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Let’s Play With Some Numbers, Social Security Edition

1:03 pm in Social Security by dakine01

We need to get this to the Fiscal Cliff! What could go wrong?

We need to get this to the Fiscal Cliff! What could go wrong?

Boy howdy, but did I make a mistake this morning. I made the mistake of allowing myself to become distracted while I was “multi-tasking” and surfing the cable channels at the same time I was checking my emails AND getting a phone call. All of a sudden, I realized I was on MSNBC and listening to Moanin’ Joe where the topic of the day appeared to be whining about how those dastardly libruls just wouldn’t get with the program and worship at the altar of Pete Peterson (as Joe declared he does.)

Then I saw someone by the name of Rick Stengel talking about how “entitlements” needed to be cut in order for everyone to show how “serious” they are with the “fiscal cliff.”

Of course, everyone that was on that show this morning (it included Harold Ford, Steven Rattner, Michael Steele, Disco Dave, Tweety, and Chuck Todd) as well as everyone on all the various talking head shows watched by the Beltway Village Idiots Courtiers are people who will never have to worry about living on Social Security as the only thing keeping them from poverty and homelessness, so they are all fine with most any and all changes being discussed. After all, they are all Very Serious People, often wrong but never in doubt. Why, we could almost call them all “economists” they are wrong so often.

A couple of years ago, I wrote this post, “Let’s Play With Some Numbers” as a “what-if” about the mythical person working the mythical full time, minimum wage job and what that person might be able to afford as far as a place to live, and associated costs.

Why is this pertinent?

Well, the current average monthly Social Security payment (for October 2012) is $1,237 per month which works out to be $14,844 per year. This will go up to $1,261 in 2013. Where I had my mythical full time minimum wage earner paying FICA/Medicare taxes, other taxes (and some healthcare costs) and missing work on the “Big 6″ holidays (New Years Day, Memorial Day, July 4, Labor Day, Thanksgiving, and Christmas) before getting into the actual available funds to pay bills (lowering the income from $15,080 by $2,570 to $12,510), the mythical average Social Security recipient pays $99.90 per month for Medicare Part B starting at age 65, going up to $104.90 for 2013.

The point of all this is that a mythical person collecting average Social Security benefits is in roughly the same position financially as the mythical person who works a mythical full time minimum wage job. My WAG is that for every person who is collecting Social Security and also has the benefits of a defined pension, 401K, or robust savings, there is another person who is relying solely and completely on Social Security and Medicare to stay alive. With the Great Recession having taken its toll these past few years, I imagine there are many people just trying to hold on until they reach age 62 and can start collecting something. I imagine there are many more, like myself, who have had to cash in their 401k/IRAs early just to try to stay alive for these past few years.

So let’s remind the Beltway Village Idiots Politicians, Pundits, and Courtiers that there are real world consequences when they so blithely toss around “cut entitlement spending” as a “solution to the deficit.” As Mr Pierce puts it so eloquently, “Fck the deficit. People got no jobs. People got no money.”
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The More Things Stay the Same

11:54 am in Uncategorized by dakine01

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Well, instead of being “surprised” by the June (lack of) Jobs Report, it seems the economists were “stunned” by the numbers (via Bloomberg):

Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said he was “stunned” by today’s U.S. employment report.

He wasn’t the only one.

Not a single economist among 85 surveyed by Bloomberg News correctly forecast the 18,000 increase in payrolls in June reported by the Labor Department. Estimates ranged from a low of 60,000 to a high of 175,000. The median was 105,000 — almost six times the actual number.

…snip…

It’s not unusual for payroll figures to fall outside of the range of economists’ forecasts. The same thing happened last month, as well as in October, November and December of last year.

That last paragraph should become a mantra for economists looking for excuses, but it most likely will not. As I’ve mentioned in earlier posts, there are always extraneous reasons for things happening within the economy. Like bad weather. And there will always be extraneous impacts that should be accounted for in any economic forecasting.

There have been a number of other articles/opinion pieces from yesterday and today that I have found interesting. While Bloomberg reported here that Warren Buffett is betting ‘very heavily’ against a “double-dip” recession (and that kinda scares me a little as I’ve predicted that there will be an official double-dip), the Wall Street Journal seems to be considering a double-dip quite possible.

Washington Beltway Villagers are still in the austerity mode with all the talk of the debt ceiling increase needing drastic cuts to accompany the increase. At least officially, although CNN points out that the GOP is once again claiming tax cuts as the route to employment Nirvana. But there are a few signs that the problems faced by millions just might be penetrating the consciousness of a few folks inside the Beltway. Today’s Washington Post had this opinion piece from Pete Peterson himself pointing out:

Immediate spending cuts and revenue increases could be counterproductive in the context of today’s grim employment outlook, but we need to reach a grand bargain fast to prove to the world that America is back in business.

Mr Austerity “how can we destroy save Social Security” himself recognizes that government does have a role and unfettered and unconstrained slashing is the worst thing that can be done.

Dave Leonhardt in the NY Times Economix points out the austerity trap by invoking Hoover, Roosevelt, and Japan:

In all kinds of ways — consumer demand, the federal deficit, even the weather — the medium-term future is highly uncertain. But this uncertainty, while the main problem, is not the only problem. We are also committing an unforced economic error. We’re cutting government at the same time that the private sector is cutting.

It is the classic mistake to make after a financial crisis. Hoover and even Roosevelt made a version of it in the 1930s. The Japanese made a version of it in the 1990s. Now we are making it.

Reuters has an analysis reaching the same conclusion:

Data on Friday showed hiring ground to a near halt last month, driving the jobless rate up to 9.2 percent and casting doubt on whether a sluggish U.S. recovery would soon pick up steam.

This all but ensures the Federal Reserve will keep interest rates at record lows well into 2012. But help probably won’t be as forthcoming from Congress and the White House, which are locked in battle over cutting a $1.4 trillion budget deficit.

The problem is one of timing: Economists and investors fear that with weak labor and housing markets causing consumers to tighten their own belts, the last thing the economy needs is an aggressive dose of austerity from the federal government.

Ezra Klein at the Washington Post had this blog post on long term effects of unemployment including:

It makes you permanently poorer: In 2009, Till von Wachter, Jae Song, and Joyce Manchester released a study on what happened to the long-term earnings of laid-off workers after the 1982 recession. Immediately, laid-off workers experienced annual earnings 30 percent lower than those of workers who hadn’t lost their jobs. But even 15 to 20 years on, these workers experienced 20 percent lower wages than people who had kept their jobs decades previous

…snip…

It makes you sicker: Being laid off has serious long-term health effects. William Gallo of Yale Medical School has found that people who are laid off near retirement are twice as likely to have a stroke or heart attack. Gallo, along with Jennie Brand and Becca Levy, have also found that being laid off or part of a branch closing increases one’s likelihood of depression.

So here we sit with more than 14M unemployed and between 25M – 30M (at least) un and underemployed, watching as the White House and Congress continue to dance in their stylized way around the real economic needs, here are a few other articles, pointing out some rather obvious things. However, as one who has seen obvious points be ignored by the folks in the bubble, it can’t hurt to point things out for even the most willfully obtuse politicians. Things such as “Wages fall in sagging job market.” Or “Job seekers get left out of the recovery.” “More consumers getting behind on their bills” and “After ‘mancession,’ women getting left out of recovery.”

The recovery has rolled into Wall Street and corporate profits. It has lifted the financial industry which created much of the original problem. But for those who aren’t MOTU or Members of Congress able to pop for a $350 bottle of wine, we keep falling further and further behind. Which I guess, just means we get to sacrifice more rather than those poor poor rich people.

And because I can:

Cross posted from Just A Small Town Country Boy

The Very Serious People Missing the Interconnectedness of Everything

12:15 pm in Uncategorized by dakine01

Author’s Note: Please take a few minutes and Join the Firedoglake Membership Program today. FDL provides the tools that help me and others extend our reach with our rants so we need to support FDL when we can.

As we see the various articles today about President Obama and the “grand bargain” being offered to get Republican votes for raising the debt ceiling, we also see further indications of the total cluelessness of so many of the folks who live inside of the beltway village.

A few weeks ago, I wrote this post explaining how good jobs would attack the so-called deficit problem. This is without addressing the $3.7T plus costs of our wars since 2001 nor that the cost of the Bush/Obama tax cuts are far larger contributors to the “problem.”

The last few days, I have seen a couple of articles reinforcing for me that Pete Peterson and his acolytes are winning the battle. Just last Friday (July 1), Bloomberg had this article on the Government Accountability Office releasing a study (pdf) on how people are going to have to delay collecting Social Security and “buy an annuity” in order to pay for their retirements:

“The risk that retirees will outlive their assets is a growing challenge,” according to a study from the Government Accountability Office released today. Increased life expectancies and health-care costs coupled with declines in financial markets and home equity over the last few years have “intensified” workers’ concerns about how to manage their savings in retirement, the report said.

…snip…

“The risk that retirees will outlive their assets is a growing challenge,” according to a study from the Government Accountability Office released today. Increased life expectancies and health-care costs coupled with declines in financial markets and home equity over the last few years have “intensified” workers’ concerns about how to manage their savings in retirement, the report said.

Of course, the study does not and cannot explain how we are all supposed to be able to come up with the cash to buy an annuity nor does it explain how we’re are supposed to find insurance companies that will actually be around to pay off on the annuities, even if we could afford them.

Today’s (Thursday July 7) Washington Post continues in the same vein with this column from Michelle Singletary:

A survey by First Command Financial Services found that almost half of respondents said they plan to work into their 70s. Those participating were ages 25 to 70, with annual household incomes of at least $50,000.

Seventy-six percent who haven’t retired yet said they are likely to consider working at least part time when they do retire. Many said they planned to work longer because they need the income. Some who said they have sufficient savings wanted to keep working so they could delay pulling from their retirement nest egg for an idle period that could last 30 years or more.

…snip…

Recent research by EBRI found that even if workers delay retirement into their 80s, there is still a chance they will not have enough money in retirement.

In 2003, EBRI created a retirement security projection model to assess people’s retirement income prospects. The 2011 version added a new feature, which allows households to see whether delaying retirement past 65 could help meet their income needs. The model found that 84 is the age at which 90 percent of low-income households would have a 50 percent probability of having enough retirement income.

Once again, we seem to be missing a key ingredient here – the actual jobs that would allow people to keep working, even if they wanted to work until 84 years old.

Last Friday’s (July 1) NY Times The New Old Age blog was a bit closer to reality being faced by many of us, with the results of a second GAO study:

There’s a long list of reasons that older people suffer malnutrition and weight loss, a geriatrician recently told a Senate subcommittee on health and aging: smell and taste diminishing with age, high rates of depression, medications that that suppress appetite or upset stomachs, disabilities that make it hard to shop and cook.

But at the same hearing, an official with Government Accountability Office pointed out another, perhaps more basic problem: poverty.

What a new G.A.O. report calls “food insecurity” remains stubbornly high among seniors with low incomes. In 2009, about 19 percent of households with a low-income person over age 60 faced this problem — meaning that the older adult was uncertain of having enough food or unable to acquire enough.

Unemployment is officially at 9.1% (roughly 14M people) and underemployment is nearly double that. Social Security has been one of if not the most effective government program of all time, yet all we hear out of Washington is how there must be “shared sacrifices” (from all but the very richest of us of course) so Social Security must be “on the table” for budget discussions, even though Social Security has not contributed one dime to the “problems” with the budget.

Tuesday’s LA Times had this column with the headline, “What’s Behind GOP Attack on Product-Safety Database?” For me, I think it is just a variant of the Republican health care plan that now former Rep Alan Grayson noted:

Don’t Get Sick! And if You Do Get Sick, Die Quickly!

And because I can:

Cross posted from Just A Small Town Country Boy

Jobs and the Cat Food Commission

7:28 am in Uncategorized by dakine01

Have I mentioned recently that I NEED a FREAKIN’ JOB?

Well, I do. As do many millions more of my fellow citizens. I’m feeling a bit too lazy to go get the official figures but just last week, the official Unemployment rate was 9.9% (roughly 15 million). Add in another few million for the Underemployed and a few million more to cover the folks who have given up, "self-employed," and the other groups not counted and the figure is probably doubled or more.

So what do we get? Scaling back of the so-called Jobs Bill to appease the Deficit hawks.

Under fire from rank-and-file Democrats worried about the soaring national debt, congressional leaders reached a tentative agreement Wednesday to scale back a package that would have devoted nearly $200 billion to jobless benefits and other economic provisions while postponing a scheduled pay cut for doctors who see Medicare patients.

Nothing about scaling back on fighting two wars of choice. Nothing about raising taxes on Hedge Fund managers who pocket Billions and pay taxes at the Capital Gains rate. (Parenthetically, why is "unearned income" felt to be so much more valuable than "earned income" that it is taxed at less than half the rate of earned income? Doesn’t that fly directly against the traditional Horatio Alger effect that hard work is one of the primary positive attributes in the US and should be rewarded?)

David Dayen yesterday picks up on Harold Meyerson’s column from yesterday morning:

Of all the gaps between elite and mass opinion in America today, perhaps the greatest is this: The elites don’t really believe we’re still in recession. Or maybe, they just don’t care.

My bold. For years, I’ve described myself as a "cynically pessimistic optimist" because I want to believe that those we elect actually do have the best interests of all in mind. Now, I’m just becoming a cynical pessimist. (Yes, I’m one of those who bought into the myths as a child and losing those beliefs is difficult.)

The original stimulus package was used to save a lot of teaching jobs. The White House reported the figure of 650K jobs saved (not all of these being teaching jobs). But now we’re back to needing to pass another emergency bill to save 100K teaching jobs. Again. And this will be an on-going need since most states are still struggling to balance their budgets so we will be back here again next year.

So what does all this have to do with the President’s "Deficit Control Commission" (aka the Cat Food Commission)?

Glad you asked.

We are in the worst economic times since the Great Depression of the 1930s; a time when getting people back to work at meaningful jobs with living wages should be the highest priority of everyone in office right now. It seems to me, that one real good way to increase federal revenues is to get more people working, paying both federal, state taxes and FICA. Unfortunatley, it appears that it is mainly the Unions such as AFSCME and AFL-CIO that recognize this. Gerald McEntee, the President of AFSCME says it best:

“Right now, jobs matter more than deficits,” Mr. McEntee said at a news conference at the Capitol. “And even if the deficit is your top concern, imagine what will happen to it if hundreds of thousands more Americans lose their jobs.”

President Obama set the charter of the Deficit Commission that "everything has to be on the table." Including Social Security, Medicare, Medicaid, and even the just passed subsidies for health care.

Just as the Clinton Administration provided cover to the Republicans in destroying the welfare safety net, so will the Obama Administration provide cover for the destruction of Social Security. Isn’t it a good thing that billionaire hedge fund operators are so concerned with Social Security that the only way they can see to save it is to destroy it? (/snark)

And because I can:

Cross Posted from Just A Small Town Country Boy