That's not exactly what Samuelson said, after all a 12 percentage point increase in the income tax would take a lot of money from rich people. Samuelson told readers that increasing the normal retirement age for Social Security by an additional two years between now and 2027 (it is already scheduled to rise to 67) "wouldn’t impose major hardship." Raising the normal retirement age by two years is effectively a 12 percent cut in benefits. (For orientation, the average Social Security benefit is less than $1,300 a month.)

Since Social Security is more than 90 percent of the income for one third of retirees this would be equivalent to almost a 12 percentage increase in the income tax for this group. It's more than half of the income for two-thirds of retirees, which means that Samuelson's proposal would be equivalent to a tax increase more than 6 percentage points for this larger group of seniors. By comparison, the Republicans claimed that President Obama's proposal to raise the marginal tax rate by 4.6 percentage points on the rich would be devastating.

The context is Samuelson's praise for New Jersey Governor Chris Christie's proposal to phase in an increase in the normal retirement age for Social Security to 69, which he proposes to phase in by 2034. Samuelson wants it done immediately. Samuelson also applauds Chrstie's proposal to phase out benefits for seniors with incomes between $80,000 and $200,000. This would have the same incentive effect on these seniors as an increase in the income tax rate of 25 percentage points.

Since it affects relatively few people, and would provide a substantial incentive for evasion and avoidance, this proposal would have little impact on the finances of the program, although it would likely help to undermine political support since it would no longer be a universal program. The cutoff for benefit cuts could also be gradually lowered as the promised savings are not realized. It is also worth noting that the $80,000 cutoff for being wealthy in the context of Social Security cuts, and also Christie's proposal to cut Medicare, is one-fifth of the $400,000 cutoff set for the higher income tax rates put in place in 2013.

But the most striking part of Samuelson's piece is that these cuts to Social Security are supposed to be part of a drive for "generational justice." Samuelson complains that:

"Boomers’ children and grandchildren would pay for these more generous benefits [Social Security and Medicare] while their own future benefits would drop."

April 2015, David Rosnick

Dean Baker
Truthout, April 20, 2015

The Washington Post has established itself over many decades as a major mouthpiece of elite opinion. Its editorial pages argue strongly for the interests of the wealthy, with scarcely concealed contempt for people who have to work for a living. (They do support alms for the poor, hence they are okay with programs like food stamps and TANF.) 

This attitude has been shown many times over the years, but perhaps never more clearly than in its editorial on the bailout of General Motors and Chrysler, where it fumed about auto workers who earned $56,650 a year. By contrast, it was an ardent supporter of the Wall Street bailout, which was largely about helping people who make this much money in a day.

In fact, the Post helped to conceal one of the major scams that was used to pass the bailout, the claim that the commercial paper market was shutting down. When people were saying that the economy was at the edge of collapse following the Lehman bankruptcy, the commercial paper market was the most immediate issue.

Many large profitable companies (e.g. Verizon or Boeing) were dependent on issuing commercial paper to meet their monthly bills such as payroll, utility bills, and payments to suppliers. If these companies could not get the credit needed to make these payments, the economy really would collapse. What most of the country, and almost certainly most members of Congress, did not know at the time the bailout was approved was that Ben Bernanke and the Fed single-handedly had the ability to support the commercial paper market. The weekend after Congress approved the TARP, Ben Bernanke announced the creation of the Commercial Paper Funding Facility. Congress would have had a much more informed debate about whether it wanted to save Wall Street if it knew the Fed had this power before it voted, but folks like the Washington Post editorial board didn't want any delays before the Wall Street folks got the money.

The Americas Blog’s friend for the week is none other than Senator Robert Menendez, the Democrat from New Jersey! Currently under federal indictment on bribery and corruption charges, Senator Menendez recently took a break from trashing Venezuela and fighting the administration over its attempts to normalize relations with Cuba and reach a deal with Iran in order to add his voice to the overwhelming majority of Democrats in Congress who criticize “Fast Track,” also known as Trade Promotion Authority.

Late last night, Senators Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.) announced a Senate Finance Committee hearing with just 12 hours notice. The hearing started off this morning with three Cabinet level officials giving testimony, despite the fact that the “Fast Track” bill had not been published. All three said they had not seen the final text of the bill, which in any event was introduced several hours later, at around 2:30 PM this afternoon.

This rushed timeline and lack of transparency was the focus of a statement published by Menendez and signed by half of the Democrats in the Senate Finance Committee:

With millions of jobs on the line, American workers and manufacturers deserve more than a hastily scheduled hearing without an underlying bill. Congress should undergo a thorough and deliberative committee process for debating trade agreements that account for 40 percent of our world’s GDP. And we should be debating a bill that has seen the light of day and contains strong provisions to protect American workers against illegal trade practices like currency manipulation.

During his time for questions, Senator Menendez rightly pressed the U.S. Trade Representative, Ambassador Michael Froman, on his estimate of the net jobs effect of the proposed Trans-Pacific Partnership (TPP). Here is the exchange, taken from a transcript prepared by CQ Congressional Transcripts:

MENENDEZ:

[…] Ambassador Froman, I asked you at our last hearing on the broad question of trade, how many jobs do you expect to be created -- net jobs, I would say, because in every process of trade, there are winners and losers -- net jobs to be created in TPP within the first year, the first five years, the first 10 years?

You didn't give me any figures, and I'm wondering if, at this point, you're in the position to describe what that would be.

FROMAN:

So when the -- the agreement is complete, there'll be a full economic analysis done.

I think the most authoritative analysis right now is probably the one that comes from the Peterson report -- the Peterson Institute that talks about expanding exports when fully implemented by $123 billion a year, adding $77 billion to U.S. GDP and contributing to many more high-paying jobs.

It depends a bit on where you are on the spectrum of full employment. If you're not at full employment, then it adds jobs. If you are at full employment, then it adds better jobs. And so it'll bend a little bit...

MENENDEZ:

So -- so we don't have a number on the jobs? You're talking about just gross?

One of the most underutilized sources for labor market data is the Job Openings and Labor Turnover Survey (JOLTS). The survey provides valuable information on a host of topics, including how and why people leave their jobs.

JOLTS tracks the number of “total [job] separations” that occur in any one month. They break these job separations down into three categories: “quits,” “layoffs and discharges,” and “other separations.” According to the April news release of the February JOLTS data, the “other separations” category includes “separations due to retirement, death, and disability, as well as transfers to other locations of the same firm.”

Eileen AppelbaumThe Huffington Post, April 15, 2015

Like many other folks connected with the Washington Post, columnist Charles Lane wants to cut Social Security. He used his column today to argue that New Jersey governor Chris Christie and Massachusetts senator Elizabeth Warren want to address the shortfall in Social Security in essentially the same way, but progressives are too dumb to recognize this fact.

"The irony is that the progressive plan and Christie’s plan are equivalent, at least in their very broad financial strokes. Both claim to match Social Security resources and obligations over time, and to accomplish this progressively; that is, with upper-income folks bearing a relatively higher share of the adjustment costs."

While Lane may see Christie’s proposal to means-test Social Security benefits as being essentially the same as Warren’s plan to eliminate the cap on wage income subject to the Social Security tax, the numbers indicate otherwise. Christie has said that he would means-test benefits on people with income above $80,000 with the idea of phasing out all benefits for people with incomes over $200,000. If we assume that these people have benefits of roughly $30,000 a year (this is a bit less than the average benefit projected for a high income earner in 2025), this means that we would be phasing out $30,000 in benefits over an income span of $120,000 (the difference between the $200,000 end point and the $80,000 start point). That is equivalent to a 25 percentage point increase in the marginal tax rate for retirees whose income falls within this band.

Under the Christie plan, retirees with incomes above $200,000 would see no further cuts than those with incomes of $200,000 since they will have already lost all of their Social Security. This means that those with income of $2 million or even $20 million would face the same income loss as those with income of $200,000. Of course his plan also does not affect at all people who are still working and not collecting Social Security.

There is also the issue of taking away a benefit that workers have paid for. After all, we could means-test interest payments on government bonds, but that apparently does not bother either Christie or Lane. In addition, we are likely to see substantial distortions as upper income retirees find ways to hide income (e.g. buy a condo for winter vacations rather than use investment income to pay for a hotel). But such distortions apparently do not matter to Lane and Christie, even though they are likely to substantially reduce the savings from means-testing.