Occupy Wall Street - Page 130

On October 31 2011 10:27 Tien wrote:
I support medicare / social security. The cost structure of those two programs however will bankrupt the country.

Just look at the unfunded liabilities of those two programs. Gives me an effing headache just looking at it.

Americans have much bigger problems than wealth inequality to worry about. I'm pissed off that the politicians are not getting the shit that the OWSers should be giving them.

Basically what I'm saying is OWSer should be directing their movement to Washington and congress. Changing what happens there will effect their lives more than camping out at wall street and complaining about rich bankers.

On October 31 2011 10:44 aksfjh wrote:
Those are 2 programs that are actually fully funded. The payroll taxes we've collected over the decades will pay for those. The ONLY reason they will "bankrupt" the nation is because that fund has been looted so corporate and private incomes taxes could be lowered and we could use surpluses to fund other ventures (like high defense spending). We have decades of back taxes that are owed, yet we're not willing to accept that is the case.

A. HIGHLIGHTS
The major findings of this report under the intermediate set of assumptions are summarized below. Each of these findings is described in more detail in the “Overview” and “Actuarial Analysis” sections.
In 2010, 47.5 million people were covered by Medicare: 39.6 million aged 65 and older, and 7.9 million disabled. About 25 percent of beneficiaries have chosen to enroll in Part C private health plans that contract with Medicare to provide Part A and Part B health services. Total benefits paid in 2010 were $516 billion. Income was $486 billion, expenditures were $523 billion, and assets held in special issue U.S. Treasury securities were $344 billion.

Short-Range Results
The financial status of the HI trust fund was substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act. However, the HI trust fund is now estimated to be exhausted in 2024, 5 years earlier than was shown in last year's report, and the fund is not adequately financed over the next 10 years. HI taxable earnings in 2010 were lower than previously estimated, and the rate of growth in these earnings is projected to accelerate and to exceed last year’s growth assumptions in 2011-2019. HI expenditures in 2010 were close to the previous estimate, but the projected level grows more rapidly than shown in last year’s report because of the projected faster growth in earnings. HI expenditures have exceeded income annually since 2008 and are projected to continue doing so through the short-range period until the fund becomes exhausted in 2024. In 2010, $32.3 billion in trust fund assets were redeemed to cover the shortfall of income relative to expenditures. The assets were $272 billion at the beginning of 2011, and the asset balance will fall below the Trustees’ recommended minimum level early in 2011 under the intermediate assumptions, 1 year earlier than estimated in last year’s report. The HI trust fund has not met the Trustees’ formal test of short-range financial adequacy since 2003.
The SMI trust fund is adequately financed over the next 10 years and beyond because premium and general revenue income for Parts B and D are reset each year to match expected costs. Part B costs, however, have been increasing rapidly, having averaged 6.9 percent annual growth over the last 5 years, and are likely to continue doing so. Under current law, an average annual growth rate of 4.7 percent is projected for the next 5 years. This rate is unrealistically constrained due to a physician fee reduction of over 29 percent that would occur in 2012 under current law. If Congress overrides this reduction, as they have for 2003 through 2011, the Part B growth rate would instead average 7.5 percent. For Part D, the average annual increase in expenditures is estimated to be 9.7 percent through 2020. The U.S. economy is projected to grow at an average annual rate of 5.2 percent during this period, significantly more slowly than Part D and the probable growth rate for Part B.
Transfers from the general fund are an important source of financing for the SMI trust fund and are central to the automatic financial balance of the fund’s two accounts. Such transfers represent a large and growing requirement for the Federal Budget. SMI general revenues currently equal 1.5 percent of GDP and would increase to an estimated 3.0 percent in 2085 under current law (or to 4.8 percent under the illustrative alternative to current law).
The difference between Medicare’s total outlays and its “dedicated financing sources” is estimated to reach 45 percent of outlays in fiscal year 2011, the first year of the projection. Based on this result, the Board of Trustees is required to issue a determination of projected “excess general revenue Medicare funding” in this report. This is the sixth consecutive such finding, and it again triggers a statutory “Medicare funding warning,” indicating that Federal general revenues are becoming a substantial share of total financing for Medicare. The law directs the President to submit to Congress proposed legislation to respond to the warning within 15 days after the date of the Budget submission for the succeeding year.

On October 31 2011 10:32 dOofuS wrote:


I don't disagree with any of this, but I think you exaggerate the 'eat or be eaten' mentality. Your last paragraph hits the problem most American's are currently engaged in debating. The federal government needs to accept the reality of our situation, and stop spending beyond its means. More borrowing, taxing, or printing of money will not help our situation, regardless of its good intent. The problem is spending, and more spending is not the solution.

I am in open support of Ron Paul, and am proud that his plan begins to actually address the issue of bloated government and runaway spending. I also feel that the progress he and others have made in creating some transparency in the Federal Reserve's dealings will continue to reveal the corrupt state of our governments money printing machine.

On October 31 2011 11:36 HellRoxYa wrote:


Part of me would like to see him win (and get his policies through) just so that I can watch the US burn. This especially stands out for me; "eliminating five cabinet departments (Energy, HUD, Commerce, Interior, and Education)". Ignoring all the unemployed people this creates getting rid of these departments seem like a really bad idea.

On October 31 2011 11:36 HellRoxYa wrote:


Part of me would like to see him win (and get his policies through) just so that I can watch the US burn. This especially stands out for me; "eliminating five cabinet departments (Energy, HUD, Commerce, Interior, and Education)". Ignoring all the unemployed people this creates getting rid of these departments seem like a really bad idea.

On October 31 2011 11:32 TanGeng wrote:


Payroll taxes? Decades of back taxes?
Excerpt from 2010 Medicare Trustees Report:



Medicare and social security program are liabilities. They are huge liabilities. Bush's indiscretion with taxes and war eroded general funding's ability to absorb social security and medicare shortfalls. It doesn't lessen their dead weight.

On October 31 2011 11:46 wherebugsgo wrote:


They're projected to run out 5 years early precisely because the surplus has been taken.

On October 31 2011 11:39 TanGeng wrote:


While we're wishing ill on one another, I hope EU in Brussels takes over all of the member countries and impose its corporate will on everyone there, especially Sweden.

On October 31 2011 11:52 BioNova wrote:

That's hilarious, but I know your joking.

On October 31 2011 11:32 TanGeng wrote:


Payroll taxes? Decades of back taxes?
Excerpt from 2010 Medicare Trustees Report:



Medicare and social security program are liabilities. They are huge liabilities. Bush's indiscretion with taxes and war eroded general funding's ability to absorb social security and medicare shortfalls. It doesn't lessen their dead weight.

TESS VIGELAND: In an ideal world the holiday season is not about money. It's about all the other things that make us rich: family, friends, the comforts of home.

But the question of how much money makes us rich took center stage in the fight over tax cuts. And whether having an adjusted gross income of $250,000 and up means you're wealthy. We produced a special hour-long report on this question in October. And today we're reprising that hour, with a special twist at the end.

Now let's clarify a couple of things. First, when politicians were batting around the $250,000 figure, they were talking about what's left after taxes and deductions. Second, we're not talking about money and happiness here. Just money. And how much of it makes you wealthy.

Of course by using that word, I'm throwing a wrench into things, because there's well-off, there's wealthy, and then there's rich.

Ted Klontz: Ben Franklin said, he asked the question who is rich? And he answered that by saying he who is content. And then he asked the question, who's that? And he said nobody.

That's Ted Klontz. He's a financial psychologist and author of "Mind Over Money." Through today's show we'll be hearing from him and from Robert Frank, who writes the wealth report blog for the Wall Street Journal.

We started with Frank and the question: Is $250,000 rich?

ROBERT FRANK: No, if you look at the statistics in America, it would make them rich on a national basis, but relative to peer groups, relative to what true wealth is in America, no.

VIGELAND: Ted Klonz?

KLONZ: Well I think if people measure their wealth in terms of dollars probably not, and they probably will never have enough dollars.

VIGELAND: Well, let's get to the question of relativity, which Mr. Frank you brought up, and this really is a question of perception I think. According to census data in 2008, and I'm going to credit Dan Gross over at Slate for compiling this, median household income nationwide was just over $50,000. And as he pointed out even in the wealthiest areas of the country -- San Francisco at $74,000 median income, New York metro $61,000 -- $250,000 is way above all of those. How does anyone argue that $250,000 a year is somehow middle-class, Mr. Frank?

FRANK: I think it really depends on what kinds of things you want to buy and what kind of lifestyle you want to have to be "comfortable" or to be wealthy. In New York City, if you want to send your kids to private school, if you want to own a car, if you want to own an apartment larger than 400 sq. ft. All of those things require income probably in the $500,000 or more category. Now if you lived in Omaha, Neb., or South Dakota, $250,000, $300,000 is very comfortable and probably wealthy. So it's not so much relative to peers but relative to the cost of where you live.

KLONZ: This is Ted, and one of the concepts that we talk about is something we call "relative deprivation." It's a sense that people have a judgment of whether they are wealthy or poor based on who they hang around. There was a Harvard study not too long ago where students were asked would you rather make $50,000 while your peers make $25,000, or $100,000 while your peers made $200,000? And the majority of the students choose $50,000.

VIGELAND: But when we are talking about government policy, why should those kinds of external influences -- 'I don't feel rich' -- play a part in that? Shouldn't that be very dispassionate and realistic based on the numbers?

FRANK: One of the pitfalls of what's happened with the discussion of wealth in America today is that it's becomes very politicized, and I think misrepresented by both the left and right. Look, the government needs money right now for lots of things: for health care, for the deficit, the states need money. I think the term "rich," the term "wealthy," has been applied with numbers really to make it politically sellable to voters. And I think that's really distorted the debate.

TESS VIGELAND: James Surowiecki argues that a big part of the problem with this whole debate is that there aren't enough tax brackets.

In 1970, there were 25. Today, there are only six. And that means that wildly disparate incomes are lumped together, especially at the top.

Surowiecki is a staff writer at the New Yorker and wrote an article this year headlined "Soak the Very, Very Rich." I asked him whether $250,000 qualifies.

JAMES SUROWIECKI: Well, it's almost like a metaphysical question. I think the easy way to answer that is that it makes you incredibly well off, in the context of the United States at the moment. Yeah, it makes you rich, it puts you probably within the top 3 percent of earners in the country and I think by most standards most people would consider that well off.

VIGELAND: Then how is it metaphysical?

SUROWIECKI: Well, because obviously the definition of rich changes depending on where you are and by the standards of most of the world, just about every American is rich. So there is a kind of question as where do you draw the line, is someone who is in the top 10 percent rich, is someone in the top 15 percent rich, it's hard to say. But I think that the $250,000 number, it would be hard to argue that those people are not doing incredible well by the standards of just about everyone in the world.

VIGELAND: Then why do you think that there is so much debate about it? I mean top 2 percent, I mean it's pretty easy -- you are really well off.

SUROWIECKI: I think the real reason there is a debate is that although people who earn, let's say $250,000, $300,000 have done very well relative to most Americans, they have not done anywhere near as well as people above them. If you look at the incredible rise in incomes at the top of the income spectrum, the vast majority of those gains have gone to the top 1 percent. And it actually is even more stark than that; they really have gone to the top 0.1 percent. So what you have actually seen is this curious phenomenon where while the gap between people who earn $250,000 and ordinary Americans has widened, the gap between the people earning $250,000 or $300,000 and the people above them has widened much more. They don't feel well off, basically.

VIGELAND: And you have a great example in the article that you wrote, where you say that LeBron James and LeBron James's dentist are paying the same tax rate.

SUROWIECKI: Right, so they are paying the same marginal rates. So every additional dollar that LeBron James makes, he pays the same marginal tax rate as his dentist does. Now the point though, I think, is not necessarily to say that the people earning $250,000 should not have their taxes hiked a little. It's odd that we don't have more tax brackets. In other words, it's odd that someone who makes $5 million or $6 million a year is paying the same marginal rate as someone who makes $250,000 or $300,000 a year.

VIGELAND: I want to take you back to a word that you mentioned earlier, which is this notion of "perception" and that a lot of people even when they are making $250,000 a year don't feel rich. Should that be a factor -- does it really matter whether you feel rich when you pretty much categorically are?

SUROWIECKI: It shouldn't make a difference in terms of public policy or anything along those lines. But I think it clearly affects the way people react. One of the consequences of this widening gap is that you have this kind of strange phenomenon where you have people who may very well have gone to college together, perhaps live in the same neighborhood, who really have radically different experiences of the world. I think the reality is that the way that human beings think about money and status is that people tend to compare themselves to their peer groups. They don't tend to compare themselves to everyone else in the country or in the world. It is a total disconnect; people don't understand how well off they are, but they don't understand it because that's not their experience of the world.

VIGELAND: Is that uniquely American, the aspirational idea that we are comparing ourselves to something that's completely unrealistic?

SUROWIECKI: I think the reason people feel this way is that it doesn't seem unrealistic, because people who are very much like them, again people who they went to college with, who do not have more education, who do not seem smarter, do not work any harder or the like, but who happen to work on Wall Street, let's say, or happen to be a partner in a law firm or whatever it is. Those people are earning six, seven, 10, 15 times as much. So it doesn't seem unrealistic exactly -- it just seems like arbitrary. I took this path, you took that path. But I don't think the phenomenon of comparing yourself to your peers is quintessentially American, I think it's pretty universal. But I do think America, because of the American mythology of upward mobility, the American dream, and because we live in an incredibly and intensely consumerist society, that I think kind of magnifies people's sense that they need to basically keep working to get ahead and that they never really have enough.

VIGELAND: James Surowiecki of The New Yorker magazine. His most recent book is "The Wisdom of Crowds."

TESS VIGELAND: And some final thoughts now from Robert Frank and Ted Klontz. The Bush tax cuts were originally enacted in 2001 and 2003, years before the onset of the Great Recession.

Since then just about everyone's notions of wealth have been upended. But to what extent?

Ted Klontz starts us off.

TED KLONTZ: The more money you have, the more quickly you understand that it can go away in one afternoon on the stock market. And so that's another huge insecurity that leaves the folks that I work with a lot of anxiety: "Look, it's only in a computer that I got this, if something happens I could be penniless tomorrow." And that thinking that they can get security if they have more, works. I know of a lady who just bought 350 pounds worth of gold and had it delivered to her house, and the people go, "What am I supposed to do with this?"

ROBERT FRANK: Wealth used to be about comfort and stability, first and foremost; that you didn't have to worry about money. What's changed about wealth creation and investing is that nothing is secure anymore. As we learned, most millionaires in America lost about 30 percent of their fortune during this great crisis and yes, some of them have made a portion of that back, but what the lesson was is that wealth is no longer about stability. And I think going forward we are going to have a much more anxious class of wealth and also maybe the rest of us saying, 'well stability is something I can get from other things in life rather than just wealth.'

TESS VIGELAND: Yeah, but losing 30 percent off multi-millions, someone who lost 30 percent off a $100,000, is going to look at that and say, 'oh gee too bad.' I really wonder, when you look at the perception of folks who are below the $250,000 mark and they look at folks who do make that, who are complaining and saying I'm not rich, I'm actually middle-class. Talk to me about what that means for people who are making $40,000, $50,000, $60,000.

FRANK: Well, what's happened in the economy the wealthy had become more removed from the rest of the world and the rest of the country, both financially, psychologically and culturally. So you had this huge disconnect between the world of the wealthy and the rest of America, where the world of the wealthy compared to the rest of the country is wealthy but they don't feel it, they don't feel they are living it or that they ever are going to get there, because again, their whole economics is different from the rest of the country's.

Felix Salmon: In England, if you are born rich and privileged, you'll probably stay that way forever. And if you are born poor, you'll probably stay that way, too.

Tess Vigeland: Commentator and Reuters blogger Felix Salmon.

Salmon: Americans, by contrast, believe in the American Dream, the idea that anybody can become rich or become president. The two countries' income taxes reflect the differences: the U.K. has a progressive income tax which reaches 50 percent on incomes more than 150,000 pounds, which is roughly the same as $250,000. In the U.S., by contrast, the federal income tax is always less than 40 percent no matter how much money you make.

Part of the reason is tied up in American aspirations, which were tweaked in a recent New Yorker cartoon. Two guys are in a bar, the first says to the second: "As a potential lottery winner, I totally support tax cuts for the wealthy."

Potential wealth. That's why Americans don't like high taxes on the rich, and that's the difference between the U.S. and the U.K.

The U.S. is a fundamentally aspirational society, where financiers like Donald Trump have an enormous and genuine popular following, mostly just because they're rich. Yes, we have wealthy families and celebrities and entrepreneurs and real estate moguls in the U.K. But Brits tend to react to seven-figure incomes with disgust rather than with awe or respect. And they're not under any delusion that they will be wealthy one day.

And in that respect, the Brits are much more realistic than Americans. For all that the American Dream is woven into this country's culture, there's actually less social mobility here than in most of Europe. If you're born poor, you're much more likely to make it rich in a country like Sweden or even Canada than you are in the U.S.

Countries that provide good resources for poorer families and have cheap or free university education are much more likely than America to see people working their way up the ladder. Americans oppose tax cuts because they think that even if they're not rich today, they might be tomorrow. But they're wrong about that. The American Dream is just a dream -- it is not based on reality.

But the larger point there, which I think is an honest one for most of these wealthy people, is if you can convince yourself and you are convinced that you are not rich, you are not wealthy, you are absolving yourself of the responsibilities that come with wealth. John Rockefeller, Jr. talked a lot about, with great privilege comes great responsibility, and he really built the Rockefeller philanthropy engine that drives so much good work today. And I think that if you are a self-made rich guy and you say, "Well I'm not wealthy, the guy down the street is," then philanthropy, giving to the community, treating your workers well, all the responsibilities that comes with wealth sort of falls of your shoulder. And you can just say, "Well when I get there, that's when I will be responsible." And it's a serious issue that a lot of today's wealthy don't perceive themselves as wealthy.

Countries like Australia, Sweden, Canada and Switzerland all have stronger middle classes than the U.S. What makes the differences?

Who is the middle class? (iStockPhoto)

Jeremy Hobson: Perhaps one of the reasons the Occupy Wall Street protests have picked up so much steam is that the middle class is being squeezed in this country. So is there a country that's doing a good job when it comes to building a strong middle class?

We asked Marketplace economics correspondent Chris Farrell to look into that, and he joins us now. Good morning.

Chris Farrell: Good morning Jeremy.

Hobson: So is anybody getting it right when it comes to fostering a strong middle class?

Farrell: Oh I think there are a number of countries that are truly getting it right. The northern European countries -- Denmark, Sweden, Switzerland, Germany -- they're doing it right, have a healthy middle class. And then there's Canada, Australia, New Zealand -- they also have a much more vibrant middle class compared to the U.S.

Hobson: And what is it that they're doing to get that vibrant middle class?

Farrell: These are all liberal economies, these are all capitalist economies, but they have a much stronger social safety net. Big difference, for example -- every citizen has health care. Another thing that they have is, essentially, they're fiscally conservative.

I mean, I know if you look up past over their history, there have been moments where they haven't been, at least essentially, fiscally conservative societies that pay as they go. They tend to have strong unions. So in strong unions, low income folks tend to be paid better; middle managers tend to be paid less.

Hobson: But how can you have that where you have a strong safety net and also a fiscally conservative government?

Farrell: Very simple: If you look in U.S. history, Walter Mondale was a fiscal conservative. He lost to Ronald Reagan, but what he argued for is if we're going to have Social Security, if we're going to have Medicare, if we're going to have these social programs -- we pay for them. That's what being socially conservative or fiscally conservative means.

Hobson: But aren't we different, Chris? I mean, we're so much bigger here in the U.S. than, say, Switzerland or Norway. Doesn't that make a difference when it comes to trying to have a strong middle class?

Farrell: It does. But we're not that different. Look, we're not going to have strong private sector unions in the U.S. That's what our history tells us. But what we can do is focus government policies, and learn from these countries about focusing government policies to boosting the low income folks in this country. For example: helping out families and health care.

Hobson: Marketplace economics correspondent Chris Farrell. Chris, thanks so much.

Farrell: Thanks a lot.

A government report says that over the past 30 years the top 1 percent in the U.S. doubled their share of national income. Who are the rich and how do they earn their living?

'Occupy Wall Street' protesters march in front of the Chase Manhattan Bank headquarters on October 12, 2011 in New York City. (Spencer Platt/Getty Images)

Kai Ryssdal: Here's some fodder for the zeitgeist debate over whether or not Occupy Wall Street might be onto something. There's a new report out from the non-partisan Congressional Budget Office on income inequality. Contained within is a somewhat startling statistic: The top 1 percent of the population has seen its share of total national income nearly double in the last 30 years. The CBO says the top 1 percent now captures more than 20 percent of everything we collectively take home.

The protesters down on Wall Street and across the country and the world have a saying you might have heard: 'We are the 99 percent,' it goes. So who's in the 1 percent? And what do they do for a living that gets them there? We sent Marketplace's David Gura to find out.

David Gura: So, there's this old story about F. Scott Fitzgerald and Ernest Hemingway, and it may be apocryphal, but supposedly Fitzgerald said to Hemingway, "The very rich are different from you and me."

Jacob Hacker: And Ernest Hemingway replied, "Yes. They have a lot more money."

That's Jacob Hacker. He teaches at Yale -- political science, not American literature. Anyway, Hacker says that over the last 30 years, the wealthiest Americans have gotten way wealthier.

Hacker: The top 1 percent has pulled dramatically away from the rest of Americans over the last generation.

Hacker says government policies helped fuel that trend with tax cuts and loopholes that benefit the rich. We're talking about corporate lawyers, hedge fund managers and real estate titans.

Lane Kenworthy is a sociologist at the University of Arizona.

Lane Kenworthy: A third of them, roughly speaking, are executives and supervisors who are not in finance.

Kenworthy says you'd expect the top 1 percent to include athletes and movie stars. Well, you'll be surprised.

Kenworthy: Sports and media is actually much, much smaller than most people imagine.

Only about 2 percent of that top 1 percent.

So, what's changed? Jacob Hacker says we've seen a big shift. Today's rich, for the most part, are the working rich.

Hacker: Unlike the rich of the Gilded Age, back in the early 20th century, the very rich today are not living off their accumulated wealth.

Making money off investments and real estate. Today, they're getting big paychecks. Those have ballooned since financial deregulation. But compensation is more than than that: it's also stock options, insurance and big bonuses. And the Gilded Age has given way to golden parachutes executives can deploy even when companies don't do so well.

In Washington, I'm David Gura for Marketplace.

Wilkinson says, “If Americans want to live the American dream, they should go to Denmark.”

On October 31 2011 10:32 dOofuS wrote:


I don't disagree with any of this, but I think you exaggerate the 'eat or be eaten' mentality. Your last paragraph hits the problem most American's are currently engaged in debating. The federal government needs to accept the reality of our situation, and stop spending beyond its means. More borrowing, taxing, or printing of money will not help our situation, regardless of its good intent. The problem is spending, and more spending is not the solution.

I am in open support of Ron Paul, and am proud that his plan begins to actually address the issue of bloated government and runaway spending. I also feel that the progress he and others have made in creating some transparency in the Federal Reserve's dealings will continue to reveal the corrupt state of our governments money printing machine.

On October 31 2011 12:25 aksfjh wrote:
Higher taxes on the 1% to fund projects that we can all benefit from helps everybody. Upgrading a great deal of internet infrastructure alone would likely reduce costs for businesses as well as give the potential employees better options for employment in a sector that we could really grow globally: information service.