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The Price Of Everything*
Do you remember when Rudolph Giuliani didn’t know the price of milk? Well, it may be time to ask again. Milk prices have jumped – 15 cents a quart in the supermarkets near me. Have politicians noticed? (In the most concrete sense of course, they know since milk prices are regulated)
One way to think about the fiscal impact on families of Bush years is to imagine how our national economic (income) pie is shared, according to the Economic Policy Institute. When economists write of pie, I imagine pie charts; but in this case it’s an interesting bar graph. The EPI’s Laurence Mishel tells us that in 2001-2005 period the very richest among us (top 1%) have seen their share of the pie increase while bottom-half and middle income people are getting less. This clearly written (for an economist) squib and chart are definitely worth a click if only to confirm that it’s not your imagination: almost all of us are worse off than we were in 2001 (to unearth a Ronald Reagan slogan). See also this excellent Alternet article and this essay by James Parrott on how inequality plays out in NYC.
One reason, as it turns out, the rich are different from you and me is that they pay taxes at a much lower rate than the rest of us. In Friday’s Washington Post Jeffery Birnbaum & Lori Montgomery explain it all. Yes, yes; tax stories put us to sleep; but as Willie Sutton is claimed to have said (about banks), it’s where the money is. One big surprise has been the energy with which our own Senator Schumer has defended this loophole for the superrich. Amy Traub, at the DMI blog, tells that tawdry tale here. It's so odd for us to worry about the small burden of congestion pricing falling on the very few, while the huge inequities in our tax system allow the rich to make out like bandits and place the costs on the rest of us.
In the light of rising costs of living and increasing flow of income to the richest, Congressional action raising the minimum wage seems paltry and overtaken actual costs. This wonderful victory by progressive democrats will not bring our lowest paid workers to the earning power the minimum wage had in 1956. It doesn’t mean the victory wasn’t great, only that we’re barely begun the process. See this article from the American Prospect and Nicholas von Hoffman’s article from The Nation .
One concrete way we can shape our demands to fix this is to ensure that cost of living increases are built into the minimum wage and public assistance. To be fair, for a change, there have been increases in the shelter allowance and food stamp allotment, but the basic public assistance grant has remained unchanged for since 1990. Below, one proposal to begin to fix it which includes a cost of living escalator. We need to build that in.
The Governor and the State Legislature have not raised the welfare grant since 1990. The value of welfare benefits has fallen to only half of the federal poverty level. 577,000 New Yorkers are on Temporary Assistance including 333,000 children. For more than a decade the courts have repeatedly ruled that welfare payments for housing are illegally low.
In 1975 public assistance for a three-person family was equal to 110% of the Federal Poverty Level.
Proposal: Increase the non-shelter portion of the public assistance grant from $291 to $450 for a family of three to reflect increase in the cost of living since the last adjustment in 1990. Fuel for Heating Allowances should be increased to account for inflationary increases since the last adjustments in 1987. A commission should be established to investigate the adequacy of all public assistance allowances and to recommend mechanisms to provide for annual cost adjustments.
This legislative proposal melted like the proverbial snowball in Albany. When next you meet or write your electeds, consider asking them about it. For me, the slogan to keep in mind is the one we Dodgers fans used to utter annually (pre-1955): Wait 'till next year.
*Oscar Wilde, it is said, called a cynic a person who knows the price of everything but the value of nothing.
Oscar Wilde was a lightweight
And a liberal is someone who knows the value of everything and the price of nothing.
In addition to making a lot more money, the wealthiest are also paying a lower percentage of that income in federal taxes. We need to do the following:
• Raise the top two income tax rates back to where they were under Bill Clinton;
• Repeal the dividend tax break;
• Restore tax rates on capital gains to at least 28%;
• Continue the rise in the Social Secuity "retirement age" (it's on its way from 65 to 67 now), bringing it up to 70 for people born in 1970 or later; and at the same time
• Cut Social Security taxes.
This would balance the federal budget on the backs of those who can most afford it, save Social Security without privatization, cut taxes for the working poor and the middle classes, and provide the money needed for expanded Medicare, infrastructure investment, education, etc.
Some of this seems like a good program and some of it not, Dan
Personally, I've always thought the cap on the maximum social security tax was a mistake and have qualms about cutting FICA payroll taxes (although when, toward the end of the year, I've maxed out my tax, I've reveled in the extra cash.)
The real question, to me, is: what can I (and presumably you) do to make fairer taxes really happen?
FICA
Social Security is already set up in such a way that the more you earn (up to the cap), the less you're going to get back for each dollar you pay. Raising the cap, or even eliminating it, while a seductive concept, won't happen.
Meanwhile, we need to come to terms with the fact that when Social Security was created in 1935 most people didn't make it to 65 and those who did were old, but today most people live actively well beyond 65. By raising the age at which people can begin to collect full benefits, slowly and over a long period of time, we can bring the program back to its roots and lower the tax rate.
The beauty of lowering the Social Security tax rate is that since there is a cap the wealthiest among us don't get the kind of percentage break that the working class and middle class get. Furthermore, it's the only kind of tax cut that gives money back to the working poor, since we all pay Social Security taxes on the first dollar we earn every year.
The problem, oddly enough, is with Democrats -- they're scared of the steelworker who says he can't work past 65 (even though he already is -- people born in 1942 and therefore turn 65 this year have to wait an extra ten months, and people born in 1943 have to wait until they're 66. Furthermore, considering the constantly shrinking number of steelworkers and other hard laborers in this country, the time is ripe for just such a fix.