• Seriously, We Should Get Rid of the Social Security Payroll Tax

    Greg Sorber/Albuquerque Journal via ZUMA

    A couple of days ago I wrote that Donald Trump accidentally had a good idea when he proposed doing away with the payroll tax that funds Social Security. This prompted several readers to push back on the grounds that funding Social Security through ordinary income taxes would make it a budgetary football every year. But that’s not how it works.

    Social Security is an entitlement. Technically, it’s classified as mandatory spending, which means that it gets paid out automatically and doesn’t require an annual appropriation. If you qualify, you get Social Security. Period. It doesn’t matter where the funding comes from.

    It’s worth noting that for the next couple of decades Social Security will be partially funded by income taxes anyway. The infamous trust fund, after all, is nothing but a bunch of government bonds in a filing cabinet somewhere in Virginia. If payroll taxes are insufficient to cover Social Security payments, the bonds are cashed in. And where does the money to redeem the bonds come from? The general fund, of course, which consists primarily of money from income taxes.

    Here’s how this all plays out:

    • Social Security payments are mandatory regardless of how they’re funded. Congress does not approve a Social Security budget every year.
    • Payroll taxes are regressive. Nobody on the left should defend them.
    • Income taxes are progressive. We like progressive taxes!
    • Funding Social Security through the general fund means (a) it’s funded by a progressive tax, and (b) there’s no more trust fund and no more blather about Social Security “going bankrupt” or similar nonsense.

    Back when Social Security was first started, FDR defended the payroll tax as “straight politics.” It was a way of tricking people into thinking that the money coming out of their paycheck was being “saved” in some way and then paid back to them when they retired. This has never been true, and FDR knew it, but it was a useful way of guaranteeing that Social Security couldn’t be touched in the future.

    That may have been necessary 90 years ago, but it’s not anymore. It’s not the funding source that stops Congress from cutting Social Security payments, it’s the broad support for the program itself. It’s just too damn popular to screw around with.

    Bottom line: There are several upsides to funding Social Security through the general fund and literally no downsides. This is something that any progressive should support.

  • Raw Data: Blue Collar Wages During the COVID-19 Pandemic

    Here’s something you might not have seen before: average earnings of blue collar workers over the past few months. Thanks to the rescue bills—primarily the CARES Act—average pay for blue collar workers has gone up 4 percent since February:

    And what are people doing with this extra money? Putting it in the bank and then drawing it down:

    Workers drew down $3 trillion in savings in May and June. At this rate, the extra savings generated by the CARES Act will be gone by the end of August. September is going to be a very grim month for a lot of people if Congress doesn’t get itself back in session quickly and pass another rescue bill. Because it’s a dead certainty that COVID-19 won’t be gone by then.

  • Lunchtime Photo

    This is a castilleja fissifolia from Sumapaz National Park in Colombia. At least, I think that’s what it is. It seems obviously to be a member of what we call the paintbrush family around these parts, but it doesn’t have a common name of its own that I was able to dig up. Alternatively, I might have screwed up the ID on this plant entirely. Perhaps we’ll learn more in comments.

    August 8, 2019 — Sumapaz National Park, Colombia
  • Why Not Finish Privatizing the Postal Service?

    Richard B. Levine/Levine Roberts via ZUMA

    Speaking of the postal service, why not finish the job of privatizing it? We hear a lot about the pension prefunding requirement that has wrecked its finances, but let’s face it: the real problem is the absurdly low rates that USPS is required to charge for first class mail. A first class stamp currently costs 55 cents, about half what it costs in Great Britain. Other countries are even higher, some charging $1.50 or more.

    We should give the postal service control over their own rates along with control over everything else too. There would be some exceptions, of course: the basic deal in which USPS gets a monopoly on first class mail in return for universal service should remain intact. There are a few other rules that would remain as well. Generally speaking, though, there’s no special reason that delivering mail shouldn’t be about 99 percent private these days.

  • Trump: Ruining the Postal Service Is Just a Way to Hurt Democrats

    John Marshall Mantel/ZUMA

    From the Washington Post:

    President Trump said Thursday that he does not want to fund the U.S. Postal Service because Democrats are seeking to expand mail-in voting during the coronavirus pandemic, making explicit the reason he has declined to approve $25 billion in emergency funding for the cash-strapped agency.

    “Now, they need that money in order to make the post office work, so it can take all of these millions and millions of ballots,” Trump said in an interview with Fox Business Network’s Maria Bartiromo. He added: “Now, if we don’t make a deal, that means they don’t get the money. That means they can’t have universal mail-in voting, they just can’t have it.”

    At this point, I don’t think anyone should be surprised that Trump is willing to wreck the postal service in order to gain some minor personal advantage. That’s our boy. But what still gets me is that he’s willing to blandly admit it on national TV and nobody seems to care. Does no one in the Republican Party object to this? Are Trump’s supporters so wildly anti-Democrat that they think this is a great idea?

    And has no one ever told Trump that this isn’t going to hurt Democrats very much anyway? He’s just ruining the mail for nothing.

  • Lunchtime Photo

    Is this the most boring job in the world? I took this picture at 4:30 in the morning on Highway 78 in the middle of nowhere. I was probably the first car this guy had seen in an hour. Still, there’s something about the actinic glare of the light that’s oddly attractive. Plus I didn’t have anything else to do while I waited around for my lane to open up, so I figured I might as well take some pictures.

    August 17, 2018 — Julian, California
  • President Trump Has a Great Idea About Social Security—Really

    Donald Trump sure looks tired these days, doesn't he?Jim Loscalzo/CNP via ZUMA

    A few days ago President Trump held a rambling press conference in which he promised to do something about Social Security taxes. He’s already signed an executive action that (if it passes muster in the courts) would defer all payroll taxes through December but then require them to be paid back in a lump sum in January. So one thing he wants to do is forgive the repayment. But then there was more. Trump started to blather about “extending” the payroll tax deferral. Finally, apparently unable to stop himself, he went further and promised to permanently reduce or even terminate the payroll tax. Later in the day, his campaign made that promise explicit:

    As with most things, your best bet in this case is to ignore everything Trump says. It’s just meaningless chatter that even Trump himself probably doesn’t understand. But guess what? In this case, he’s accidentally stumbled onto a great idea.

    You see, we should terminate the payroll tax. It’s regressive, it’s pointless, and it long ago stopped serving its original purpose. We should get rid of it and simply fund Social Security out of general tax revenues, just like everything else. Why should it have a less reliable funding source than the Pentagon, after all?

    So that’s that. Get rid of the payroll tax and increase the personal and corporate income taxes to make up the revenue. At the same time, we can make a bonfire out of the bonds in the Social Security trust fund, televised on national TV for everyone to see. There would be no more ridiculous talk about Social Security “going bankrupt” or endless arguments about whether the trust fund is “real” or “fully funded over the 75-year window.” When it’s all over, we’d pay for Social Security (and Medicare) the same way everything else is paid for: through general purpose taxes. This would save Social Security and Medicare and ensure their full funding forever.

    It’s too bad this was just Trump blather. If he were serious about it, it would have been a great idea.