Social What?

In the United States, there is a federal government program called the Old-Age, Survivors, and Disability Insurance (OASDI) program.  It is the largest governmental program in the world, and in the U.S. it is the single greatest expenditure of tax monies, greater even than federal defense spending.  It is also the greatest redistribution of income in the country--from the poor to the rich.  Yes, the poor to the rich.  It is known as the Social Security program.

Consider another U.S. government program--the federal income tax program.  The federal income tax program is described as a progressive tax, i.e., the greater the amount of income, the higher the rate of tax.  So higher income wage-earners pay a higher percentage of their income to the federal government than lower income people.  Why?  The belief is that if a person has a high income, they are likely to be able to pay a higher rate of income tax because it is less of a sacrifice for them.  This is often considered tax fairness.  But, surprisingly, when it comes to Social Security, people with higher income pay a lower tax rate than do those with lower income.

If one's income is $25,000 per year, one pays 6.2% of it to the Federal Insurance Contributions Act tax, called FICA on your pay receipt.  But for someone who earns a $250,000 salary, they pay only 2.7% of their income to FICA.  For a $500k salary, the FICA tax rate drops to 1.4%, and a million dollar salary is required to pay less than 1% to FICA.  So lower income wage-earners pay over 6 times the tax rate of millionaires.  Those who can least afford it are subsidizing those who can best afford it.  Why is this tax regressive instead of progressive as the income tax?

The FICA tax is actually a 12.4% flat tax, half paid by the employee and half by the employer.  However, in 2012 it is limited to the first $110,100 earned.  Any income above that threshold is FICA tax-free.  Compare that to the 2.9% Medicare flat tax for health care insurance for seniors, again half paid by the employee.  There is no maximum income threshold for Medicare tax.

If you purchase a car, the sales tax is applied to the price of the car, regardless of the amount of the price.  There is no price limit.  A low-priced Kia is taxed at the same rate as a high-priced Mercedes Benz.

The fund that holds all the FICA tax is being depleted and, depending on the analysis, could use up all it funds in 20 years or less.  So there is much discussion about reducing benefits or raising the retirement age in order to make the funds last longer.  Why?

The obvious solution to the continuation of funding Social Security is not to cut benefits.  It is to eliminate the income limit on which the tax is applied.  Why is this not being considered, or even discussed by our elected U.S. Senators and Representatives whose individual salary is at least $174,000 per year, or in the case of the Speaker of the House over $223,000?  Wait--how much?

Why is this not being considered?

Election

What happened in the U.S. election?  That was the question asked when the phone call came through early in the evening on election day from Adelaide, Australia, where it was 15 1/2 hours later than Pittsburgh.  Our friends were very concerned about the outcome of the Presidential vote, and the polls hadn't even closed in Pennsylvania.

"Don't worry," I told them.  "Obama will win more than 50% of the popular vote for the second time, and at least 313 electoral votes, and all he needs is 270."

They couldn't believe me.  How did I know?  How could I be so certain?  To me it was very simple.  The Republican Party had been moving to the right ever since the Tea Party got their first mention in the national media, and the American people had been moving to the left during the same time period.  The Democratic Party had recognized the demographic changes that were developing in the population and had emphasized  the social and financial issues that were important to that changing populace, and addressed those issues in ways that appealed to them.  Racial and ethnic minorities were becoming a larger percentage of the population, and especially the voting population, and would continue for decades in the future.  Women would also be a big factor, especially those women who saw Republicans as a threat to freedom of choice and health care.  This election was the last chance for the extreme right-wing to take over the government.  This would be the last chance for an election controlled by the old rich white guys

African-Americans had been approximately 13% of the population for decades, but even after the Voting Rights Act of 1965 had outlawed discriminatory practices, they had not voted anywhere near the rate of whites.  This had been changing in recent national elections, and had reached a peak for Obama in 2008.  This year, for the first time, Hispanics would be over 10% of U.S. voters.  If both groups voted for Obama this year as they had in 2008, along with Asians, women, and young people, it would be difficult if not impossible for the Republicans to win the Presidency and increase their numbers in the Senate.  The only arm of the national government that Republicans had a lock on was the House of Representatives.  Due to gerrymandering of voting districts by state governments, nearly every Republican in the House was guaranteed to get re-elected.

Health care, education, immigration, income inequality, past tax cuts for the richest 1%, social justice, marriage equality, climate change, wars, corporate welfare--these are the issues the new voter majority wanted to have addressed.  And all the Republicans had were birthers, the NRA, more tax cuts for the wealthy, cuts in needed social programs, attacks on Planned Parenthood, and demonizing of the poor.

How could you not be certain that Obama and the Democrats would win?  Everything was in their favor, except the amount of money that billionaires gave to Republican political action committees.  And Romney had the rich, or as George Bush called them "my base".  He had a slow economy to blame on Obama, high unemployment, high debt, and Fox News.  Obama had the people and the multicultural future.

The extreme right-wing which controls the Republican Party threatens to destroy it as a viable political force for the foreseeable future in a country which will, in the near future, have a majority minority population.  Cosmetic changes in how the Republicans approach minorities will not be sufficient to hide the real right-wing agenda.  The only chance Republicans have to remain as a force in national politics is to divorce themselves of the extremists and make a serious attempt to re-form the Party around Jon Huntsman Jr and Gary Johnson, and perhaps pull in Chris Christie and some very blue-dog (conservative) Democrats.  That probably will not work, because the populace is becoming even more progressive, as is seen by the choice of Senators-Elect Elizabeth Warren and Tammy Baldwin who will be the first openly gay U.S. Senator, and the defeat of a number of high-profile Tea Party candidates for both the U.S. House and Senate.

With the House controlled by Republicans, there still may not be much that will be accomplished under Obama.  At least we will not see the massive damage that could have been caused if the Senate and Presidency had been lost.  And the future is bright.

American dream or nightmare 2

So no one can get elected to any official office in the USA without stating support for American Exceptionalism by repeatedly referring to America as The Land of Opportunity, to The American Dream, and any of many other trite pseudo-patriotic expressions.  Why is this important?  Mainly due to the fact that since the Reagan era, America has no longer been The Land of Opportunity, and The American Dream has turned into a myth.

Since Reagan, the percentage of national wealth held by the richest 1% of Americans has doubled, the percentage of wealth of the richest 0.1% has tripled, and the average income for the 99% has barely moved.  This is one of the points that the Occupy Movement was trying to emphasize.  Compared to the other first world countries, the USA has the lowest equality of opportunity, and this includes "Old Europe".  We have low social mobility.  The status you were born into largely determines the status you will obtain in your adult life.  Much of this has to do with differences in nutrition, education, peers, social pressures--things that are mainly a result of the opportunities that wealth can provide.  And the rate of difference in equality has been increasing, especially through the eight Bush years, and not slowed much through the first four Obama years.  We are heading toward an America that has two classes--the rich and the poor, and very few in the middle class--if we cannot stop and reverse this trend toward income inequality.

As "Americans", we have to acknowledge that Obamacare is important for the future of our people.  We have to acknowledge that true improvement in education (not voucher schools) is important for the future of our people.  We have to acknowledge that those richest Americans who create wealth for themselves but not economic growth for the 99% have to pay their fair share and stop filling their pockets with corporate welfare.

This failure of the American system is hurting the 99% by restricting economic growth for the middle class, keeping the poor from having a fair shot at obtaining their potential, and will eventually negatively affect those at the top, who have for the past few decades benefited from tax cuts for themselves and spending cuts for programs that can help improve income equality.  This is what the New Deal and the Great Society programs were trying to accomplish, and Reagan, the Bushes, and, yes, even Clinton have created the means to destroy.  "We went so well so long...when I think of the road were travelling on, I wonder what's gone wrong."

We have seen the enemy in the mirror.  Yes, he is us.  We must change, or the loss of The American Dream will be permanent.