December 28, 2012

The Atlantic’s Steven Hill: Time to make Big Government your only retirement option [Darleen Click]

You can easily skip the first part of Hill’s epic; it covers ground we know only too well on how people have been acting more like Grasshoppers than Ants in regards to their retirement plans (and the economic beatings many have received due to Government shennigans).

But Mr. Hill’s solutions is to, literally, double-down

The gritty reality that the Obama administration and House Republicans must face is that the vast majority of America’s retirees cannot afford to watch them hack off part of the only leg that remains of the three-legged stool. Quite the contrary, we should make that leg more robust by doubling the current Social Security payout, and turning it into a true national retirement system called “Social Security Plus.” Doing so not only would be good for American retirees, but also would be good for the greater macro economy.

Now you may be wondering if Mr. Hill had partaken of just too much liquid Christmas cheer as he scribbled; certainly he must be aware that even as today’s retirees will not receive back from Social Security what they put in, there still is no there there when it come to a “trust fund” or “lockbox.” All Social Security surpluses from 1983 to present have, by law, gone into the general fund and “IOU”s — in the form of non-marketable Treasury “obligations” — have been issued. How do we know that the Social Security monies have been squandered? Obama himself confirmed it in 2011 when he said SocSec checks might not go out without a raise in the debt ceiling.

Yet Mr. Hill laughably posits that Social Security is the best place, and should be the only place, for retiree monies. Here’s how he wants to “fund” the “doubling of benefits.”

Step 1. Lift Social Security’s payroll cap that favors the wealthy.

Currently Social Security only taxes wages up to $106,800 a year, and any income earned above that is not taxed. The net result is that poor, middle class, and even moderately upper middle class Americans are taxed 12.4 percent (split between employee and employer) on 100 percent of their income, but the wealthy pay a much lower percentage. Millionaire bankers effectively pay a paltry 1.2 percent.

Since benefits are paid out based on what one contributed, Hill never addresses whether such a radical increase of contributions from “millionaires” would mean they would get increased benefits. I will make a rash assumption that he doesn’t want to increase benefits; he wants to use SocSec as another redistribute-the-wealth scheme For The Fairness.

Step 2. Cut out the business deduction for employees’ retirement plans.

With all Americans receiving Social Security Plus, employer-based pensions would be redundant

Hells Bells, we can’t let people have their own private pensions now! That would just break Big Nannystate’s heart.

Step 3. Cut or reduce other deductions that disproportionately benefit top income earners.

Other possible revenue streams should include ones that would reduce or eliminate unfair deductions in the tax code which currently allow the top 20 percent of income earners to reap generous deductions that barely help most low and moderate income Americans. These include deductions for private retirement savings, health care, homeownership and education.

Only higher income individuals have enough earnings to divert for savings or investments that allow them the luxury of enjoying considerable tax deductions for their 401(k)s, IRAs and pensions. The poor and middle class rarely can take advantage of these sorts of deductions because they don’t make enough income to benefit from itemizing deductions on their tax returns.

So you’re frugal, you tuck away money in 401(k) or IRA … time to punish you for trying to be independent of Big Nanny.

Just who do you think you are, a responsible adult or citizen or something?

Winston, get with the program. FORWARD!

Posted by Darleen @ 9:15am
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Comments (24)

  1. I disagree with Mr. Hill. I think senior citizens should get even more money, live in castles, and be served by robots! Just like the rich!

    In fact, I heard that if we quadruple the amount of social security payouts, Jesus will return with a fountain of youth for everyone!!! Everyone knows He’s only holding out because he’s so scared of the rich, that’s why he compared them to needles!

    Whee! Cheap grace, wishful thinking, and ignoring consequences if fun!

    Ugh. TGIF.

  2. Over the last two years, I have heard from many different people in position to both know and to do something about their own money, that employer-sponsored 401k plans with matching and even Roth 401k plans are in the cross-hairs of the income-redistribution crowd. One guy I had dinner with in New York scared the absolute living shit out of me and I’ve been looking into alternate ways of saving for retirement ever since. Pretty much unsuccessfully. I got a little complacent over the last couple of months, until I saw some asshole on TV do a big presentation on how much revenue the government gives up by not counting any employer match to the employees 401k contribution as taxable income, and how this isn’t fair because it isn’t available to everyone.

    “It isn’t fair.” Jesus fuck, the world is being run by eleven year old girls.

  3. Not the ‘Steven Hill’ gay soldier supposed booed at the GOP convention, but the New America Foundation – JournoList think-tank writer.

    His NEW LEFTIST AMERICA! writings featured prominently at all the ‘respected’ LeftLibProgg havens.

  4. how much revenue the government gives up by not counting any employer match to the employees 401k contribution as taxable income,

    See, it all comes back to “who does the money belong to.”

    Such assholes that say such things seriously really believe that all property belongs to The State and we just get to rent it out on their terms.

  5. “All your pay are belong to us.” Bitches.

  6. I wouldn’t worry about that just yet LMC, They will want to take our guns first.

    Thieves prefer unarmed marks, you see…

  7. with the perverted Roberts court the only thing standing between us and the amelioration of property rights this would seem to be an idea whose time has come

  8. leigh

    More like “You all are belong to us.”

    The feudalists are winning.

  9. Steven Hill would prefer America to be CHANGed significantly, to accommodate the overpopulated Leftist hell-holes like California…

    But it must be recognised that it’s not just Obama’s shortcomings that are causing the problem. The very structure of the American political system is at the heart of these failures. For example, thwarting Obama on a regular basis is an unrepresentative senate where “minority rule” prevails and undermines what a majority of the country may want. With two senators elected per state, regardless of population, California with more than 35 million people has the same number of senators as Wyoming with just half a million residents. This constitutional arrangement greatly favours low population states, many of which tend to be conservative, producing what one political analyst has called “a weighted vote for small-town whites in pickup trucks with gun racks.”

  10. Steven Hill is one of the farthest-Left Progressives who ‘whipped’ Obama for not enacting Progressive agenda quickly enough…

    New rules

    Yet a progressive future is not only contingent on a genuine grassroots movement. Structural political reforms are needed for that movement to transmit change through government at all levels. We would never have had this latest meltdown of our economic system if our political system had not melted down first. The two-party system is sclerotic. As Obama’s presidency shows, more than ever, there is no room for progressives at the table of highest political power. The reason for this is that the rules of the game that elect our representatives actually hurt progressives.

    Truly, Steven Hill is not satisfied with the America that allowed him to flourish. If this great Republic tanks, let’s hope this bastard lives long enough to rue his ideology.

  11. Mr Hill, fool, is stuck in the antiquated feedback loop that is government-stealing-you-blind. Mr Hill loves his captors and a hundred years of their failures (and thefts and murders) has left him oddly willfully ignorant.

    Hence: Fool.

    The antidote? Not surprisingly, it’s reality.

    Nearly half a century ago, I dropped out of graduate school and enlisted as a foot soldier in America’s War on Poverty. Today, I’m still on the front lines, working to move people out of dependency and into employment. But with an important difference: I’ve become fed up with the useless policies that I once supported, and I’m trying to change the strategy of our bogged-down army.

    We know for certain that income transfers, the preferred tactic of generations of liberals, have utterly failed to end poverty. My firsthand experience with welfare clients has shown me why: being on the dole encourages dependency. Working at a real job, by contrast, is the surest way for a person to climb out of poverty. Accordingly, the surest way for the government to fight poverty is to eliminate cash assistance almost entirely and offer jobs instead.

    More at the link. Extrapolate across all federal social programs, not least of which is the smouldering dozen trillion dollar crater that is Social Security, a cleverly branded fiasco-in-waiting the moment it was conceived.

    Punch back twice as hard, as it’s said. Sucks that that blow always comes as part of a thorough and detailed debunking — a supreme waste of time against Fools — instead of just, sound, and proper ridicule. And from there unrelenting invitations to leave the country.

    Somebody let the left in the door. I see no reason to talk to the thieves and liars on their terms.

  12. Such assholes that say such things seriously really believe that all property belongs to The State and we just get to rent it out on their terms.

    They’re not entirely wrong. Consider your property rights re: estate and taxes. Now try retaking it.

  13. All property does belong to the state. That’s been quite obvious for some time. If you don’t pay taxes on your property, they will take it away from you.

  14. Such assholes that say such things seriously really believe that all property belongs to The State and we just get to rent it out on their terms.

    i.e. Property taxes.

  15. Only higher income individuals have enough earnings to divert for savings or investments that allow them the luxury of enjoying considerable tax deductions for their 401(k)s, IRAs and pensions. The poor and middle class rarely can take advantage of these sorts of deductions because they don’t make enough income to benefit from itemizing deductions on their tax returns.

    I’ve seen this kind of statement before and I don’t get it. You don’t buy a home or save for retirement soley because there may or may not be tax benefits — at least I don’t.
    I am neither a tax lawyer or accountant but I thought that:
    (1) the 401(k) isn’t a deduction, because it isn’t included in taxable income. Instead it is deferred compensation, taxed at the tax rate you are paying when you take the money (after 59-1/2). Still, you pay SS, Medicare & Fed Employment taxes on it, as well as state taxes in PA, in the year you are paid the money by your employer. Any emplorer contributions are treated like this as well. Don’t know why the “poor and middle class” can’t do this. I’ve been doing since I was making 13K a year 30+ years ago.
    (2) the Roth IRA is NOT available to high earners. Top end is around 125K/175K (couples), as I recall. And it is taxed as income.
    (3) Housing. You can get a twin home in NE Philly for about 54K. The 20% DP (10.8K) may be hard to do (do they still offer PMI?), but it is doable. With 20K down, a 30-year fixed mortgage at 3.325APR is $185 a month. With tax and insurance, $307 a month. Qualifying income: 11K. Does this get you into a McMansion? No, but my wife and I, who are (or were) millionaires according to the 250K income calculus, still live in the 1200 sf home we bought 27 years ago when our income was 27K a year. The homeowner’s deduction may not be enough to get you into the itemized deduction category, but I think at this level of income the standard deduction may be more apt anyway.

    Of course, this may be all beside the point of Darlene’s post. I just get tired of the narrative that the “poor and middle class can’t do x”. Yes they can, and they need to stop listening to their betters who say thay can’t.

  16. steph

    the whole point of 401(k) & other deferred compensation was supposed to be a carrot to get ppl to save more for their own retirement.

    Now the State (and it’s Leftist cheerleaders) are coveting all that private money. Suddenly, these programs are “luxuries” because some people decided not to participate.

  17. *
    “soley” = solely
    “emplorer” = employer
    “this level of income”, meaning 11K a year
    “apt” = apropos

  18. Darleen,

    Oh I quite agree with your point. I was just trying to make a different point.
    One minor quibble: The left covets your money, it uses the state as the cudgel to steal it. And it uses the ruse that the redistribution of that money will make things equitable and “help the poor”; whereas, as JHo’s link above points out, it will do no such thing. The money is taken by the redistributors for the redistributors, and there it stays.

  19. “Now the State (and it’s Leftist cheerleaders) are coveting all that private money.”

    Look at the way state pension monies have been handled in Illinois for a picture of the future.

  20. The poor and middle class rarely can take advantage of these sorts of [401k IRA ] deductions because they don’t make enough income to benefit from itemizing deductions on their tax returns.

    Well, you can have a cellphone for every member of the family with a dataplan, high speed internet, cable TV, satellite TV, Pay per Viw TV, X-Box, Nintendo, Playstation, and games galore, lease two new cars (one an SUV) every 36 months, eat out, catch all the new movies, bar hop, keep up with the Joneses digital lifestyle,

    or you can save for your retirement.

    Fucking rich bastards. Keeping people from saving for their retirement like that.

  21. Until people making these proposals are kicked in the nads every time they poke their heads out the door, they are going to keep trying to steal other people’s property.

  22. I see no reason to talk to the thieves and liars on their terms.

    The only language that works is a bullet. Understand that. Now what?

  23. I want the people who don’t pay any tax at all to have to pony up a token $500 at least.

    The Won is always saying everyone needs to have skin in the game. Walk the walk, bitches.

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