Social Security: The Democrats Join Generation Greed’s Theft of the Future From Less Well Off Later-Born Generations

Approximately eight years ago, I was outraged by a Republican proposal to address the oncoming insolvency of Social Security by cutting benefits, as Ben Smith, then at Politico but now at Buzzfeed, noted at the time.

It wasn’t that benefit cuts were proposed per se that outraged me. I am well aware that as a result of decades of self-serving actions by Generation Greed, the majority of whom voted Republican at the federal level to get one tax cut after another but also demanded even more benefits for themselves, people my age and younger would, on average, end up much worse off in old age, as the federal, state and local governments go broke. Worse off compared with what the “tax cut” “government shutdown” generations promised themselves but refused to pay for.  After all, our benefits have already been cut as part of the deal to “Save Social Security!” in 1983.  As a result those born in 1937 had a “full retirement age” of 65, compared with 67 for those my age and older, with retirement ages in between for those born in years in between.  Which really means that no matter when you start collecting between age 62 and 70, you will get less in monthly benefits than those in earlier generations who retired at the same time.

No, what outraged me is that the generations whose short-sighted, self-serving, entitled and hypocritical choices put us in this situation were proposed to be exempted from any and all of the sacrifices that their own choices have caused. As I said at the time:

I already know Paul Ryan and the Republicans are a fraud because no sacrifices will be imposed, and no changes will be required, for those age 55 and older. Which means those born in 1956 or earlier. Which means those who were 17 in 1973, the year wages peaked for most American workers. The richest generations in American history, the first to leave those coming after worse off in the private sector, the ones that created all those deficits and debts and unfunded pension obligations in the public sector, the ones who wanted more senior spending and less in taxes, Generation Greed, gives back nothing. And there is a barely an acknowledgement of what this means in a moral sense.

Eight years later, it is the Democrats who are making proposals with regard to the upcoming insolvency of Social Security.  So things must be different, right?

No, they are not!

The Democrats would probably say that whereas the Republicans would postpone the insolvency of Social Security exclusively with benefit cuts, the Democrats would do so exclusively with tax increases.

But it isn’t the tax increases that outrage me per se.  After all, those my generation and younger already had our payroll taxes massively increased as part of the 1983 deal to “Save Social Security!”  And unlike those who entered the workforce previously we have paid at those higher rates for our entire careers.   Moreover, we and our children and our grandchildren are already certain become even worse with even higher taxes in the future, not just for Social Security but also for Medicare, Medicaid, the debts run up due to the Reagan, Bush and now Trump tax cuts, inadequate past infrastructure investment, retroactive pension increases for older generations of public employees, and the refusal to fully fund public employee pensions.  Because Generation Greed wanted state and local tax cuts, exemptions and deals for themselves, too.

I am once again outraged because like the Republicans, the Democrats are making damn sure the richest, most entitled and most self-serving generations in U.S. history are exempted from all or most of any sacrifices.

The new legislation would leave income between $132,900 and $400,000 untaxed. Over time, the present-day cap would rise to $400,000, at which point all earnings would be subject to the tax. Larson’s legislation would also raise the payroll tax by 1.2 percentage points on both employees and employers, phasing in the change over 24 years.

Meaning that for the next few years, there would be barely any tax increase at all.

The bill’s payroll tax increase is likely to be the biggest political challenge for Larson and other Democrats trying to advance the bill.  To try to preempt that line of attack, Larson is fond of brandishing a Starbucks cup at every event promoting the bill. He calculates that for a worker making $50,000 a year, the tax hike amounts to just 50 cents a week ― or one $4.50 cup of Starbucks every nine weeks.

Under the proposal that would only be true in 2020, when quite a few members of Generation Greed would still be working and would have to pay. It wouldn’t be much more over the next few years either.  And then by 2024, the last of the richest generations in U.S. history would reach age 66 ½ of so and start collecting Social Security. They wouldn’t have to pay an extra dime of payroll tax in later years, when the burden really soared.

What would happen when the tax increase was fully phased in?  The 1.2 percent of $50,000 in income is $600 per year, not the $26 per year those Democratic frauds are selling, but that is the “employee share” alone.

People who understand the idea of “tax incidence” know that the entity from whom the tax is directly collected is not always the entity that becomes worse off to pay for it.  What has happened since payroll taxes were jacked up in 1983?  Did corporate profits and stock prices fall, relative to inflation, because of the “employer share” of the increase?  Or have the wages of most workers earning up to the payroll tax maximum, now $132,900, fallen far behind inflation.  You know the answer.  In reality the workers paid both halves of that 1983 payroll tax increase, the employer share and the employee share.  The additional tax increase now proposed would likely work the same way.

So that’s $1,200 more per year in federal taxes for those earning just $50,000.  Plus the other tax increases and/or service and benefit cuts that are coming as a result of Generation Greed, for Medicare, Medicaid, the national debt, state and local government debts, underfunded public employee pensions, etc.

Or $2,400 more in taxes for those earning $100,000.

Or $13,184 more in taxes for those earning $200,000, as the rate increase combines with a greater base.

Except for those who have the monopoly or political power to shift that entire burden to the customers – other workers, in other words.  Unionized public employees and government contractors, for example.  That’s two of the three privileged interests that matter, and are grabbling more.  Generation Greed in general, and the political/union class the Democrats actually represent.

People are OK taking a little bit of the burden on themselves as long as they understand we’re dedicating the money to Social Security, according to one of them.

Well, if it’s OK for disadvantaged, poorer, later-born generations to be that much worse off personally for much or all of their working lives, why not impose the higher tax right now nd have the last members of Generation Greed kick in for just a few years?  They aren’t taking burdens on themselves.  They are shifting even more burdens to others.  Because they still want to get, but they still don’t want to pay.   After all, they have lots of needs relative their higher expectations, and that makes them the needy.

Median Household Income Age of Householder

And they don’t even want to merely preserve  Social Security, because they know that any reductions in old age benefits will only affect the children and grandchildren they don’t seem to care about.  So the Democrats offer Generation Greed something more.

In less than a decade, mainstream Democrats in Congress have gone from entertaining Social Security cuts to almost universally endorsing the program’s expansion.

So those forced to pay far more in taxes for their entire lives would be the only ones to also get more in benefits?  NO.  Generation Greed would get more in benefits RIGHT NOW, despite most of them contributing nothing in additional Social Security taxes and rest contributing little.  The tax increases are deferred so they don’t have to pay, but the benefit increases are immediate.

The bill would provide an across-the-board benefit increase equivalent to about two percent of the average Social Security benefit. It would raise the annual cost-of-living adjustment to reflect the fact that older Americans tend to use more of some services like health care. And it would increase the minimum benefit to ensure that workers with many years of low earnings do not retire into poverty.

The income of the average worker has been falling behind the overall inflation rate for decades, while Social Security payments have kept up with overall inflation. That gap is proposed to be increased, by providing Social Security recipients with increases in excess of overall inflation, because they are using more health care – even though unlike for workers the government pays for most of that health care.

Of all the money raised by the bill, about one-fourth would be used to increase benefits, and the rest would cover projected deficits in the Social Security trust over the next 75 years.

That’s one-fourth of the payroll tax increase going to benefit increases.  And how much of that increase is necessary because the tax increases are deferred?  How much less could taxes rise, effective immediately, if the goal were merely to preserve Social Security?

So Generation Greed, the tax cut, government shutdown, I’m against Obamacare because I’ve got mine jack generations, take out even more right now, and that increases the extra taxes poorer later-born generations will have to pay later. But taking more out isn’t enough for the Democrats to pander to those majority-Republican generations.

At the same time, the bill cuts income taxes on Social Security benefits for those who receive them by raising the income threshold at which they would be taxed. Under the legislation, 12 million beneficiaries ― out of nearly 63 million total ― would receive a tax cut, according to Larson.

These aren’t “poor seniors.”  Seniors who actually are poor already pay zero federal income tax precisely because their income is low.   In fact, seniors are already considered poor enough to pay no federal income tax with $20,000 more in income than wage earners.  These are better off members of the richest generations in U.S. history, those who have already benefitted from the Trump tax cut that they voted for – and which has sent the national debt they had already inflated soaring even more.

And under the Democratic proposal they not only take out more, but also put in even less. Again.  That’s “progressive?”  That isn’t what the word meant 100 years ago, but it is what the word means now.  It is also what the word “conservative” means now.  Before Generation Greed, you had McGovern and Goldwater. Now you have the greed, selfishness and hypocrisy.

This proposed deal is exactly like the retroactive pension increases the United Federation of Teachers scored in New York City, with big benefit increases for the already retired or soon to be cashing in and moving out, along with cuts in the contributions to their own pensions.  Claimed to cost nothing, not paid for at the time, but paid for into the indefinite future by cuts in educational services, cuts in other services, higher taxes, and cuts in pay and benefits for later-hired teachers.  This deal sounds like yet another social injustice pursued by the UFT.

And yet the New York Times has endorsed it.  It has more than 200 Democratic co-sponsors. The Center for Retirement Research, with its aging staff that advises disadvantaged later-born generations they’d better sacrifice and prepare to settle for less, is also in favor.

Basically, we now have a Congress and mainstream media that consists of those that endorsed the Trump tax cuts, scheduled to expire with a big tax increase on later born generations in a decade, those who have endorsed or co-sponsored this proposal, another generational gang rape, and perhaps a few who endorsed both.  All while pretending to be on different sides, and shifting the national conversation to anything other than generational equity.  No wonder they want to argue about the border wall.

Would any of them be in favor of higher taxes if those taxes were to be increased right now, while some members of Generation Greed were still working, and if there were no additional benefit increases for today’s, all to merely preserve the lower benefits later-born generations have been promised?  I think not.

This proposal is yet another outrage, and it isn’t just what is proposed that is a social injustice piled on social injustice piled on social injustice.  Consider what is not proposed.

This is a proposal for a huge increase in the payroll tax, which falls exclusively on wage and self-employment income. Low, moderate- and middle-income worker income, proposed to be increased gradually, in the future, to a tax that also falls on upper middle-income worker income.  Once the current generation of upper middle class coastal cosmopolitans who vote Democratic is retired, and wouldn’t have to pay.

This proposal, however, includes no tax increase on capital income, which is the type of income the truly wealthy get. Amazon’s Jeff Bezos and Facebook’s Mark Zuckerberg wouldn’t pay an extra cent.  Donald Trump would only pay taxes on a small share of the income he is getting from us taxpayers as President.  After all, the majority of the super-rich are now part of the Democratic coalition, and fund Democratic campaigns.  So the Democrats make sure they don’t have to make any sacrifices either.  Which administration drastically slashed federal taxes on capital income, relative to labor income? The administration of Bill Clinton.

It’s the executive/financial class, the political/union class, and the serfs.

Consider this comment on the 2016 election that someone else made on The Economist.

The Democratic Party’s last original economic ideas came with Ted Kennedy. You may have noticed that he got old and died. All of the new ideas since LBJ’s administration have come from Republicans. True, a lot of them have been atrocious ideas, but where are the Democrats?

They are stuck for three reasons:  They have spent 50 years trying to ‘complete’ the reforms of LBJ, despite the American people telling them that they didn’t much like those reforms, and were unwilling to fund their extensions.  Second, they have become the party of the unionized public sector employee, who naturally oppose reform of public services to make them more efficient. 

Third, they are dominated, intellectually and financially, by upper middle class and rich leaders and donors whose highest priorities are social issues, rather than economic issues. So they seek social reforms, but are satisfied with the economic status quo, particularly the low taxes on the rich part.

And low taxes on the other rich – the years in retirement rich, the unionized public sector employees.

With far more years in retirement than years worked, and one retroactive pension increase after another, the total wage income of New York City’s teachers, firefighters and police offices is now lower than the soaring cost of their benefits. But all that benefit income, like the capital income of the rich, is exempt from the payroll tax.  Like Jeff Bezos, they wouldn’t pay either.

That’s what the Democrats propose to do on the tax side – exempt the truly money rich and the years in retirement rich.  Their crowd.  And on the Social Security benefits side?

His legislation would not change the age at which a retiree can collect benefits.

As I noted, the Social Security “full retirement age” is meaningless.  At any retirement age between 62 and 70, the program is structured so a beneficiary would get the same lifetime benefit payments.  The higher benefit payment per month at age 70 exactly offsets the fewer average years of life expectancy left to collect, and the same is also true of every year in between.  There is nothing magical about age 65 or 67.

What is different is someone born in 1960 or later would get less compared with an otherwise identical person born earlier. Those born later who retire at a given age get less every year, right now.   The Democrats could have proposed to increase benefits by reversing the 1983 benefit cut.  But if they did most of the increase would go to later-born generations who are now disadvantaged.  Those who also paid more in.

Moreover, an otherwise identical person born in later years is not, in fact, identical.

The average person born later has also been paid less, on average, over their careers than those born sooner, with otherwise identical educational attainment and occupation, unless that occupation is CEO.  By an average of about 20 percent, but greater disadvantage at the lower end of the education and income scale.

And the lower average pay of later-born generations will, by itself, reduce their Social Security benefits – over and above the changes in the program under the 1983 deal.   Aside from the lowest paid, who would continue to get the Social Security minimum, and the highest paid, who would still hit the maximum.  The fact that the lower career pay of the former middle class will also lead to lower benefits in old age compared with the better off people who came before is something I haven’t heard mentioned anywhere else by anyone else.

And the life expectancy of those born after 1957 is actually falling relative to those born sooner, such is the extent of their average cumulative disadvantage.

Only Angus Deaton and Anne Case have compiled the data by age group, but based on their research we know the decreases in life expectancy affect disadvantaged later-born generations.   While Generation Greed, richer than both its predecessors and those coming after, and retiring earlier than both its predecessors and those coming after, is also likely to live longer than those coming before or after.  Despite the significant number of them that had their lives cut short in Korea or Vietnam.

The one thing the Democratic proposal to “Expand Social Security” will not do is equalize the benefits received across generations, by having the so-called full retirement age be the same. Because, you know, what’s in it for them?

It isn’t just more in benefits and less and taxes that Generation Greed demands, and Republicans and Democrats both provide.  It is silence with regard to the fact that is what in fact occurring, so they don’t even have to fell bad about it.  They say things like “Why start a generational war by talking about how past trends have affected different generations?  What’s done is done, and you are just upsetting people for no good reason.”

But then, with their entitlement unchallenged, they take even more yet again.  No limits.  No shame.  Just rationalization.

Alice Munnel of the Center for Retirement research wrote:

This Larson-Blumenthal-Van Hollen proposal is not only appealing to me but also helpful for the required debate about how to fix Social Security. The American people need to let their representatives in Congress know how they would like the elimination of Social Security’s 75-year shortfall allocated between benefit cuts and tax increases — 100% with benefit cuts, 100% with tax increases; 50%/50%; 75%/25%; or 25%/75%? My guess is that Americans are willing to pay more taxes to retain current benefits under this crucial program.

Is that really the required debate, or just the debate Generation Greed is willing to have?  What about the fairness of the level of taxes paid and benefits received by people in different generations right how, and under any proposed change?

We need the truth about this not because we can go back to the past and force the most irresponsible generations in U.S. history to be more responsible.  But because it is only when they are damned for what they have already done that they will stop grabbing even more, as this proposal shows.

Would my peers, AKA Generation Apathy, be bought off by throwing us a few nickels at the expense of our own children and the future of our country? I hope not, but cannot say for sure.  But what I can say is that this crap is so evil it makes me sick.

Will a single “left leaning” publication raise the generational equity issue?

I don’t follow this sort of thing too closely, but there are, what, 40 or 50 candidates now running for the Democratic nomination for President?  All of whom need to attract attention and distinguish themselves from the rest of the field.  Will none of them step forward and say “we need to do something about Social Security, but this particular proposal is unjust, because it is later-born generations who have become worse off, and we need to think of them first for once?”

Back when I wrote the post on Room Eight about the Republican proposal, and Politico published an excerpt, there were plenty of angry comments (apparently all the comments have since been deleted). Littlefield, they said, is obviously a left wing ideologue who hates the Republican Party.  When in reality only the second of those things is true.

And now, there are likely those who would rationalize this proposal by claiming that I’m obviously a right wing ideologue who hates the Democratic Party.  When in reality it is only the second of those things that is true, and it is only true with regard to Democrats from New York and similar places.

Had the Democrats proposed merely preserving Social Security exclusively with tax increases effective right now, I wouldn’t be outraged. But the fact that they have proposed benefit increases and tax cuts for Generation Greed, deferred the related tax increase so that generation won’t have to pay, and exempted the money rich and the benefit rich (not to mention the retired) from any share of the burden?  That shows what they are.

1 thought on “Social Security: The Democrats Join Generation Greed’s Theft of the Future From Less Well Off Later-Born Generations

  1. larrylittlefield Post author

    Generation Greed goes on and on. In Illinois, past public employees got retroactive pension increases and past taxpayers didn’t pay enough in. So the state and its localities are facing financial disaster. With all retirement income exempt from the state income tax, and the usual panoply of property tax breaks for seniors, those who reach retirement — like those who move out of state, are off the hook.

    Chicago’s pension crisis — its four funds’ average funding ratio is only 26 percent — is one reason this editorial board endorses former U.S. Commerce Secretary Bill Daley for mayor. He is the only leading candidate who supports loosening the Illinois Constitution’s overly rigorous pension clause. Amending that clause would allow the legislature to protect benefits already earned but modify benefits going forward.

    WHAT? You mean those who put Chicago in this mess, probably under another member of Daley’s family, and took more than what they were promised when hired give back nothing? And those who have worked for 20 years and have accrued little toward their pensions (that’s the way pension accruals work — they are back-loaded) lose almost everything?

    Already in Illinois new teachers, who don’t get Social Security, get nearly zero in taxpayer contributions to their own pensions. A massive cut in their compensation compared with their predecessors. But would the union say they the wages of the more privileged should be frozen and any money should be given to those new hired in cash to even that up? No way.

    The deal to screw new teachers was passed by a Democratic Assembly and Democratic Senate and signed by a Democratic Governor. And no matter how high taxes soar, no politicians is willing to suggest that perhaps the retired should actually have to pay state income taxes too, in the state with the second most sold out future among states in the U.S.

    If you look beyond the propaganda, you see the same values at work everywhere. Twenty years ago, those at or under age 40 were those getting screwed. Ten years ago, it was everyone age 50 or younger. Today it is everyone age 60 or under. At the federal level, it is mostly the Republicans who have been responsible for stealing the future. But as these deals show, that was only because they were the ones with the opportunity.

    When will the truth come out? When there is nothing left?

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