Baby boomers' retirement planning

So I'm watching CNN: Poppy Harlow is reporting on the fact that the first wave of baby boomers will be turning 65 and retiring in large numbers in 2011 - and the ramifications of that fact.  Her report notes that the boomers are in for some serious economic pain in the form of a substantially reduced standard of living, and states that the baby boomers have "failed" to plan properly and effectively for retirement.  Consequently, the report concludes, many boomers will have to work throughout their retirement.  The implication is clear: the boomers are up the brown, runny creek, and they're there because they screwed up.

If you don't know Poppy Harlow, she is a pretty blonde who just may be as old as 30.  She's a pretty decent reporter.  Now, with wisdom born of her great age and depth of financial and life experience, she criticizes her parents' (or grandparents?) generation for failing to plan enough and save enough to take care of themselves as they age.  In the interest of painting a broader and more accurate picture of the boomers' current situtation, allow me to mention a few economic trends that all of the boomers' saving and planning couldn't have accounted for:

• the burgeoning cost of their children's educations;
• the cost of their parents' long term care and medical expenses;
• the loss of whole classes of well-paying jobs, through offshoring and/or corporate downsizings that had the effect of purging older, better paid workers and replacing them with the very generation of children that boomers raised and educated;
• the systematic elimination of employer-provided health insurance;
• the ever increasing costs of private health insurance and medical and dental care;
• the systematic evisceration of corporate retirement programs; and
• the impact of the recession on boomers' investment and retirement accounts.

With all due respect, Poppy Harlow, walk a decade or two in the boomers' shoes before you conclude that they are responsible for the economic pain they may be facing in retirement.  Stop blaming the boomers, and start looking at the great risk shift* engineered by corporate America and the legislators it has bought and paid for, not to mention the "bubble and bust" economy created by our virtually unregulated financial institutions.

*   For more information, try reading Jacob S. Hacker's The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream.

Christmas musings: morality and the distribution of income, wealth and opportunity

This morning on CNN (yes, I watch the news even on Christmas), there was a story about Sesame Street’s “Food for Thought” initiative, segments in which the Sesame Street characters explore healthy food choices and learn to love broccoli and whole grains.  The mastermind behind this laudable effort identified the target audience as economically disadvantaged families who suffer the “stigma of nutritional insufficiency” – aka, poor people who are blamed and shamed because they don’t have enough to eat.

Shame implies a moral failing.  In 21^st century America, poverty has become a moral failing:  it is now shameful not to be able to afford to buy enough food to feed your family.  This is just a smug, self-serving  rationalization foisted upon us by wealthy Americans and their political handmaidens, the GOP.    Republican tax and economic policies exacerbate inequalities in the distribution of income and wealth in America the likes of which we have not seen since the days of the original Vanderbilts, Carnegies, Mellons and Morgans.  Meanwhile, the GOP’s base, the wealthy, the neo-cons, and the Christian right, are happy to believe that they are prospering because of their moral superiority, and, conversely, that everyone else – including the sick or disabled, the unemployed, and the working poor – are doing badly because of some moral failing (e.g., they’re lazy, they’re stupid, God doesn’t love them).  Not only does this belief make the wealthy feel better, but it apparently absolves many of them of any sense of obligation to contribute to the common good by paying their fair share of taxes. 

So I’m wondering, which is the bigger moral failure?  To cry on national TV about making sure our children achieve the American dream, while voting consistently against programs that make that dream achievable?  Or to work 2 or 3 jobs and still not have enough to feed your kids?  To get paid 20 or 30 times as much as your employees for maximizing profits by cutting employee health, disability and retirement plans?  Or to declare bankruptcy and lose your house because one of your children has a rare form of cancer and you have no health insurance?  To make tens of millions of dollars buying and selling the companies other people have built?  Or to depend on extended unemployment benefits because your company was sold and your job was moved to Bangalore?  To wear your mink coat, your Rolex and your Christian Laboutins to church to worship the Christian God, while exploiting a rigged financial system the other 6 days of the week?  Or to buy your clothes at the Salvation Army store so your children can attend a public college or university?  

It seems clear to me that the moral failure here is that of a socio-economic system that has grown fat and happy exploiting -- and then blaming – its victims.

Some thoughts on taxes and public policy

An old colleague and friend whose politics and opinions I have always respected posted the following comment re:my last blog entry:

one thing I think we should all consider is for all of us to stop buying the mantra that taxes are evil, or that "we" can spend our money better than "they" can. Taxes pay for services - police, fire departments, teachers, clean air, food safety --- things that individually, we cannot do by ourselves in virtually all cases.

The middle class was all too happy to support continuing tax cuts for themselves...but we do, as a country, have debts to pay...and we should pay for our wars (or not get into them or get out of them), for one thing.

This comment raises two points that I feel inclined to address.

Taxes are the price we pay to live in a civilized society that provides for the basic needs of its citizens – needs that those citizens cannot provide for themselves – and, yes, we should pay them without begrudging them, provided they are used in the best interests of the common good.   These days, a lot of folks object to paying Federal taxes because they feel that the Federal government just pisses their money away, or gives it back to them “with strings attached.”  The crux of these folks’ objections (and my own, at times) is that the government has used their tax money for a LOT of stuff that doesn’t benefit them directly and/or that they don’t agree with.  But that isn’t really the standard, is it?  The standard is the common good.  We elect a President, Senators, and Representatives to figure out what that common good is and to spend accordingly.  If we don’t agree with their decisions, we elect someone else.  We don’t start mailing tea bags to Washington and electing demagogues who promise to cut taxes to nothing and to starve the Federal government out of existence.  I shudder to think where we’d be if the demagogues succeeded with that agenda.  And you can be sure that the Tea Baggers, the GOP, Sarah Palin, Rush Limbaugh and Glen Beck would be among the first to complain about the failure of  government services under that scenario.

Yes, the middle class should pay its fair share of taxes, along with wealthier individuals.  But not now, when we’re trying to get our economy restarted.  Let me present an illustration of why I believe that we should raise taxes on the wealthiest Americans first, and NOW.  Let’s take two families of 4:  the Middle family has a combined gross income of $75,000; the Betteroff family has a combined gross income of $750,000.  The Middle family’s income is likely to be almost entirely earned income.  The Betteroff family probably receives a portion of its income in the form of stock options and other “capital gains” and can better afford to use tax shelter and deferral mechanisms.  Consequently, the Middles already pay more taxes, as a percentage of gross income, than the Betteroffs do.  (In recent years, the wealthiest Americans paid 17% or less of their gross income in taxes.)   Moreover, the Middles must dedicate a much higher percentage of their net income than the Betteroffs do to “nondiscretionary” spending on housing, food, insurance, clothing, utilities, medical expenses, local property taxes, etc.  When all is said and done, the Middles are going to be awfully lucky to have $20-25,000 left for discretionary spending and saving, and they are likely to spend most of it.  On the other hand, the Betteroffs will likely have $200,000 or more left for these purposes, and they will save a healthy chunk of it.  The Betteroffs’ savings is NOT money circulating in the economy, spurring production and growth and creating jobs.  It’s just wealth piling up, to be passed on (tax free up to $3.5 million) to the next generations of Betteroffs.  The Betteroffs are better able to maintain their standard of living even if they pay 5% more in taxes, and that 5% could be put to better immediate use for the common good than sitting in the Betteroff’s VUL policies, stock accounts, or laddered CD’s. 

For an outstandingly clear and well reasoned extended discussion of these and related policy issues, I highly recommend Robert Reich’s new book, Aftershock: The Next Economy and America’s Future.

This is WAR

In October, my husband and I attended Jon Stewart’s Rally to Restore Sanity – a gathering dedicated to the proposition that, if we all just dialed down the rhetoric and listened to each other, we could work together and make America a better place.  What a lovely thought.

Lately, however, I can’t help but notice that the only folks who are dialing down the rhetoric, trying to play well with others, and – yes – compromising, are Independents and Democrats.  The GOP, including its Tea Party faction, has turned up the volume and is single mindedly pursuing its “lower taxes and smaller government” agenda.  In the name of that agenda, Republicans are blatantly and shamelessly pursuing policies that benefit major corporate interests and the wealthy at the expense of America’s middle class and less affluent citizens.

 The GOP’s top priority is “lower taxes” for the wealthiest Americans: Republican Senators and Representatives made this undeniably clear by their willingness to add $874 billion to the Federal deficit by passing a “compromise” extension of the Bush tax cuts and emergency unemployment benefits earlier this month.  Meanwhile, in the name of smaller government and deficit concerns, these same Senators and Representatives refuse to fund health care reform and health benefits for our post 9/11 “heroes.”    Look for them to use the same justification for cutting or withholding Federal funding for education programs, regulatory enforcement, entitlement programs, and anything that looks like a stimulus program.   

Of course, everything that Republicans want to cut in the name of “smaller government” and/or “deficit reduction” directly benefits the lower socio-economic classes of Americans.  The wealthiest Americans don’t need these programs: they can afford to pay for the best education, health care and long-term care, in addition to saving a bundle for a comfortable retirement.  They can afford them in part because they pay a ridiculously small percentage of their income in taxes.  And, with the GOP ascendant, they can count on their ridiculously low tax income and estate tax rates to remain in effect for the foreseeable future.

The GOP says it is declaring war on the “welfare state” in order to enforce “constitutional limits” on government and protect the “financial liberty” of American citizens.  From where I’m sitting, it looks like it’s declared war on everyone but the wealthiest 10% of us.  So, no more sanity and polite discourse: I’ve been attacked, and I’m declaring war on the GOP.   I will expose and fight the GOP’s agenda by every legal means at my disposal.  If you’d like to join my army, or contribute ideas, I’d love to hear from you.  I’m guessing that I’ll need some help.

Just because these people are technically “human” doesn’t mean they’re the same species as I am, does it? (Please, please say no)

I don’t know very much about Elizabeth Edwards, except that she lost her 16-year-old child to an accident (which would have absolutely destroyed me), suffered public betrayal by her husband and relentless embarrassment at the hands of the press, and gracefully and courageously fought a truly nasty disease.  Now she is dead, and her family has the right to commemorate her life and bury her in peace and with dignity. 

I was brought up in the Methodist Church, and taught that it was not my place, as a mere mortal, to judge another person’s life and sins.   Jesus said, “Judge not, that ye be not judged.”  So, whatever sins Elizabeth Edwards committed should and will be judged by God alone, right?  WRONG!  Apparently, the Westboro Baptist Church of Topeka, Kansas, has been deputized by the Almighty himself to pass judgment on Elizabeth Edwards.

The WBC has announced that “God Hates Elizabeth Edwards,” because:

When they [the Edwardses] were visited from the Most High God with the death of their 16-year-old son, they did not humble themselves before His mighty hand. They reared up in rage, decided they would show God who is boss, and meddled in matters of the womb, resulting in 2 more children -- now motherless."

Asserting that Elizabeth Edwards is now a "resident of hell, where her rebellion and rage will take full flower," the WBC has announced its intention to disrupt and defile her funeral – just as its members have disrupted and defiled funerals of several US troops killed in Iraq and Afghanistan.  (You will recall that the WBC justifies those disruptions by asserting that God hates America.)
I refuse to believe that real flesh-and-blood human beings could be as hateful and cruel as the leaders and members of the Westboro Baptist Church.  And isn’t it the ultimate irony that they invoke their faith in a loving Christian God to justify their behavior?

Some thoughts on the President's hostage analogy . . .

In his press conference today, President Obama “had some ‘splainin’ to do” about his tax cut deal with Congressional Republicans.  The President made it pretty clear that, in the face of Republican obduracy, he thought the deal was the only way to make sure that middle class taxes didn’t go up on January 1 and that those most in need continued to receive unemployment benefits.  When asked if he didn’t think that he was setting a dangerous precedent for future dealings with the GOP, the President resorted to the hostage analogy.  He said that, although everyone agreed that it was a bad idea to negotiate with hostage takers, exceptions had to be made when it looked like the hostages would get hurt.  He felt that the injury to the hostages – higher taxes for the middle class and the loss of benefits to the long-term unemployed – was just too great to risk in this case.

Okay, Mr. President, I’ll give you the benefit of the doubt on this one.  You say that you only caved on the Republicans’ “holy grail” of tax cuts for the wealthiest Americans on a temporary basis and because the risk to the middle class and the neediest Americans in the current economy was too great.  You say that you are looking forward to future tests of will against the Republicans, when the immediate risk to the middle class and the unemployed is no longer an issue.  You say that the Republicans will find that you will not blink under more stable and less dangerous economic circumstances.  I fervently hope that all of that is true.  Time will tell.

Meanwhile, in any hostage situation, aren’t the hostages always in danger of getting hurt?  Isn’t that danger the factor that makes hostage-taking a potentially successful course of action for people who don’t give a s*** about the hostages?  Isn’t the hostage takers’ indifference to the fate of their hostages the very thing that gives them leverage over the folks that want the hostages’ safe return?  So here’s the takeaway for all of us who aren’t among the very wealthiest Americans (for whose tax cuts we were taken hostage):  the Republican Party does not give a rat’s ass about our financial well-being.  They do NOT care about us.  At all.  And as long as we are stupid enough to keep electing them and handing them the power to determine our future, they will screw us six ways from Sunday. 

Is we learning yet?

Extortion works . . .

President Obama has just announced that he is caving on the Bush tax cuts – for the noblest of reasons, of course.  I know that symbolic victories don’t mean squat to the average American family, whose income has remained at a standstill (if they’re lucky) while the cost of food, education and utilities has climbed steadily.  BUT:

·        The President’s deal with the GOP trades off 13 more months of unemployment benefits for a 2-year continuation of ALL of the Bush tax cuts to everyone, including the richest Americans. 

·        The cost of the unemployment benefit extension is substantially less than half of the cost of extending the Bush tax cuts to the richest Americans.

·        Neither the unemployment benefits extension nor the tax cut extension is in any way “paid for” by this deal.  In fact, the deal includes absolutely NO SPENDING CUTS.  None.  Nada.  Zip.  Zilch.  So, while everyone claims to be concerned about the deficit, the President and the GOP have just agreed to spend a lot of money and to pass up even more in revenues.

·        Economists report that each $1 of unemployment benefits produces $1.60 in spending in the private sector, while each $1 of taxes not collected from the wealthy produces considerably less than $1 in private sector spending.  So, while everyone is concerned about stimulating the economy and private sector spending, the President and the GOP have just agreed to incur substantial additional Federal debt while producing less than optimal economic stimulus.

·        Among the Bush tax cuts that will be extended under this deal are cuts in the Federal Estate Tax that allow the first $5 million of every estate to pass tax free.  This is a bonus for the wealthy which produces no economic stimulus whatsoever.

Sadly, I have to conclude that:

1.      President Obama lacks cojones.

2.      Political extortion works when your opponent lacks cojones.

3.      The GOP is totally full of crap.  Republicans don’t give a rat’s anus about the debt or the unemployment rate or the state of the economy.  The only thing they care about is making sure that rich people pay as little in taxes as possible.

On the plus side:  The Republicans and the business community have told us for the better part of a year that employers would start hiring just as soon as they could be sure of what their tax situation would be after 12/31/10.  So any day now, new jobs should start falling on us like rain.  Laissez le bons temps rouler! 

Tax and Spend vs. Borrow and Spend

It turns out that, after these most expensive mid-term elections in American history, both the Democratic National Committee and the Republican National Committee are about $15 million in debt.   The difference is that the DNC has $10 million in the bank, while the RNC only has $2 million.  This translates into a $5 million deficit for the Tax and Spend Democrats, and a $13 million deficit for the Borrow and Spend Republicans. 

HELLO Republicans!!!!  Spending alone does not create deficits:  it’s spending substantially in excess of revenues and assets that creates deficits.  But I guess a party that can’t grasp such a basic economic concept in managing its own little committee can’t be expected to apply that concept to managing a big Federal budget. 

Don’t worry, little RNC: your big donors can bail you out with all the money they’re going to save when Republicans in Congress extend the Bush tax cuts for our richest Americans.

GOP: Still the “party of no,” unless you make more than $250K a year

Today, all 42 Senate Republicans signed a letter informing Harry Reid that they would block any “legislative item” in the Senate unless and until the Bush tax cuts are extended. Now, let’s be clear: the tax cuts the GOP is determined to extend are tax cuts to Americans making over $250,000 a year.  The Democrats would agree in a New York minute to extend the tax cuts for those making $250K or less, i.e., for everyone but the richest Americans.  In fact, House Democrats plan to vote on a permanent extension for all but the richest of us tomorrow morning.  House Republican Eric Cantor has dismissed that vote as a “non-starter” and “political chicanery.”

The legislative items that are being held hostage by the GOP include, inter alia, extending unemployment benefits and ratifying the New Start Treaty.  Seems nothing – including fundamental fairness and nuclear non-proliferation – is as important as making sure that the richest Americans don’t have to contribute their fair share to the common weal.

FML – we are sooooooo screwed.