Exploring economic inequality - Advocating for the bottom 50%
Raising Social Security’s retirement age would slam low-wage workers yet again - Karl Polzer/CCSE
Thanks to the Washington Examiner for publishing this op-ed, which provides a perspective typically ignored by Washington's elite and both political parties. The article is based on this study:
A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a
Particularly Bad Deal for Low-Wage Earners - Society of Actuaries
For life expectancy, money matters – Harvard Gazette
"You might expect two or three years of life differential ... but 10 or 15 years … it’s an immense difference"
"While researchers have long known that life expectancy increases with income, Cutler and others were surprised to find that trend never plateaued...
"Cutler and Chetty then examined how life expectancy changed over time, and found that while life expectancy has increased for the wealthiest, it has edged up only slightly for low-income Americans...
"'The increase has been approximately three years at the high end, versus zero for the lowest incomes,' Cutler said. 'This is important, because it has major implications for Social Security policy. People say, "Americans are living longer, so we ought to delay the age of retirement," but … it’s a little bit unfair to say to low-income people that they’re going to get Social Security and Medicare for fewer years because investment bankers are living longer.'
"When they laid the data over maps of the United States, Cutler and Chetty again found unexpected results, with low life expectancy concentrated not in the Deep South, but across the Midwest Rust Belt.
"'What emerges strongly is that there is a belt from West Virginia, Kentucky, and down through parts of southern Ohio, through Oklahoma and into Texas — it’s not a story of the Deep South,' Cutler said. 'The variability in where high-income people live longest is not as large and is much less geographically concentrated. You don’t see this same type of belt — it’s scattered all over.'"
Implication (Manchin & McConnell alert): The pain resulting from raising the standard Social Security retirement age would fall most heavily on particular low-income states and regions.
Britain has endured a decade of early deaths. Why? - Economist
"Life expectancy in Britain, as in almost all other rich countries, had been rising for nearly two centuries...
"Two features make this figure even more worrying. Death comes mostly when people are old. But the slowdown in life expectancy has occurred across all age groups. Mortality rates have stalled for infants, and risen among young adults and the middle-aged. Death rates for 30- to 49-year-olds have steadily increased in Britain since around 2012, in sharp contrast with neighbouring countries.
"Although the deaths have been spread across generations, they have not been spread across the income spectrum. Life expectancy has fallen among the poorest in society but risen for the richest. A poor English girl could on average expect to live 6.8 years less than a rich girl in 2011, but 7.7 less in 2017. For boys, the gap increased from 9.1 to 9.5 years over the same period."
A Black family fights to get their kids back from Tennessee Department of Children’s Services - TN Lookout
"One month after the Tennessee Highway Patrol pulled the couple over, their five young children remain in state custody."
Need a break taking care of the kids? Try driving a car with "a dark tint" slowly from Chattanooga to Knoxville with the kids in the back seat and a joint on the dashboard. The Volunteer State can help.
In Florida, showing mental health struggles could get a child detained - WaPost
"Advocates say the Baker Act, designed as a measure of last resort, is not used that way. The result: Kindergarteners can be forcibly committed to psych centers for exams."
Sunday, March 19, 2023
"But many who are first will be last, and the last first."
Arizona Proposal for Automated Income Tax Cuts Sounds Benign but Would Cause Great Harm - CBPP
"Income and wealth inequality has grown in Arizona, while the state’s legislature and courts have recently taken several actions that shift even more of the state’s income to these wealthy interests. Policymakers and the courts ignored public will after Arizona voters approved increasing taxes on millionaires to fund public schools. Instead, the legislature cut income taxes, particularly for high-income people, and restricted voters’ ability to ever again tax wealthy people via the ballot box."
2022-2023 Arizona State Income Tax: Rates, Who Pays - NerdWallet
Whitmer signs bill to boost EITC, restore retirement tax break - Michigan Radio/NPR
Historic highs in employment for people with disabilities: An unexpected pandemic outcome - Journal of Spinal Cord Medicine
"While much attention focused on the risks of COVID-19 infection and the social, emotional, and psychological consequences of lockdowns and mandatory isolation, in the U.S. many people with disabilities realized newfound opportunities as employers faced widespread labor shortages."
Wealthy Executives Make Millions Trading Competitors’ Stock With Remarkable Timing - ProPublica
Fire the Fed - Matt Stoller/BIG
"Key bad guys in the Silicon Valley Bank saga are at the Federal Reserve. It's time to end the era of central bank supremacy and fire the Fed as our most important bank regulator."
But a thousand economists with PhDs can't be wrong!...Where's Wright Patman when you need him?
The Silicon Valley Bank Failure Should Terrify the Federal Reserve - Desmond Lachman/AEI
Treasury Secretary Yellen says not all uninsured deposits will be protected in future bank failures - CNBC
"Treasury Secretary Janet Yellen told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system."
In the wake of a statement like this, one might expect capital to move from smaller to larger banks.
Wall Street banks will put $30 billion into beleaguered First Republic - WaPost
Moral hazard or creative destruction? - Michael Roberts
Interesting history and analysis. Maybe the gov could design a way to randomly bail out enough failed banks to stabilize markets while letting enough flounder to reduce moral hazard? :)
To repeat, seems like what we have is socialism for the capitalists. And creative destruction for everyone else.
Creative Destruction: Out With the Old, in With the New - Investopedia
Another Predictable Bank Failure - Joseph Stiglitz/Project Syndicate
Rate of women dying in childbirth surged by 40%. What's to blame for these preventable deaths? - USA Today
Pregnancy-Related Deaths: Data from Maternal Mortality Review Committees in 36 US States, 2017–2019 - CDC
"Over 80% of pregnancy-related deaths were determined to be preventable."
Maternal Health:Outcomes Worsened and Disparities Persisted During the Pandemic - GAO
Maternal Mortality: Trends in Pregnancy-Related Deaths and Federal Efforts to Reduce Them - GAO
Scroll down for report on how states are expanding Medicaid postpartum coverage.
Expanding Work Requirements Would Make It Harder for People to Meet Basic Needs - CBPP
Total National Work = Paid Work + Unpaid Work (especially raising the next generation).
Source: underpaid economist, 2023
Congress’ failure to reup expanded child tax credit displays longtime favoritism toward higher income - CCSE
"If lawmakers decide to add a work mandate, it could be softened to require only part-time paid employment for low-income single parents who have the hardest time earning a living wage since they have no partner. Alternatively, low-income parents facing work requirements could be provided with adequate subsidies for childcare, which incidentally would be far more costly for taxpayers than the expanded 2021 credit amounts.
"Sen. Romney and other leaders realize that work does not have to be paid to have great value to a society. Raising children is hard work – and perhaps the most important contribution that parents make to the country’s health and wellbeing. Having enough time to raise their children should not disqualify a mother or father from getting government assistance that better-off parents receive."
There is finally bipartisan consensus on reducing maternal deaths - Leana Wen/WaPost
State Efforts to Extend Medicaid Postpartum Coverage - NASHP
"This interactive map and chart summarizes proposed and approved legislation since 2018, Medicaid waivers and state plan amendments, financial estimates, and other initiatives designed to extend coverage during the postpartum period.
"Under the Consolidated Appropriations Act of 2023, the 12-month extended Medicaid postpartum coverage option has been made permanent. This option was created by the American Rescue Plan Act of 2021, and previously expired in 2027. Now once states take up the option to extend the postpartum period from 60 days to 12 months, they will continue to receive federal matching funds."
Unfair Cap Means Millionaires Stop Contributing to Social Security on February 28, 2023 -CEPR
"Ninety-four percent of workers are paid less than $160,200 per year, so they pay the 6.2 percent social security payroll tax on all of the paychecks they receive in 2023. But workers who earn over $160,200 pay no tax on their earnings above this level. For a millionaire, only about 1 percent or less of their total earnings go to supporting Social Security. Despite earning much more than the average worker, a millionaire’s effective tax rate is far lower than the average worker’s. As a result, the burden of supporting Social Security falls most heavily on working-class and middle-class people."
‘That’s how capitalism works,’ Biden says of SVB, Signature Bank investors who lost money in failed banks - CNBC
Really? Another soft landing for 'risk takers' operating the US financial casino. Meanwhile, the Fed amps up risk people at the bottom will lose jobs, homes, means to pay bills and raise families...
Socialism for capitalists. Capitalism for everyone else.
Big Tech wins unfair advantage over American workers in SVB scandal - NY Post
With demands for a bank bailout, Silicon Valley shows its 'small government' mantra was just a pose - msn/LA Times
Billionaires, Buybacks & Medicare: How Biden’s 2024 Budget Outlines Trillions Of Dollars In Proposed New Taxes - Forbes
"The budget is not expected to make its way through Congress, according to Senate Republican leader Mitch McConnell. McConnell noted that because Republicans hold a House majority, the budget 'will not see the light of day,' according to Reuters."
Stock Buyback Excise Taxes: What We Know And Don’t Know - TPC
Biden’s making gov’t discriminate by race — he needs to stop - NY Post
For the record, "equity" on this web site denotes fair treatment, ownership of property, freedom from bias or discrimination, and inclusion of everyone in the yield of the economy.
An End to Airline Consolidation? - Matt Stoller/BIG
Virginia, West Va. Kroger employees allege computer-generated wage theft - Virginia Mercury
"Class-action suit, one of four nationwide, filed in Richmond in January."
Nurses march in Toronto to demand better wages, staffing, working conditions - CBC
Registered nurse salaries in Ontario
New Mexico Has Lost Track of Juveniles Locked Up for Life. We Found Nearly Two Dozen. - ProPublica
"New legislation would require the New Mexico Corrections Department to help schedule parole hearings for prisoners given life sentences as children. But the agency wasn’t aware of at least 21 'juvenile lifers' in its custody."
"...New Mexico, despite having banned the death penalty for children three decades before the Supreme Court did, had not yet addressed extreme juvenile sentencing. (Twenty-six other states and Washington, D.C., have done so.)"
New Study Finds 1% Recidivism Rate Among Released Philly Juvenile Lifers - Montclair State University
Va. prison reform advocates fear approved solitary confinement bill won’t lead to meaningful change – Daily Press
Sunday, March 12, 2023
Another Norfolk Southern Train Derailed as Its CEO Testified Before the Senate - truthout
Congress, this isn't Ayn Rand's railroad.
Inequality Costs Social Security Trillions - CounterPunch
Black Americans view capitalism more negatively than positively but express hope in Black businesses - PEW
"Isms" can imply a sense of worship.
Inequality is behind central bank dilemma - Martin Wolf/Financial Times
Wolf's analysis still holds up. If clicking this link leads to a paywall, try goggling the title of the article.
Central banks should better communicate monetary policy’s distributional effects - IMF
Source: Fed Distributional Financial Accounts
What Wealth Inequality in America Looks Like: Key Facts & Figures - St. Louis Fed
"Based on past research, here are four recommendations that could help families build wealth.
"Help families build a rainy-day fund...
"Promote early-in-life investments...
"Examine college costs...
"Support all forms of housing.
"Increase the supply of affordable rental housing while promoting paths to sustainable homeownership. Homeownership should be treated as a “capstone” financial event, not a first step; building a diversified balance sheet—with low levels of consumer debts and high levels of liquid savings—should precede and help sustain homeownership."
U.S. household wealth rebounded to $147.7 trillion in 4th quarter - Reuters
Most low-income households have zero net worth or owe more than they own.
Missing Middle Plan Wins Unanimous Approval From Planning Commission - Patch
As high-income Northern Virginia leaders begin contemplating making room for what's left of the middle class, don't forget low-wage people including those who work at restaurants, supermarkets, nursing homes, warehouses and childcare centers, and as construction workers, drivers, maids, and grass cutters. Judged by their lack of action on providing affordable housing for workers like these, county and city officials across the Potomac from the US capital demonstrate this attitude: "We want you work here, but don't think about living here." (Contact Fairfax County or Falls Church and ask what kind of housing assistance or advice they have for full-time workers making $35,000 or less a year.)
Idaho Childcare Workers Strike Statewide – As Democrats Dither, Virginia Bus Drivers Strike Remains Deadlocked - Payday Report
News Blog: Feb. 10 - March 9, 2023 - Click here.
Israeli reserve soldiers, veterans and activists protest outside the Supreme Court in Jerusalem, 2/10/2023. (Yonatan Sindel/Flash90)
A mass wave of Israeli army refusal could be a transformative moment - +972
"Civil resistance against the government has put the Israeli military in an unparalleled crisis, presenting an opportunity for those fighting apartheid."
A couple perspectives on babies and the economic bathwater in China:
China’s collapsing birth and marriage rates reflect a people’s deep pessimism - Nicholas Eberstadt/AEI/WaPost
China and the ‘experts’ - Michael Roberts
“Eye-popping” executive salaries led these hospitals to lose their property tax benefits - Lown Institute
Hospital Raises Prices if You Are Uninsured - Dr. Eric Bricker/AHealthcareZ
Another example of how US hospitals gouge uninsured patients and those without the power, knowledge, connections, or money to push back.
Labor’s Struggle With Anti-Monopoly - American Prospect
Summer Lee Mocks AFL-CIO Chapter - 3 Million French Workers Strike - French-owned Company Unionbusts Va. Bus Drivers - Payday Report
One of US’s Largest Public Universities Could See First Strike in Its 257 Years - truthout
300,000 federal workers confront Canada’s union-backed Liberal government in struggle for real-terms pay increases - WSWS
France comes to a standstill as livid workers protest plan to increase retirement age - CBC
Dear Sens. King and Cassidy: Before you finalize your Social Security reform plan please read this:
"A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a Particularly Bad Deal for Low-Wage Earners" - Karl Polzer/Society of Actuaries
Why is life expectancy in the US lower than in other rich countries? - Our World in Data
A bipartisan group of Senators is talking about raising the retirement age on Social Security - Semafor
As Social Security reform talks heat up, changes to the retirement age, payroll tax may be on the table - CNC
Biden to tax high-earners to save Medicare - Reuters
Biden to unveil plan averting Medicare funding crisis, challenging GOP - WaPost
"The White House would raise taxes on high earners and reduce government payments for some prescription drugs in a bid to keep the program stable."
CRFB Welcomes Plan to Put Medicare Solvency On the Table
What Income Level Is Considered Middle Class in Your State? - msn
The Gospel of Deglobalization: What’s the Cost of a Fractured World Economy? - Raghuram Rajan/Foreign Affairs
"Deglobalization is well underway...but the costs of giving up on globalization are immense and will be borne disproportionately by...people who live outside the developed world, the young, and future generations."
Billionaire investor Mark Mobius says he cannot take money out of China - Fox/Reuters
UK PM Sunak vows to deport all illegal immigrants: ‘You will not be able to stay’ - Fox
"Sunak says illegal immigrants will not be able to apply for asylum."
Haaretz: Israel has erected ‘a formal, full-fledged apartheid regime’ - Middle East Monitor
A mile-long line for free food offers a warning as covid benefits end - WaPost
SNAP cuts could lead to ‘hunger cliff,’ experts fear - The Hill
Dear Fed chair + economists: The sudden withdrawal of food subsidies may present an opportunity for research on the degree of influence changes in demand from low-income people have on food prices and inflation.
Note that while Congress and the White House are trying to increase the labor supply (in part by removing work disincentives) to drive economic growth, the Fed has been raising interest rates on the assumption that suppressing economic activity and increasing unemployment helps to drive down inflation. Higher costs for life necessities hit low-income people the hardest.
What happens to a vehicle when you press the brakes and gas pedal simultaneously?
It’s Time to Link Work and Food Stamps Again - AEI/Deseret News
A Quick Guide to SNAP Eligibility and Benefits - CBPP
SNAP: State by State Data, Fact Sheets, and Resources
SNAP Helps Low-Wage Workers in Every State
Sunday, March 5, 2023
Welcome To the Vegetable Garden of Europe – ‘The Greenhouses of Death’ - IPS
Spanish immigration pinata?
Who Stands for Freedom? - Joseph Stiglitz
"For decades, Americans have been led to believe that liberty is more or less synonymous with anti-government market fundamentalism. But, because this conception of liberty fails to account for the complexities of real societies, it cannot possibly deliver the 'freedom' it promises."
A cleaning company illegally employed a 13-year-old. Her family is paying the price. - WaPost
"...One blustery day last month, the girl’s stepfather, Manuel De la Cruz, arrived at the county courthouse in downtown Grand Island for sentencing in his own misdemeanor case. He had pleaded guilty to violating child labor laws by driving the middle-schooler to a dangerous job, a charge that carries a maximum penalty of six months in jail. His lawyer asked the judge to impose a fine.
"The judge, Arthur Wetzel, called the case “extremely difficult.” He accused Packers of “forcing young children to work on a kill floor.” He blamed the girl’s mother for obtaining the fake papers and collecting her pay. And he blamed “the elephant in the room, JBS,” for “hiring a cleaning company such as this.”
"“However, Mr. De la Cruz, you also are at fault,” the judge said. “To have a 14-year-old daughter employed eight hours before she’s expected to attend school under dangerous circumstances simply could not be condoned by this court.”
"The judge sentenced De la Cruz to 30 days in jail. After serving his time, court records show, he could be deported. Through his lawyer, he declined to comment.
"An officer’s handcuffs clicked open. At the back of the courtroom, De la Cruz’s 19-year-old stepdaughter sobbed. Outside, his wife and young children watched as he was led away.
The 14-year-old girl did not attend the hearing. For the moment, at least, she was still in school."
Legal and policy Qs for "the reasonable (hu)man": How is it possible, by visual inspection, for supervisors not to suspect that a 13- or 14-year-old female from Central America isn't an adult?
Is a $1.5-million civil fine sufficient deterrent for a $100-billion private equity firm to change the employment practices of companies under its control?
More immigration games? Here's one of the first pieces posted on this site:
"Let's Play Illegal Immigration Pinata."
BTW, these kids have shown they are hard workers. US employers should be happy to hire them once they are of age.
Leaked audio reveals US rail workers were told to skip inspections as Ohio crash prompts scrutiny to industry - Guardian
Norfolk Southern, rail union floated exchanging sick days for automatic track inspections - WSWS
Meanwhile, on the other side of the tracks:
Meet the highest-paid CEO(s) in America - msn
See any of your friends?
This is how the world's wealthiest people invest their money — from office buildings, to art, to crypto — according to a major survey of the super-rich - Business Insider
Starbucks Faces New Front in Its Labor Disputes: White-Collar Workers - Bloomberg
UAW Prez Vote Count Very Tight – After 58 Dead, Greek Rail Workers Strike – East Palestine Rail Union Says Workers are Falling Ill - Payday Report
Close of voting nears in UAW presidential run-off election - Reuters
"UAW officers previously were elected through a delegate system. Members approved direct elections in a 2021 referendum required as part of a 2020 Justice Department settlement to resolve a corruption probe which resulted in the incarceration of two former UAW presidents."
Maryland lawmakers push to accelerate $15 minimum wage increase from 2025 to 2023 - ABC Baltimore
"The 'Fair Wage Act' also includes an inflation buster, in that starting in 2025, all future wage increases would be tied to the Maryland Area Consumer Price Index."
The minimum wage is indexed for inflation in 19 states and D.C., meaning it is automatically adjusted each year for increases in prices. See:
EPI Minimum Wage Tracker
Reducing Child Poverty in the United States - Brookings Hamilton Project event
Well worth watching, Sen. Michael Bennet (D-CO), a leading advocate of expanding the child tax credit (CTC) to include all low-income families, begins this discussion (min. 11:10) by laying out values and ideas aligning with much of what's advocated on this website. Panels of leaders and experts then examine the economic impacts of child poverty and propose national and state-level solutions. Among these is a proposed compromise (see below) to bridge differences between Democrats and Republicans on expanding the CTC.
A proposal for an enhanced partially refundable Child Tax Credit - Brookings
The long-term effects of conditional cash transfer programmes: Evidence from Colombia - VoxDev
"Conditional cash transfer programmes can have long-term benefits by reducing crime, lowering adolescent fertility and increasing school attendance as well as formal employment."
Did Lina Khan Just Slash Insulin Prices? - Matt Stoller/BIG
Norfolk Southern Workers Win Paid Sick Days – Hyundai to Divest from Plant that Used Child Labor – BBC Reporters to Strike - Payday Report
While most salaried workers take paid sick time for granted, millions of hourly and tipped workers without it take a pay cut when they go to the doctor or hospital.
All Workers Should Have A Few Paid Sick Days. The President And Congress Can Make It Happen - HealthAffairs
Student Debt Forgiveness Benefit Distribution, FY2022
THE BIDEN STUDENT LOAN FORGIVENESS PLAN: BUDGETARY COSTS AND DISTRIBUTIONAL IMPACT - Penn Wharton Budget Model
A slice for everyone - except taxpayers and people who don't go to college.
Conservative Justices Appear Ready To Scrap Biden's Student Loan Plan — But It Might Survive Because Of Standing - Yahoo
"The conservative justices also took aim at the program for violating the court’s major questions doctrine. They asked how it could be possible for such a large program with a cost of $500 billion to not constitute a major question of 'vast economic or political significance.'"
"Hunger cliff" looms as 32 states are set to cut food-stamp benefits - CBS
SNAP Emergency Allotments State Fact Sheets - FRAC
"As of March 1, 2023, all Supplemental Nutrition Assistance Program (SNAP) participants will suffer cuts to their benefits each month as the temporary, pandemic-era SNAP boosts known as Emergency Allotments come to an end."
Find Your Local Food Bank - Feeding America
What are the basic priorities and big ideas in the 2023 Farm Bill debate? - Purdue University
Bread & circus: hunger games on Capitol Hill.
Worker Earnings, Service Quality, and Firm Profitability: Evidence from Nursing Homes and Minimum Wage Reforms - MIT
"...higher minimum wages increase income and retention among low-wage employees and improve consumer outcomes, measured by fewer inspection violations; lower rates of adverse, preventable health conditions; and lower resident mortality. Firms maintain profitability by attracting consumers with a greater ability to pay and increasing prices for these individuals."
How do rich people avoid taxes? Wealthy Americans skirt $160 billion a year in tax payment - USA Today
America's 401(k) millionaires have plunged by a third - CBS
A PPP plan for East Palestine - Sen. J.D. Vance/WaPost
It's good to see newly elected Sen. J.D. Vance stick up for the low-income community in his state struck by the toxic impact of the recent railroad disaster. But a program like the PPP would be the wrong response from Washington.
In a recent analysis of Covid stimulus spending, we noted: "Not only was the PPP riddled with fraud, the free “loans” to prevent businesses from closing and laying off staff were a "fire hose" of untargeted, unaudited spending. Much of it went to businesses and non-profits that already had adequate financing and to high-income people."
With the senator's colleagues in the House expected to hold further hearings to probe PPP fraud, direct aid to residents based on injury and need could help more. East Palestine residents also are gearing up for court battles including redress through the tort system.
Erin Brockovich urges East Palestine residents to document health conditions as some diagnosed with bronchitis - Fox
“They have upended people’s lives”: East Palestine residents speak out at Erin Brockovich town hall meeting - WSWS
EEA1 – the causes of current inflation - Michael Roberts
Capitalists, the state and globalization - Branko Milanovic/Global Inequality
"The tendency to create the world market is directly given in a concept of capital itself. Every limit appears as a barrier to be overcome…In accord with this tendency, capital drives beyond national barriers and prejudices as much as beyond nature worship, as well as all traditional, confined, complacent…reproductions of old ways of life. It is destructive towards all of this, and constantly revolutionizes it, tearing down all the barriers which hem in the development of the forces of production, the expansion of needs…” etc. (Grundrisse).
Reimagining The James Baldwin and William F. Buckley Debate - NPR
What Would It Take to Balance the Budget? An Update - CRFB
"In this analysis, we show that in order to achieve budgetary balance within a decade all spending would need to be cut by 27 percent and the necessary cut would grow to 78 percent if defense, veterans, Social Security, and Medicare spending were off the table. These cuts would be so large that it would require the equivalent of ending all nondefense appropriations and eliminating the entire Medicaid program just to get to balance...
"Of course, the task is made more feasible by adopting a combination of different types of spending reductions and reforms along with new revenue, user fees, and stronger economic growth. But even then, achieving balance within a decade is incredibly challenging. Enacting the $7 trillion CRFB Fiscal Blueprint, which puts all parts of the budget and taxes on the table, would reduce the 2032 deficit to 2.9 percent of GDP (down from 6.6 percent) when incorporating stronger economic growth effects – still far short of balance."
This analysis would be more helpful if it included options to raise revenue as well as to cut spending.
TPC estimates of making the Individual Income Tax and Estate Tax Provisions in the 2017 Tax Act Permanent, by ECI Percentiles, 2026
Comment: If the tax cuts lapse or are repealed, the bottom quintiles could be held harmless.
Opinion: Here’s a dirty little secret about Trump’s tax cuts - WaPost
"Here’s a dirty little secret about those expensive, unpopular Trump tax cuts: We’re probably stuck with them for good, because neither party seems to have the political courage to let them lapse. Not the Republicans who supposedly care about fiscal responsibility, and not the Democrats who are on record as hating them."
We'll see. What happens will provide a clue about whom the political parties are working for.
Striking it Richer:
The Evolution of Top Incomes in the United States (Updated with 2019-2021 estimates) -
Emmanuel Saez, UC Berkeley
"What’s new for recent years?
COVID 2019-2021: Record surge in top incomes fueled by capital gains"
"From 2019 (the year before the COVID crisis hit) to 2021. (the year the economy recovered from the crisis), real average incomes per family have grown by 13.1%.
"This very large growth hides substantial inequality as bottom 99% real incomes grew by only 4.1% from 2019 to 2021 while the top 1% grew by 46.6%."
Top 7 billionaires in US healthcare - Becker's Hospital Review
The Dysfunctional Health Benefits Market and Implications for US Employers and Employees - JAMA
Dysfunctional Employee Benefits Article in Journal of the American Medical Association - Eric Bricker, MD
Bottom line: Because they profit over time from rising health costs by getting a cut, health insurers do not function properly as agents (fiduciaries) for employee benefit plans or participants. This structural flaw is harming employees and families who can no longer afford health care coverage and hence care. Researchers recommend DOL change ERISA fiduciary duty standards to correct this contradiction.
Here's some past work on ERISA dealing with issues that developed when plan sponsors deployed "managed care" strategies to control health care cost growth:
"ERISA Health Plan Liability: Issues and Options for Reform" - GWU
"Emerging Issues in the Use of Binding Arbitration to Resolve Disputes between Individuals and Health Plans" - GWU ... (arbitration update)
Pre-ACA overview of interplay of ERISA and state law: "ERISA and Variation in CA Health Plan Consumer Protections" - CHCF
Russia-Ukraine: one year of war – the economics - Michael Roberts
At least 11 Palestinians killed and scores hurt in Israel West Bank raid - NBC
Dear Congress & WH: Need to spend less money? What about cutting military support to one of the most racist regimes on Earth?
Israel-Gaza: How much money does Israel get from the US? - BBC
How the US Is Bankrolling Israel - Mother Jones
"Consider also that this top recipient of such aid—nearly all of it military since 2008—has been busily engaged in what looks like a nineteenth-century-style colonization project. In the late 1940s, our beneficiary expelled some 700,000 indigenous people from the land it was claiming. In 1967, our client seized some contiguous pieces of real estate and ever since has been colonizing these territories with nearly 650,000 of its own people." (2014)
Israel’s ‘nation-state law’ parallels the Nazi Nuremberg Laws - Aljazeera
Nuremberg Laws - Wiki
India at a Crossroads -
Union Pacific Railroad Workers Win Paid Sick Days – Fayetteville Bus Drivers Strike 2nd Time in 2 Years – Anti-Caste Discrimination Legislation Introduced in Seattle - Payday Report
The state of our families: Child and dependent tax benefits in the states - Niskanen Center
New York’s proposed Working Family Tax Credit is the boldest reform yet - Niskanen Center
"Overall, the credit is a great example of the benefits of 'targeting within universalism,” where all families receive support, but additional support is provided to lower-income families with the greatest need."
End the Charitable Tax Exemption and Remove the Conflict of Interest Baked Into Big Philanthropy - CoP
"This circle of self-serving charitable giving has helped to spawn a permanent, parasitic, and professional philanthropic class that knows who butters its bread: Big Philanthropy. America’s professional philanthropic class includes employees of universities, think tanks, philanthropies, investment banks, financial and philanthropic advisers, charitable foundations, and thousands of nonprofit organizations. All drink from the same government-regulated trough of tax-advantaged charitable funding. This renders Big Philanthropy apologists as suspect as Big Tobacco advocates in the 1970s."
Has the US non-profit evolved into an animal that has sex with itself to produce offspring? ... Only donations that end up being spent on services to the poor and disadvantaged should be fully tax favored. Donations to non-profits involved in politics and policy should be fully taxed.
Fair Taxation, Not Philanthropy - LAP
"Concentrated wealth and power exploit philanthropy and distort its service to the common good. We need to end the use of charitable vehicles for tax dodging or wealth warehousing and increase the flow of money to working charities."
Mormon church fined $5M for obscuring size of portfolio - AP
Joel Osteen’s taxes: What’s probably true and what isn’t - Business Insider
Joel Osteen’s Lakewood Church opens doors during bitter-cold weather - Houston Chronicle
"If moving a mountain is too much trouble, another approach is breeding millions of tiny camels that can navigate narrow corridors and tight corners." - unknown accountant
You Won't Believe What This Bank CEO Earns After a 30% Pay Cut -ascent/motley fool
The average CEO pay increased by 1,322.2% between 1978 and 2020.
The average American worker earns $63,214 per year.
In one study, the CEO-to-worker pay ratio was 670-to-1.
How Increasing the Federal Minimum Wage Could Affect Employment and Family Income - CBO interactive tool
CBO cautions of major uncertainty in estimating the impacts of raising the minimum wage. For example, CBO calculates that a higher minimum would both lead to 1) a net reduction in average family income and 2) a reduction of the number of people in poverty. Go figure.
The Federal Government Should Raise The Minimum Wage - WoodWardAvenue
"Overall, raising the minimum wage would be beneficial to both low-income workers and taxpayers. It would provide a boost to the economy and reduce the number of people who rely on government assistance programs."
Want to cut federal government spending? Why not raise the minimum wage?
Raising Minimum Wage Would Reduce Public Assistance Spending - National Low Income Housing Coalition
Some of our work on this issue:
"Considerations on Raising the U.S. Minimum Wage To Help Workers and Families While Minimizing Negative Impacts"
"Congress faces the difficult task of creating a standard high enough to help low-income workers in higher-income areas, yet low enough to be digestible in low-income state and regional economies."
"Yes, raise the minimum wage, but don't stop there" - op-ed
"Expanding Use, Scope of the EITC & Child Tax Credit: a Win-Win for Workers and Employers"
This paper, originally a memo to the long-term care industry, makes the case that the EITC is a subsidy to employers as well as their employees. Raising the minimum wage could reduce the cost of the EITC and other subsidies based on low income.
The Darker Truths About the State of Unionizing in the Country — and What Can Be Done to Change Things - Capital & Main
US wage growth is slowing and not keeping pace with inflation — but that doesn't mean the Fed will stop hiking rates - Business Insider
Chinese Visit to Moscow Showcases Deepening Ties with Russia - WSJ/msn
China may be on brink of supplying arms to Russia, says Blinken - Guardian
American Compass Cost-of-Thriving Index
"The middle-class security once enjoyed by American families has slipped out of reach. Americans know this to be true: Raising a family in middle-class security on a single income is rarely possible for the typical worker, and ever more young people are forgoing marriage and dropping out of the workforce...
"In 1985, a basket of major annual costs for a family of four (food, housing, health care, transportation, higher education) took a typical male worker about 40 weeks to afford. In 2022, that figure had shot to 62 weeks, driven by stagnating wages and rising costs.
"In other words, in 1985, a single full-time earner could support a family with room to save, but today, a comparable man could work all year and still come up ten weeks short."
Why Conservative Women Report Being the Happiest—and How You Can Be, Too - AEI
Are marriage and family undervalued in US culture?
Remembering artist Jesse Treviño, who rebuilt life and career after war’s toll - San Antonio Report
Jesse Trevino, painter who persevered after Vietnam War injuries, dies at 76 - msn/WaPost
Sunday, February 19, 2023
“Have faith in God,” Jesus answered. 23 “Truly I tell you, if anyone says to this mountain, ‘Go, throw yourself into the sea,’ and does not doubt in their heart but believes that what they say will happen, it will be done for them. 24Therefore I tell you, whatever you ask for in prayer, believe that you have received it, and it will be yours. 25And when you stand praying, if you hold anything against anyone, forgive them, so that your Father in heaven may forgive you your sins.”
Mark 11:22-25 NIV
Pyramid of Capitalist System - wiki
State treasurer challenges NC health system executive pay as medical costs rise - Charlotte Observer
"Folwell has called the healthcare industry in North Carolina a cartel, expressing frustration at the lack of transparency on prices for healthcare services.
"'This is the largest transfer of wealth, especially from low- and fixed-income people, of anything that I’ve ever observed in my business career,' the treasurer said. 'It’s all being financed, especially on the backs proportionately of low and fixed-income people – sick low-income and fixed-income people.'"
Fat Joe Calls On President Biden And Others To Protect Hospital Patients Against Hospitals And Insurance Companies - msn
Republicans take aim at food stamps in growing fight over federal debt - WaPost
"Some GOP lawmakers are eyeing work requirements and other changes to the SNAP program in a bid to reduce the deficit."
No problem with establishing adequate work incentives. But is the timing right as the Fed continues driving up interest rates in an effort to slow the economy and increase unemployment as a way to stifle inflation?
SNAP Is and Remains Our Most Effective Tool to Combat Hunger - CBPP
MORE THAN 100 CHILDREN ILLEGALLY EMPLOYED IN HAZARDOUS JOBS, FEDERAL INVESTIGATION FINDS; FOOD SANITATION CONTRACTOR PAYS $1.5M IN PENALTIES - US DOL
U.S. fines firm $1.5 million for hiring kids to clean meatpacking plants - WaPost
"In a statement, a spokeswoman for Packers said the company has a 'zero-tolerance policy' on employing underage workers. Packers is privately owned by Blackstone, one of the world’s largest private equity firms, and employs roughly 17,000 workers."
Q for policymakers: Do you think a $1.5 million fine will influence the behavior of a private equity firm with $1 trillion in assets under management? If not, what might?
Alexandria ends ‘unconstitutional' BIPOC Small Business Grant program, seeks new solutions - msn
That nettlesome 14th amendment...
U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes - Commonwealth Fund
Gigantic flags displayed on TV football games notwithstanding, can it be that major US health care purchasers - employers and the government - are very dumb negotiators compared with foreign counterparts? Probably not, from their perspective: US health care decision makers are generally high-income and get excellent health care for themselves and their families...Future international research and comparisons should include distributional analysis of how citizens in the top, middle, and bottom strata compare in health costs, access, and outcomes.
The company behind Ohio’s toxic train disaster: Deaths, silenced whistleblowers, and $10bn for shareholders - Independent
Universal raises hourly wage to $17, setting pace for parks - AP
Twin Peaks Employees Go on Strike - Nashville Scene
Alaska governor drops college degree requirement for most state jobs to fight worker shortage - Hill
The highest-paying jobs in Washington, D.C. for high school graduates - msn
Older Americans Are Richer Than Thought, Census Bureau Says - Bloomberg
"...the general trend was to revise incomes up for older households, and revise them down for younger ones — widening the generational gap."
Maryland sought an accurate poverty count. It found 110,000 more kids. - WaPost
"Child poverty in Maryland is deeper and more widespread than previously calculated, with a new state government analysis finding that more than half of public school students now qualify for a range of anti-poverty programs."
Implications for the bottom 50%?
Long live Social Security: chief actuary says Bernie Sanders’s plan would keep program alive another 75 years - Marketwatch
Click here for CCSE work on Social Security and retirement savings policy
How the Supreme Court turned America into a casino - Charles Lane/WaPost
"American capitalism has come a long way since Max Weber, roughly 120 years ago, argued that it epitomized a 'Protestant ethic," which sanctified savings, investment and other productivity-enhancing deferrals of gratification.
"Legal sports betting — at times with money borrowed via credit cards — typifies 'limbic capitalism.'"
Because The U.S. Is Too Corrupt To Pass Privacy Legislation, Data Brokers Increasingly Traffic In Sensitive Mental Health Data - techdirt
Data Brokers and the Sale of Americans’ Mental Health Data - Duke University
Why Americans need protection from the Consumer Financial Protection Bureau - George Will/WaPost
One way or the other, how long before the CFPB is captured by financial interests it regulates?
Supreme Court Gives President Power To Fire Key Independent Agency Chief - NPR
Biden Administration Proposes Big Change To Benefits For People With Disabilities - HuffPost
Good first step. Keep going.
CCSE on this issue:
SSI Needs Fixing: Chronic neglect is choking off access to Social Security’s critical backstop – and pushing more
blind, disabled and old people into poverty. - Karl Polzer
Social Security's disability program desperately needs fixing - Washington Examiner op-ed
Unmasking India’s Crony Capitalist Oligarchy -
Lower income brackets have to commute as top earners work from home - Evening Standard
"More than 60% of those earning less than £30,000 said they were required to travel to work every day with no work-from-home option."
The crisis of democratic capitalism - Michael Roberts
Interesting discussion of book by Martin Wolf. Schumpeter goes deeper:
"Capitalism, Socialism and Democracy" - wiki
First baby in Kentucky is anonymously left at one of its 'baby box' at fire station - Daily Mail
"All 50 states in the US now have 'safe haven' laws, which allow parents to give up their children without fear of criminal charges. More than 10 states have since permitted the installation of baby boxes."
Poll: Reeves trails Presley in 2023 governor’s race, welfare scandal a top issue - Mississippi Today
GOP has been chanting "Let's go Brandon" for a long time. Be careful what you... :)
Millions of people are about to get kicked off Medicaid - Vox
"It is an absurdity of the American health system, compared to those of other developed countries, that millions of vulnerable people could end up becoming uninsured in a matter of months. But even in normal times, because of how our health system is set up, people with low incomes shift frequently between different insurance coverage, going from Medicaid to ACA insurance subsidized by the federal government or not having any insurance at all.
"It’s called “churn,” and it has long been recognized as a problem. In 2018, about 10 percent of Medicaid enrollees cycled on and off the program within a year."
Unjust absurdities - after decades of legislative neglect - become intentional.
If Medicare And Social Security Are Off The Table, Medicaid Could Be A GOP Target - HuffPost
Biden and Democratic governors embrace the new (old) class politics - E.J. Dionne Jr./WaPost
Some Dems are saying the right things about returning to New Deal values. But the columnist's parting comment (see below) shows that fighting for workers is no longer in the party's DNA. To Dionne and other top-20% members of the Dem elite, doing more frontline workers is seen as a political "wager" rather than a commitment:
"...Whitmer still believes in the oldest of progressive dreams, that some of the country’s deepest divides could be eased if politicians were more attentive to people’s economic needs. 'There are a lot of similarities between poor inner cities and small towns and rural parts' of her state, she said. 'A feeling that they’re just a number or they don’t matter or they’re not on anyone’s radar.' Her word of advice to those in her business: 'Listen.'
"A lot is riding on this wager being right."
NY Mayor Eric Adams praised for revealing uncomfortable theory about Democratic Party, wokeism and minorities - Fox
There Is More Inflation Complexity Ahead - Mohamed El-Erian/PS
More macroeconomics roulette: Choose between door #1, #2 (double wide), or #3. Tiger or pussycat?
Don't care for the doors and tigers metaphor? What about this one for the Fed and monetary policy?
Sorcerer's Apprentice - Fantasia/YouTube
Economy Remains the Public’s Top Policy Priority; COVID-19 Concerns Decline Again - PEW
"Aside from the economy, no single policy area stands out. About six-in-ten rate several issues as top priorities: reducing health care costs (60%), defending against terrorism (60%), reducing the influence of money in politics (59%), reducing the budget deficit (57%), reducing crime (57%) and improving education (57%)."
An anonymous donor reportedly walked into the Turkish Embassy in the US and gave $30 million to aid victims of the devastating earthquake - msn
Sunday, February 12, 2023
Why Americans are leaving their churches - Religion News Service
Top 5 reasons Black millennials are leaving the church - Defender
Israel: A Jewish democracy or religious state? - Jerusalem Post
Mob storms Pakistan police station and lynches man accused of blasphemy - Guardian
"Why the conventional tools of the Phillips Curve, NAIRU, potential output, and money-supply growth are useless"
The Quasi-Inflation of 2021-2022: A Case of Bad Analysis and Worse Response - James Galbraith/INET
"In brief summary: The price increases of 2021-2022 were cost-driven, accompanied by an asset price boom incident to the disruption of the service economy. They were not driven by macroeconomic excess, neither fiscal nor monetary. But they did hand the Federal Reserve a political problem, which it proceeded to solve, in what may prove to be the worst way." ...
"What did households do with the (stimulus) money? For the vast majority, laid-off from low-to-moderate-wage service jobs, the best answer (Peterson Foundation 2021) appears to be that they kept up with their ordinary, fixed, and customary expenses: rent, utilities, groceries, gasoline, education. They did not splurge, but for these households, there was only a modest increase in savings. For households in the upper tiers of the distribution, the picture is different. They had previously spent heavily on the services that employed the large majority of American workers; they were less likely to become unemployed and the assistance was a less-important share of their incomes. But they were cut off from the ordinary use of their earnings. So they saved what they could not spend, and aggregate savings rose temporarily to about one-third of aggregate income. These savings then found their way into asset markets: real estate, corporate equities, collectibles, and the like, with purchases abetted by extremely low long-term interest rates. Asset prices, accordingly, recovered quickly and rose sharply as the pandemic wore on."
So, to what degree did the asset price bubbles increase money available to bid up prices of goods and labor in response to supply constraints? Did low bond yields resulting from Fed actions cut off saving/investment options that might have tempered inflation?
GOP Virginia House kills paid sick day bills - VICPP
"The House paid sick day bills were killed. The Senate one passed out of committee but with an exemption for employers with fewer than 25 employees. We oppose this exemption and will be asking you to have conversations with some of the Senators about why there should be no employer size exemptions. We have talked with the patron about working with us next year to fight for a bill to cover all workers regardless of employer size (like most paid sick day policies around the country)."
Here's what we posted before the 2022 legislative session. Sent this to several VA newspapers but they weren't interested:
"What about a few paid sick days? Are low-wage workers
simply invisible to Virginia’s elected leaders?"
"The spreading virus calls for fast action on paid sick days for health and personal care workers" - Karl Polzer/CCSE
"All Workers Should Have A Few Paid Sick Days. The President And Congress Can Make It Happen" - HealthAffairs blog
"To stop coronavirus, take quick action on paid sick days" - Washington Examiner op-ed
TRADE POLICY, EQUITY, AND THE WORKING POOR /PPI
"The U.S. MFN tariff system is a regressive element of the U.S. tax system, with disproportionate effects on low-income families (in particular, single-parent families), and also on African American and Hispanic families relative to families of other races and ethnicities. This emerges from four points:
"(1) U.S. MFN tariffs raise revenue principally from home necessities such as clothes, shoes, and a few other consumer goods. These make up only a small share of imports but provide more than half of MFN tariff revenue.
"(2) This fact makes the MFN tariff system a regressive form of taxation, since low-income families, single-parent families, and African American and Hispanic families spend more of their family budgets on these products than the U.S. average.
"(3) U.S. MFN tariffs on these and several other categories of consumer goods are systematically skewed, taxing cheap goods heavily and luxury goods lightly, making the MFN tariff system discriminatory as well as regressive.
"(4) Tariffs on consumer goods appear ineffective as protectors of employment or production.
The Regressive Nature of the U.S. Tariff Code: Origins and Implications - Miguel Acosta and Lydia Cox
"... (US) consumers would save a little over $4 billion on imported goods (via savings on tariff revenues) if the regressive
pattern were eliminated... (when) we lower tariffs uniformly by 5 percentage points
across all varieties, the average welfare gain for an individual earning $20,000 per year is around double the gain for an individual earning $100,000 per year. When we additionally eliminate the
regressivity in tariff rates, the lower-income individual gains about three times as much...
"We show that regressivity has been a longstanding feature of U.S. tariffs, and is a feature of the tariff schedule of the E.U."
What women’s underwear tells us about our trade system - Catherine Rampell/WaPost
"So why aren’t feminists and anti-poverty advocates up in arms? Perhaps because there’s such limited understanding of how the U.S. trade system works. Like so many features of government, it is cloaked in complexity. Plus, those who usually fight for more equitable treatment might be loath to take on the political allies who push protectionism.
"Maybe someday we’ll build a trade system that’s friendlier to women and the poor. Now that would be romantic."
News Blog: Jan. 10 - Feb. 9, 2023 - Click here.
Will Growing Inequality Make Social Security & Long Term Care Financing Fixes Harder?
2020 Society of Actuaries Living to 100 Symposium
Mixing Capitalism and Socialism:
Policies To Moderate Systemic Wealth Concentration in the United States
Karl Polzer/Center on Capital & Social Equity
This essay explores two basic questions. The first is the extent to which capitalism, which emphasizes the rights of individuals to pursue their interests, and socialism, which focuses on group needs, tend to function in tandem as much as they do in conflict. As many agree that the political pendulum in recent decades has swung in favor of capitalism, the paper also discusses a range of public policies that can be used to reduce its imbalances and risks, with particular emphasis on moderating capitalism's tendency toward systemic inequality. Policy options range from programs to help the poorest, social insurance, higher taxation of income and wealth, and re-channeling to all citizens a portion of profits from private exploitation of public assets and business activities enabled by public laws and infrastructure.
Including all workers in our retirement savings system requires 2 things: a universal tax credit and a secure place to invest it.
Congress should be working on both.
Almost half of Americans have no net assets and little or no retirement savings. Many have no money to save, and if they did, and no retirement account to put it in. Meanwhile, Americans at the top of the economic heap get generous tax breaks for retirement savings – and capital gains from these assets widen the wealth gap.
Establishing a national retirement savings system and reshaping tax policy to provide every American worker a modest tax credit to put in a retirement account could improve economic security, help people prepare for old age, and facilitate saving for emergency expenses. This type of inclusive capitalism would make every American worker an owner of assets generating income. Such a system could be funded via a relatively small sacrifice to high earners without increased federal spending.
Include Everyone in the Retirement Savings System
Related initiatives and proposals:
- 40% of Older Americans Rely Solely on Social Security for Retirement Income - ADVISOR Magazine
The State of American Retirement Savings: How the shift to 401(k)s has increased gaps in retirement preparedness based on income, race, ethnicity, education, and marital status
What if OregonSaves Went National: A Look at the Impact on Retirement Income Adequacy
- Plan Sponsor Groups Oppose Financial Literacy Proposal
- DOL Exemption Paves Way for Auto Portability
- State-run Auto-IRAs Will Help Close the Coverage Gap
States Boost Access to Retirement Plans, Seeking to Close Savings Gap
- Half of Americans have no retirement savings — here’s how Congress can look out for them
Don’t exclude low-wage workers from planning for retirement savings programs
- Why Not a Minimum Pension?
- Capitalize Workers!
The Story Behind 16 Million Abandoned Retirement Savings Accounts
Americans Haven’t Saved Enough for Retirement. What Are We Going to Do About It?
- New York Envisions a State-run Retirement Plan for Private Workers
- If you want more equality, you have to embrace the risk premium
- A preview of the U.S. without pensions - older people work longer
- Why it's so hard for Americans to save
- OregonSaves web site
- Facing employer jitters, ERISA lawsuits, Oregon & other states push toward universal retirement savings systems.
- Treasury ending Obama Administration's myRA savings program.
- Bipartisan Policy Center commission suggests developing a near-universal retirement savings system along with raising Social Security benefits for lower-income and raising Social Security taxes to ensure program solvency.
- Universal system would significantly raise Americans' retirement readiness: EBRI
- Great Britain is ramping up a new universal pension system called National Employment Savings Trust or NEST. Features include automatic enrollment, mandated contributions, and a choice of diversified investment funds, including those based on a person's age.
- Harvard study finds tax subsidies less effective policy option in boosting retirement savings than automatic enrollment or putting money in low-income savers' accounts.
- Appalachian Savings Project helped child-care workers with low and variable earnings save 5.5% of income on average. Program evaluation.
- Urban Institute's "Super Simple" savings proposal. Sharing many features of a system now being implemented in Great Britain, this proposal would establish a universal retirement savings system with contributions from employers, workers, and the government.
- Oklahoma experiment shows power of universal children's savings. Early formal evaluation of the Oklahoma program.
- Great Britain's experience with "Child Trust Funds."
- "Automatic IRAs" available to workers and the self-employed. There is growing support for this type of approach.
- State Retirement Savings Resource Center - AARP
- Illinois to set to build an auto-IRA system for companies with at least 25 employees by 2017. Other states considering similar approaches.
- Click here for a summary of state activity as of July 2016.
- Three ways states are organizing retirement savings programs for private-sector workers.
- Aspen Institute issue brief explores how state retirement savings programs can utilize the federal saver's tax credit.
- Reps. Crowley and Ellison propose legislation to start savings accounts for all U.S. children.
- Research shows value of "hands on" financial education.
If you know of other proposals along these lines or would like to comment, please go the "Contact Us" page on this site and send us an email.
CCSE Proposes Universal Starter IRAs
Australia as a Model?
Australia’s “superannuation” system requires employers to contribute a percentage of employees’ income into diversified retirement funds managed by trustees. By 1999, 97 percent of Australia’s full-time employees and 76 percent of part-time employees were covered by the superannuation system. Over the years, Australia has increased required contributions and continued to refine the system, which has been credited with raising levels of capital accumulation and improving retirement security.
According to a July 2016 report, the Australian superannuation system continues to broaden coverage, but may be contributing to growing wealth inequality in its current form.
Research shows dramatic growth of upper middle class, major shift in economic resources
An Urban Institute report published in June 2016 found that since 1979 the percentage of wealthy and upper-middle-class Americans have grown dramatically while the middle- and lower-middle class has become smaller. The study found that "the proportion of the population in the upper middle class went from under 13 percent in 1979 to over 29 percent in 2014."
The report documents a major shift in the distribution of economic resources. "In 1979, the bottom three income groups controlled 70 percent of all incomes, and the upper middle class and rich controlled 30 percent. By 2014, this distribution shifted to 37 percent for the bottom three groups and 63 percent for the upper middle class and rich groups. The middle class alone saw its share of income decline from 46 percent in 1979 to 26 percent in 2014."
The study divides the population into five classes. The poor and the near-poor had annual incomes from $0 to $29,999; the lower middle class, from $30,000 to $49,999; the middle class, from $50,000 to $99,999; the upper middle class, from $100,000 to $349,999; and the rich, $350,000 and up.
Pew study shows long-term decline in size of middle class, rise in number of poor
After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it, according to a study released in December. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, according to the Pew Research Center analysis of government data. Highlights include the following:
"While the share of U.S. adults living in both upper- and lower-income households rose alongside the declining share in the middle from 1971 to 2015, the share in the upper-income tier grew more.
"Over the same period, however, the nation’s aggregate household income has substantially shifted from middle-income to upper-income households, driven by the growing size of the upper-income tier and more rapid gains in income at the top. Fully 49% of U.S. aggregate income went to upper-income households in 2014, up from 29% in 1970. The share accruing to middle-income households was 43% in 2014, down substantially from 62% in 1970.
"And middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.
"Meanwhile, the far edges of the income spectrum have shown the most growth. In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971. On the opposite side, 9% are in the highest-income tier, more than double the 4% share in 1971. At the same time, the shares of adults in the lower-middle or upper-middle income tiers were nearly unchanged.
"These findings emerge from a new Pew Research Center analysis of data from the U.S. Census Bureau and the Federal Reserve Board of Governors. In this study, which examines the changing size, demographic composition and economic fortunes of the American middle class, ‘middle-income’ Americans are defined as adults whose annual household income is two-thirds to double the national median, about $42,000 to $126,000 annually in 2014 dollars for a household of three. Under this definition, the middle class made up 50% of the U.S. adult population in 2015, down from 61% in 1971."
Impact of Raising the Minimum Wage
Increasing the minimum wage would have two principal effects on low-wage workers, according to an analysis by the Congressional Budget Office. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.
- Five Facts about the Minimum Wage.
- Living Wage Calculator: The cost of meeting basic needs varies widely depending on where you live. MIT offers an on-line tool to help determine such costs and the living wage in each county and metropolitan area in the U.S. The site also has articles on related issues.
- State Minimum Wage Levels: Federal minimum wage law supersedes a state's minimum wage law if the state level is lower. In those states where the state minimum wage is greater than the federal level, the state minimum wage prevails. Two states have a minimum wage set lower than the federal minimum wage. In 29 states and DC, the state minimum wage is higher than the federal minimum. Fourteen states have a minimum wage that is the same as the federal requirement. The remaining five states have not established a minimum wage.
The Economics of Inequality
Deaton Wins Nobel Prize
"The award comes at a time when there is rising academic and popular interest in the study of inequality. Several economists, including Anthony Atkinson of the London School of Economics (who was among the leading contenders for a Nobel prize this year) and Thomas Piketty of the Paris School of Economics (who is still a bit too young for one), have published widely-read volumes on the subject over the last two years. Mr Deaton published his, The Great Escape: Health, Wealth, and the Origins of Inequality, in 2013. In it, he argued that while most people in the world have gained in terms of health and well-being from GDP growth over the last few decades, there are many groups that have missed out, particularly if on measures beyond those most commonly examined."
-- The Economist
Milanovic Explores Dynamics of Income Inequality in Age of Globalization
In “Global Inequality: A New Approach for the Age of Globalization,” Branko Milanovic identifies five forces pushing up inequality in the United States:
1. The increasing share of national income that accrues to owners of capital.
2. Very high and rising concentration of incomes from capital.
3. People holding high-paying jobs also often have high capital income.
4. The tendency of high-income individuals to marry each other.
5. The rising political power of the rich.
Revisiting the work of American economist Simon Kuznets, Milanovic describes how global income economy waxes and wanes in "waves" driven by economic and political forces.
CBO report analyzes impact of government transfers, taxes on rising U.S. income inequality
According to the June 2016 report:
"Between 1979 and 2013, all three measures of income examined in this report—market income, before-tax income, and after-tax income—became less equally distributed, based on a standard measure of inequality known as the Gini index. The increase in inequality in both before-tax and after-tax income over the 35-year period stemmed largely from a significant increase in inequality in market income, mostly because of substantial income growth at the top of the market income distribution.
"Because government transfers go predominantly to lower-income households, before-tax income (which is equal to market income plus government transfers) was more evenly distributed in each year than market income. And because higher-income households pay a larger share of federal taxes than lower-income households do, after-tax income was more evenly distributed than before-tax income.
"In each year between 1979 and 2013, government transfers reduced income inequality significantly more than the federal tax system did."
View from the Paris School of Economics
- The return of a patrimonial (or wealth-based) society in the Old World (Europe, Japan).
- Inequality in America: Is the New World developing a new inequality model that is based upon extreme labor income inequality more than upon wealth inequality? Is it more merit-based, or can it become the worst of all worlds?
- In all nations with capitalist economies examined, the poorest half of the population owns virtually no assets or is in debt.
- In general, when the rate of growth of capital exceeds the rate of growth of the overall economy, wealth tends to concentrate. There is no natural market mechanism to counter this tendency; a nation's degree of wealth concentration in large part is a function of public policy.
"The Spirit Level: Why Greater Equality Makes Societies Stronger"
In this book, Richard Wilkinson and Kate Pickett present data making the case that countries with greater income inequality tend to have more health and social problems. Furthermore, there is evidence that the negative effects of inequality impact not just the poor, but people at all social levels. The Equality Trust provides slides of some of the supporting data.
This short Wall Street Journal video describes competing views of the wealth inequality issue and how to address it.
Thomas Piketty reviews Anthony Atkinson's book, Inequality: What Can Be Done? , and evaluates its prescription for Great Britain's economy.
Economists Discuss Atkinson's Ideas on Reducing Inequality
Robert Solow, the Russell Sage Foundation’s Robert K. Merton Scholar and Institute Professor Emeritus at MIT, joined New York Times columnist Paul Krugman and moderator Janet Gornick (Director of the Luxembourg Income Study Center and a former RSF Visiting Scholar) at the Foundation for a conversation on Inequality: What Can Be Done?, a new book by British inequality scholar Anthony B. Atkinson. In the book, Atkinson argues that economic inequality has reached unacceptable levels in many countries and lays out an agenda for reducing inequality. His policy proposals span five areas: technology, employment, the sharing of capital, taxation, and social security.
Columbia's Joseph Stiglitz takes on "The Great Divide"
Click on highlighted words to hear interview.
Hayek Revisited: Is Compromise Possible?
Is Friedrich Hayek's classic defense of individual liberty and economic freedom, rooted in moral tradition, just as relevant today as during World War II? Click here to read a summary of Hayek's "The Road to Serfdom," published by Reader's Digest as that war came to an end and a new international economic order was developed.
Today, how can monopoly power, whether wielded by corporations or government agencies, be checked while expanding economic opportunity and inclusion for all including the young, old, and those with few assets? If Hayek could have foreseen the ability of modern corporations to concentrate wealth and power, what policies would he recommend?
"...Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance -- where, in short, we deal with genuinely insurable risks -- the case for the state's helping to organize a comprehensive system of social insurance is very strong. ...
"(T)here is no incompatibility in principle between the state's providing greater security in this way and the preservation of individual freedom."
-- F. Hayek, The Road to Serfdom, Chapter 9/Security and Freedom
March 3, 2023
East Palestine needs help, but another PPP isn’t the answer - op-ed
"As the White House considers possible economic aid for East Palestine residents, the PPP model should be scrapped along with the wrecked Norfolk Southern railway cars. While it might be a boon for bankers administering the so-called loans, a PPP-style approach has proven prone to fraud and poor targeting and would miss altogether many people needing assistance."
What can trillions in Covid stimulus spending teach us in preparing to head off a future financial disaster?
Center on Capital & Social Equity
Corporate giants need a different brand of capitalism - Karl Polzer
Thanks to the Richmond Times-Dispatch for running this column. It's based on the longer piece below, which contains references:
Instead of crying about socialist boogiemen, Home Depot, other corporate giants could use a different brand of capitalism to improve service - essay
Thanks to the Washington Post for running most of our letter responding to Sen. Hawley's op-ed:
How to make the GOP more appealing to voters - WaPost
The unedited version below has something to say about both political parties:
Sen. Hawley is right on doing more for workers – but the GOP (and Dems) need to deliver concrete economic benefits
Time to get their ducks in a row?
Dec. 15, 2022
Who’s More Likely To Find Gifts from Congress under the X-Mas Tree? Low-income Families - or Well-off Retirees and Corporate Shareholders?
"As time ticks down for 117th U.S. Congress to pass a year-end spending package, it will be interesting to see which strata of society our lame-duck lawmakers might gift the most if a deal can be reached. Will they deliver corporate tax breaks for those at the top? Good chance. Corporate tax breaks may be the prerequisite for anyone else getting anything.
"What about tax-code adjustments mostly benefiting well-off owners of retirement funds? Possible. As described as a case study below, long-prepared, bipartisan legislation – aka the Secure Act 2 or Earn ACT— is ready for final touches and attachment to a spending bill.
"What about something that could help people at the bottom..."
Capitalizing on college football
"In U.S. college sports -- as in the nation’s broader blend of capitalism and socialism -- political leverage can be advantageous. Winning football coaches now sit at the top of the public university food chain. They are emblems of both American economic opportunity and inequality..."
Thanks to the Washington Examiner for publishing this op-ed.
P.S. The draft, titled "Capitalizing on the public-private college football plantation," includes links to the classic Marx Brothers film "Horsefeathers."
American ranch-style house
April 6, 2022
Russia, Nuclear Disaster and What To Do with Our House
Karl Polzer, Center on Capital & Social Equity
Click here to read article.
Thanks to the Washington Post for publishing our letter.
P.S. (March 3, 2022) As the invasion escalates, it appears that Putin's operational objectives may include: 1) ongoing military and political control of Belarus; 2) depopulation of non-Russian speaking Ukraine to facilitate larger annexation (a la Israel/Palestine); and 3) constricting the mobility and internal political threat of Russian oligarchs (a la Xi and Chinese capitalists).
Western State Hospital home page - December 2020
March 5 - This week, the Senate approved HB 388 with amended text. The House then passed the Senate version. Both votes were unanimous. The bill now goes to Virginia's Governor. Unlike other states, if the Governor does not act on a bill, it becomes law without his signature in 30 days (the majority of bills are not signed).
Virginia becomes first state to ensure mental hospital patients, families have access to video visitation
April 11 - It's a law! Gov. Youngkin signed HB 388, which was passed unanimously by both Virginia's House and Senate. Effective July 1, 2022, the bill requires the director of each of the state's 10 mental health hospitals to have a process in place to facilitate virtual visitation. It will help thousands of patients and their families and friends stay connected and could positively impact patient care and hospital transparency.
The Center on Capital & Social Equity worked with staff at Western State Hospital in Staunton to develop a pilot program when in-person visitation was suspended due to Covid 19. We then advocated to expand access to video visits to patients at all state hospitals. Special thanks to the staff at Western State, the Virginia chapter of the National Alliance on Mental Illness, and Del. Rod Willett and his staff who were instrumental in making this happen.
To our knowledge, Virginia is the first state to make sure that mental hospital patients and families have access to video visitation. Today, the world is slightly less unequal!
COVID Ended In-Person State Hospital Visits So Father Pushed For Virginia Law Allowing Zoom-Like Calls For Patients - Pete Earley
Thanks to Peter Earley for posting on our work to increase connectivity between people living in institutional settings and their families and the larger community.
Extending the Expanded Child Tax Credit:
"In the bigger picture,
total national work = paid work + unpaid work, which includes raising children."
Also see last section of the paper below on raising the minimum wage: "Combining a minimum wage hike with the EITC, more aid to raise children" on p.11:
"Considerations on Raising the U.S. Minimum Wage To Help Workers and Families While Minimizing Negative Impacts"
Click on the article above for the answer to the puzzle below:
Nov. 4, 2021
White House’s promised childcare subsidies face a host of ‘devils in the details’
Karl Polzer, Center on Capital & Social Equity
"The $1.75-trillion Build Back Better (BBB) proposal’s promise to cap childcare expenses at 7% of income for families earning up to $300,000 faces a series of policy hurdles regarding cost, equity, long-term impacts, and how such a program might be administered. While subsidized childcare would meet a pressing need for many low- and modest-income working parents, providing benefits to upper-income professionals and inflationary impacts could push the program’s cost as high as $1 trillion over 10 years.
"Some analysts warn that massive subsidies combined with costly regulatory requirements could end up reducing care choices for many low-income families, particularly those preferring to look after their children at home..."
Nov. 20, 2021
Why our grandchildren will being moving back from the ocean and heading north
Karl Polzer – Center on Capital & Social Equity
As the fog lifts from what was achieved during last week’s international negotiations over controlling climate change, some outlines of future reality come into focus. Layers of carbon pollution girding the Earth will continue to drive up temperatures and sea levels. The world’s 195 countries will not be able to change human behavior enough to stop major climate change. By later this century, billions of people will face pressure to move away from eroding seashores to higher ground and north to cooler places to live.
There are several reasons to expect this...
Oct. 15, 2021
As Congress Whittles Down the Spending Package, Don’t Bet Low-Income People Will Get Much More - or the Monied, Much Less.
Center on Capital & Social Equity
Oct. 26, 2021
Responses received from Virginia campaigns for governor
Last week, the Center on Capital & Social Equity, which operates from Northern Virginia, sent a short list of questions to policy and press people working on the two Virginia campaigns for governor. We are pleased that both campaigns sent responses but would have liked to see more specific answers to many of the questions.
Our motivation in asking these questions is to help focus the next governor on the needs of low-income people who make up a large portion of Virginia’s population. Their everyday challenges are often ignored by their political representatives. Attention to detail and commitment will be keys to developing and implementing policies that will help improve their lives on issues including adequate wages, paid sick days, access to mental health care, the cost of living,and affordable health care. We look forward to working with the next administration on these and other matters.
November 20th, 2021 Grocery Store Labor Action - All Workers Deserve Paid Sick Days - Virginia Interfaith Center for Public Policy
"Grocery store workers are one of the best examples of why Virginia needs a paid sick day standard. Two-thirds of grocery store workers have no paid sick days. Virginians for Paid Sick Days is partnering with UFCW Local 400 to hold actions outside grocery stores on the Saturday of November 20, 2021 (the Saturday before Thanksgiving) highlighting the need for all grocery store workers to have paid sick days."
Getting Inflation out of Capital Gains Taxation Is Fair - and Might Help Reach a Deal on Taxing the Dead
Karl Polzer - CCSE
July 12, 2021
"Congress could do many relatively inexpensive things to improve working people’s lives. At spending levels near the bottom of what’s being now debated, all workers – including the lowest-paid -- could have additional funds to raise their kids, paid sick days, more job training, and some savings for retirement and emergencies. Millions more could have higher wages and health care coverage. And millions more disabled and elderly people could move above the poverty line. Much of this could be done by modifying existing programs and policies."
Social ‘infrastructure’ improvements for the working class
- Target subsidies for families (child tax credits, daycare, college) to people most in need.
- Raise the minimum wage and index it for inflation. Give states reasonable flexibility to adjust the minimum. All workers get paid sick days.
- Repair and improve SSI.
- Establish a universal retirement savings system.
- Incentivize states to expand Medicaid. Hold Medicare spending increases to general inflation or less.
- Improve Social Security benefits for the bottom 50%. Achieve long-term solvency through higher taxes mostly on the top 20%.
- Improve the unemployment insurance system and job training.
Thanks to the Washington Post for publishing most of our letter:
"Push the pain of taxes into the afterlife"
Really don't think that a particular billionaire (hint: cojones enough to be shot into space) would have objected to being mentioned as in the letter submitted:
"A Smart Way To Tax the Rich: Let Sleeping Billionaires Lie"
Thanks to the Washington Examiner for featuring this.
Biden’s spending spree could destabilize Social Security - Karl Polzer
"President Joe Biden’s plan to inject $4 trillion of social and capital infrastructure spending into a $21 trillion economy could help many people take care of their families. But there are also major economic and political downsides. These risks could be reduced, and the proposal’s value increased, by putting Social Security on the table and targeting new social spending to people most in need..."
Where's Social Security?
How much can we tax the wealthy to finance long-run social and physical infrastructure needs?
Karl Polzer, Center on Capital & Social Equity
A government, already paying interest on more than its people produce each year (hint: $22 trillion), now proposes to tax its wealthiest citizens in the vicinity of $3 trillion more to finance a growing list of social and physical infrastructure needs. Like families paying off mortgages, indebted governments should know that each major purchase narrows its ability to raise capital for future needs...
So, what do we need and how can the wealthy be tapped to pay for it? What's missing?...
Click here to read the paper
Thanks to the Washington Examiner for timely publication of this op-ed.
Yes, raise the minimum wage, but don't stop there
March 1, 2021
"...States could be given flexibility. Congress could set the national minimum at the high end of current proposals, say at $15 or $16, and allow states to adjust it downward by a certain margin, say 20% or 25%, but no lower. A national minimum wage corridor, rather than a line, could help California and New York build up and adjust down from a higher platform. Poorer states could choose lower levels in the corridor, say $12 to $13 an hour.
"Policymakers also should consider how changes to the earned income tax credit and child tax credit can complement wages for working-class families. Members of both parties support higher subsidies to raise children. Such payments should be targeted to help the poorest the most. Yet the current child tax credit provides the most money to higher-income families."
Click here to read the op-ed.
Feb. 17, 2021
Analysis: Ways To Raise the U.S. Minimum Wage To Help Workers, Families, While Minimizing Negative Impacts
Karl Polzer, Center on Capital & Social Equity
A recent Congressional Budget Office (CBO) analysis reinforces the case that raising the national minimum wage is long overdue. But it also provides reasons for caution. Dialing up wages at the bottom up too fast and too much could increase the magnitude of negative side effects including job loss and price increases.
This paper examines potential impacts of raising the federal minimum wage nationally and in selected states and local areas. It ends with suggestions to temper negative side effects resulting from a higher minimum wage and discusses the need to fill income gaps that are too large for a higher minimum wage to address adequately, especially for some types of families. Options include setting a national corridor in which states can choose a minimum wage best fitted to them and supplementing low wages with more support for raising children.
Click here to read the paper.
Thanks to the Washington Examiner for running this op-ed and its openness to air a variety of views including our work exploring inequality and advocating for the bottom 50%. The Examiner's audience includes conservative members of Congress whose votes are needed to pass and sustain legislation advancing working class interests.
Biden's stimulus risks sending aid to those who don't need it - Karl Polzer/Washington Examiner op-ed
January 29, 2021
Who exactly will get the enhanced cash aid, and who won't, in the stimulus package the Biden administration will soon negotiate with Congress? This is the first of many distributional challenges awaiting lawmakers on both sides of the aisle. Choices on targeting increasingly scarce public funds will reveal which income groups both parties are committed to represent.
Details of the relief proposal had not been released as of this writing. But it is likely that the administration has been working from the distribution template in legislation Democrats introduced at the end of December. That bill, the Cash Act of 2020, would increase the $600 COVID-19 cash relief authorized last month to a total of $2,000 ($4,000 for couples). It also would send billions of dollars to well-off people that don’t need the money. As with previous COVID-19 cash aid legislation, an argument can be made that the distribution scheme shortchanges millions of people who need money to pay for food and rent.
The Center on Capital & Social Equity explores and promotes ways to include all workers and families in the output of capitalist economies. (See chart above.) All should have the opportunity to own shares of working capital. One way to mitigate the negative effects of monopolies, which antitrust regulation cannot entirely control, is through widespread profit sharing. This can be done by setting up a universal retirement savings system.
Missionary being eaten by a jaguar (Noé León, 1907)
Making Sure We Get to Universal Coverage: a letter to Sen. Bernie Sanders
Feb. 23, 2020
Dear Sen. Sanders,
Among all candidates for president, we think you are the most committed to making sure that ALL Americans have health insurance and access to comprehensive health care. We commend you for your leadership on this issue.
Unfortunately, it is hard to see how the Medicare-for-all legislation you propose could gain Congressional approval in the foreseeable political future. As a longtime member of the U.S. Senate, you must be able to understand the grounds for this concern.
Please answer this question: If, during your presidency, Congress could agree to pass a universal coverage bill using a different, perhaps more traditional, approach, would you sign it?
Getting ALL Americans affordable coverage as soon as possible is an important part of our policy agenda. We cannot wait until a political moment in the unforeseeable future in which a Medicare-for-all system can gain approval. We also recognize that any universal system put in place will need to enjoy long-lasting acceptance spanning the ebbs and flows of partisan politics.
Our question is of deepest sincerity. Your answer could be key to broadening your base of support and winning the presidency.
Thank you again for your leadership.
Karl Polzer, Center on Capital & Social Equity
Interesting evidence on how CARE Act stimulus helped low-income people get through the summer, despite large job losses, and why we need more stimulus now.
Thanks to the Washington Post for publishing this as leaders in Congress negotiated changes to Covid-19 relief legislation:
Low-income Americans are left out of covid stimulus - Center on Capital & Social Equity
Dec. 11, 2020 at 4:31 p.m. EST
Sens. Mark R. Warner (D-Va.) and Susan Collins (R-Maine) said in their Dec. 8 op-ed, “We can’t afford inaction on the covid-19 compromise package,” that their compromise “would help Americans at least get through the next four months.” With due respect to their bipartisan efforts, that was dead wrong.
Very little in the coronavirus relief package would help low-income Americans make it through even one month. What’s needed most is rent relief and money to cover food and utility bills. Yet no direct payments to low-income individuals similar to the checks issued under the Cares Act in the spring are to be found. The bipartisan proposal mainly would benefit interests with access to Congress: businesses (via cheap or free money, plus a liability shield), nonprofits/associations/churches, state governments, and professional classes including doctors, lawyers and accountants.
The D.C. government’s decision to send $1,200 checks to people among the hardest hit sets a good example for states and the federal government. Congressional leaders, many perched in the nation’s wealthiest strata, need to understand that about half of the U.S. workforce earns low wages or is out of a job. Viewed from the bottom up, the United States is becoming a much more impoverished nation.
Karl Polzer, Falls Church
The writer is founder of the Center on Capital & Social Equity.
Fed report shows a promising turnaround for low-wage workers, but that was before the pandemic
Thanks to the Washington Examiner for publishing this op-ed.
Politics and the pandemic darken the Fed’s findings of a fragile turnaround in American economic inequality
Center on Capital & Social Equity
Policy Goals: Increase economic inclusion at reasonable public cost
- Raise minimum wage with annual COLA (option: give states some leeway to adjust ↓ to reflect cost of living/labor).
- Five PAID sick days annually for ALL workers.
- 100% of Americans with health coverage by 2025 - with strong cost controls (any number of payers will work).
- Universal retirement savings system with minimum $500 annual government contribution (so, all Americans own working capital, have stake in market economy).
- No surprise medical bill >$500.
- Cut cost of college/expand apprenticeship programs.
- Improve Social Security benefits for bottom 50%. Achieve long-term solvency through higher taxes mostly on top 20%.
- Increase refundable child tax credit.
Life expectancy has not increased for the lowest-paid workers - National Academy of Sciences
A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a Particularly Bad Deal for Low-Wage Earners - Karl Polzer/Society of Actuaries
Thanks to the Society for publishing this article.
Presentation: Will Growing Inequality Make Social Security & Long Term Care Financing Fixes Harder?
2020 Society of Actuaries Living to 100 Symposium
Race-neutral, progressive economic policies deliver $$ to minority communities
"Although much of it may turn out to be pre-election packaging, legislation unveiled last week by Democrats to help racial minorities is a poorly conceived policy approach that fails to treat the nation’s low-wage workers fairly or equally. Senate leadership is billing the Economic Justice Act as a “major new legislative proposal to make $350 billion in immediate and long-term investments in Black communities and other communities of color.” However, policies that reward or punish citizens based on skin color not only rest of shaky legal and ethical ground. If enacted, they may ignite a political backlash that will set minority communities back rather than helping them move forward."
Click here to read article.
A Sea Change for Wages v. Capital?
Addicted to Identity Politics, Progressives May Miss a Historic Chance To Connect with America’s Working Class
Karl Polzer – Center on Capital & Social Equity
New research affirms what has been known for centuries. In the wake of a pandemic, a smaller, more risk-averse work force is often in position to demand higher wages. After the Black Death ripped through Europe, for example, peasants, shop workers and craftsmen realized they had gained bargaining power. Wages rose and the return on capital fell.
Though the impact of the current pandemic probably will be much milder, millions in the American working class suddenly deemed to be “essential” may come to a similar realization. People working with their hands in nursing homes, grocery stores, meat packing plants, or as home health aides, might ask whether they are getting a fair deal. Why, they might ask, are we expected show up to work and risk contagion for wages that barely cover the rent, while millions in the professional, management, and bureaucratic classes can shelter at home and still pull down a good salary? Why don’t we get paid sick days, health insurance, and other basic benefits like they do? Why can’t we spend more time raising our kids to help them get ahead?
In just two months, the Covid virus has upended the American workforce. Incomes have crashed. Unemployment has rocketed. Whatever new normal emerges will be different and probably more unequal. A larger portion of the workface – and the electorate -- may well be unemployed or working for low wages. Jobs that can support a middle-class lifestyle may be harder to find.
This is the perfect time for elected officials to talk to all American workers about how to improve their lives. Unfortunately, many Democrat leaders are deeply rutted in rituals of race and gender politics. The Democratic party may be blowing its chance to regain working class support -- once its bread and butter -- in two important ways. First, its policy agenda largely reflects upper-middle class priorities. Second, the party’s world view and messaging for many years has presumed that low-wage work is exclusive to blacks and Hispanics. To many Democratic leaders, pale-skinned poor people seem to have no standing. It’s almost as if they don’t exist...
July 1, 2020
Letter to U.S. Political Leaders and Media
It’s past time the White House, Congress required - and funded - Covid testing in nursing homes
What wasn’t said at last week’s Congressional hearings on Covid-19 should raise alarm. Federal officials testified the CDC plans to issue “more targeted” testing "guidelines" for states and nursing homes. More advice is not enough. After five months and more than 120,000 virus deaths, lack of federal and state action -- and adequate funding -- for testing in nursing homes is homicide by negligent policy...
July 14, 2020
CMS to deliver ‘point-of-care’ COVID-19 test kits to all nursing homes
Yes! Credit to CMS Administrator Verma and the Administration. We've been calling on the feds to deploy rapid, comprehensive testing for nursing home residents and staff for 4 months. This is a major step toward reducing deaths from the pandemic. Now, make sure to include long term care providers not directly regulated by CMS, such as assisted living facilities, in the testing program. About 1.5 million live in nursing homes and one million in assisted living.
June 15, 2020
Op-ed:Upgrade Medicaid, don't gut it
Thanks to the Washington Examiner for running this article.
"The current Medicaid regime is a mixture of bad and good. It often renders low quality nursing home care. But Medicaid does provide universal long-term care coverage, a rarity in American social policy. That’s a good thing. Medicaid needs to be upgraded – not gutted. Long-term care insurance and personal savings simply can’t fill the gap cutting Medicaid would leave." ...
"Witness the Trump administration’s delegation of most of the responsibility for the COVID-19 nursing home policy to the states. It recommended, for example, that states make sure COVID-19 testing gets done in nursing homes rather than having CMS require it nationally. Washington’s failure to take the lead on testing can’t bode well for nursing home quality and mortality rates."
Detroit Industry - Diego Rivera
The World Inequality Lab Newsletter - July 2020
Thomas Piketty - Why Capitalism Must Be Reformed | The Daily Social Distancing Show
Capital Gains and U.K. Inequality - Arun Advani and Andy Summers
Three policy recommendations include: "Capital gains tax rates need to be aligned more closely with marginal income tax rates, since large gaps lead to repackaging of income, reducing the redistributive effects of tax, creating horizontal inequity, and biasing measures of vertical inequality."
The Missing Profits of Nations: How much each country loses or attracts because of tax competition - Thomas Torslov, Ludvig Wier and Gabriel Zucman
Awakening Slaves - Michelangelo
"Capital and Ideology": Notes and Figures - Thomas Piketty, 2020
"In this talk, I present some of the figures & tables gathered in my book Capital and Ideology (2020) - an economic, social & political history of inequality regimes, from trifunctional and colonial societies to post-communist, post-colonial hyper-capitalist societies. As compared to Capital in the 21st Century (2014): Capital and Ideology is less western-centered, more political and focuses on the fragilities and the transformation of inequality ideologies. A much better book (I believe!)"
New Book by Anne Case and Angus Deaton
How fighting one pandemic can deepen another: Review of “Deaths of Despair and the Future of Capitalism” - Carlos Lozada
Capitalism Is Killing Us: In their new book, Anne Case and Angus Deaton argue that suicides, overdoses, and income inequality are consequences of capitalism. - The Nation
"Deaths of despair": The deadly epidemic that predated coronavirus: Vox Interviews Case and Deaton
Opinion | How Working-Class Life Is Killing Americans, in Charts - NYT
Case and Deaton talk about their book: "Deaths of Despair and the Future of Capitalism" - Politics and Prose Live
The Saving Glut of the Rich and the Rise in Household Debt - NBER
Comment: Excellent new paper. Remember Macro 101: national savings = national investment? This takes Keynes one step further. Instead of being invested, savings glut at top generates rents, increases systemic inequality, through increased lending to bottom 90%. Who pays high credit card interest and transaction fees, and who profits, e.g.?
Great Flower Moon - Richard Coleman
Letter to the Washington Post, Other Media - April 3, 2020
U.S. news media should make coronavirus coverage available to everyone
The Washington Post and other newspapers have done yeoman work in covering the coronavirus outbreak. Getting reliable and thoughtful information to the public quickly plays a critical role in helping to coordinate responses and saves lives. Unfortunately, the normal practice of restricting access to paid subscribers slows down dissemination of critical information, particularly to lower-income people.
Until this national emergency is over, the Post and other media should "ungate" all coverage related to the pandemic. That way people and organizations that subscribe can quickly get the word out about latest developments. This would be a great service to the public.
Karl Polzer/Center on Capital & Social Equity
March 3, 2020 - Letter to the Washington Post
A wealth tax could be both fair and enforceable
The Post’s March 3 article “Bernie Sanders and Elizabeth Warren want a wealth tax. Wealthy Swiss say their model could work for America” raises key issues of tax fairness and enforcement.
Why would it be unfair to tax the super wealthy on total net assets when middle-class homeowners already are taxed on the value of homes largely financed through debt on which they pay interest to banks (whose profits flow disproportionately to the wealthiest)? Existing American wealth taxes -- state and local property taxes -- now finance most K-12 education. A national wealth tax could be used to make school funding more equitable and lessen the tax burden on the middle class. We already tax the middle class on property it partially owns. So why not tax the wealthiest on the value assets they own lock, stock and barrel?
Incentives are key to enforcement. A progressive wealth tax -- rising in increments from point A to point B -- could be enforced by applying the maximum rate to all households with wealth over a given threshold, and leaving it up to filers to document to the IRS that the lowest allowable rate is appropriate. Finally, a reasonable tax rate could provide an incentive for investment that spurs economic growth. A high rate could stifle it.
Karl Polzer/Center on Capital & Social Equity
A full time worker paid the federal minimum wage earns 13% of the average national income per worker in the US -- the lowest level since the creation of the minimum wage in 1938.
Source: Gabriel Zucman.
"Fastest way to cut carbon emissions is a 'fee' and dividend, top leaders say," Washington Post, 2/14/20
The article above is an example of how the virtue of economic analysis can't be measured by the pound or aggregate number of titles. The insight of a single analyst can contain more wisdom than collective opinion of 100.
How to make carbon taxes more equitable - letter to the Washington Post
Jan. 28, 2020 at 5:40 p.m. EST
The Jan. 25 news article “At Davos, enthusiasm for trees but not a carbon tax” did not mention an important reason political leaders might balk at levying higher carbon taxes. Carbon taxes, including those on gasoline, are highly regressive, affecting lower-income people much more than higher-income. For example, if gas taxes were doubled in the Washington area, most well-paid professionals would have enough capital (or access to credit) to easily switch to a hybrid vehicle. Over the life of the vehicle, their savings in fuel and taxes would probably cancel out any initial expense. In contrast, for lack of capital, a person driving a used gas guzzler to two low-paying jobs would be stuck driving the gas guzzler along with higher fuel costs.
Hiking fuel taxes would make it even harder for the growing share of the U.S. population working low-paying jobs to make ends meet and raise families. Carbon taxes would be more equitable and politically feasible if governments also made sure that workers struggling to pay their bills could afford the switch to clean-energy technology.
Karl Polzer, Falls Church
The writer is founder of the Center on Capital & Social Equity.
Response to WaPo dialogue stemming from our letter on carbon taxes
Dear Washington Post Editors:
Sabrina S. Fu made excellent points in her Feb. 4 letter “Quit saying ‘carbon tax.’ It’s a fee and dividend” addressing concerns I raised in a letter last week. Her proposal, however, would work best an ideal political world where one can control opponents' and skeptics' language used to frame an issue. My concern over tax fairness would remain because in the legislative bargaining process -- including a last-minute deal in conference committee -- the redistribution part of the proposal could easily be watered down, or eliminated, while the regressive "tax" or "fee" would become law.
Why don’t we start by applying her proposal to the current gasoline tax? If it survives the legislative process and works for current energy taxes, then move on to carbon writ large. Bottom line: advocates for low- and middle-income people trying to survive today need to keep a sharp eye on idealistic proposals coming from the better-situated trying to save the planet in the next century.
CCSE work on this issue:
How the American Retirement Savings System Magnifies Inequality - Society of Actuaries (2015)
Half of Americans Have No Retirement Savings. Here's How Congress Can Look Out for Them - Washington Examiner Op-ed (2018)
Aug. 7, 2019
By letting banks charge excessive credit card fees, US raises prices for all, shifts billions of $$$ to the wealthier
There are many mechanisms through which the financial establishment systematically drains money from workers struggling to pay their bills. Some hum along in plain sight while regulators and members of Congress barely take notice. Such is the case with the $80 billion in fees that banks will extract from credit and debit card transactions this year.
While other countries have lowered credit card transaction costs, either through non-bank market innovation (in China) or regulation (in the European Union, Australia, and other nations), U.S. policymakers empower banks and credit card networks to levy what amounts to a doubly regressive national sales tax...
(Also see the note on excessive credit card interest rates beginning on p. 6.)
A winner for the poor? Soda machine offers lower price for cash in Poulsbo, WA
Photo by Tom Hahler
Letter to Washington Post - Nov. 17, 2019
The Post’s call for vigorous debate on capitalism raises issue of its role as honest broker
Today’s lead editorial (“Capitalism itself is on the 2020 ballot: Every billionaire is not a policy failure, but each can afford to pay more”) begins by defending core values of capitalism. It then endorses higher taxes on the super wealthy to temper growing inequality. On the critical issue of how much more wealthy people should pay toward government operation and programs, the editorial is silent. It ends with a call for vigorous and informed debate over these critical issues during the 2020 election.
Along the way, by carefully acknowledging that its current owner, Jeff Bezos, bought the Post from the “civic minded” Graham family six years ago, the editors raise another important issue. That is whether one of the world’s most influential sources of news and public opinion can maintain both neutrality and vigor in the debate over capitalism if owned by one of the world’s richest people. As the debate deepens, this potential conflict of interest may become more awkward and harder to explain.
Karl Polzer, Founder, Center on Capital & Social Equity
Saez/Zucman's "The Triumph of Injustice: How the Rich Dodge Taxes and How To Make Them Pay"
Branko Milanovic's "Capitalism, Alone"
Map of golf clubs in and around San Francisco
Ways To Replace the "Cadillac" High-Cost Health Plan Tax
Warning: Read the article above at your own risk. Author declaims any responsibility for variation in sense of humor. Note that some links in this article are intended to provide useful information, others irony.
NRA HQ in the Northern Virginia suburbs.
States strike back in federal court on AHPs
CCSE asked to co-sign amicus brief opposing U.S. Labor Dept.'s AHP rule, which increases risk of stripped-down benefits (e.g. no mental health coverage), healthplan insolvency, and consumers being defrauded.
Effects of Raising the Federal Minimum Wage
Congressional Budget Office - July 2019
Findings: "In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour. Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well. But 1.3 million other workers would become jobless, according to CBO’s median estimate. There is a two-thirds chance that the change in employment would be between about zero and a decrease of 3.7 million workers. The number of people with annual income below the poverty threshold in 2025 would fall by 1.3 million." … Similar, but smaller effects for minimum wage of $12 … Ditto for $10 minimum wage.
MIT Living Wage Calculator Provides Powerful Tool for State and Local Policymakers
Many U.S. households earning less than a living wage: MIT analysis
"Across all family sizes, the living wage exceeds the poverty threshold, often used to identify need. State minimum wages provide for only a portion of the living wage. For two adult, two children families, the minimum wage covers 73.0% of the living wage at best in the District of Columbia and 41.8% at worst in Virginia. This means that families earning between the poverty threshold ($25,298 for two working adults, two children on average in 2018) and the living wage $67,146) on average for two working adults, two children per year before taxes), may fall short of the income and assistance they require to meet their basic needs."
Example: Maryland is one of the wealthiest states in the U.S., but income varies widely by region. This has made it difficult for the legislature to set a uniform minimum wage.
Possible option: Set a statewide minimum wage at $15/hour (or other level) and let local governments reduce it up to a fixed percentage (say 30%) to account for regional differences. It's important to index any minimum to inflation.
Joseph Stiglitz discusses his new book and "progressive capitalism" plan to rebuild America’s middle class on SalonTV.
If crimes against children can’t be stopped from within, the Vatican & its subsidiaries need purging from the outside: Letter to Washington Post
Every Catholic and every U.S. citizen should carefully read The Post’s Feb. 20 front-page article “ ‘The tragedy that keeps playing out.’ ” It is the latest in an endless stream of detailed evidence that the church power structure is incapable of changing from within to protect children in its care from sexual abuse. Senior church officials should be charged with criminal negligence for failing to remove predators they employ from positions from which they could injure children. Billions of dollars should be removed from the Vatican and its subsidiaries through the courts and distributed to victims. Still, would they change their ways?
Until this systemic problem is forcibly corrected, every church, school and other Catholic facility whose employees come into contact with children should undergo thorough inspection every year on the presumption that abuse may be occurring. If this cannot be corrected from within, then the Catholic Church should be broken up and reorganized. The same should happen with any church operating this way. Jesus commands that those in power do not harm those in their care, particularly children.
America: Build This Wall! :)
The stand off over building a border wall sadly embodies the narrow-mindedness of America’s leaders and disrespects the creative potential of American capitalism. It’s an undeniable fact that Donald, Chuck and Nancy are thinking way too small to discern the proper dimensions of a win-win agreement that could profit the United States for centuries...
Distribution of Household Income before/after Transfers and Taxes: CBO
Summary of slides released November 2018
In 2015, household income was unevenly distributed: Households at the top of the income distribution received significantly more income than households at the bottom of the distribution.
Before accounting for the effects of means-tested transfers and federal taxes:
- Average income among households in the lowest quintile (or fifth) of the income distribution was about $20,000.
- Average income among households in the highest quintile was about $292,000.
- Within the highest quintile, income was highly skewed toward the very top of the distribution: Among households in the bottom half of the highest quintile (the 81st to 90th percentiles), average income was $157,000; among the 1.2 million households in the top 1 percent of the distribution, it was $1.9 million.
The combined effect of means-tested transfers and federal taxes in 2015 was, on average, to increase income at the bottom of the income distribution and decrease income at the top of the distribution.
After accounting for the effects of means-tested transfers and federal taxes:
- Average income among households in the lowest quintile of the income distribution was about $33,000.
- Average income among households in the highest quintile was about $215,000.
- Among households in the bottom half of the highest quintile, average income was $125,000; among households in the top 1 percent, it was $1.2 million.
Below: Taxes, transfers resulted in significantly more income growth from 1979-2015 for the bottom income group than the middle three, while the top income group was held harmless.
Would Adam Smith favor policies creating a more inclusive economy?
Karl Polzer – Center on Capital & Social Equity
In a recent op-ed, I suggested that Congress establish a universal retirement savings system, possibly funded by a tiny tax on financial market transactions. In another, that growing income and wealth inequality has shrunk Social Security’s revenue and that taxing capital gains and high earnings could help the program stay solvent without cutting benefits. What would Adam Smith, the father of modern economic analysis, think of taxing financial transactions and capital gains? The notion of including all workers in saving and ownership of working capital? Helping correct the tendency of modern capitalism to concentrate wealth? Although conservative economists often cite Smith as a siren of an unfettered market, he might give these proposals serious consideration. Times have changed. Yet his manner of reasoning remains vital in addressing issues we face today.
Growing inequality has shrunk Social Security’s tax base. Revitalizing it could restore solvency without cutting benefits.
As the graying and outsized baby boom generation claims Social Security benefits, Americans increasingly doubt whether the program can pay all that it has promised – or even continue to cut checks at all. In their annual report released June 5, Social Security’s Trustees warn that, unless Congress acts to restore the program’s long-term solvency, by 2034 it will only have sufficient funds to pay 77 cents of each dollar currently promised. By then, the Social Security trust fund will be empty and the program will lack legal authority to pay out more than it can bring in through earmarked taxes. An adjustment this size in 2018 would drop the average annual Social Security payment of $16,848 to $12,973. Most older Americans depend on Social Security for all or most of their income.
The longer Congress plays chicken on this issue, the greater the risk that changes such as tax increases or benefit cuts, or a combination, will have major economic impacts on retirees and workers. The trustees’ report emphasizes the growing ratio of retirees receiving benefits to workers contributing payroll taxes as a major force impinging on the program’s solvency. Underlying factors include the size of the baby boom generation and a lower birth rate. But other forces are at work. Growing wealth and income inequality have significantly eroded Social Security’s tax base.
First, wealth inequality: As Americans at the top of the economic spectrum continue to amass equities, bonds, and other assets, the portion of national income from capital investment has increased significantly, pushing down the portion earned through labor. In the United States, labor’s share of earnings fell about eight percentage points between 1995 and 2013 (compared to a bit over three percentage points in other Organization for Economic Co-operation and Development countries). Since Social Security relies primarily on a tax on labor for its sustenance, the relative growth of capital income gradually is choking off a source of revenue.
Second, income inequality: As part of its structure to promote fairness between economic classes, Social Security replaces relatively more lifetime income for lower-wage workers than those with higher wages – but also caps wages subject to its payroll tax, in part to increase the net value of Social Security in the eyes of higher earners. The wage cap for 2018 is $128,400. Over the past several decades, wages of lower-income Americans have stagnated, while those at the top have grown significantly. As a result, the trustees note that portion of wage income taxed by Social Security has dropped by about six percentage points (see p. 144). In agency jargon, the “taxable ratio” of payroll fell from 88.6 percent in 1984 to 82.6 percent in 2000, and has fluctuated near the latter level since then. Social Security Administration (SSA) actuaries assume the ratio will remain about 82.5 percent over the next decade. In summary, unless the tax cap on earnings keeps up with the growing prosperity of those at the top, Social Security’s tax base shrinks as a portion of national income.
America's Inequality and What To Do about It
The Poor Will Always Be with Us. Will the Middle Class?
Why the Wealth Gap Hits Families the Hardest - NYT
"The top 1 percent saw their wealth increase by 156 percent (from 1989 to 2013), while parents in the bottom half saw their wealth shrink by 260 percent. About a third of all families with children in 2013 had no wealth, only debt."
"Rising Inequality and the Changing Structure of Political Conflict" - Piketty lecture at the Kennedy School
Extreme Income Inequality: Brazil, India, the Middle-East and South Africa
This paper presents findings about inequality dynamics in Brazil, India, the Middle-East and South Africa by combining tax data, household surveys and national accounts.
In all of these four regions, top 10% earners receive more than 50% of national income. These societies are characterized by a dual social structure, with an extremely rich group at the top whose income levels are broadly comparable to their counterparts in high-income countries, and a much poorer mass of the population. The authors highlight the importance of the historical legacy of social segregation and of modern institutions in shaping income disparities.
Which Way Is Your Country Headed?
Analysis including Housing Assets Finds Piketty May Have Underestimated Wealth Gap
The Rate of Return on Everything - CEPR
"One of the most intensely debated economic questions in recent years is the relationship between real returns on wealth, and the real rate of growth. In his influential book, Piketty (2014) argued that if the return to capital exceeded the rate of economic growth, rentiers would accumulate wealth at a faster rate than incomes grow. Comparing returns to growth, or “r minus g'' in Piketty's vernacular, we uncover that in fact “r >> g” for more countries, more years, and more dramatically than Piketty himself reported."
These two figures show that the only exceptions to “r>>g” happen in very special periods: the years in or right around wartime. In the pre-WW2 period, r minus g was on average 5% per annum (excluding WW1). As of today, this gap is still quite large – in the range of 3%–4% – and it narrowed to 2% during the 1970s oil crises, before widening in the years leading up to the Global Crisis.
"We show that income inequality has increased in nearly all world regions in recent decades, but at different speeds. The fact that inequality levels are so different among countries, even when countries share similar levels of development, highlights the important roles that national policies and institutions play in shaping inequality."
How Humans Extract Rent from Nature's Gifts
"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them, and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities, makes a third.”
― Adam Smith, Wealth of Nations
Indian income inequality, 1922-2014: From British Raj to Billionaire Raj?
Lucas Chancel & Thomas Piketty,
This chart shows that collective income accruing to India's “middle 40” rose to just over 45 percent by the early 1980s, while that of the top 10 percent declined from about 37 percent in 1951 to 30 percent. After 1990 the two trends reverse. The top 10 percent garnered more than 55 percent of all income in 2014, almost double its share in the early 1980s, while the middle 40 percent’s share fell to just over 30 percent.
U.S. Tax Policy Should Boost Retirement Savings for All Workers, Not Just the Wealthiest
Center on Capital & Social Equity - October 2017
Current tax breaks for retirement savings mainly subsidize the top half of the income distribution, leaving almost half the workforce out of the system. Part of the federal tax subsidy for 401(k)s should be rechanneled into a retirement savers tax credit that all workers get ($500 to $1,000 a year).
In 2017 employees can put up to $18,000 in tax-deferred defined contribution plans (e.g., 401(k)s) and those 50 or older can put aside an additional $6,000. Total employee and employer contributions are limited to $54,000. The Tax Policy Center estimates that in 2016 the tax savings from all tax-qualified pension and defined contribution accounts averaged about $1,040 per taxpayer. (No kidding: 1040.) These tax savings, however, were extremely tilted toward the well-off. Only 4.4 percent of workers in the lowest fifth of the income distribution received any tax benefit and their average tax savings in 2016 was $20. In contrast, 82 percent of the highest-paid quintile received a tax benefits with an average benefit of $4,750. About 48 percent of the middle fifth received a tax benefit with an average savings of $580.
The result of this tax policy? About half the American population has put aside virtually nothing for retirement, while many wealthy people are being paid to save money they would have saved anyway. It’s clear that retirement savings tax breaks could be better targeted. For more information see:
- Distribution of Tax Benefits by Family Income
- Retirement Tax Incentives Are Ripe for Reform Current Incentives Are Expensive, Inefficient, and Inequitable
- Who Benefits from Asset Building Tax Subsidies?
- Estimates of a Proposal to Establish Guaranteed Retirement Accounts, Financed by Reduced Limits on Current Law Contributions to Defined Contribution Retirement Saving Plans
- There's a Better Way To Target Retirement Savings Tax Breaks
"Worry not at all about inequality if it is achieved by smart betterment....But do worry about inequality if it is achieved by using the government to get protection for favored groups. It is what a large government, worth capturing to get the protection, is mainly used for, to the detriment of most of the people off-stage."
Are Workers Receiving the EITC Being Shortchanged on Social Security?
updated October 2017
..."Under the current system, a person whose highest earnings averaged $15,000 a year over 35 years would end up with about $10,542 in annual Social Security benefits – the same as a worker averaging $15,000 wages plus various amounts of EITC. A worker averaging $20,000 in wages would end up with $1,600 (15%) more in annual Social Security benefits compared with another with the same total income but instead averaging $15,000 wages and taking home $5,000 in EITC. Similarly, someone averaging $25,000 in wages would end up with $3,200 (30%) more in Social Security benefits than a counterpart averaging $15,000 and receiving $10,000 in EITC."
Green lines: current law Purple: proposed increases
D's Push for Major EITC Expansion
Two members of Congress are teaming up to bring much-needed relief to low-wage workers and their families through an expanded Earned Income Tax Credit (EITC).
Senator Sherrod Brown (D-OH) and Representative Ro Khanna (D-CA) introduced the Grow American Incomes Now (GAIN) Act in both the House and Senate. Currently, a family of three can receive a maximum EITC of $6,318, while workers without dependent children can receive at most a $510 credit. The legislation would roughly double the EITC for eligible workers raising children and increase the credit for workers without dependent children nearly six fold. The bill also lowers the qualifying age for the EITC from 25 to 21.
Expanding the EITC is a good idea. However, as the share of workers' income provided by government subsidies rises, the case becomes stronger for the federal government to begin making corresponding payments to Social Security. Also, a way to simplify tax policy might be to coordinate the EITC and Child Tax Credit (CTC) in the following way: the EITC could be based solely on income, not family structure. The refundable component of the Child Tax Credit could be expanded to provide additional income for low- and middle-income families.
September 2017 - Karl Polzer
Expanding Use, Scope of the EITC & Child Tax Credit: a Win-Win for Workers and Employers
This paper makes the case that helping employees access the Earned Income Tax Credit and Child Tax Credit – along with supporting bipartisan legislation to expand these programs – can help industries with large numbers of low-to-middle wage workers. In the long-term care field, such a strategy can improve worker income through government wage supplements, thus encouraging more to enter the workforce. Increased labor supply would dampen employer wage costs – all while expanding the range of affordable services providers can offer. This could result in hundreds of millions of dollars of added value in worker earnings as well as provider and customer savings.
From Soviets to Oligarchs: Inequality and Property in Russia 1905-2016
"...(T)op income shares are now similar to (or higher than) the levels observed in the U.S. ... inequality has increased substantially more in Russia than in China and other ex-communist countries in Eastern Europe. ...the wealth held offshore by rich Russians is about three times larger than official net foreign reserves, and is comparable in magnitude to total household financial assets held in Russia."
High earnings of labour are an advantage to the society - Adam Smith
“Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.”
-- The Wealth of Nations (originally published in 1776)
A Life Lived in Truth
For the last eight years of Liu Xiaobo’s life, the Chinese authorities robbed him of his liberty and his dignity. But in the state-enforced silence surrounding Liu’s stage-managed death, the words of his Nobel Prize lecture ring out even louder: “Freedom of expression is the foundation of human rights, the source of humanity, and the mother of truth.”
Warren Buffett: Government Should Do More on Income Inequality - short video
"Natural forces of a market economy and capitalism will drive that disparity unless government does things to help." Buffett says EITC should be expanded so workers can have decent lives. (See CCSE article on this site about relationship of EITC and Social Security.)
Capital Accumulation, Private Property and Rising Inequality in China, 1978- 2015
Thomas Piketty, Li Yang, Gabriel Zucman
Researchers find that the share of public property in China'snational wealth has declined from about 70% in 1978 to 30% in 2015...
"The top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% share dropped from 27% to 15%. China’s inequality levels used to be close to Nordic countries' and are now approaching U.S. levels."
Robin Hood Tax Reform - May 2017
How Modest Changes in Health, Retirement Tax Breaks Could Produce Major Gains in US Health Access, Financial Security – at Little or No Added Government Cost
..."The positive impacts of two such changes discussed below could include 1) lowering the rate of health care cost inflation; 2) providing revenue to help subsidize health insurance for the unemployed; 3) creating seed money and a low-cost infrastructure for a universal retirement savings system; and 4) increasing retirement security for low- and middle-income people; and 5) helping people save for long-term care costs. Looking at benefit tax exclusion is already on the table as Congress faces the unsavory chore of developing a fix for the Affordable Care Act’s clumsily designed “Cadillac” health plan excise tax. Most importantly, these changes could result in greater economic fairness and inclusion."
Eyes on the Prize: Universal Health Insurance Is the Goal
Letter to the Washington Post:
Charles Krauthammer’s March 31 op-ed, “The road to single-payer health care,” was largely on point. However, it is important to separate the concepts of “single-payer,” which is a means toward a goal, and “universal coverage,” which should be the primary goal. Universal coverage can be achieved without having the government cover every citizen. Even if government programs cover most citizens, there will always be multiple payers, including individuals and taxpayers; a universal system also could allow employer plans to operate. Ironically, creating a larger government role in sponsoring and subsidizing health insurance could result in a more competitive market for providing services. Karl Polzer - April 2, 2017
Reformed Tax Incentives Among Tools Needed To Boost Retirement Saving
David Kamin of NYU law school presents proposed changes at the Aspen Institute.
Obama Signs Bipartisan Bill To Speed Miracle Cures to Market. Who Will Have Access to the New Technology? Who Won’t?
In a city that’s witnessed trench warfare between Congress and the White House during the last six years of the Obama Administration, this was a rare moment: a bipartisan love fest. On Dec. 13, 2016, President Obama signed the "21st Century Cures Act," which includes expanded funding to push medical technology through the development pipeline. “We are bringing to reality the possibility of new breakthroughs to some of the greatest health-care challenges of our time,” Obama said. “It is wonderful to see how well Democrats and Republicans in the closing day of this Congress came together around a common cause.”
The legislation was backed by a coalition of interests, including the powerful pharmaceutical industry, academia, and consumer groups supporting speedier medical research. Its few critics have mainly argued that the popular funding provisions “mask a worrisome loosening of regulations at the Food and Drug Administration that could put patients at risk.”
Hardly anyone, however, is asking the million-dollar question: Which Americans will end up having access to new miracle cures, many of which promise to be extremely expensive? And, who will not? The country’s patchwork of health insurance already is rationing expensive new technology to some populations, particularly low-income people. Congress, meanwhile, has begun a fractious debate over repealing, and possibly replacing, the Affordable Care Act (ACA). So, while lawmakers have just put their collective foot on the technology gas pedal, they may soon slam the brakes on funding for expanded coverage, potentially throwing millions of Americans into the ranks of the uninsured...
Traditions of Democracy
"The tradition of Jefferson and Jackson might recede, but it could never disappear. It was bound to endure in America so long as liberal capitalistic society endured, for it was the creation of the internal necessities of such a society. American democracy has come to accept the struggle among competing groups for the control of the state as a positive virtue -- indeed, as the only foundation for liberty. The business community has been ordinarily the most powerful of these groups, and liberalism in America has been ordinarily the movement on the part of other sections of society to restrain the power of the business community. This was the tradition of Jefferson and Jackson, and it has been the basic meaning of American liberalism."
Excerpt from Chapter 37, "The Age of Jackson," Arthur M. Schlesinger, Jr.
June 30, 2016
Reflections on American Wealth Concentration – and What To Do About It
Just over one year ago, the Center on Capital & Social Equity (CCSE) began exploring the phenomenon of growing wealth concentration and inequality, while advocating for a more inclusive form of capitalism. Following are some general observations.
Over the past year, the issue of economic inequality in the United States has moved from the backburner to center stage. Much credit for this goes to Sen. Bernie Sanders’ attack on the “top one percent” in his run for the Democratic nomination. While there is ample reason to question many details of his proposals, Sanders’ call for an increased role for government in providing opportunity and essential services resonated with many Americans who feel they have been left out of the economic mainstream. Yet the problems posed by rising economic inequality are deeply rooted and go well beyond the disproportional gains of the top one percent. They will be harder to address than portrayed in election rhetoric and require judicious use of public resources.
Three observations can be made about economic inequality in the United States. First, income and wealth inequality have grown steadily since the 1980s, suggesting that some of the causes are structural in nature. Second, high levels of inequality increase the risk of political and economic instability. Finally, moving toward an economy that is less unequal and offers opportunity to more Americans will require major changes in public policy and shifts in spending.
Life Expectancy Gap is Large - and Expanding
The gap in life expectancy between the richest 1% and poorest 1% was 14.6 years for men and 10.1 years for women. A study published in the Journal of the American Medical Association also found that inequality in Americans' life expectancy is growing over time.
How the U.S. Retirement Savings System Magnifies Wealth Inequality
Karl Polzer, Center on Capital & Social Equity
Economic inequality and wealth concentration have have emerged as central issues in the U.S. presidential race. While these concerns appear to have risen to the forefront quite suddenly, forces driving wealth concentration have been building for decades. As analysts probe the dynamics beneath these trends, they may find that America's shift to a defined contribution retirement system is playing an increasing role in the concentration of wealth...
So, What Does Jesus Say about Wealth Concentration and Inequality?
In recent years, the tendency for wealth to concentrate in the hands of a powerful few has come under scrutiny, prompting concern about growing inequality from political and religious leaders, most notably Pope Francis. While excessive wealth concentration is likely lead to greater social ills and unrest, how to rein in growing inequality is a more difficult question. Should we move away from capitalism and the market system? Develop a more socialist model? Reform capitalism from inside to benefit people more equitably? ...
Investigators Detail Growth of Extreme Poverty in U.S.
"$2.00 a Day: Living on Almost Nothing in America," a discussion with authors Kathryn Edin and Luke Shaefer
Virginia's push to end veteran homelessness faces steep challenges
On Nov. 11, 2015, Virginia Gov. Terry McAuliffe announced that the state was the first to "functionally" end homelessness among veterans of the U.S. armed forces. To assist two veterans living on the street not aware of the program, the Center on Capital & Social Equity contacted the governor's office, asking how veterans can gain access to housing and other services under the collaboration involving state, federal, and local government agencies.
The Virginia Department of Veterans Services provided information (click on the button below), including contact points at the local and state levels where veterans and their advocates can begin the process of finding temporary or permanent housing.
To follow up, we contacted three Northern Virginia jurisdictions and found an array of barriers to functionally ending veteran homelessness. These problems include lack of knowledge on the part of local officials of the state's initiative; lack of affordable and subsidized housing resources; high housing prices; lack of shelter space (for example, Fairfax County has 1 million residents but only three homeless shelters that can't meet wintertime demand); unwillingness by many street people to seek help (for a variety of reasons); coordination issues between state and local, local and local, and federal and state and local agencies; bottlenecks like having to go through shelters to gain access to housing, when shelter space is limited; and many other factors.
While helping one of the veterans gain access to temporary shelter and services, we reported these issues back to the state officials who said they will take steps to increase awareness of the governor's initiative, including posting information about the program on a state website. For more detail, see our correspondence with state and local officials, which can be accessed by clicking the second button below.
Let’s sell health insurance “across states lines” – through Medicare
Republicans, stop with being the party of “no.” It’s time to step up to the plate and seize the initiative on health policy...
Playing Immigration Piñata
Deception and hypocrisy are no strangers to politics. This seems particularly true in recent incantations about illegal immigration. Republican presidential candidates – other than Jeb Bush – mostly want to round up illegals and dump them into Mexico. Donald Trump wants to spend billions to build a massive wall in the wrong place...
How Can U.S. Policy Reduce Financial Risk for the Very Old?
CCSE explores ways to reduce retirement risk and pay for long term care in Society of Actuaries monograph.
Finding: 401(k)rule changes including new "sub-accounts" could help seniors better save for needs in very old age.
Retirement Strategy: When Should I Start Receiving Social Security Checks?
Americans can begin taking Social Security between ages 62 and 70. Waiting to take Social Security can increase the amount on your check significantly. Collecting Social Security benefits early has the opposite effect.
When to start depends on many factors including your life situation, needs and plans. Most Americans begin taking Social Security early.
The U.S. Consumer Financial Protection Bureau offers this planning tool and other information to help people work through this decision.
A Dream Deferred
by Langston Hughes
What happens to a dream deferred?
Does it dry up
like a raisin in the sun?
Or fester like a sore--
And then run?
Does it stink like rotten meat?
Or crust and sugar over--
like a syrupy sweet?
Maybe it just sags
like a heavy load.
Or does it explode?
Still I Rise
You may write me down in history
With your bitter, twisted lies,
You may tread me in the very dirt
But still, like dust, I'll rise.
Does my sassiness upset you?
Why are you beset with gloom?
'Cause I walk like I've got oil wells
Pumping in my living room.
Just like moons and like suns,
With the certainty of tides,
Just like hopes springing high,
Still I'll rise.
Did you want to see me broken?
Bowed head and lowered eyes?
Shoulders falling down like teardrops.
Weakened by my soulful cries.
Does my haughtiness offend you?
Don't you take it awful hard
'Cause I laugh like I've got gold mines
Diggin' in my own back yard.
You may shoot me with your words,
You may cut me with your eyes,
You may kill me with your hatefulness,
But still, like air, I'll rise.
Does my sexiness upset you?
Does it come as a surprise
That I dance like I've got diamonds
At the meeting of my thighs?
Out of the huts of history's shame
Up from a past that's rooted in pain
I'm a black ocean, leaping and wide,
Welling and swelling I bear in the tide.
Leaving behind nights of terror and fear
Into a daybreak that's wondrously clear
Bringing the gifts that my ancestors gave,
I am the dream and the hope of the slave.
Easter Essay: Is the Golden Rule Enough? Mathematics of the Two Great Commandments
Whether people see themselves as Christians, followers of other faiths, or atheists, all are pulled by the power of many gods: the god of money, the god of technology, the nymph of new electronic gadgets, satyrs of TV and the worldwide net, and so on. In adoration of possessions, money, and power, atheists and believers are equal -- even deeply religious in the way that Paul sarcastically described the polytheistic statuary of Athens as evidence of its faith. Some of today’s humanists and atheists are more Christian in spirit and behavior than nominal Christians. And, unlike some Christians, many have thought through their views on religion and feel they need to have moral justification they can explain. The conventional morality of good people often is a humanism expressed by the Golden Rule.
Jesus taught the Golden Rule two thousand years ago, as one of two great principles. But to Jesus the Golden Rule, while essential, is incomplete without a first principle. Jesus preached the Golden Rule in the Sermon on the Mount. "Therefore, whatever you want men to do to you, do also to them, for this is the Law and the Prophets." (Mat 7:12 NKJV).) Here he is speaking to a large crowd that can't hear him that well and needs a simple guideline.
Later, speaking to religious leaders, he aligns the Golden Rule with the first commandment. In Matthew 22:34-40, "hearing that Jesus had silenced the Sadducees, the Pharisees got together. One of them, an expert in the law, tested him with this question: ‘Teacher, which is the greatest commandment in the Law?’ " To this audience, Jesus provides more context: "'Love the Lord your God with all your heart and with all your soul and with all your mind.' This is the first and greatest commandment. And the second is like it: 'Love your neighbor as yourself.' All the Law and the Prophets hang on these two commandments."
The interaction of the two great commandments shows why the second commandment is not sufficient and why God -- an overarching Spirit that connects individual people -- is necessary, even for a functional morality. For example, if we only love our neighbor as ourselves -- and we happen to be filled with hate and rage for ourselves -- then we won't treat our neighbors very well. The Golden Rule can remedy part of this problem by changing the focus from "loving" to "treating" neighbors as we would have them treat us -- thereby imposing our view of ideal behavior and not raw emotion as the standard. But that won't work for some people either, especially those who lack a model of ideal behavior. So, these folks still might act destructively to people around them.
The idea of a single God, or life force, connecting all people creates a vertical pull toward a connecting spirit (the first commandment) to accompany the horizontal equity of the second commandment. Mathematically, the second commandment is nothing more than a simple equation: Love for me = Love for you. The first commandment is a command to maximize Love to the limit of capacity. Without the first commandment, the potential of a person's love would be limited by inherited and culturally absorbed defects and injuries. The two commandments can be seen as consistent with scientific theories of evolution. The first commandment reflects the biological imperative that no individual can carry on life on his or her own. Individuals must interact and communicate with others to continue the stream of life. The Golden Rule suggests that individuals have the freedom to choose the way they interact and communicate with others. Perhaps those with greater faith and sense of fairness are more likely to pass along their genes. --
Karl Polzer, Easter 2017
"In God We Trust" was adopted as the official motto of the United States in 1956 as an alternative or replacement to the unofficial motto of E pluribus unum, which was adopted when the Great Seal of the United States was created and adopted in 1782. Secularists have expressed objections to its use and have sought to have the religious reference removed from the currency. Wikipedia, 2015
We invite you to join the discussion.