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Issue #73 |
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Last Update May 20, 2013 |
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New York Stringer is published by NYStringer.com. For all communications, contact David Katz, Editor and Publisher, at david@nystringer.com |
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National and International A Phoney Issue by David Katz 4/15/13 It is ironic that the ones screaming loudest about the deficit are the ones that caused it. Having done great damage to our economy, they are now seeking to shift attention from themselves, and place the blame and burden on those who are innocent, and can least afford to correct the damage. Republicans (and a few conservative Democrats) are calling for drastic cuts to “entitlements”, while looking to preserve their governmental handouts, artificially low tax rates and pressure on the working and middle classes to reduce standards of living. Let's look at their claims. “Social Security is in a crisis and benefits must be cut.” This is the fallback position of conservatives who have seen their call for privatization of social security crumble to dust in the face of stock market disasters. “Baby boomers will be retiring in great numbers, and we will not have the funds to pay their benefits.” In fact, Social Security, at current revenue rates, is solvent through 2033 without making any changes. Currently, no payroll taxes are levied on income above $113,700. Removing that cap will make Social Security solvent for the next 75 years, well beyond the baby boom bubble. However, in the context of the deficit, the whole Social Security thing is a red herring; Social Security does not contribute to the deficit at all. “Medicare is bleeding us dry.” Medicare Advantage subsidies (subsidizing private insurance companies to provide medicare benefits) cost 11 billion dollars in 2009. Obamacare cuts back on these subsidies over time. Some of the Medicare costs are congressionally mandated. For example, eliminating the congressionally imposed restriction on medicare using its bulk purchasing power to lower drug prices would save another 15.6 billion dollars per year. It would take only minor tinkering to get us over the Baby Boomer hump in medicare costs if these savings were realized. Repatriation of profits could return $150 billion per year (the difference between the average 20% tax rate on offshore profits and the 35% US rate, on the estimated $1 trillion hidden offshore annually). That would make a substantial contribution to reducing the deficit, without cutting needed government programs. If the money is used to boost the economy and create jobs, much of the recession-driven deficit would disappear. Then we could get back to the panic at the end of the Clinton administration, when conservative economists were screaming that paying off the national debt would throw us into deflation. In their eyes, whatever the government does is wrong, even if they thought of it first. |
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