One December in the earlier 1990s — while I still was getting paper paychecks instead of direct deposits — I looked at my paper paycheck and discovered my net salary was higher than expected. When I received my second December paycheck, my net was even higher. I pulled out some earlier pay stubs, and discovered the difference resulted from reduced FICA contributions. Thanks to a good union, years on the job, and earning enough extra post-graduate credits, I'd gone past the cap on Social Security contributions.
January came around, and my net pay went down again. I remember thinking, back then, that if my pay hadn't gone up in December, I wouldn't have noticed. So why was there a cap on FICA contributions? Frankly, it didn't seem fair. It was a regressive tax.
Right now, the FICA cap is a bit over $114,000. To me, that sounds like a pretty high income for one worker, and I doubt that if those making $120,000 didn't get their December "bonus," nor if those making over $250,000 didn't get their October through December bonuses, they really would have paid much attention. I guess those making seven million would notice because the $434,000 they owed all would come out of their first paychecks of the year, so they'd get only about 150 grand for January, and to which I say, tough shit.
Eliminating the cap would make Social Security solvent, with no "chained CPI" needed. Even if we increased maximum Social Security payments to those who paid more, it would work. A "sliding scale" for the super-rich would make it work even better. If Jaimie Dimon collected five or six grand a month in Social Security payments, it wouldn't make a hell of a lot of difference to the rest of us — nor to Jamie Dimon.
Will somebody please slap Obama upside the head and knock a little sense into him? Michelle?
Showing posts with label FICA. Show all posts
Showing posts with label FICA. Show all posts
Saturday, April 13, 2013
Thursday, January 10, 2013
Beware the "Grand Bargain"
The general public seems to believe that what Bernanke called "the fiscal cliff" (and Krugman called "the austerity bomb") has been averted. It hasn't, of course. Sequestration and lifting the debt ceiling were kicked down the road a couple of months, but nothing, really, is settled.
During his first term, Obama seriously sought a "Grand Bargain" on tax increases and spending cuts with John Boehner — but Republicans, possibly convinced by too rich a diet of Fox News, declined, thinking they could take the Presidency and possibly the Senate as well in the 2012 elections. Well, they were wrong.
The problem now, though, is that Obama still wants a "Grand Bargain," and probably still is willing to make entirely too many concessions on what currently are called "entitlements," but which used to be called "the social safety net." (Yes, the progressives let the conservatives select the lexicon again. When Republicans talk about "reforming entitlement programs," what they mean, really, is "shredding the net.")
Well, there are some changes that could be steps in the right direction. The salary cap for FICA contributions could be lifted — or, better yet, entirely eliminated — to build the Social Security trust fund. Since that trust fund may be invested only in government bonds, perhaps the Fed could create a new instrument — available only to the trust fund — that actually pays a little interest. Since the Fed creates money out of thin air, it wouldn't cost taxpayers a cent, so beefing up the trust fund would not have any negative impact on the general economy.
What Medicare needs more than anything is what insurers call a more favorable experience rating — that is, it needs more members paying in who need less health care. Hence, it makes no sense at all to raise the age of eligibility to 67, since the youngest members use the fewest services. What should be done is to open up Medicare coverage to much younger participants. The best way I can see to do that is to allow Medicare to compete against the private companies on the Affordable Care Act exchanges. Uh huh, that good old public option — but there's no doubt it would cut costs. The real solution, of course, is single payer for all. Don't miss Eduardo Porter's column in yesterday's Times!
Needless to say, eliminating corn subsidies and the corn-based ethanol requirement for gasoline would free up a lot of money for food stamps, and raising the minimum wage to a living wage would help increase all kinds of tax revenues while reducing income inequality. Yes, prices might have to rise, but poorer people tend to spend whatever extra income they receive, boosting sales. That means more profits for (real and alleged) small businesses, and more employment.
I could go on, but why bother? None of the above will happen. After all, as Will Rogers said, "We have the best Congress money can buy."
During his first term, Obama seriously sought a "Grand Bargain" on tax increases and spending cuts with John Boehner — but Republicans, possibly convinced by too rich a diet of Fox News, declined, thinking they could take the Presidency and possibly the Senate as well in the 2012 elections. Well, they were wrong.
The problem now, though, is that Obama still wants a "Grand Bargain," and probably still is willing to make entirely too many concessions on what currently are called "entitlements," but which used to be called "the social safety net." (Yes, the progressives let the conservatives select the lexicon again. When Republicans talk about "reforming entitlement programs," what they mean, really, is "shredding the net.")
Well, there are some changes that could be steps in the right direction. The salary cap for FICA contributions could be lifted — or, better yet, entirely eliminated — to build the Social Security trust fund. Since that trust fund may be invested only in government bonds, perhaps the Fed could create a new instrument — available only to the trust fund — that actually pays a little interest. Since the Fed creates money out of thin air, it wouldn't cost taxpayers a cent, so beefing up the trust fund would not have any negative impact on the general economy.
What Medicare needs more than anything is what insurers call a more favorable experience rating — that is, it needs more members paying in who need less health care. Hence, it makes no sense at all to raise the age of eligibility to 67, since the youngest members use the fewest services. What should be done is to open up Medicare coverage to much younger participants. The best way I can see to do that is to allow Medicare to compete against the private companies on the Affordable Care Act exchanges. Uh huh, that good old public option — but there's no doubt it would cut costs. The real solution, of course, is single payer for all. Don't miss Eduardo Porter's column in yesterday's Times!
Needless to say, eliminating corn subsidies and the corn-based ethanol requirement for gasoline would free up a lot of money for food stamps, and raising the minimum wage to a living wage would help increase all kinds of tax revenues while reducing income inequality. Yes, prices might have to rise, but poorer people tend to spend whatever extra income they receive, boosting sales. That means more profits for (real and alleged) small businesses, and more employment.
I could go on, but why bother? None of the above will happen. After all, as Will Rogers said, "We have the best Congress money can buy."
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