June 15, 2008

Media Misses Historic De-Linkage in Obama Social Security Proposal

Press coverage of Barack Obama’s Social Security proposal in Columbus, Ohio last week made many of the usual mistakes any time there’s a story about the government’s “third rail” program. But in this case it missed what would be a historic de-linkage of payments made into the system from benefits paid out.

First, here are the key paragraphs from the Cincinnati Enquirer’s coverage of Obama’s speech (bolds are mine):

Sen. Barack Obama promised senior citizens Friday that as president, he would protect Social Security benefits and provide universal health care.

To extend the life of Social Security, Obama proposed applying a payroll tax to annual incomes above $250,000, affecting the wealthiest 3 percent of Americans. The Democrat also proposed eliminating income tax for any retiree making less than $50,000.

….. Obama said it is unfair for middle-class earners to pay the Social Security tax “on every dime they make,” while millionaires and billionaires pay it on only “a very small percentage of their income.”

….. The total Social Security tax rate of 12.4 percent is now evenly divided between workers and their employers. The workers’ 6.2 percent payroll tax is applied to all wages up to $102,000 a year, which covers the entire incomes of most Americans.

Under Obama’s plan, the tax would not apply to wages between that amount and $250,000.

But all salaries above the $250,000-a-year amount would be taxed under his plan, Obama said.

The “a payroll tax” reference in the first bolded item in the excerpt gives the impression that the rate of any payroll tax applied to annual incomes above $250,000 might be something other than the current 12.4% (6.2% paid by the employer, 6.2% withheld by the employee, or the entire 12.4% paid by anyone who is self-employed). But references to “the payroll tax” on the “Seniors & Social Security” page at Obama’s campaign web site and in his “Seniors Fact Sheet” (a PDF available at the “Read the Plan” link at the bottom of the “Seniors & Social Security” page) make it clear that there has been no contemplation of changing the current rate:

ObamaSocSec0608

While the first bolded item in the excerpt also claims that the tax would apply to the “wealthiest” 3% of Americans,” the article’s full context clearly indicates that the Obama proposal is actually targeting “the 3% of Americans with the highest annual earnings.” That is not an unimportant distinction: A person who makes over $250,000 a year and spends it all is not “wealthy”; a person making less than that amount who consistently saves and is a reasonably successful investor could be very wealthy.

But the big omission in the coverage was the Obama proposal’s abandonment of this following formerly immutable fact: As onerous as the Social Security tax has been in its relentless march up the salary hierarchy, those paying in could take minor consolation in the fact that their Social Security retirement benefits, should they live to see that day, would be slightly higher with each additional dollar of taxable earnings.

Social Security currently calculates old-age benefits by looking at all taxable wages earned during a person’s working career. After adjusting each year’s earnings for inflation that has occurred during the intervening period, it takes the highest 35 years of taxable earnings and calculates a person’s “Average Indexed Monthly Earnings” (AIME). The higher the AIME, the higher the benefit.

“Millionaires and billionaires” (actually, as noted, “high earners”) don’t pay into the system once they hit the current maximum taxable earnings amount of $102,000, but they also receive no additional benefit. How that is “unfair” is a mystery.

Further, most of the rich, along with many seniors whose earnings and wealth barely make them middle-class, are penalized once they reach retirement. That’s because of tax legislation first passed in 1986 and made worse 1993. If their income from other sources during retirement is “too high,” they must pay federal income tax on either 50% or 85% of their Social Security benefits. If anything, the system taken in its entirety is already unfair to high earners, along with many other retirees.

But Obama’s proposal would go much further, severing the earnings/benefit linkage for the first time in the 70-year history of Social Security. The payroll taxes collected from those whose earnings from work is greater than $250,000 would simply be a Robin Hood wealth transfer from the highest-earners to others. Team Obama surely does not plan to provide for additional benefits for the highest earners. Obama would, most likely irretrievably, turn Social Security into just another welfare program.

The Obama plan, with the exception of the “donut hole,” is in fact a re-run of the unlimited Medicare tax passed in 1993 — only much, much larger.

In 1993, the earnings ceiling for Medicare taxation was removed. In case it makes anyone feel good (why it would, I don’t understand), someone with earnings from work of $1 million pays $29,000 a year into the Medicare system ($14,500, or 1.45% of earnings, paid by the employee, with the same amount paid by the employer; or the entire 2.9% paid by the self-employed). High earners are propping up the still-tottering Medicare system with no hope of ever receiving anything resembling proportional benefits.

The Obama plan would make the Medicare tax increase look like child’s play. Instead of paying $12,648 per year into the system ($102,000 x 12.4%) and at least getting an incremental benefit increase, someone with earnings from work of $1,000,000 would now pay in a whopping $93,000 more ($750,000 in earnings above the “donut hole” times 12.4%) — and would get nothing in return.

It would nice if the press would give concrete examples of the financial impact of what Barack Obama is proposing in this and other areas. It’s not really that difficult. Better yet, perhaps the media could put a hold on its non-stop hero worship long enough to ask Obama how the economy will be able to grow if its highest earners see their take-home pay and spending power cut by 9%-12%.

Cross-posted at NewsBusters.org.

Of All the Pics CNN.com Could Have Used ….

…. for its item on John McCain’s age, it picked this one from the Associated Press:

Alan Silverleib’s article also contradicted itself within the space of just a few sentences:

Roughly one-third of respondents in most recent national polls say that McCain’s age could impede his ability to effectively govern the nation.

These percentages are in line with historical trends. Approximately one-third of voters expressed similar concerns about Bob Dole’s age in 1996 and Ronald Reagan’s age in 1984. (Dole was 73 years old in 1996. Reagan was 73 in 1984.)

The importance of the age question may be magnified this time around because it threatens to sap McCain’s support with one of his most critical constituencies: older Americans.

What? If the poll percentages of those concerned are the same, why is the concern bigger this time? Sliverleib may simply assume that the “magnification” is there because those over 65 probably make up a larger percentage of the electorate than 12 and 24 years ago. But it may also be that medical and tech advances have caused the many over 65 to recognize that 71 really isn’t that old if you take care of yourself, as it appears Mr. McCain has.

Cross-posted at NewsBusters.org.

Irish Voters’ Rejection of EU’s Lisbon Treaty Brings Out Media Elitism

Irish voters struck a blow for national sovereignty a few days ago, and the world’s media elites didn’t like it one bit.

Here’s how the UK Guardian opened its “Darn those voters” coverage Friday morning:

Ireland today decisively rejected the Lisbon treaty on European Union reform, plunging the project into chaos.

Humiliated at the polls, the Irish prime minister, Brian Cowen, admitted the country’s no vote had been a potential setback for Europe.

….. Less than 1% of the EU’s 490 million citizens appear to have scuppered the deal mapped out in Lisbon that was meant to shape Europe in the 21st century.

Ireland was the only one of the 27 EU member states obliged to hold a referendum on the treaty.

The official figures from the counts in 43 constituencies revealed that 53.4% of voters had rejected the document, while 46.6% voted in favour – a difference of 109,164 voters.

The US Constitution has about 4,400 words. The EU’s Lisbon Treaty alone has 260 pages. Perhaps Irish voters doubted whether member countries are getting any value for the $120 billion euros the EU bureaucracy will spend in fiscal 2008.

The Guardian’s next line of defense was to pretend that the EU is why Ireland has prospered (bold is mine):

Politicians in Dublin were stunned by the size of the margin in favour of the disparate no campaign, which comprised a vocal, well-funded free-market ginger group, the ultra-Catholic right, Sinn Fein and the far left.

They were also surprised at the hostility to the EU reform deal in Irish constituencies that have gained so much in European largesse.

….. Ireland may have enjoyed a net gain of €40bn from Europe since it joined what was then the EEC in the mid-1970s, but its voters were concerned about the loss of sovereignty, possible tax harmonization and a threat to the country’s neutrality.

(Aside: I believe that the correct translation of “ultra-Catholic right” would be “anyone who opposes abortion on demand.”)

As to economic matters, whatever the Guardian means by “net gain,” give me a break. The fact is that the Irish are responsible for their country’s marvelous prosperity, while Old Europe has languished.

Ireland’s policies of supply-side tax cuts and openness to professional-class immigration have turned the once economically-lagging island into a prosperous high-tech mecca. Ireland’s economy grew 5.2% last year. Meanwhile, France, Germany, and the UK grew 2.3%, 2.2%, and 2.6%, respectively. Based on data at this link, Ireland’s economy has more than tripled in size since the beginning of 1989, while France, Germany, and the UK have grown 46%, 37%, and 53%, respectively. It would appear that the Irish would rather not be held back or dragged down by Brussels bureaucrats demanding “tax harmonization,” which really means “big tax increases.” Who can blame them?

On the US side of the pond, the New York Times’s Sarah Lyall and Stephen Castle pitched in with their elitist perspective on Saturday (bold is mine):

Europe was thrown into political turmoil on Friday by Ireland’s rejection of the Lisbon Treaty, a painstakingly negotiated blueprint for consolidating the European Union’s power and streamlining its increasingly unwieldy bureaucracy.

The defeat of the treaty, by a margin of 53.4 percent to 46.6 percent, was the result of a highly organized “no” campaign that had played to Irish voters’ deepest visceral fears about the European Union. For all its benefits, many people in Ireland and in Europe feel that the union is remote, undemocratic and ever more inclined to strip its smaller members of the right to make their own laws and decide their own futures.

The Times writers act as if that’s a bad thing. The truth hurts, guys.

In a stunning contrast, considering the source, the Associated Press actually noted that Europeans across the continent appreciate what Irish voters did for them:

Ordinary Spaniards, Dutch, French and Britons, who wish they could get the same chance, might also say ”no” to the cold, distant heart of Europe.

”Spaniards feel Spanish, the French feel French, and the Dutch feel Dutch. We will never all be in the same boat,” said Eduardo Herranz, a 41-year-old salesman in Madrid, Spain.

Herranz said Europeans were right to feel alienated from bureaucrats in the EU base of Brussels, Belgium.

”You don’t decide on anything, and you don’t get to vote on anything they are talking about,” he said of the average voter. ”In day-to-day life, out on the street, the European Union is something very distant.”

….. ”It’s OK to belong to Europe, but I do not want to be governed by them,” said David Richards, 56, a tourist from Lincoln, England, on vacation in Dublin.

….. Citizens across the continent complain they have no direct power to influence EU treaties, which are produced in legalese too complex to understand. They say it’s not enough that their elected governments help to negotiate such treaties.

Maybe if reporters actually talked to ordinary Europeans more, and reprinted Brussels press releases less, they wouldn’t have been so surprised at the Irish outcome.

Cross-posted at NewsBusters.org.

Positivity: Cape firefighter given award for off-duty rescue in April

Filed under: Positivity — Tom @ 7:11 am

From Cape Girardeau, Missouri:

Saturday, June 7, 2008

Ninety seconds. That’s all. A month and a half later, it’s the time aspect that bothers Harry Schumer the most.

The Rev. Daniel McCall was banged up but alive, talking and mobile when Schumer reached him. McCall escaped death by those 90 seconds.

“At the time, you do what you do and you don’t think about it. … Afterward, I got to thinking, 90 seconds isn’t that long. And then we would have had to back off. For someone that’s alive and conscious, that is scary,” said Schumer, a firefighter with the Cape Girardeau Fire Department.

On Friday, Schumer was recognized for his heroism and was presented a medal of valor. It’s been at least four years since the last medal of valor was awarded, fire chief Rick Ennis said.

Dusk hadn’t fallen yet April 24 as Schumer was driving to Brewer, Mo., to visit a friend. As he neared Perryville he slowed down when he saw a tractor-trailer and car pulled off to the side of Interstate 55. The air was still dusty from an accident.

Schumer’s wife was the first to spot an overturned pickup truck, lying on its roof in a concrete gutter. Three people had already assembled at the scene. One was passing a pocketknife to McCall, whose truck had rolled four times when a tire blew. McCall had been on his way home to St. Louis after spending the afternoon in Advance, Mo.

With the knife, McCall, 56, frantically worked to cut himself out of his seat belt. Alone in the truck, he was trapped under the smashed frame.

Two other bystanders were firefighters, like Schumer. They were using a load lock from the tractor-trailer that had stopped to try to pry open McCall’s door.

From his experience, Schumer doubted that would release McCall. He started searching for other means. McCall could only fit his head and part of his chest through the window. The windshield was shattered but still in place.

Dressed in blue jeans and a T-shirt, Schumer, 49, lacked his usual rescue gear: protective clothing, water, cutting tools. Schumer had worked for 21 years as a Cape Girardeau firefighter but almost felt helpless.

“You’re kind of left out on your own. You have to improvise, use what you’ve got. Which at this time was basically nothing. Just your knowledge,” he said.

As he ran through escape methods in his head, the engine caught fire. He knew it wouldn’t take long for the whole vehicle to be in flames.

Wiggling his way between the ground and hood, Schumer used his bare fists to punch and pull out the windshield. Eventually a hole was big enough for McCall to crawl out. Once McCall came out halfway, Schumer pulled him the rest of the way out.

About three minutes had passed since Schumer had arrived, and within 90 seconds of McCall’s escape his vehicle was engulfed.

As Schumer reached to stabilize McCall’s head, he realized blood from his hands was covering McCall. An ambulance and firetruck arrived, and both McCall and Schumer were taken to the hospital.

Glass was removed from Schumer’s hands, but no stitches were needed. “I was still picking glass out of them three days later,” he said. McCall was treated for a sprained back and neck.

McCall was present at Friday’s ceremony, the first time he has been reunited with Schumer. …..

Go here for the rest of the story.