Streams

The Winners and Losers of President's Budget

Thursday, April 11, 2013

U.S. President Barack Obama speaks to the media after meeting with Congressional leaders at the White House, March 1, 2013. (Mark Wilson/Getty Images)

President Obama laid out the details of his budget proposal yesterday, which includes spending cuts, tax increases, and new spending. Heidi Moore, finance and economics editor for the Guardian, offers her take on the winners and losers if this budget passes. 

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Heidi Moore
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Comments [16]

RUCB_Alum from Central New Jersey

Do I have this straight...The Reagan-era Greenspan Commission DOUBLES FICA rates in order to build a surplus to handle the load on payments caused by the Boomer's retiring. Rather than invest that money in areas that would build the economy - better infrastructure, education, etc. Congress uses the dough for current expenses. Flip to FY2000, Fed budget is in surplus, national debt projected to be $0 in ten years. GWB and the GOP over-stimulate the economy with tax cuts, wars, MediCare expansion. All the loose spending finally explodes the economy. The only way to maintain GDP is to increase Government spending on EVEN LARGER borrowed amounts.

Do I have it right? You want the folks who gave the government 13% of their income throughout their working lives to accept less than the actual cost of living for increases on their investment? WHY...When the problem was caused by the GOP giving away money that they had to borrow, should we sit still for their plan to 'fix things'?

FICA rates should go down. Caps on income should be raised up to $1M. Income taxes should go up but mostly on the upper-tier earners. The requirement for matching employer payments for the self-employed should stop at 2 times or 3 times the median income. Means testing - if applied at all- should only happen after the retiree has recouped his investment.

Growth in disability payments has got to stop. We would all be better off putting the long-term unemployed in a health insurance plan thus their potential employer WOULD NOT have to pay healthcare premiums on them. These LT unemployed would immediately become more attractive hires.

Apr. 11 2013 12:30 PM
manhattan1978 from Manhattan

Brett is right on. Plus the commenter who noted the increases in Medicare premium.

Not only does Medicare premium rise with income, annual rises in Medicare premium outstrip annual rises in SS COLA.

There's a ton of wastefulness in Medicare paperwork processing. Why don't they look there for savings instead of cutting benefits to providers *and* cutting benefits to recipients.

They adamantly deny they've cut benefits to recipients but in 2012, as part of the TaxPayer Relief Act they snuck in a drastic cut to anyone who depends on Physical Therapy limits. Would someone more articulate than I please comment more on that? It was a cut, but because they "just" changed the allowable limit, they adamantly claim (including Schumer and Nadler's offices) that there was not cut.

Re putting ice on ice floes and sending us out to sea Alaskan style, won't work anymore with global warming...So they might as well fix Social Security.

Apr. 11 2013 11:05 AM
manhattan1978 from Manhattan

Very good segment.
Two facts need to be corrected:
1. guest said SS increased 2% last year, so so did COLA. Not true. COLA was only 1.7%. Plus, there have been several years with no COLA at all, and during "financial crisis", two years in succession. Social Security is not a gravy train and seniors are already being squeezed.
2. medicare premiums already *do* increase with income, and quite significantly. I imagine Medicare has a chart online showing the amount of the increase according to different income levels. Convert a traditional IRA to a Roth IRA and your Medicare premium will go up for the entire year. Just for example.
Finally, I could not agree more with the guest who asked whatever happened to raising the income limit for Social Security tax payment. If that limit were adjusted for inflation, does anyone know where it would be now?
Thanks.

Apr. 11 2013 10:51 AM
Brian from LES

Bryan, what a lame reason for not raising the cap on Social Security: You're just supposed to fund your own retirement. Great! Let's do other taxes the same way then. No kids? Well then, you don't have to fund education!

For those fortunate enough to make over $100K, they can pay a little longer into Social Security to keep olds out of the garbage cans.

Also, by law Social Security can't pay out more than it takes in. So how does cutting back on Social Security payments make any difference to the deficit?

Let's get some honest, informed and clear-headed discussion on Social Security!

Apr. 11 2013 10:50 AM

@jgarbuz, 10:23 a.m.:

You raise good points and make a compelling case.

"Those who are truly capable and desirous of higher academic work should strive for college."

But many simply cannot /afford/ college. Unlike many other countries, we do not make higher education available free-of-charge to all citizens.

(And this is a major reason why we do not truly have a "volunteer" military but what amounts, essentialy, to an effective /economic/ draft. Enlisting in the military is simply the only way that many young people have to finance an education.)

Shouldn't we change this?

Wouldn't providing an education to those who are "capable and desirous" be an investment in our future, as a nation, since many such students would surely become assets?

Apr. 11 2013 10:49 AM
Ruth Benson from Staten Island, NY

Brian made a tremendous gaffe in talking about Social Security in saying it is money that one puts in for one's own future. A common misconception. Entirely incorrect. Social Security is an insurance program in which current earners pay into the retirement benefits of current beneficiaries. i.e. My wages were taxed in order to fund my parents' Social Security benefits, FICA taxes on my childrens' wages funds my Social Security benefits. And why didn't his guest correct him?

Apr. 11 2013 10:47 AM

It seems it is not common knowledge that means testing has been used for Medicare premiums for two years. I have been paying double premiums for Medicare for two years. Alice from Manhattan

Apr. 11 2013 10:45 AM
fuva from harlemworld

Right on, Smokey.
Raising the salary cap on payroll taxes is exactly the kind of policy required -- that addresses the deficit in the context of income inequality. To purport to address the deficit without addressing the imbalances that perpetuate it is just nuts.

Apr. 11 2013 10:45 AM

Ms. Moore, the current CPI-W was frozen for 3 years just 2 years ago. That was despite Parts B/D premiums, deductibles & co-pays rose.

The current COLA rose 1.7%, but Part B premiums rose 5% & Part D rose 15.7%. Thus the current COLA leaves recipients with the same $ but larger fees.

Poor reporting - the CCPI will hit current recipients.

Apr. 11 2013 10:42 AM
April from Manhattan

I feel utterly betrayed by Obama. Not for myself, (already have Medicare), but I told younger people that the Republicans have tried since FDR and LBJ created those benefits, to get rid o them. I apologized to one yesterday. Now my only hope is that Republicans adhere to their obdurate opposition to whatever he does. As Jimmy Carter said, "Due to racism in the South and the rest of the country.

Apr. 11 2013 10:41 AM

What about having Senator Bernie Sanders (I-Vermont) to discuss this?

Please try.

Apr. 11 2013 10:40 AM
Dorothy from Manhattan

Obama will be remembered as the Dem (alleged Democrat) who put another nail in the Social Security coffin. First the payroll tax (FICA) vacation timed to coincide with the year that SS outlays were higher than SS income (to govt). Now the COLA adjustment.

Apr. 11 2013 10:38 AM
jgarbuz from Queens

As I said in a prior post, the CPI is a TOOL of government (basically a scam) to change payments when they want to, by changing the contents or weight of items in the "basket." In every country that has a pension system for its old and disabled people, the government will ultimately cut the amount given to old people as much as possible, just enough to keep them just barely alive. Which makes sense, since we old people are not going to produce anything anymore, and are just going to be a drain on the rest of society, so we should not expect much more than that. But at least they are not putting us on ice floes and setting us off to sea. The Democrats still need our votes :)

Apr. 11 2013 10:37 AM
Smokey from LES

Why are we even talking about cutting Social Security - just raise the cap on contributions and the problem goes away. Why is this not on the table?

Imagine if we collected income tax like we do contributions to Social Security. Full tax from first dollar, then no tax at all after $115K. Wow, that's a progressive tax!

Apr. 11 2013 10:36 AM
jgarbuz from Queens

We must re-purpose high school to be a place training kids to go to WORK, not to college! As indeed was once the case before liberals took over the system. And this is beginning to happen, only too slowly. There are programs that are bringing high school kids in closer contact with school projects that connect theoretical math, science and technology to real-live needs of manufacturing and other businesses. The kids in high school should be made to feel that their next stop after graduation will be to find a job! Actual work on the job is the best teacher. Those who are truly capable and desirous of higher academic work should strive for college. The majority should be taught in a way that makes it clear they are destined to go to work, not to school forever after, unless they really want to.

Apr. 11 2013 10:23 AM

is high ed spending being cut at the same time that business says, they need more h1b visas because, they can’t find grads with the degrees they want?

Apr. 11 2013 10:14 AM

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