sworn oaths to never raise any taxes on anyone for as long as you live. Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away. (Applause.)
The President is seemingly using the economic crisis as a way to begin the process of breaking the overwhelming popular support of the FICA-funded programs. The issue that some wealthy politicians face is the enduring support of FICA-funded programs. Because of how the U.S. manages its cash–using FICA funds in general revenues and issuing a nonmarketable Treasury bond (a promise to repay) in exchange for the cash–general revenues that are artificially low (due to the FICA borrowing) will have to be increased in order to pay the bonds redeemed by FICA-funded programs when the number of beneficiaries exceeds the proceeds collected from the FICA tax.
The President, when he deals with FICA-funded programs, must be carefully observed.
I think that it is beneficial to get as much information about the politicians elected to represent the citizens of the United States. I have used information from the Open Secrets website to see the net worth of the members of the Joint Committee on Deficit Reduction (JCDR) and other members of Congressional leadership.
Having completed posting on the Third Way benefit-change proposals, I will now begin to evaluate the revenue-increase proposals.
First on the list is the idea to impose benefit taxes on higher-income seniors. Third Way proposes to reduce benefits on this group and then turns around and taxes the all benefits above $50,000. I don’t see anything wrong with the current system.
Social Security is not a welfare program should not be adjusted to become one. The same response is true for the “idea” of means testing benefits—no. This move would be a sure way to diminish confidence in the program and turn it into a welfare program, which it is not. If a person pays into the Social Security program, they should receive proceeds from the program. If outside income exceeds $34,000 (or $44,000 for couples), that amount would be taxable under the current system.
As I wrote in the previous post, Third Way advocates working up to 70. I stated previously that people should enjoy life activities before the hardships of aging set in.
In the Washington Post today, yet another reason why additional years of work should not be so forcefully advocated.
Many industries find themselves in a quandary. They often need older workers for their expertise, yet they also may need to accommodate their physical disabilities and their desire for more flexible schedules. And as workers stay on the job longer, they may need training in new technologies or work procedures.
In addition, the whole idea is to transfer the knowledge of the present working generation to the generations behind them. This article indicates that that effort is not happening, and only bad results can occur because of it.