Head Down to the Welfare Office to Apply for Your Social Security

Your government hasn't made any official announcement yet, but you can now start calling Social Security “welfare.”

It happened at the end of 2011, when Congress failed to return the Social Security tax – what the media misleadingly kept referring to as “the payroll tax” in hopes that you wouldn't notice - to the 6.2% rate it had been until January, 2011. It had been slashed to 4.2%, President Obama claiming that it would help reduce unemployment. Of course, the unemployment rate stuck stubbornly around nine percent all year long. Did Congress decide, “Well, that didn't work, so we might as well return the tax rate to 6.2% and try to keep Social Security semi-solvent”?

Of course not. It's an election year. You don't raise taxes in an election year, dummy.

“But we've been hearing that Social Security is going broke,” you say. “Isn't this going to make it go broke even faster?”

Never fear. The smart guys in Congress have that problem covered. The money that the so-called Social Security trust fund is losing by the tax cut is being replaced by “general revenue.”

What's “general revenue?” Simple. It's ordinary income tax revenue, the kind the IRS gets out of your paycheck every week, and gets a little more of (or refunds some of) every April 15.

No problem, then, right?

Well, here's the problem, which starts with a little digression:

You may have heard that almost fifty percent of all households pay no federal income tax, or get all the tax they paid refunded. A lot of people – most of them taxpayers – think this is wrong. Half the country doesn't pay for aircraft carriers, public highways, veterans' hospitals, food and drug inspectors, TSA agents, environmental protection, bank and securities regulations, and on and on.

“Don't be such a hater,” the non-haters reply. “Maybe they don't pay income tax, but they pay Social Security tax, so stop complaining.” (I hear this argument all the time, from people who are actually permitted to vote and to breed.)

Yes, they do pay Social Security tax, if they're working. But they now pay 32% less Social Security tax than they used to, and you just know that Congress is not going to raise the rate back up to 6.2% soon. So the difference is going to continue to be made up by “general revenue,” or, in other words, more taxes on the people who do pay income tax.

So what do we have here? We have a Social Security tax cut for everyone who has a job, which is then paid for by the half of the population that pays income taxes.

In other words, half the population pays 32% of the Social Security tax of the other half.

“Well, they can afford it, so why shouldn't they?” you hear from the Occupy Wall Street crowd.

Well, lots of things, starting with the fact that it turns Social Security into a welfare program - money the government takes from you to give to someone else, not because they have earned it, but simply because they need it.

Millionaires generally don't get food stamps. They don't generally get public housing (the president and governors are the only exceptions that comes readily to mind). They don't get Medicaid (medical assistance for the needy, not to be confused with Medicare). And they don't get Supplemental Security Income (cash payments to needy aged, blind, or disabled people, not to be confused with Social Security).

They don't get any of these things, because those benefits are based on financial need. The money doesn't come from your IRA, or your ex-employer's pension fund. You get them, from the government (i.e. from other taxpayers) simply because you would otherwise be homeless or would starve or would sicken and die.

Social Security, on the other hand, once was paid to rich and poor, once they'd stopped working, and the amount they received was based on what they had paid in Social Security taxes over their working lives. But now you hear politicians on both the right and the left saying that one of the things we'll probably need to do to save SocialSecurity is to “means-test” it. In English, that means, if your income is too high, or your savings are too high, your Social Security check will be reduced. Or maybe cut out entirely.

So Social Security will be paid for by the wealthy, to the poor.

How does that make Social Security any different from welfare?

Next time you hear President Obama say everyone must pay “their fair share,” remember that. Half the people pay not only all the personal income taxes, but 32% of everyone else's Social Security tax. 

That's fair, right?

Kill Robin Hood

I swear, I'm going to bitch-slap the next jerk who complains that the gap between the rich and the poor is getting bigger all the time. Anyone who passed third-grade math can understand why, on the simplest level, this is wrong. And anyone who passed seventh-grade math can understand why, on the the more complex level, this is wrong.

Here's the third-grade explanation:

There is a limit to how poor you can get. That limit is known as zero. If you own absolutely nothing, you have zero. Even that panhandler asking for spare change that you just walked by has more than zero: he has the clothes on his back and the seventy-five cents in his pocket.

But there's no limit to how rich you can get. Everyone knows that.

So there's a limit to how little you can have, but there's no limit to how much. So the gap between zero and the max has to increase as long as people are creating wealth. The gap will only stop increasing when people stop creating wealth. If your income increases by ten cents next year and mine doesn't increase at all, OMG!!! More income inequality!!! Eleventy!!!111!!!11!

Here's the seventh-grade explanation:

Paul Poor is making $20,000 a year working the fry vat at the local Bun 'n' Run. Meanwhile Rose Rich is pulling down $100,000 as an IT program manager.

Rose and Paul both do their jobs well, so their bosses give them both a raise. Rose gets a two percent raise, while Paul gets five percent.

Wow! Paul's getting a much bigger raise than Rose! But if you do a little seventh-grade math, you see that Paul's five percent raise puts $1,000 a year more (before taxes) in his pocket, while Rose's smaller percentage raise gives her $2,000 more.

Dammit, the income inequality gap is still growing, even though Paul got a bigger percentage raise than Rose. Paul would have to get a ten percent raise to actually see as much extra money as Rose, or, alternatively, Rose would have to get only a one percent raise to get as little as Paul. Or maybe Rose should be sent to a re-education camp or be guillotined, as some have suggested (see link below).

This is the way things work in the real world.Some people make more than others, because the work they do is worth more.

What the complainers fail to mention is that, in the real world, Paul is probably significantly younger than Rose. That means he probably hasn't moved as far up the career ladder as Rose has. Rose didn't start out making $100,000 a year, even if her college degree was in computer science. And in the real world, Rose's opportunities for career advancement are probably a lot more limited than Paul's, simply because she's a lot higher up the career hierarchy (not to mention a lot older) than Paul is. In a couple of years, Paul well might be the manager of the Bun 'n' Run, making double or triple what he makes at the fry vat. Rose, on the other hand, is very unlikely to double her salary without becoming her company's chief information officer.

The complainers seem to think that:

• once you make a low salary, you will always make a low salary;
• once you make a high salary, you will always make a high salary;
• people who make high salaries somehow did it by stealing from people making low ones.

I don't want to live in a country where there is no income inequality. Because that's a country that says that everyone's work is worth the same, whether you're working the fry vat or managing an IT project. That's a country where people think the government should prevent income inequality by deciding how much people should be allowed to make. That was tried in a 75-year-long experiment known as communism, and the results were catastrophic.

(Roseanne Barr thinks this is a great idea, though she seems to be a little undecided as to whether we should emulate the French Revolution or Cambodia's Killing Fields...)

If Paul Poor doesn't like the fact that he doesn't make as much money as Rose Rich, he should learn how to do something that society values more than cooking French fries. Having a degree in something other than Native American Transgendered Women's Studies might help.

You'll Get Your Money - I Guarantee It

A series of exchanges from a recent online financial advice column:

"Hi. My nephew is going into business for himself. It's a business I don't know much about (green energy stuff), but he's a smart kid, and I think he's going to do well. But being young, he doesn't have a whole lot of money, or a very long credit history, so the banks he's approached haven't been jumping at the chance to finance him. He says one bank is willing to loan him the money he needs, but only if someone with a good credit history will co-sign the loan. He's asked me if I would co-sign. What should I do?

"Sam in DC" 

Dear Sam -
Co-signers typically will have well-established credit to help the borrower qualify for the loan. But being a co-signer isn't like giving a person a reference on a job application. It carries a weighty responsibility and some potentially significant implications that need to be understood before it's taken on.

That's because you're not just vouching for your nephew's ability to repay the debt, you're promising to pay it yourself if he defaults.

Most people would probably say, "That's fine. My (insert relative or friend) since third grade has a good job, is very responsible and will make every single payment."

And that may be absolutely true. It's also true that unanticipated things happen. People lose their jobs, they get sick and they die unexpectedly. If, for whatever reason, the borrower doesn't make the payments, you're on the hook.

You need to consider your nephew's character and ability to make the payments, and whether you could afford the debt if he defaults.
 
The main thing you need to understand is that you are signing that loan for a reason. If the loan goes bad, you have to pay it back. You need to look at this as if you  were taking out the loan yourself.
 
The FTC puts the situation into simple terms in its information on co-signing. You're being asked to take a risk that a professional lender has decided not to take.
 
The risks are real and significant. The lender doesn't have to exhaust every possible means to get the money from the borrower before he comes after you. The bank can select which debtor he wants to pursue. He'll pick the one who is the most likely to pay the quickest.

A few months later:

"Hi - remember me? My nephew had started his own business and needed someone to co-sign his loan. You told me the risks involved, and after weighing them as best I could (I really don't understand this green energy stuff his business is about), I decided to co-sign the loan anyway.

"Now my second nephew is going into the same line of business and he also needs a co-signer to get a loan. Since the first one seems to be working out, I'm going to co-sign for him also, even though the amount he needs to borrow is about twice what my first nephew borrowed. I think it should be okay, even though my credit score is a little lower than the last time I had checked - I guess some lenders are a little worried about my ability to pay my bills, even though I've never in my life missed a payment, or even been late.

"Sam in DC" 

A few months later:

"Hi, it's Sam in DC again; hope you remember me - I co-signed on loans for my two nephews so they could start their own green energy stuff businesses.

"I guess I should have listened to you. Nephew #1 told me he's burned through all the money the bank loaned him and his company isn't selling nearly enough of his green energy thingies to pay to keep the lights on, never mind pay his employees or pay the bank back. So he's going out of business. And now his bank is coming after me to repay the loan. I'm not happy about it, but I guess I can afford it. My nephew says there are federal investigators looking at his business records; they evidently think he might have done something criminal, and people are asking if I was somehow involved.

"I'm still guaranteeing the loan to nephew #2, but now I'm worried. Is there any way I can get out of this?

"Sam in DC" 

Dear Sam -
You are well and truly screwed. When the federal government tells you co-signing on a loan is risky business, don't you think you should listen?

 A few minutes later:
"I am the federal government."

Ten Years Later

Ask someone to name a hero these days, and you're likely to get the name of an athlete or an entertainer, someone who gets paid millions to ply a trade that presents about as much risk to life and limb as waiting tables.

We're somehow too cool to have real heroes any more, people who willingly put themselves in harm's way for someone else's benefit. Most of the time, the only popular recognition they get is when their heroism is of the man-bites-dog variety and the local eyewitless news sends someone over to film the eight-year-old who rescued his entire family from their burning house three days after he did the same thing for his neighbors. And having had his fifteen seconds of fame, he fades back into the crowd and we turn our attention back to the vulgar doings of Snooki and The Situation.

We know the names of the evil and the deranged. We know who Jared Lee Loughner is, but do we know the names of the people who subdued him and saved Gabrielle Giffords's life?

So ten years later, you doubtless recognize the name Muhammad Atta.

And you probably don't know the name of the man who single-handedly saved almost as many lives on September 11, 2001, as Atta destroyed that day.

Yes, he'd served in the U.S. Army

You don't know the name of the man who survived the 1993 World Trade Center bombing, and, convinced that it would happen again, used his position as his company's director of security, to implement a program of emergency evacuation procedures. Every three months, everyone at his company's office in the World Trade Center was required to participate in emergency evacuation drills. Everyone - even the corner office executives.

And you don't know the name of the man who, on September 11, 2001, calmly supervised the evacuation of his company's 2,700 employees - after building officials announced the building was safe and they should return to their desks. The man who kept everyone calm, who reminded them of the drills they had practiced, who sang God Bless America and other songs of his native Cornwall through his megaphone.

September 11th's greatest hero, on the day he died

The man who, after all his employees were safe, went back into the building to make sure everyone got out.

Who was last seen on the tenth floor of World Trade Center Tower 2, going up, and whose body was never recovered.

There is no monument or memorial to him at Ground Zero, and are apparently no plans for one. We're too cool to have heroes any more.

Rick Rescorla. September 11th's greatest hero.

Debt Ceiling Phonus Balonus

I don't know how the final numbers will shake out, but as of right now, the competing House and Senate versions both claim they'll increase the debt ceiling by $2 trillion or so, in exchange for $2 trillion or so in spending cuts over the next ten years - all give or take a trillion or two. The biggest sticking point seems to be whether it will be a short-term increase (six months or so) or long-term (just past the next election).

Either way, we're going to be facing another debt ceiling debate by December 2012. So the ceiling increase is good for only about 18 months, tops.

But the proposed spending cuts are spread out over ten years. Presumably, we'll be having this same argument next year or early 2013.

Some questions:

1. What spending do they think they're going to cut in 2013 in exchange for the 2013 debt ceiling increase?
2. Why do they think that spending can't be cut today, but they'll be able to cut it in 2013?
3. The proposed cuts that are being spread out over the next ten years - will they be cuts compared to what was spent this year? Or will the cuts that they're looking to schedule in, say 2018, be cuts compared to whatever ridiculous amount was spent in 2017? In other words, if, say, the EPA's budget this year is $40 billion, and it's scheduled to get cut $10 billion in 2018, will its budget be reduced to $30 billion in 2018? Or will it be reduced $10 billion from the $65 billion it had meanwhile increased over the previous five years? In other words, what is the baseline for that $10 billion cut?
4. And aren't all these proposals for cuts ten years from now a pointless, phony exercise, since nothing that Congress does today is binding on any future Congress?

I think you know the answers to these semi-rhetorical questions as well as I do, but just in case, here they are:

1. Shut up. We'll cross that bridge when we get to it.
2. We can't afford to make those cuts even today. If we make those cuts, who's going to 
1. stop black-market sales of incandescent light bulbs;
2. support NPR;
3. pay the salaries of Outreach Coordinators, Diversity Liaisons, and Sustainability Facilitators;
4. pay for high speed government rail service between Chicago and Iowa City;
5. make sure there are government warning labels on all lawn mowers warning people not to stick their limbs into them;
6. buy machine guns for Mexican drug lords;
7. grope potential five-year-old terrorists at boarding gates.
3. The 2018 EPA budget will be $93 billion, which is a cut of $11 billion from 2017's $65 billion because otherwise they would have gotten a budget of $97 billion. If that doesn't make sense, it's because you're smarter than your congressman, who, being an imbecile, understands it perfectly.
4. Yes.

 The only real spending cuts are the cuts that take effect immediately. Everything else amounts to BOHICA.

Anyway, the debt ceiling increase is meaningless. You could increase it to infinity + a jillion skillion dollars + a unicorn. The bond ratings outfits are going to downgrade our debt regardless, because they don't give a rap what our debt ceiling is. They care about what we're doing to fix the clusterfark we're in, not what we're going to allow ourselves to borrow.

And we ain't doing squat about that. Invest in China.

Social Worker Managing a Two Billion Dollar Portfolio

Michigan Senator Debbie Stabenow has a graduate degree in social work from Michigan State university.

Would you trust her to manage your money?

Would you trust her to manage $2 billion of your money?

Sen. Debbie Stabenow was also making headlines this week, touring Michigan to promote her Battery Innovation Act — legislation she plans to introduce in the Senate this week that would coordinate all aspects of advanced battery production, from research and development to manufacturing.

While the terms of Dow's recent partnership weren't disclosed, Stabenow's proposed legislation calls for the federal government to invest $2 billion into the effort that she hopes spurs a growing market.

I hatehatehatehatehate when politicians use the word "investing." Whenever a politician uses any variation of the word "invest," he's lying.

That's important, so let me say it again: Whenever a politician uses any variation of the word "invest," he's lying.

Investing means giving X dollars to someone in the hope that you'll get X+Y dollars back in Z time. With X, Y, and Z, you can calculate a return on investment, or ROI.*   Example: You invest $100 (X) in Consolidated Fuzz Corporation stock on January 1. On December 31, you sell the stock for $125.00 (Y). Your ROI is 25% per year (Z).

Politicians only use the X amount above - and they almost always get it wrong by factors of magnitude - and never, never, never give you a number for Y or Z. What they do with your money bears less resemblance to real investing than it does to throwing fistfuls of seed corn out a car window and expecting ethanol pumps to sprout up where they land.

In Stabenow's case, that may be the literal truth. She thinks she can feel global warming when she's flying, so who knows what she thinks would happen if you threw corn out your car window?

"Climate change is very real," she confessed as she embraced cap and trade's massive tax increase on Michigan industry - at the same time claiming, against all the evidence, that it would not lead to an increase in manufacturing costs or energy prices. "Global warming creates volatility. I feel it when I'm flying. The storms are more volatile. We are paying the price in more hurricanes and tornadoes."

This person is trying to spend $2 billion of your money. No wonder we're going broke.

* If you don't understand that because your degree is in something that ends with the word "studies," take a semester of accounting 101 at your local community college, after you've mastered some basic math, such as calculating percentages.

Happy Independence Day, America, and God Save the Tsar!

So last night, Cunegonde and I and some friends went to Oronoco Park here in the lovely Democratic People's Republic of Alexandria, Virginia, to celebrate America's 235th birthday and DPRAV's 262nd, the celebration of both which is traditionally the Sunday after Independence Day. It was a lovely blankets-and-lawn-chairs-and-coolers kind of evening, a rockabilly band entertained us for about the first half-hour we were there, local dignitaries made speeches, DPRAV fed birthday cupcakes to the crowd, and about an hour before the 9:30 scheduled time for the fireworks display, the Alexandria Symphony Orchestra took the stage and treated us to a wide range of music, from Duke Ellington to Rogers and Hammerstein to Gustav Holst (Jupiter, the Bringer of Jollity, from The Planets), to music from Harry Potter.

At 9:30, it was dark enough for the fireworks to begin, and the orchestra played the last ten minutes or so of Independence Day fireworks' standard accompaniment, Tchaikovsky's famous 1812 Overture.

Am I really the only person in America who finds this a ridiculously insulting juxtaposition of fireworks and music? Here's what 1812 is about, according to Wikipedia:

The music can be interpreted as a fairly literal depiction of the campaign: in June 1812, the previously undefeated French Allied Army of over half a million battle-hardened soldiers and almost 1,200 state-of-the-art guns (cannons, artillery pieces) crossed the Niemen River into Lithuania on its way to Moscow... we hear the ominous notes of approaching conflict and preparation for battle with a hint of desperation but great enthusiasm, followed by the distant strains of La Marseillaise, the French National Anthem, as the French approach... The Tsar desperately appeals to the spirit of the Russian people in an eloquent plea to come forward and defend the Rodina (Motherland)... we hear traditional Russian folk music. La Marseillaise returns in force with great sounds of battle as the French approach Moscow... the great armies clash on the plains west of Moscow, and Moscow burns. Just at the moment that Moscow is occupied and all seems hopeless, the hymn which opens the piece is heard again as God intervenes, bringing an unprecedented deep freeze with which the French cannot contend (one can hear the winter winds blowing in the music). The French attempt to retreat, but their guns, stuck in the freezing ground, are captured by the Russians and turned against them. Finally, the guns are fired in celebration and church bells all across the land peal in grateful honor of their deliverance from their "treacherous and cruel enemies."

An overture full of Russian folk tunes, La Marseillaise, the French national anthem (which Napoleon had actually banned in 1805, but never mind), and Russian hymns God Save the Tsar!, and God Preserve Thy People. What all this has to do with America's or DPRAV's birthday escapes my poor understanding. This is the celebration of the defeat of one European autocrat's armies by the armies of another European autocrat (with a huge assist from the weather), neither of whom had any use for what happened here in 1776, and both of whom happily imprisoned or murdered any of their royal subjects who had any thought of trying to bring 1776 to Paris or Moscow.

But we have to have 1812 when we have fireworks, because, well, you know, cannons! Really? Is that the only justification for playing this musical affront to every American value on the anniversary celebration of the founding of our country? Where we not only believe that all men have the inalienable right to life, liberty, and the pursuit of happiness, but consider it to be as obvious a fact as 2+2=4?

If there is no other music out there that would be suitable for the occasion, can't we find someone who can write uplifting, rousing, Independence-Day-fireworks-worthy music, to include cannons for people unwilling to give up the tradition, to replace this misbegotten celebration of dictators, death and destruction?

Is there anyone who thinks John Williams isn't up to the job?