July 20, 2011

Don't Cut Social Security and Medicare Before Cutting the Federal Workforce and Federal Pay and Benefits, Including the Military (Shared Sacrifice)

The Republican-controlled House voted July 19, 2011, to slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened Aug. 2 government default. Boehner, who played a muted role in public during the day, did not discuss what alternatives he had in mind. The "Gang of Six" briefed other senators on the group's plan... It calls for deficit cuts of slightly less than $4 trillion over a decade and includes steps to slow the growth of Social Security payments, cut at least $500 billion from Medicare, Medicaid and other health programs and wring billions in savings from programs across the face of government. It envisions tax changes that would reduce existing breaks for a number of popular items while reducing the top income bracket from the current 35 percent to 29 percent or less. Some Republicans noted a claim contained in the summary that congressional bookkeeping rules could actually consider the plan a tax cut of $1.5 trillion. That credits sponsors for retaining income tax cuts enacted at all income levels when George W. Bush was president. The Senate's two top leaders have been cooperating on a measure that would allow Obama to raise the debt limit without a prior vote of Congress while also setting up a special committee to recommend cuts from federal programs, including Social Security and Medicare. - Huge Deficit-cutting Bill Sails Through GOP House, The Associated Press, July 20, 2011

A new bipartisan plan to reduce government borrowing would target some of the most cherished tax breaks enjoyed by millions of families — those promoting health insurance, home ownership, charitable giving and retirement savings. Many taxpayers would face higher taxes — a total of at least $1.2 trillion over the next decade, and perhaps more. For its part, the Gang of Six plan punts on many of the most difficult issues, leaving it to congressional committees to fill in the details later. Some congressional leaders said the plan lacks details and could produce much bigger tax increases than advertised. The plan would simplify the tax code by reducing the number of tax brackets from six to three, lowering the top rate from 35 percent to somewhere between 23 percent and 29 percent, providing a windfall for wealthy taxpayers. To help pay for lower rates, the plan would reduce popular tax breaks for mortgage interest, health insurance, charitable giving and retirement savings (about 35 million households claimed the mortgage interest deduction in 2009, and about 36 million households claimed deductions for charitable contributions). Other tax breaks would be spared, including the $1,000-per-child tax credit and the earned income tax credit, which helps the working poor stay out of poverty. The alternative minimum tax, which was enacted in 1969 to make sure that high-income families pay at least some income tax, would be repealed. Starting in 2018, the new health care law would tax high-priced health insurance plans; there are several proposals to adjust the tax to include more health plans. The Gang of Six plan is silent about taxes on capital gains and dividends; the current top rate on capital gains and dividends is 15 percent — well below the top rate for ordinary income. On the business side, the plan would lower the corporate income tax rate from 35 percent to somewhere between 23 percent and 29 percent. Under current law, the U.S. taxes overseas profits of American corporations but only after they return those profits to the U.S. The proposal calls for a territorial tax system, which would tax only profits made in the U.S. The proposal could be a huge windfall for U.S.-based multinational corporations. Business groups have already been lobbying Congress to keep their tax breaks and to create new ones. - Bipartisan Tax Plan Trims Mortgage Deduction, The Associated Press, July 20, 2011

Don't Cut Social Security and Medicare, Cut Unfunded Wars and the Military; Cut Unnecessary and Unconstitutional Federal Agencies, Departments and Programs, Cut the Federal Workforce and Federal Compensation; Force Multinational Corporations to Pay a 35% Tax Rate and Stop Using the Public Treasury to Fund Agenda 21

Groups Urge Leaders to Reject Proposals Aimed at Federal Workforce

The House-passed version of the fiscal 2012 budget resolution included a recommendation that would require federal employees to pay for half the defined benefit they receive with their pensions at retirement. Most employees currently contribute 0.8 percent of their salaries and agencies (taxpayers) pay 11.7 percent, with agencies' (taxpaypers') contribution set to increase to 11.9 percent in October.

Government Executive

With less than a month to go before the government begins to default on its obligations, federal employee groups continue to urge congressional leaders and the White House to reject proposals targeting their pay and benefits as part of a deficit reduction deal.

A coalition of 25 groups sent letters to President Obama and House and Senate leaders July 1, criticizing a plan negotiators are considering that would require federal workers to contribute more of their salaries to their pension plans, calling the proposed increase a "payroll tax." Federal employee advocates argue such an increase in worker contributions could exceed 5 percent of employees' income.

"Federal civil servants are already subject to a two-year pay freeze, despite the fact the nation's debt crisis did not arise out of exorbitant federal civil service pay or benefits," the letters stated.

The Federal-Postal Coalition is made up of organizations including the American Federation of State, County and Municipal Employees, the National Association of Letter Carriers, and the Senior Executives Association. The group sent a similar letter in June to Vice President Biden, who is leading the debt ceiling negotiations.

Bruce Moyer, chairman of the Federal-Postal Coalition, said in an email that the group has not received a response to its July 1 letter.

The future of government employees' contributions to the Federal Employees Retirement System is uncertain. In addition to discussions to increase workers' share as part of debt ceiling negotiations, the House-passed version of the fiscal 2012 budget resolution included a recommendation that would require federal employees to pay for half the defined benefit they receive with their pensions at retirement. Most employees currently contribute 0.8 percent of their salaries and agencies pay 11.7 percent, with agencies' contribution set to increase to 11.9 percent in October.

In June, the U.S. Postal Service halted employer contributions to the FERS-defined benefit plan, which the agency estimates will free up $800 million in cash this fiscal year.

The Treasury Department in May suspended investments into federal employees' pensions, when the government officially hit its debt ceiling of $14.3 trillion. Once the debt issue is resolved, the Treasury by law will be required to restore federal pensions and the Thrift Savings Plan's stable government securities (G) fund to their full balance, along with any interest lost during the suspension. The government expects to default on its obligations on Aug. 2, unless negotiators can come to an agreement.

Current and former lawmakers have jumped in on the pension debate. Sen. Barbara Mikulski, D-Md., last month urged Treasury Secretary Timothy Geithner to protect federal pensions during budget negotiations. She also criticized the idea that government workers should contribute more to their retirement plans in an effort to cut spending. Sens. Richard Burr, R-N.C., and Tom Coburn, R-Okla., have introduced legislation that would end the FERS defined benefit plan for new federal employees, including new members of Congress, starting in 2013.

Failure to raise the government's debt ceiling could lead to cuts in pay and benefits for federal civilian employees, military members and veterans, according to an analysis from the Bipartisan Policy Center. In a report published in June, the center found that unless the debt ceiling is raised, federal spending would be cut by 44 percent in August. Under several scenarios, Geithner could prioritize spending to include reductions in pay for government workers, the group said.

A February report from the Congressional Research Service, however, found that exceeding the debt ceiling carries less risk for federal workers than a government shutdown.

"Failing to raise the debt ceiling would not bring the government to a screeching halt the way that not passing appropriations bills would," CRS wrote, quoting a 1995 report from the Congressional Budget Office. "Employees would not be sent home and checks would continue to be issued."

GOP Assault on Federal Pay Puts Obama in Politically Difficult Position

Fox News
November 16, 2010

President Obama is stuck between a rock and a hard place, as newly empowered House Republicans unleash a torrent of proposals to shrink the size of government and following a series of reports that show federal workers increasing in numbers and salary.

Obama may have to choose between satisfying his base or placating independents who moved overwhelming into the Republican camp in the midterm elections two weeks ago based in part on their frustration over the growth of government in the past two years.

While slashing the government will be a top priority for Republicans in the next Congress, 60 percent of the federal workforce is represented by the labor unions that helped sweep the president into power two years ago.
"The calculation he has to make is how much he wants to bring that swing vote back," said Matrick Masters, a national labor expert and a professor of business and political science at Wayne State University.

"One of the ways is to go after government issues. The calculation he's going to make is how much damage it's going to do to the base," Masters told FoxNews.com. "He's got to realize he's got a difficult situation."
Already a flurry of proposals have been offered to slash spending on government functionaries.

Speaker-in-waiting John Boehner has called for a freeze in hiring and pay raises. Incoming House Majority Leader Eric Cantor said his federal payroll plan could save taxpayers $35 billion.

Rep. Jason Chaffetz, the top Republican on the subcommittee with oversight of the federal workforce who is likely to become the panel's next chairman, wants a 10 percent across-the-board pay cut.

Chaffetz told FoxNews.com on Tuesday that the federal payroll has grown by an additional 141,000 federal workers -- not counting Census employees, postal workers and uniformed members of the military -- since Obama took office. The president wants to hire 125,000 more workers. [Editor's Note: The true size of the government's workforce is estimated to be about 15 million when you factor in the hidden workforce.]

Including compensation, the current cost of the federal workforce is $447 billion, he said.
"Somehow, some way, we're going to have to learn how to survive on just $400 billion," he said, adding that his proposal would give each agency and department discretion in how to reach a 10 percent reduction.
Even the chairman of Obama's bipartisan federal deficit commission has recommended a three-year freeze on federal salaries and a 10 percent cut in the number of federal workers as part of a draft report that some lawmakers say is dead on arrival.

But the proposals run counter to Obama's plan to give a 1.4 percent across-the-board pay raise to 2.1 million federal workers next fiscal year.

A USA Today analysis last week showed that the number of federal workers earning $150,000 or more per year has soared tenfold in the past five years and doubled since Obama took office.

But the American Federation of Government Employees, the largest union for federal employees and a staunch supporter of the president, rejects the notion that federal workers make more than their private-sector counterparts.
"There has been a concerted campaign by corporate-influenced groups and others to introduce the dangerous lie that federal employees are 'overpaid' relative to their private sector counterparts," union president John Gage said in a written statement.
Gage cited statistics from the Labor Bureau that showed federal salaries lag behind those in the private sector for almost all jobs in almost all locations throughout the U.S.

And AFGE spokeswoman Christine Erling said AFGE "vigorously opposes any efforts to freeze federal hiring and cut federal employees' pay."
"We have made and will continue to make our opposition to these types of punitive proposals known to the Obama administration as well as to the Congress," Erling said in an e-mail to FoxNews.com.
Supporters of federal pay rates note that the highest paid federal workers, such as doctors, lawyers and nuclear engineers, are earning well below market price. But the Heritage Foundation has estimated that taxpayers would save $47 billion if federal workers were paid at the same rate as private sector employees.

The White House did not respond to an e-mail seeking an interview, but unions, which represent more than 600,000 federal employees and total about 60 percent of the government workforce, put Obama in a politically difficult position if he wanted to seek a compromise with Republicans on the issue.

Labor was critical in mobilizing voters and getting them to cast ballots for Obama in 2008 but turnout dropped in the 2010 midterm in part because many union workers didn't see Obama go to bat for their initiatives, Masters said.
"I don't think those memories are lost upon him," he said. "He will need the support of labor in 2012."
Masters said that Obama will be under "intense" pressure to freeze hiring and pay in the federal workforce.
"It's a relatively easy thing to do -- a stroke of the pen and say, I'm going to freeze hiring, cap pay, and everybody is going to say, hip hip hooray -- jump for joy and not think about what it means," he said.
But, he suggested, Obama may just want to try to explain why he opposes a hiring freeze.
"What are you going to do if you have 1,000 air traffic controllers retire tomorrow morning? What are you going to do? But you don't want planes to be delayed. What's the economic consequence of that?" he asked by way of example. "It's going to have some impact." [Editor's Note: I know quite a few air traffic controllers hired in the early 1980s who, in 2008, were making $156,000 to $172,000 per year; I looked them up by name in the federal employees salary database for 2008.]

The Federal Workforce Cost the U.S. Taxpayers $447 Billion This Year

For a nation battered by layoffs, plant closings and double-digit unemployment, Uncle Sam's hiring largesse should be a source of hope and inspiration. However, 98 percent of working Americans aren't federal employees, and many are wondering aloud why federal civil servants haven't faced the wage freezes, layoffs, furloughs, pay cuts and hiring freezes that many in the general work force have endured. - Should federal workers be asked to take pay cut, too?, McClatchy Newspapers, May 19, 2010

Don Surber
November 10, 2010

Wall Street has nothing on this administration.

At least $35 billion a year in pay and bonuses — more than $200,000 a year — is going to the 10% of federal workers.

The number of federal workers receiving $150,000 — $3,000 a week — to push their pencils has doubled under Barack Obama as the president pays back all those public employee unions.

They cannot be fired and they enjoy the best fringe benefits in the world.

They are our Overlords.


Civil servants should not be unionized. Republicans should ban all federal unions — and make anyone GS 12 or above a will-and-pleasure employee.

That 171,689 of them now make $150,000 a year — or more — $200,000 a year when those Cadillac fringe benefits are included — is sickening.

That is $16 billion in pay and fringes.

And Barack Obama dares to demonize Wall Street compensation?

It is not all his fault. In 2005, we overpaid “only” 12,399 of them.

If they can do better in the private sector, then let them go.

From Glenn Reynolds: CHANGE:

“Retiring at 62 became law in France on Wednesday, a victory for President Nicolas Sarkozy’s conservative government and a defeat for the unions that waged massive strikes and street protests to try to stop the austerity measure.”

But while we scoff at France, let us remember that federal employees can retire at 56. It will take another 17 years for that minimum to rise — be still my heart — to 57.

So who is the fool this time, fool?

Cuts in federal personnel must be made. And they must be deep. And they must be painful.

The government is broke.

This is what bankrupt companies do.

Bring in Romney. He knows how to turn a bankrupt company around.

The USA Today report.

Social Security Basic Facts

As with all federal retirees, U.S. military retirees and former civilian Department of Defense employees receive pension benefits from the government. The 2012 figure is $48.5 billion for military personnel, $20 billion for those civilian employees. We have no figure for the pensions of non-Pentagon federal retirees who worked on security issues for the Department of Homeland Security, the State Department, or the Departments of Justice and Treasury [The Real U.S. National Security Budget is $1.2 Trillion, Tomdispatch.com, March 3, 2011].

It is one thing for the taxpaying citizens of the United States to know that federal employees are being provided for (including matching deposits into all versions of the Civil Service Retirement), but now the General Accounting Office (GAO) has come out with a new report showing that taxpayers are providing retirement benefits, including pensions and health care, for independent/freelance (private) contractors not on the federal payroll. Taxpayers also cover these retiree costs for contractors' spouses, too. And, in some cases, if contractors want to retire early (at age 50), just like regular federal workers, many can then get taxpayer-funded coverage. A statistic from this GAO Report is as follows: "For the Department of Energy alone, overall this coverage cost taxpayers $6.8 billion over the last 10 years." Note that this situation is ongoing for years.

If private citizens cannot collect Social Security benefits until age 62, and if the maximum Social Security benefit is $21,636 per individual, then why are federal employees allowed to retire at age 50 and why aren't their pensions capped at $21,636 per individual. Many federal retirees have annual pensions of $40,000 or more.

May 17, 2011
  • In 2011, nearly 55 million Americans will receive $727 billion in Social Security benefits.
December 2010 Beneficiary Data
Retired workers
35 million
$40.7 billion
$1,175 average monthly benefit
2.9 million
$ 1.7 billion
Disabled workers
8 million
$ 8.8 billion
$1,068 average monthly benefit
2 million
$ .6 billion
6.4 million
$ 6.3 billion
$1,134 average monthly benefit
  • Social Security is the major source of income for most of the elderly.

    • Nine out of ten individuals age 65 and older receive Social Security benefits.

    • Social Security benefits represent about 41% of the income of the elderly.

    • Among elderly Social Security beneficiaries, 54% of married couples and 73% of unmarried persons receive 50% or more of their income from Social Security.

    • Among elderly Social Security beneficiaries, 22% of married couples and about 43% of unmarried persons rely on Social Security for 90% or more of their income.

  • Social Security provides more than just retirement benefits.

    • Retired workers and their dependents account for 69% of total benefits paid.

    • Disabled workers and their dependents account for 19% of total benefits paid.
      • About 91 percent of workers age 21-64 in covered employment in 2009 and their families have protection in the event of a long-term disability.

      • Just over 1 in 4 of today’s 20 year-olds will become disabled before reaching age 67.

      • 67% of the private sector workforce has no long-term disability insurance.

    • Survivors of deceased workers account for about 12% of total benefits paid.
      • About one in eight of today’s 20 year-olds will die before reaching age 67.

      • About 97% of persons aged 20-49 who worked in covered employment in 2009 have survivors insurance protection for their young children and the surviving spouse caring for the children.

  • An estimated 157 million workers, 94% of all workers, are covered under Social Security.

    • 50% of the workforce has no private pension coverage.
    • 31% of the workforce has no savings set aside specifically for retirement.
  • In 1940, the life expectancy of a 65-year-old was almost 14 years; today it's almost 20 years.

  • By 2036, there will be almost twice as many older Americans as today -- from 41.9 million today to 78.1 million.

  • There are currently 2.9 workers for each Social Security beneficiary. By 2036, there will be 2.1 workers for each beneficiary.

Federal Worker Salaries of $150,000+ Double on Obama’s Watch

Hmmm...interesting. Social Security recipients don't get a raise, yet government workers do?

Coming on the heels of the establishment of the Department of Homeland Security’s (DHS) similar authorities regarding pay, 2003 marked a turning point in the way federal employees are compensated. This was the second year of full comparability under the Federal Employees Pay Comparability Act of 1990 and the complete realization of the local comparability system for federal General Schedule (GS) employees. Under the FECPA, the 10-year phase-in of locality pay adjustments was completed, giving salary boosts up to 25% or more for federal employees in certain regions. [From the General Schedule Pay System for Federal Employees and FEPCA]

In 1953, about 75 percent of Federal employees had a GS level of 7 or below. By 2009, in contrast, more than 70 percent of the workforce was GS 8 or higher. (The 2010 pay scale for a GS 8 is $46,745 - $60,765; for a GS 15, it is $123,758 - $155,500) [From A Government Document in Which Government Employees Justify their High Salaries]

The Blaze
November 10, 2010

Federal government workers have notoriously earned more than — in many cases more than double — their private sector counterparts for a while. But a new analysis from USA Today sheds light on the shocking size and scope of pay increases for federal workers, most notably in recent years. According to USA Today, the number of federal workers earning salaries of $150,000 or more has increased tenfold over the past five years and doubled since President Obama took office in January 2009.

While the rest of the U.S. economy remains stagnant, the fast-growing pay of federal employees has raised eyebrows among conservative Republicans. Though the GOP made significant gains during last week’s midterm elections, Republicans are wary of Democrats’ plans to approve a 1.4 percent across-the-board pay raise to 2.1 million federal workers during the upcoming lame-duck session. USA Today reports:
Rep. Jason Chaffetz, R-Utah, who will head the panel overseeing federal pay, says he wants a pay freeze and prefers a 10% pay cut. “It‘s stunning when you see what’s happened to federal compensation,” he says. “Every metric shows we’re heading in the wrong direction.”
National Treasury Employees Union President Colleen Kelley counters that the proposed raise “is a modest amount and should be implemented” to help make salaries more comparable with those in the private sector.

Federal salaries have grown robustly in recent years, according to a USA TODAY analysis of Office of Personnel Management data. Key findings:

Government-wide raises. Top-paid staff have increased in every department and agency. The Defense Department had nine civilians earning $170,000 or more in 2005, 214 when Obama took office and 994 in June.

Long-time workers thrive. The biggest pay hikes have gone to employees who have been with the government for 15 to 24 years. Since 2005, average salaries for this group climbed 25% compared with a 9% inflation rate.

Physicians rewarded. Medical doctors at veterans hospitals, prisons and elsewhere earn an average of $179,500, up from $111,000 in 2005.

Federal workers earning $150,000 or more now make up 3.9% of the country’s workforce, up from just 0.4% in 2005. In addition, federal workers enjoy more robust benefits packages than their private sector counterparts.

Since 2000, federal pay and benefits have increased 3% annually above inflation compared with 0.8% for private workers, according to the Bureau of Economic Analysis. Members of Congress earn $174,000, up from $141,300 in 2000, an increase below the rate of inflation.

Coming Soon: Smaller Raises for Seniors?

July 15, 2011

As part of the current deficit-reduction talks, White House officials and Congressional leaders on both sides of the aisle are advocating changes to the way inflation is calculated. The little-noticed proposal advocates measuring inflation with the "chained consumer price index," a metric that would likely make inflation look slower than the current measurement does. That would result in smaller Social Security increases for seniors, experts say.
"Seniors cannot afford this," says Mary Johnson, a senior policy analyst at The Senior Citizens League, a non-profit seniors rights advocate. "This would negatively impact not just seniors, but also many families that end up helping out these seniors financially."

For the roughly 60% of seniors who rely on Social Security for at least half of their retirement income, this is a big deal. Under the new calculation, the rate of inflation would grow at an average annual rate of about 0.3% less, on average, than under the current calculations, according to the Congressional Budget Office.

If Social Security uses the new measurement to determine cost-of-living adjustments, the average retiree would receive about $18,000 less in benefits over 25 years, according to The Senior Citizens League. Or, under the new calculations, after 10 years, a 73-year-old would get a check that's about 3% smaller than he would get under the old calculations, according to the Congressional Budget Office.

Of course, lower benefits are part of the point. Using the slower-rising index is being billed by many including President Barack Obama's fiscal responsibility commission and the Bipartisan Policy Center -- as a way to generate much-needed savings to help deal with the country's mounting debt crisis. In fact, the savings could amount to an estimated $112 billion over 10 years, according to the Congressional Budget Office.

"This is a start in helping us fix Social Security," says David John, a senior fellow at the Heritage Foundation.

But critics say the new proposal only makes a bad system worse. The current measurement of inflation is supposed to account for the spending habits of adults of all ages, including only a small proportion of retirees. That doesn't reflect the true inflation seniors face, says Moshe A. Milevsky, a finance professor at York University in Toronto. For example, many older people spend a large share of their budgets on items like health care, whose prices have risen about twice as fast as overall prices, according to a 2010 paper published by the Congressional Research Service.

To be sure, almost everyone agrees that the current Social Security system is unsustainable, and the current debate over the deficit has turned up the pressure. Social Security has become a target partially because of the significant cost of the program, say experts. (In 2011, the government will pay out an estimated $606 billion in Social Security, survivor's benefits and related expenditures; this number is projected to rise to more than $1 trillion in 2020, according to a report from the Social Security Administration.)

Whether the new measurement will be adopted remains unclear. Some experts think at least some Social Security cuts will go through, at least in part because Obama has warned that unless an agreement on the current debate to extend the United States' borrowing limits is reached, Social Security benefits cannot be guaranteed starting on Aug. 3.

A spokesman for House Minority Leader Nancy Pelosi (D., Calif.) simply said "a deal has not yet been reached," and a representative for Senator Mitch McConnell (R., Ky.), who has been vocal in his criticism of the president's budget plan and announced his own plan on Tuesday, could not be reached.
For some retirees, the proposed switch could mean more belt-tightening. For pre-retirees, it could mean saving more earlier to make up for lower benefits. On top of that, it would become more important to protect a retirement portfolio from inflation hikes, experts say. That includes considering investments that rise or keep pace with inflation, such as dividend-paying stocks, Treasury Inflation-Protected Securities, or floating-rate loan funds. What to avoid? Fixed-rate, low-yielding certificates of deposit, says Michael Wall, the founder of Wall Financial Group in Altoona, Penn.:
"They're a good way to lose buying power."

Coalition Launches Drive to Fight Social Security Cuts

AFL-CIO Now Blog
November 19, 2010

As Social Security turns 75 years old Aug. 14, the nation’s most successful social program likely will be under attack by the federal budget deficit commission, which, by all accounts, is considering benefits cuts and raising the retirement age.

Today, more than 60 groups, including the AFL-CIO, announced the creation of the coalition Strengthen Social Security…Don’t Cut It. The group is launching a major mobilization to push back the commission’s phony assertions, backed by the Wall Street spin machine, that claim Social Security is a major component of the budget deficit and is teetering on the brink of disaster.

In a press conference at the National Press Club in Washington, D.C., the group outlined plans to build support in Congress to fight benefits cuts and press candidates this election to pledge to fight any move to raise the retirement age or privatization scheme. Says Ed Coyle, executive director of the Alliance for Retired Americans:

The Strengthen Social Security campaign unites everyone here to improve—not weaken—Social Security. We are united against any cuts in benefits, such as increases in the retirement age, and to any form of privatization of Social Security.

We will stand united if the commission calls for any cuts to Social Security. We are launching a major lobbying campaign for Congress to block their recommendations.

Speaking at the press conference, AFL-CIO President Richard Trumka said that:

Raising the retirement age is a benefit cut, plain and simple. It is a cut that is unnecessary and one that Americans can ill-afford.

He also says it unfairly singles out workers in demanding physical occupations,

Workers like my father who spent his life in the mines and couldn’t work another day by the time he qualified for Social Security—and those older workers who may no longer be able to find work due to age discrimination.

Social Security benefits are the largest source of retirement income for most retirees. For six of 10 seniors, Social Security represents more than half of their income. In addition, nearly one-half of older unmarried women and widows, and one-third of all beneficiaries, have little other than Social Security and rely on its monthly benefit for 90 percent or more of their retirement income. Says Terry O’Neill, president of the National Organization for Women (NOW):

Social Security is the mainstay for millions of older women. Every year, a major share of the nearly 24 million women age 62 and older who receive benefits are kept out of poverty because of Social Security. Often that monthly Social Security check is their only income.

A new Gallup Poll out today shows that by a nearly 2-to-1 margin, Americans oppose raising the retirement age and, by an even bigger margin, say the best way to strengthen Social Security is to ensure the wealthiest pay their fair share.

Currently, all workers pay the Social Security payroll tax on the first $106,000 of their earnings. Earnings above $106,000 are exempt from the Social Security payroll tax. That means a grocery clerk or warehouse worker pays a bigger chunk of income to Social Security than a hedge fund manager. By a 67 percent to 30 percent margin, the public supports raising the Social Security payroll tax to cover all earnings.

Also taking part in the press conference, AFSCME President Gerald McEntee says the deficit commission is trying to turn Social Security into a scapegoat for the deficit. Social Security is not the problem.

Social Security—with a $2.6 trillion surplus projected to grow to $4.3 trillion by 2023—is not the cause of the nation’s deficit. Says O’Neill:

The fiscal commission should address the real causes of the deficit—unfunded wars, irresponsible tax breaks for the wealthiest, and an economic crisis caused by financial regulatory failures.

This fall, says Coyle, coalition members will be “demanding clear, unequivocal answers from the candidates on where they stand on Social Security.”

As McEntee warns congressional candidates:

If you break promise from 75 years ago, we will hold you accountable. Keep your hands off our Social Security.

A Formula for Real Economic Growth: Cut Public Employee Pay by 20%

Big Government
February 8, 2010

Slate’s Jacob Weisberg came unhinged on Friday and gave the country the finger.

“Down with the People!” he screams from Bill Gates lap. As Jacob sees it, we the people are demanding two mutually exclusive things: premium government services and tax cuts; and when we can’t have what we want, we become unruly children.

There is of course a third option, and I think it is the voting issue for the 2010 elections. It frankly amazes me that TPM-style Democrats going after Paul Ryan’s Roadmap, don’t see it coming…

You can thank me later, but I just saved the United State of America at least $278,309,600,000.00 PER YEAR. You read that right. $278 BILLION per year. That’s almost entirely what Medicaid will spend this year for children and the disabled. That’s what our normal deficit looks like without TARP and stimulus.

The crazy thing is how easy it was to do. It took me like three minutes. And since I’m a big open source, creative commons guy I’m even posting my magical formula shown here using 2008’s budget:

(1,391,548 1,000,000)*.2

Somebody start printing bumper stickers baby, so everyone can see how much we save when we cut federal, state, and local public employee pay by 20%.*

Amazing isn’t it? And Obama, Weisberg, and SEIU are out of their friggin minds if they think 20% government pay cuts aren’t on the table come next November. What are they going to do? Quit? Strike? Bring it on. Newt’s 1994 revolution will look uneventful by comparison. We call them civil “servants” for a reason.

We don’t need to be politically delicate about this, we aren’t advocating a single program cut, no school closed, no park uncleaned, no fireman not coming to save you. All of that will continue to happen.

But the government employees doing all this marvelous stuff for us are going to earn 20% less…. and from now on their future pay increases will be tied to private wage inflation.

Our country is in deep financial straits, and it is time for government workers to share our pain and get their interests aligned with ours. They’ll make more money when we do.

Yes, there are further budget issues we face, entitlements must be humanely reigned in, but before we can seriously look at future debt projections, we must first return sanity to the public labor market. Until we cut government pay down to size, we can’t honestly talk about which programs to fund… because right now they all cost too much.

Republicans and Blue Dog Democrats should refuse to deal with any other issue until this one is fixed. They should make Senator Shelby’s 70 holds seem a trifle. Want a jobs bill? Let’s fix government pay so main street can have a tax cut. $278 BILLION as small business tax relief at the federal, state, and local level is one hell of a jobs program. Real jobs. The kind that don’t have the dirty taint of government on them.

China will LOVE us. Wall Street will soar. It will be serious proof Washington DC has been cracked to the core. It will be morning in America.

I can’t imagine a single Indie voter not rushing to the voting booth on this one. Politicians courting the tea party, listen up: this gets completely around the false choice the left wants the voters to have to make. Instantly, the debate changes.

*Of course, Josh Marshall, there will be no military cuts. Minus military wages, the Bureau of Economic Analysis places government compensation in 2008, at $1,391,548,000,000.00

Cut Federal Pay to Help Reduce the Deficit Before Cutting Social Security Benefits

Feds working under the old retirement system CSRS might retire if they have 30 plus years and 55 years old. The ones under the new system FERS have 1/3 of their retirement under Social Security. The minimum age for Social Security motivates the FERS fed worker retirement plans. Freezing the pay increase will not cause a massive exodus of fed workers except for the ones under the older system CSRS. Many of them know that RIFs (reduction in force) are coming with the new Congress and budgetary problems. The DoD/NASA workers went thru this during Bush 41 and Clinton, but the non DoD workers are going to face culture shock as their departments face layoffs and reductions. - Poundstone, Frozen Assets (Pay Raise for Federal Employees), March 2, 2010

Federal Times
March 2, 2010

The federal government is borrowing too much and costs too much to run. If it were a private company, it would have cut employee salaries [and department budgets] a long time ago to make ends meet, say two economists in a column for Forbes magazine.

And that’s what the federal government needs to do to show it’s serious about fiscal responsibility and reducing the deficit, write economists Robert Stein and Brian Wesbury.

If private companies operated like the federal government, creditors and analysts would have serious concerns about the companies’ fiscal health and reconsider doing business with them, they write. And with unemployment hovering at 10 percent, the remaining employed workforce — many of whom have dealt with pay cuts, furloughs and pay freezes — shouldn’t keep giving their income to provide for pay raises for federal employees, they write.
The pay increase in his budget would actually be the smallest in 20 years. But total compensation per federal worker — cash earnings plus fringe benefits – now averages twice that of the private sector. So cutting cash earnings by 10 percent across the board seems not only reasonable, but justified.
A 10 percent cut would save $15 billion a year, not a lot when compared to the $14 trillion deficit, they write. But “with today’s interest rates, the present value of all future outlay savings would total roughly $750 billion,” they calculate.

What say you? Debates over federal pay can often get heated, so let’s have a vigorous debate — but keep it civil.

# Lo Jo Says:
March 2, 2010
This is a no-brainer! WHY hasn’t the federal government ordered an across-the-board FURLOUGH of all government workers, (except the public safety “essential” workers) to a 4 day (80%) workweek equivalent?

This would yield close to a 15-20% reduction in labor costs, again exempting those “public safety positions” which would require more in-depth research before trimming.

Most interesting, in thanks to a paralyzing snowstorm, District area government was closed for almost a week and no one in the citizenry seemed to notice any difference!

Second are the benefits: medical care, paid leave, holidays, travel and training, relocation expenses when they CHOOSE to transfer – all of this at taxpayers’ expense. It is very unfair!

And let’s not stop with federal employees. Let’s put the “servant” back into public servant. REDUCE Congress’ pay to stipends/per diems only. Let’s see how many really want to SERVE when all they will be compensated for is room and board during their tenure. Maybe they will actually accomplish something during their first term so that they don’t have to be reelected for 20 years. Eliminate Congressional pensions and provide them all with medical care and/or hospital care at the public hospitals!

When I was the CEO of a firm, coming in after the previous CEO left a huge operating deficit, I addressed all the employees PERSONALLY and showed them the options of losing positions OR everyone sharing equally in the cutbacks by furloughing to a 4-day workweek until the deficit was closed.

The employees sided with an across-the-board furlough because they all felt EQUALLY part of the solution. There was enough flexibility for some to take a full day off per week, while others chose less hours every day for family-personal reasons. Since no particular individual was lost, all skills were still available and no re-hiring or training was required to stay operating.

The budget gap was closed AHEAD OF SCHEDULE, and the following fiscal year revenues were healthy enough to restore original salaries as well as a year-end bonus across-the-board.

LEADERSHIP is required to get that kind of willing sacrifice and teamwork.

I know several professional and executive workers in the government sector and, for the life of me, I can’t figure out what they actually DO. Oh sure, they keep BUSY, but most of their time is spent on non-productive tasks that make that sitcom, “The Office” look like a serious corporation!

Trainings and committee meetings absorb the majority of their time, and I am not seeing any tangible product or service yielded. Where is the public sector’s report card? Schools and teachers are regularly picked on for non-performance, but what about all those federal government agencies’ employees?

So many of these departments serve no (visible to the public) useful purpose anymore, but they remain. If the federal agencies were independently audited like all the private sectors it would be a first step in the right direction to show their worth and value to the citizens.
# Jim Says:
July 10, 2010
Federal employees get bad press because your services are not “sold” to us, but rather forced. I think IBM or Microsoft would love the government model: They’ll provide software and services for “free” all while coercively garnishing wages of employers and employees to cover their not-for-profit “expenses.” We “whine” because almost no one would pay for your service voluntarily. The rest of us, who aren’t colluding with government, have to provide a service or product that people actually are willing to pay for.

I work in the technical sector and their is little to no pay difference. If you figure in the benefits, then the government employees are well ahead. The reason why I and others chose not to take the jobs (I was offered a job with the NSA after contracting through a private company) was because of the work environment. The NSA was/is a good agency to work for, but I’ve also seen other agencies like the DOL and SSA, which are a complete joke.

In fact, I rarely hear others use salary as the main reason not to take a fed job. Its generally because there is no competition, little incentive to provide a good product (most of that is done by the contractors) and those that do work are unfairly burdened by the unmotivated majority.

The problem is lack of accountability and competition. Certain agencies should just be dismantled and the remaining should be severely cut, with contractors being some of the first to go. Those that remain should compete for high-paying jobs, with no guaranteed pensions or union protections.

Exploring Federal Pay for Cuts

The Committee for Responsible Federal Budget
June 22, 2010

As our Budget Simulator grows in popularity, more and more people have taken the spending challenge to voice how they would like to see government spending cut. One popular suggestion has been that something be done regarding federal pay and benefits, which have fared relatively well in this economy while the private sector has felt the stronger sting of the recession.

Truth be told, federal employees do quite well for the most part. In fact, a recent USA Today analysis found that in a job-to-job comparison, a typical federal employee is paid about 20% more than his private sector counterpart.

It is true that much of this difference is due to differing levels of education attainment, as Peter Orszag explains here. But in addition to high wages, federal employees receive extremely generous benefits. Among them are a very generous health care plan, life and disability insurance, two types of retirement benefits (a DB pension and a 401(k)-type plan with a match), and a significant amount of paid time off. Not to mention flexible work schedules and a level of job security unheard of in the private sector.

The gap between federal and private employees has worsened some as the recession has taken hold. Over the past two years, government wages have grown 4.5% while private wages have grown only 2.2%. Over the last year, private wage have actually fallen. In other words, government wages have maintained strength over the course of the recession, while private sector wages have suffered.

Source: Bureau of Economic Analysis, National Income and Product Accounts Table, 6.6D

One recent analysis actually found that 19% of civil servants earn salaries above $100,000 – compared to 14% before the recession. Few other industries have been so lucky. To us, this suggests that federal compensation might be an area ripe for reform.

And military compensation must be on the table as well as civilian compensation. The 2008 Quadrennial Review of Military Compensation found that service members made a larger salary than 80 percent of comparable civilians. And a Defense Department sponsored study by CAN Corp. found in 2006 that enlisted service members made over $13,000 more (including benefits) than their civilian counterparts. Officers were found to make almost $25,000 more.

To be sure, we cannot solve our debt woes just by reining in on federal wages and benefits. If the pendulum swings too far in the other direction, the quality of our federal workforce could suffer.

Still, there are a number of ways we could begin to pare back some of the generosity in federal compensation. Some of the options highlighted below could help produce savings for our fiscally-strapped government:

Policy Option Savings (billions)
Reduce military pay raises by 1 percent for five years $15
Calculate federal pension benefits based off five years of earnings to conform with private sector $4
Base COLAs for federal and military pensions and veterans' benefits on alternative measures of inflation $23
Increase federal employees' contributions to pension plans $9
Reduce benefits under the federal employees' compensation act $2
Freeze federal civilian pay for 1 year $30
Freeze federal civilian pay for 3 years $90
Base federal retirees' health benefits on length of service $1
Adopt a voucher plan for the Federal Employees Health Benefits Program $33
Increase health care cost sharing for family members of active-duty military personnel $7
Introduce minimum out-of-pocket requirements under TRICARE for life $40
Increase medical cost sharing for military retirees who are not yet eligible for Medicare $25
Require copayments for medical care provided by the Dept. of Veterans Affairs to enrollees without a service-connected disability $7
Remove tax exclusions on certain allowances for federal employees abroad $18
Remove the tax exclusions of military pay and benefits $68
Remove tax exclusions on veterans' disability compensation and pensions $43

How Is It that Federal Workers and Federal Retirees Owe $3.3 Billion in Back Taxes and Yet Still Receive Their Government Checks?

November 16, 2010

According to an IRS study last year, federal employees and retirees owed a staggering $3.3 billion dollars in delinquent tax payments to the government.

The federal agency with the largest back-tax bill? The US Postal Service, where hundreds of thousands of employees owed a total of more than $283 million, said the report.

Also high on the list is the Department of Veterans Affairs, where employees had more than $156 million in back taxes.

The biggest group, though, is retired military personnel. That group owed more than $1.5 billion dollars.

And even the White House folks are behind in their taxes. Employees in the executive office of the president, which includes nearly 2,000 employees, owed more than $831,000 to Uncle Sam, the IRS found.

Federal Workers and Contractors are Living the Good Life, Yet the People Who Pay Their Salaries and Allow Them to Retire After 30 Years (with Generous Lifetime Pensions and Healthcare Benefits) Must Live Off of Reduced Social Security and Medicare Benefits

Loudoun County is located 25 miles from Washington, DC. In the past decade, more than 53,000 net new jobs were created in Loudoun. Several significant factors contribute to this high rate of employment growth: the growth of technology businesses in the Dulles Corridor, expansion activity at Washington Dulles International Airport, and increases in federal government contracts. Loudoun County is home to over 900 federal government prime contractors -- along with numerous subcontractors. The location in the Washington, D.C., region provides easy access to customers, ranging from the Pentagon, the U.S. Department of Defense and military installations, to NASA and all of the federal agencies in the Washington, D.C. region (U.S. Postal Service, Federal Aviation Administration, Homeland Security, Transportation Security Administration, etc.). In 2009, federal procurement in Loudoun totaled more than $2 billion. [Source]

If you drive through Northern Virginia, you will find nearly entire neighborhoods of $500,000 to $900,000 homes owned by government workers or contractors. Then you can drive five streets over and find $200,000 to $400,000 homes owned by those who pay the salaries for those government employees. It’s a fascinating distribution of wealth. Most government employees and contractors could not earn more than $60,000 on the free market. Their only chance to make that kind of money comes from having an employer that not only never has to make a profit but can forcibly take money through taxation. - Public Servants Live Better Than the Public, and Federal Pay Continues to Skyrocket, The Daily Bail, October 26, 2009

In his weekly radio and Internet address, Obama appealed to the to the public in hopes of influencing a debt reduction deal that talks have failed to produce so far. "We have to ask everyone to play their part because we are all part of the same country," Obama said Saturday, pushing a combination of spending cuts and tax increases. "We are all in this together." Obama said the wealthiest must "pay their fair share." Of course what he really means is the transnational corporations in collusion with government will continue to use loopholes to reduce their tax burdens and politicians will continue to reward public servants for being obedient workers while reducing Social Security and Medicare benefits for the private sector.

Nation's Capital Boasts the Biggest Salaries in the East

Considering the fact that government is the largest employer in the DC metro area, it is no wonder that the nation's capital boasts the biggest salaries. Yet, the typical worker in DC making $60,900 per year is still below the national average salary for federal workers ($79,197) and the area average for public school teachers ($67,150). The national average for private sector employees is $49,935.

In 2010 a USA Today analysis reported that federal civil servants earned in 2009, on average, twice as much in pay and benefits ($123,049), including unrealized pension benefits, as the average private worker ($61,051). Average benefits were worth $41,791, most of it due to pensions. The average federal salary grew 33% faster than inflation from 2000 to 2009. Average compensation grew 36.9% since 2000, after adjusting for inflation, compared with 8.8% for private workers. The federal compensation advantage had grown from $30,415 in 2000 to $62,000 in 2009. [From Wikipedia]

Yahoo! News
May 11, 2011

D.C. workers make more money than their counterparts in other eastern U.S. cities, according to an analysis by the Business Journals.

Using Bureau of Labor Statistics data, the group's On Numbers column found that "the typical worker in the Washington-Arlington-Alexandria metropolitan division earned $60,090 in 2009 ... $1,760 above the runner-up, Boston-Cambridge-Quincy, Mass."

Based on the Journals' interactive chart of 673 Washington professions, ushers make $18,360; watch repairers earn $37,800; transportation inspectors average $89,950, and orthodontists pull down $221,020.

Maryland's Bethesda-Frederick-Gaithersburg area was No. 5 on the list, with an average pay of $56,900.

See a list of the Top 10 Eastern metro areas by pay.

The Washington Business Journal also reports that D.C. home values are outperforming most other places in the United States and that area job growth, although expected to slow, "will remain well above the average area annual job growth rate."

Many in Washington Area Seeing an End to Foreclosure Crisis

Recovery concentrated in District and region's urban counties

July 14, 2011

The Washington area is seeing a steep drop in foreclosure filings. Foreclosure filings are plummeting across the region, a sign that the worst of the housing bust -- for most homeowners -- is over.

But the recovery is concentrated in the District and other urban counties while the region's outlying areas still have a long way to go before the foreclosure crisis stops depleting property values.

Foreclosures in the Washington area fell by more than 54 percent in the first six months of the year, compared with the corresponding period last year, according to a report released Thursday by the foreclosure tracking firm RealtyTrac.

Source: RealtyTrac, MRIS

Housing bust ending
Foreclosures are dropping, but some markets are still dealing with the aftermath.

rate (1/X)Jan.-Juneforeclosureannual price

Jan.-June2010sales Junechange
Prince William1/79-44.1%13.4%1.8%
Prince George's1/96-55.1%40.0%-9.8%

"Once we get past all these foreclosures, I think the housing market will take off," said John McClain, deputy director of the George Mason University Center for Regional Analysis.

"There became a higher premium on location during this whole [housing bust]. So D.C., Arlington and Alexandria, they're almost back to peak [home prices] and that's largely because of their location."

But Prince William and Prince George's counties are still lagging. According to data from real estate technology developer Metropolitan Regional Information Systems Inc., foreclosure sales in those jurisdictions still dominate the market. This spring and last spring, roughly half of homes sold in Prince George's were foreclosures.

In June that share was 40 percent, the highest in the region. By comparison, just 4 percent of homes sold in July 2008 were in foreclosure, according to MRIS. The county's home prices in June fell by nearly 10 percent compared with the prior June, the only jurisdiction to see a price drop.

McClain said he believes Prince William's foreclosure crisis has bottomed out the housing market there while Prince George's is approaching it. Although Prince William has the highest foreclosure rate in the region this year with one in every 79 homes, the percentage of homes selling in foreclosure has been steadily falling since it hit 47 percent in May 2009.

Foreclosures in Prince William made up 13 percent of all home sales last month and its prices in June were 2 percent higher than June 2010, according to MRIS.

Nationally, foreclosure filings through the first half of the year dropped by 29 percent compared with a year earlier. Total filings in the second quarter were the lowest quarterly total since the fourth quarter of 2007.

Home Prices Hit Post-bust Lows in Most Big Cities

The Associated Press
February 22, 2011

Home prices in a majority of major U.S. cities tracked by a private trade group have fallen to their lowest levels since the housing bubble burst, and analysts expect further declines this year.

The Standard & Poor's/Case-Shiller 20-city home price index fell 1 percent in December from November. Prices fell in all but one of the metropolitan markets tracked.

The only city to see a gain was Washington, where hiring by the federal government has helped boost the region's job market [Editor's Note: the public sector is the largest employer in this area].

Eleven of the markets hit their lowest point since the housing bust, in 2006 and 2007: Atlanta, Charlotte, N.C., Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland, Ore., Seattle and Tampa, Fla.

The housing sector is struggling even while the rest of the economy is showing signs of a slow but steady recovery. The latest evidence of this divide came Tuesday when the Conference Board said its Consumer Confidence Index rose in February to its highest point in three years. The index surveys how people feel about hiring and income, and how they see that changing over the next six months.

By contrast, the outlook for housing in 2011 is not promising. Construction of new homes has fallen to a rate of about 600,000 homes built per year. In a healthy economy, builders expect to construct about 1 million homes each year. Homeowner vacancy rates are near record highs and the creation of new households in the United States is at its lowest point in four decades.
"Despite improvements in the overall economy, housing continues to drift lower and weaker," said David M. Blitzer, chairman of the index committee at Standard & Poor's.
The damage from the real estate bubble has spread well beyond the Sun Belt, where new homes cropped up at a frantic pace during the mid-2000s. In many places, prices are expected to keep falling for at least the next six months and several analysts said they expect prices to fall at least another 5 percent.

Some of the worst declines are in cities hit hardest by foreclosures and high unemployment, including Detroit, Phoenix and Tampa. A home that sold for $250,000 in the Motor City in 2000 now sells for roughly $163,150, according to the housing report. Homes in Las Vegas and Cleveland now sell, on average, for less than they of what they did a decade ago. Many people are holding off buying or selling homes because they fear the market hasn't hit bottom yet.

A large number of homes that aren't selling are contributing to a second wave of price declines since the boom years. Many of them have been vacant for months.

In December, prices fell for the sixth straight month and for the eighth time in the past 11 months. Foreclosures are also expected to increase as the year goes forward.
"There's just way too many homes out there relative to demand and we're not going to see that change anytime soon," said Joshua Shapiro, chief U.S. economist for MFR Inc.
The housing recovery is uneven across the United States. Coastal cities in California and the Northeast are faring much better than the Midwest and Southeast. That's mainly because they benefit from expensive and somewhat recession-proof housing markets buoyed by low unemployment and limited new construction.

The Case-Shiller report measures home price increases and decreases relative to prices in January 2000 and gives an updated three-month average for the metropolitan areas it looks at.

56% of All Wage Earners Pay More in Social Security and Medicare Taxes Than They Do Income Tax, 86% If You Count Both the Employer and Employee Share of Payroll Taxes (FICA)

December 23, 2010

Now that Congress has extended the Bush tax cuts for everyone -- rich and poor and everyone in between, ask yourself: How much of the tax burden do you bear today?

No issue seems to get under Americans' skin more -- or command more attention from politicians -- than whether taxes will rise or fall and, frankly, whose ox will be gored. The lame duck session of Congress has been filled with acid debate on this topic as lawmakers battled over what to do with the Bush tax cuts.

More from Kiplinger.com

Calculator: How Your Income Stacks Up

What is the 2011 Tax Cut Worth to You?

The Most Overlooked Tax Deductions

In the end, of course, our lawmakers kicked the can down the road a bit -- neither allowing the tax cuts to expire nor permanently extending them. Instead, there's a two year extension of the status quo. That means that, after a brief respite, taxes will be right back in the thick of things.

In the meantime, we have developed a tool to show how the nation's tax bill is distributed among its citizens. Are the wealthy coddled with tax favors? Is the middle class unfairly burdened? Our tool uses the latest IRS data to shine light on such issues. We'll also show you how your own income stacks up against your fellow Americans.

Are you ready to see where you fit in? With our simple calculator (see link above), enter a single number from your 2009 tax return and you'll instantly know the answer.

What the Numbers Show (Based on 2008 Tax Returns)

  1. When it comes to income taxes paid:

    The top 1% of income earners paid 38.02% of individual income taxes collected. That's a lot, but it's actually a smaller share of the total tax bill than the top 1% paid in 2007 (that year they paid 40.42%).

    Compared with that 38.02% of taxes paid by the top 1% of earners, the bottom 50% pay just 2.7% of the taxes collected.

    This means that all the other earners paid 59.28% of the taxes collected.

  2. When it comes to reported income (adjusted gross income):

    The richest 1% of Americans made 20% of all the adjusted gross income reported.

    The lowest-earning 50% of workers made 12.75% of total income earned collectively. Yes, 1.4 million taxpayers earn 20% of all income reported while 70 million share just 12.75%.

    This means that all other earners made 67.25% of total income reported.
These income and tax burden breakdowns come from information reported on 2008 individual income tax returns. Income categories are based on adjusted gross income (AGI), which is basically salary plus investment, rental and business income minus investment losses and expenses such as alimony paid, contributions to retirement plans, moving expenses and a few other costs.

(Note that these figures include only federal income taxes. According to one study, 56% of all wage earners pay more in Social Security and Medicare taxes than they do income tax, and the percentage of those paying more payroll tax than income tax soars to 86% if you count both the employer and employee share of Social Security and Medicare taxes.)

For historical perspective, back in 1986, the top 1% of earners reported 11% of all income and paid 26% of the income taxes (compared to 20% and 38.02% in 2008); the lower-earning 50% made 17% of the income and paid 6% (compared to 12.75% and 2.7% in 2008) of the nation's individual income tax bill.


No comments:

Post a Comment

Go to The Lamb Slain Home Page