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Congresswoman Jan Schakowsky (D-IL 9), member of the president's deficit reduction committee, offers her plan for cutting the deficit.
Social security was designed to provide some retirement security and is completely separate from the federal budget. Individuals make contributions, matched by their employers, and they receive benefits related to their contributions. The more one contributes, the more one receives. If we raise the wage limit (currently $106,000), then the higher income workers will collect more, which won't help the problem. IF we completely change the system so that it becomes simply a tax on higher-income workers with little or no increase in benefits, we should put the system ON BUDGET and just make it another government payment like unemployment or welfare. Those who need it, would get it.
Dear Rep. Schakowsky,
I'd like to thank you for proposing an alternative deficit reduction plan that doesn't overly burden the middle class and working poor. Here are a few additional thoughts that I hope you will consider :
Additional Revenues :
1) Eliminate the Corporate Interest deduction -This will reduce risky leveraged deals and debt-financed takeovers that cost Americans jobs.
2) Annual tax on ASSETS of the wealthy.Assets > $5 million taxed at 4 % per year.
3) Fixed $ tax break for all instead of Bush cuts.Give all tax payers 2 times the median cut under Bush - instead of extending Bush cuts.
4) Progressive national sales tax - Exempt low cost and below median cost items. Additional Premium rates for high cost and luxury (top 10 % in catagory) goods.
5) Capital gains premium rate on investments outside the U.S. - to subsidize local U.S. employment and growth.
6) Additional sales tax on goods from countries who run chronic trade surpluses in bilateral trade with the U.S.. 7) Tobin/Stamp tax on all financial transactions. Creating a small tax on all financial transactions could reduce speculation and raise revenue if coordinated with other leading economies.
Please forward these ideas to Rep. Schakowsky. Thank you.
Creating a small tax of a few basis points (ex : 0.02 %) on all financial transactions could reduce speculation and raise revenue if coordinated with other leading economies.
This tax approach has been proposed by many leading economist including Keynes (and more recently Stiglitz). It would require coordination with other leading economies and penalties for use of offshore trading havens to evade the tax.
It could raise substantial revenue - mostlyfrom large traders, hedge funds and speculators, and is thought to reduce market volatility.
Currently companies can deduct the interest they pay on corporate debt from their income. This rewards excessive leverage and risk taking and has been a major cause of mass layoffs and financial crises since the 1980s.
Companies borrow heavily and takeover other more prudent companies. They then fire many employees, cut back on R&D, reduce long term capital investment and find ways to duck their pension and other obligations. They often streamline their processes for exploiting their customers(as we see in retail finance).
Leverage is increased risk. The U.S. taxpayers should stop subsidizing reckless corporate behavior by ELIMINATING THE DEDUCTABILITY OF CORPORATE INTEREST PAYMENTS.
This is far more prudent, beneficial andkind than eliminating the home mortgagededuction in the middle of a housing slump - a policy sure to increase foreclosures and harm the middle class.
Bottom line :
Eliminate the deductability of corporateinterest payments. It will raise revenue,reduce risk, and reward prudent corporate behavior.
Shakowsky's proposal for Capital Gains tax rate parity with earned income rates is sound. Here's a way to increase it's benefit for U.S. growth and jobs :
1) Charge a higher capital gains tax rate premium on investments outside the U.S.
2) Use some of the proceeds to subsidizelocal U.S. employment and growth.
The idea of a national sales tax is a soundone, but it is often regressive.
Here's a way to make it progressive :
1) exempt low cost and below median cost items.
2) Additional Premium rates for high cost and luxury (top 10 % in catagory) goods.
3) Additional sales tax on goods from countries who run chronic trade surpluses in bilateral trade with the U.S.. (Let them try to sue us in the WTO if they like).
The top 400 people make over $120 billion per year in aggregate. Much of it is capital gains which is taxed at a much lower rate than earned income.
As Buffett observed, many of the rich pay a lower tax rate than their secretaries and maids.
One way to fix this is to make the capital gains tax rate progressive.For example, capital gains in excess of $1 million per year could be taxedat the same rate as earned income - or higher. This would generate subtantial income to invest in growth or reduce the deficit.
Bottom line : Stop favoring capital gains over earned income. This will help the rich to pay their fair share.
Republicans want a tax break for all. Fine.
Estimate the MEDIAN taxreduction from the Bush tax cuts to all taxpayers. DOUBLE IT.
Give this amount (2 x the median tax reduction) AS A FIXED AMOUNT to ALL taxpayers - instead of renewing the Bush cuts. This will avoid being grossly regressive, and will save money for all (since benefits are grossly skewed to the rich, so the mean tax cut is much higher than the median). It will also increase the economic stimulus since more money will go to the middle class and working poor who are more likely to spend it.
Republicans who oppose this can and should be properly labelled as Schills for the Rich.
TAX *ASSETS* - ONLY above $5 million - at 4 % per year. ASSETs NOT Income. Most of the income of the wealthy is in the formof RECOGNIZED CAPITAL GAINS - this is highly manipulable, and therich can use tax accounting shelters, offshore accounts and delaying of recognition of capital gains to reduce their "income" during higher tax periods (until they can lobby to get the tax reduced). ASSETS on the other hand areharder to manipulate.The richest 1 % own 38 % of the assets in the U.S.. The richest 40 peoplehave 1.2 trillion in assets. They have also gained from both the bubble and thebailouts, and from the Bush tax cuts and other policies far more than the middle class.An annual asset tax of 4 % of assets above $5 million - on rich American citizens' and residents' worldwide assets will fix our deficit with little to no suffering required forAmerica's troubled middle class. The fact that less than 1/2 of 1 percent of thepopulation has the power to keep such proposals from even being consideredspeaks volumes about the excessive power of wealth in our democracy.Bottom line : To fix the deficit : Create an annual ASSET tax on the Rich ( > $ 5 Million)
Well one this Jan Schakowsky won't cut is aide to Israel.
"In running for reelection she traded insults with Republican challenger Joel Pollak. over who was a better candidate for Israel. According to the Israeli media Pollak, an Orthodox Jew born in South Africa, started the exchange by claiming that Schakowsky was "soft on Israel’s security," that she was "too sympathetic to the Palestinians" and supportive only of "weak" sanctions against Iran. Pollak, one of whose supporters is Alan Dershowitz, asked Schakowsky to join him in "condemning the Obama administration’s ongoing attack on Israel." In a debate with Schakowsky, Pollak unrolled a map of Israel and announced "My focus tonight will be Israel."
Schakowsky’s campaign countered that she had a 100% pro-Israel voting record, which was the truth, including even a vote in favor of Israel’s right to defend itself after it killed 300 Palestinian children in operation Cast Lead against Gaza. She also cited self defense when signing a congressional letter endorsing the killing of US citizen Furkan Dogan on the Gaza flotilla. In addition, she has enthusiastically endorsed every actual and proposed piece of legislation sanctioning Iran.
Schakowsky, who has considerable baggage due to her possible involvement with Turkish lobbyists as documented by Sibel Edmonds, was never challenged by Pollak on the issue, possibly because the Edmonds revelations also involved Israel. Jan Schakowsky defeated Pollak in the election by a large margin, demonstrating perhaps that the electorate was not as consumed by the Israel issue as was Pollak."
From amer conservative Sibel Edmonds http://www.amconmag.com/article/2009/nov/01/00006/
"EDMONDS: Yes, and in 2000, another representative was added to the list, Jan Schakowsky, the Democratic congresswoman from Illinois. Turkish agents started gathering information on her, and they found out that she was bisexual. So a Turkish agent struck up a relationship with her. When Jan Schakowsky’s mother died, the Turkish woman went to the funeral, hoping to exploit her vulnerability. They later were intimate in Schakowsky’s townhouse, which had been set up with recording devices and hidden cameras. They needed Schakowsky and her husband Robert Creamer to perform certain illegal operational facilitations for them in Illinois. They already had Hastert, the mayor, and several other Illinois state senators involved. I don’t know if Congresswoman Schakowsky ever was actually blackmailed or did anything for the Turkish woman."
Since Senator Alan Simpson (I hope that I spelled his name correctly) is so intent on sharing the pain for all Americans, especially Social Security recipients, how about cutting or eliminating, the welfare that we pay to former members of the house and senate? that may not save enough, but at least we would know that he really means sharing the pain...Oh I forgot the members of congress have to vote on it.
The US is the only country in the world with miltary commands on five continents.. China doesn't. Russia has withdrawn its forces from the constituent republics of the former Soviet Union but still whipped Georgia.The Royal Navy and Royal Marines were able to get to the Falklands and countered Argentinian aggression. Modern combat aircraft flying at mach 2 can be anywhere in the world in eleven hours. The US maintains a missile comand and control system that, if ever employed, would initiate a lemming like jump off the cliff into oblivion and the end of human civilization. Yes we need a military so we can help our friends defend themselves if necessary but as currently structured it is a jobs program for young wwomen and men and a big, fat payday for the aerospace and weapons industries. Israel has the most effective military in the world and they are able to provide free or low cost medical care for its citizens. Figure it out.
Why are we punishing WE the People of the U.S.A. when the seniors who have worked more than 45 years made the country prosper? It is time to reflect on how the wealthy of our country can do something to thank America for the opportunity of getting wealthy. My suggestions are:
1. tax on all sports organizations;2. getting the FDA re-organized and trimmed down as they are ineffective and cause more difficulties for entrepreneurs;3. Military Contractors-- trim down 4. Politicians - close curbs on spending;5. Wealthy tax over 250,000 a "I Give" tax to help the country;6. The Corporations and Banks got American into this mess, so why not make it harder for them and not the poor seniors living on social security.7.Every one earning over $100K must pay $10 to the USA as an extra "I luv America" tax specifically to reduce the budget.8. Anyone owning more than one SUV pays$5,000 On their income tax. WE the People work more than 40 hours a week for more than 40 years just to stay alive, most of us, so focus on politicians,the wasteful government spending, the military, and the FDA, a messed upand ineffective entity. Rents go up, no cost of living help for the seniors, and a broken metro system with fares going up constantly, to tear down hard working people.
And how can we talk aboutedicare and not address the ridiculous amountof money spent on end of life treatment? Most people will cost the system more in their last two months of life than the rest of their life combined. I would rather have quality of life things covered by Medicare while I am still leading a decent life (motorized scooters, hearing aids, heck even Viagra) than have my children and grandchildren saddled with huge debt so I can spend the last 2 months of my life in and out of hospitals.
Has Brian just stopped pretending to be nonpartisan? Of course I know 95% of his listeners are far, far left-wing, but don't we still at least *pretend* it's public radio?
Greg - people who make less than $100,000 pay their own money into social security, and it should be there when they retire, not after they die. It has nothing to do with the deficit. That's not "shared prosperity."
The deficit question is different, and it is one of shared prosperity. We are all paying taxes, (well, the rich and corporations pay FAR less than teachers and firefighters and employees at starbucks and walmart) and that money is then spent on wars, largesse, further subsidies for corporations, etc. We're beggaring ourselves for the powerful in this country.
Look at the healthcare act. It's a gigantic stripping of wealth from the working people of this country to line the pockets of the very people who are currently making the system untenable. And that's a big part of our deficit - medicare and spiraling healthcare costs.
And Jesus, the wars, honestly. The wars. Get a grip on reality and the policy points and stop barking every time you hear the dog-whistle.
Generally speaking I am a far leftie, but I am starting to be scared by all of the politicians looking to "the Rich" to solve all of our budget woes. If everybody looks for more and more ways to increase the taxes on people making more than $250K per year, then taxes on these "Rich" people are going to skyrocket in 20 different ways! How about some REAL fiscal savings?
Yeah! Waste in the mililtary.Too much war with no draft.Draft the children of the rich.Let them earn their place in society.
* End means testing for every community service provided through government. The bureaucratic needs cost a fortune, and are frequently contracted out at higher costs than doing the work in-house--and are no more efficient, since there needs to be a government bureaucracy to ensure that they are using the money legally.
Thank goodness for Congresswoman Jan Schakowsky and her realistic appraisal of the economic situation in this country! As wealth accrues at the top, the income gap grows and middle class wages remain stagnant over decades while all costs and fees continue to soar this country becomes less and less viable and poverty rates rise and education levels drop.
I am glad to hear that she has a more realistic ratio of cuts in spending vs raising revenue. "Shared sacrifice" is a clever way of continuing to stick if to the middle & working class whilst paying lip service to the social safety net and continuing to allow wealth to flow upward.
Thank you Brian for hosting the Esteemed Representative Illinois.
She deserves more airtime!
2011 will the second year with no increase in SS payments and so the third year of receiving the same monthly income. We were told that there was no cost of living increase! Well, my rent went up, my Verizon got an increase, ConEd got an increase so my bills are higher and food costs continue to rise incredibly so don't tell me I haven't had a cost of living increase. This is all bunk.You, the media, base your reporting on what you hear from others, why don't you look into the facts as Rep Schackowsky has and find out the facts. She has it all right. She keeps on knocking down what you say because she knows, she studies it. You regurgitate what you hear or read that some other non-knower reports.
Overhauling transportation between NY and by building another Hudson tunnel would have increased property values in NJ by tens of billions. But it would have cost billions that the NJ Governor said the state couldn't afford.
Is this the time to invest in US infrastructure? If not now then when?
I say slap another tax on cigarettes.
People want to make this seem really complicated, but it's not. End out wars in Iraq and Afghanistan. Stop using private contractors for overseas security. Allow direct drug price negotiation for Medicare. Start a viable, national public health insurance option or allow everyone to buy into Medicare. Remove the cap on taxable income for Social Security, exempt the first $11,000 from FICA (you could even cut the rate if you remove the cap and still fund soc. sec. beyond any predictable horizon--or increase benefits, something sorely needed).
Tax all income as income and stop renewing the Bush cuts. . . and voila!
Greg why is your life defined by your bank account?
If you keep pushing for higher Social Security income limits and means testing, I can guarantee that you will start to lose progressive peolple like me. I am all for a progressive income tax system, but Social Security was never intended to be a redistributive system. It was intended to be a reliable base retirement income for EVERYONE. We all put in, and we all get back. If everyone keeps pushing this point, you will see people like me goig to the other side and pushing for privatization. Oh by the way, I am 35 and really don't think I will see much anyway. VA drug prices are lower because they useMostly generic drugs. Have fun comingUp with the $50,000,000,000 that drug companies spend every year on R&D if they can recoup drug development costs here in the US.
How about, for a company to be allowed to lobby, a sort of lobby license, the company must be based and pay taxes in the US?
* Increase the national required minimum wage significantly with an automatic annual cost of living increase. Minimum wage workers--frequently service and retail etc. workers whose jobs do not go overseas--spend their incomes quickly, therefore adding to federal revenue in many ways: income tax, social security, sales taxes.* Add education taxes on corporations, since they are the first to complain that we have an inadequate supply of trained workers and will benefit the most by an increase in literate, thoughtful workers.
...lower the mortgage interest deduction...
Why do I never hear about cutting the oil depletion allowance or subsidies to fossil fuel industries?They don't need itWhat about cutting subsidies to big agribusiness?They don't need it
"Shared prosperity"?! Is she saying "spread the wealth"? So what incentive do I have to excell in business if I know my achievements will be "shared" with people who put in half the time I do?
Old people must suffer so that Wall St can get its hands on the trust fund for the horse races. That's what they mean by "shared sacrifice." Social Security isn't even part of the deficit.
The campaign against social security has been a long one, and it's about kicking the working poor right between the legs.
Cheers to Rep. Schakowsky for pointing out the ridiculousness of the national discourse on this issue. Too bad she doesn't work in the White House.
She is another clueless Leftie who drove our country into bankruptcy and, after all this, still refuses to admit that these policies are wrong.
Change in 2012.
"We talk about shared sacrifice."
No "we" don't. Those receiving under around $1 million per year do.
I've assumed it was common knowledge that the core issue since 2000 or so is that some Americans want to share the sacrifices and some don't.
Thanks for having Representative Schakowsky, she has it right on the head with what the problems are. She's right about us all sharing is baloney, we all have shared this failure it's time for the rich to share it a little more than the rest of us. She's got it right on Soc Sec too. Right on Representative Schakowsky, you got my vote.
means testing for SS!!!
...and raise the age by one year for anyone under 21, and another year for anyone not yet born.
Two questions for your guest:
1) What is the "right" ratio of debt to revenue for the country? Currently Federal debt is ~3x times larger than Federal tax receipts. Not too dissimilar to homeowner debt to income. Debt can be good- it attracts cheap foreign cash to our economy (in preference to our trading partners), and allows us to invest in the future. But how much debt is optimal?
2) Its hard to beat averages. And on average, a country cannot offer interest rates that are higher than GDP growth. That's because interest is really "new" money freed up by productivity improvements in the economy. Well, the US is growing at around 2% per year per person (in constant dollars), yet state and federal pension plans assume closer to 4-5% (constant dollar) returns. How can we fix the pension shortfalls while hewing to unrealistic return rates?
See http://seekingalpha.com/user/727366/instablog for a clear discussion of this issue.
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