Re: Don't be fooled by the wealthy's economic research deception

Posted: Fri Jan 11, 2019 11:09 am, #7
by MaureenCarter
Growing economic inequality is a significant factor killing the Social Security program. Because the rich are exempt from paying into the system after an income cap of $132,900 (in 2019), the burden to maintain the system falls onto the shoulders of those who are poorer.

As noted in the previous post:
Jessica is correct when stating we must be vigilant and wary when reading research and articles trying to minimize the extent of income and economic inequality. Every war has their Joseph Goebbels, their ministers of propaganda, who will defend their position regardless of how immoral it is (not withstand their own religious heritage). What is worse are those who will present this disinformation knowing full well and being cognizant their reporting does not match reality to justify their own position
The Motley Fool
Are the Rich Killing Social Security?
An estimated $1.2 trillion in earnings was exempted from the payroll tax in 2016.
Sean Williams, Jan 10, 2019 https://www.fool.com/retirement/2019/01 ... urity.aspx
Social Security might appear perfectly fine with close to $2.9 trillion in asset reserves in its coffers right now, but the existing path the program is on would completely exhaust this excess cash by 2034. Should this happen, then-current and future beneficiaries would be subject to an across-the-board reduction in their monthly payouts of up to 21%. Note that Social Security won't go bankrupt, but those people who are heavily reliant on the program would certainly feel this benefit cut.
Are the wealthy responsible for Social Security's woes?

Another factor that generally flies under the radar, but that is nevertheless very much responsible for Social Security's issues, is growing income inequality. In 2016, the Social Security Administration found that $1.2 trillion in earned income was exempt from the 12.4% payroll tax, which, in 2019, is capped at $132,900. In plainer terms, it means that more than 90% of working Americans (i.e., those making less than $132,900 a year) are paying into Social Security with every dollar they earn. Meanwhile, the remaining percentage of well-to-do workers are being exempted on every dollar earned above $132,900.
Yet the author, Sean Williams, wants to have his analysis both ways stating,
As you can imagine, that's a lot of money escaping the Social Security program, and it's raised the idea that the rich are actually what's killing Social Security. But is this the case? The answer is both yes and no.
I certainly agree with the "yes" part but the "no" part is sorely lacking in substance when he states,
... or not to blame the rich

Then again, the well-to-do don't shoulder the blame for this country's fiscal policy and congressional inaction. The payroll tax cap could be raised with bipartisan support in Congress, but getting to the needed 60 votes of support to pass Social Security amendments in the Senate hasn't come to fruition.
and further clarifies this by stating,
In other words, the wealthy aren't purposefully out to weaken Social Security. They're simply able to take advantage of faster earnings growth, the lack of universal healthcare in the U.S., and relatively slow increases in the payroll tax cap, which is tied to the National Average Wage Index. Put this way, it's not the fault of the rich.
Really? "it's not the fault of the rich"? He best rethink this supposition based upon the facts.

Under the website listing, FirstRateCrowd's EIRA, post #13, Jessica wrote,
Political policy undergoes continuous erosion when it comes to correcting economic inequality. Money in politics and regulatory capture (including corporate capture) ensures the wealthy will always comeback into power. The Economic Inequality Rating App is a means to stop this insane never ending process.

Like Sisyphus of Greek mythology who was forced to roll an immense boulder up a hill only for it to roll down when it nears the top, repeating this action for eternity, it is the same with our political battle against the wealthy. For those of us who have lived many decades and have experienced this process first hand, we know the political process is a frustrating and demoralizing cyclic endeavor to control the power of the rich. It is said colloquially that power begets power, absolute power corrupts absolutely, and the rich get richer. So it has been forever.

There are levers of power that sustain this ongoing insane process. Here are just two such levers:

1) Money in politics

© 2018 Scholars Strategy Network
How Money Corrupts American Politics
Benjamin I. Page, Northwestern University
https://scholars.org/how-money-corrupts ... -politics

the perfectly legal flood of money that pervades American politics has fundamentally corrupting effects.

The effects of money are manifold, subtle, and hard to pin down, but a number of pathways of influence can be laid out. Most are based on judgments about the best available evidence, short of irrefutable proof. But on certain key points the quantitative evidence is fairly conclusive. Political scientist Gary Jacobson and other scholars have pinned down how monetary advantages affect chances of winning congressional elections Large amounts of money are virtually essential if a candidate is to have any serious chance of winning. Inability to raise big money leads to losing general elections, losing party nominations, or giving up even before getting started. Thus the need to raise money acts as a filter, tending to eliminate public officials who hold certain points of view – even points of view that are popular with most Americans.

The need for money tends to filter out centrist candidates. Most congressional districts are gerrymandered to ensure a big advantage for one party or the other, so that election outcomes are actually decided in low-salience, low-turnout, one-party primary elections. Primaries are usually dominated by ideological party activists and money givers, who tend to hold extreme views and to reject all but the purest partisan candidates. This contributes to party polarization and legislative gridlock in Congress.

The need for money filters out candidates on the economic left. Democratic as well as Republican candidates have to raise big money, most of which comes from economically successful entrepreneurs and professionals who tend to hold rather conservative views on taxes, social welfare spending, and economic regulation. As a result, few candidates whose views are not broadly acceptable to the affluent are nominated or elected.

The quest for money tilts candidates' priorities and policy stands. Countless hours spent grubbing for money from affluent contributors changes candidates' priorities and sense of constituent needs. As they speak with potential donors, candidates hear repeatedly about resentment of progressive taxes and "wasteful" social spending. Special tax breaks for corporations and hedge fund managers start to sound reasonable.

Affluent citizens get extra influence by turning out to vote, working in campaigns, and contacting officials. Campaign contributions are not the only way in which affluent people get involved in politics; these same people tend to be active in other ways too, underscoring their importance to candidates.

Money can tip the outcome of close elections. Money spent on media, organizing, and turnout tends to increase vote totals, giving a significant advantage to candidates favored by money givers.

Money buys access to officials. When big contributors contact officials they tend to get attention. Their economic resources enable them to get a hearing, to offer help with information and expertise – even to draft bills. Research shows that these processes boost the influence of the affluent on the policy topics and ideas officeholders consider, biasing the public agenda toward the concerns of the affluent.

The quest for re-election money affects officials' priorities and policy stands. From the moment they win office, candidates look ahead to the money they must raise for reelection, and this is bound to steal time from official duties and slant their attention toward constituents who are substantial donors.


2) Regulatory capture (and corporate capture)

Wikipedia

"Regulatory capture is a form of government failure which occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating.[1] When regulatory capture occurs, the interests of firms or political groups are prioritized over the interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called "captured agencies"

"Likelihood of regulatory capture is a risk to which an agency is exposed by its very nature.[6] This suggests that a regulatory agency should be protected from outside influence as much as possible. Alternatively, it may be better to not create a given agency at all lest the agency become victim, in which case it may serve its regulated subjects rather than those whom the agency was designed to protect. A captured regulatory agency is often worse than no regulation, because it wields the authority of government. However, increased transparency of the agency may mitigate the effects of capture. Recent evidence suggests that, even in mature democracies with high levels of transparency and media freedom, more extensive and complex regulatory environments are associated with higher levels of corruption (including regulatory capture).[7]"

Harvard Law School Forum on Corporate Governance and Financial Regulation
The Corporate Capture of the United States
Posted by the Harvard Law School Forum on Corporate Governance & Financial Regulation, on
Thursday, January 5, 2012 Editor
https://corpgov.law.harvard.edu/2012/01 ... ed-states/

American corporations today are like the great European monarchies of yore: They have the power to control the rules under which they function and to direct the allocation of public resources. This is not a prediction of what’s to come; this is a simple statement of the present state of affairs. Corporations have effectively captured the United States: its judiciary, its political system, and its national wealth, without assuming any of the responsibilities of dominion. Evidence is everywhere.

The “smoking gun” is CEO pay. Compensation is an expression of concentrated power — of enterprise power concentrated in the chief executive officer and of national power concentrated in corporations.

This is the essence of “capture” – CEOs are enriched, while all other corporate constituencies, including government, are left with liabilities. A relatively few autocrats have taken control over the policies and wealth allocation of the United States.

The financial power of American corporations now controls every stage of politics — legislative, executive, and ultimately judicial. With its January 2010 decision in the Citizens United case, the Supreme Court removed all legal restraints on the extent of corporate financial involvement in politics, a grotesque decision that can have only one effect: maximizing corporate – not national — value. Today’s CEOs have been granted the power to direct political payments and organize PAC programs to achieve objectives entirely in their own self-interest, and they have been quick to use it.

Capture has been further implemented through the extensive lobbying power of corporations. Abraham Lincoln’s warning about “corporations enthroned” and Dwight Eisenhower’s about the “unwarranted influence by the military/industrial complex” have been fully realized in our own time. Reported lobbying expenditures have risen annually, to $3.5 billion in 2010. Half of the Senators and 42 percent of House members who left Congress between 1998 and 2004 became lobbyists, as did 310 former appointees of George W. Bush and 283 of Bill Clinton.

Capture has placed the most powerful CEOs above the reach of the law and beyond its effective enforcement. Extensive evidence of Wall Street’s critical involvement in the financial crisis notwithstanding, not a single senior Wall Street executive has lost his job, and pay levels have been rigorously maintained even when, as noted earlier, TARP payments had to be refinanced in order to remove any possible restrictions.

Finally, capture has been perpetuated through the removal of property “off shore,” where it is neither regulated nor taxed. The social contract between Americans and their corporations was supposed to go roughly as follows: In exchange for limited liability and other privileges, corporations were to be held to a set of obligations that legitimatized the powers they were given. But modern corporations have assumed the right to relocate to different jurisdictions, almost at will, irrespective of where they really do business, and thus avoid the constraints of those obligations.
Additionally, Sterling wrote post #22 under, Pitchforks And Torches Will No Longer Be Able To Stop The 1%, regarding legalized bribery in our political process,
Regulatory capture, money in politics, and a subcategory of legalized bribery, are just some of the mechanisms whereby the wealthy maintain laws favorable to themselves. The political process is ineffective in stopping the wealthy from continually coming back into power. This is why the Economic Inequality Rating App is so important. It circumvents the elite's wealth and political clout to change the laws creating high economic inequality.

Answer this rhetorical question for yourself, if you were a politician and two lobbyists were sitting in your waiting room, one with ten thousand dollars and the other with one million dollars, who would you want to speak to first?

Jessica just wrote an interesting post, (#13 under FirstRateCrowd's EIRA), that is relevant as to how the financial power of the wealthy can change the laws to suppress the will of the people and continue to reemerge at the top of the financial pyramid. (see her post to learn more about these mechanisms)

Political policy undergoes continuous erosion when it comes to correcting economic inequality. Money in politics and regulatory capture (including corporate capture) ensures the wealthy will always comeback into power. The Economic Inequality Rating App is a means to stop this insane never ending process.

Like Sisyphus of Greek mythology who was forced to roll an immense boulder up a hill only for it to roll down when it nears the top, repeating this action for eternity, it is the same with our political battle against the wealthy. For those of us who have lived many decades and have experienced this process first hand, we know the political process is a frustrating and demoralizing cyclic endeavor to control the power of the rich. It is said colloquially that power begets power, absolute power corrupts absolutely, and the rich get richer. So it has been forever.

There are levers of power that sustain this ongoing insane process. Here are just two such levers:

Money in Politics and Regulatory capture (and corporate capture)

Another lever of power to benefit the wealthy in creating laws favorable to themselves is a subcategory of money in politics; it is legalized bribery.

Vox
I was a lobbyist for more than 6 years. I quit. My conscience couldn’t take it anymore.
“The hypocrisy from both sides is staggering.”
By Jimmy Williams Updated Jan 5, 2018
https://www.vox.com/first-person/2017/6 ... y-politics

Today, most lobbyists are engaged in a system of bribery but it’s the legal kind, the kind that runs rampant in the corridors of Washington. It’s a system of sycophantic elected leaders expecting a campaign cash flow, and in return, industry, interest groups, and big labor are rewarded with what they want: legislation and rules that favor their constituencies.

Everyone in this country, from the left to the right, deserves a voice, and they should be heard loud and clear. If that means hiring a lobbyist to represent your point of view before Congress, awesomesauce. If that means you take to the streets, demand meetings and town halls with cowardly members of the House and Senate, or, better yet, run against them, I’m your biggest advocate.

But what I don’t support are Supreme Court rulings that have repeatedly told us money is an absolutely protected form of speech. A string of cases like Citizens United and others has opened the barn door to unlimited “dark money” campaign spending. Cases like Citizens gross me and most everyone else out because the result is the money in your politics becomes the voice in your politics. Americans’ right “to redress” comes at a cost, and if you don’t have the cash, chances are you’ll be ignored.

Bottom line: Those with the most money have the largest voices. Those with the least are rarely part of the process. That makes the legality of the practice of lobbying less relevant because it’s an uneven playing field.

The following videos help to clarify this concept.

Video: When Does Lobbying Become Bribery?
https://www.youtube.com/watch?v=33gHhunzOlE

Video: Ryan Bribe, Income Inequality, Restaurant CEO, and Minimum Wage
https://www.youtube.com/watch?v=maDx_XMvj7w
So, are we really to believe the rich are just merely watching a bad play they have been caught up in with no culpability when the author of the article under question states,
the wealthy aren't purposefully out to weaken Social Security.
and then follows with
Put this way, it's not the fault of the rich.


I sharply disagree. Instead, I suggest the author, Sean Williams, who by the way has a degree in economics from UC San Diego, change his wording and punctuation for the title of his article from, Are The Rich Killing Social Security?, to The Rich Are Killing Social Security! The blame obviously lies with the Rich and anyone with a background in economics should under this concept unless the emphasis is upon the word Fool in the publication The Motley Fool.