Sunday, March 29, 2015

This is what job polarization looks like (animation)

Latest wage data from the Social Security Administration for 2013 showed an annual median wage of $28,031 — and at 40 hours a week for 52 weeks would be $13.48/hour. But FiveThirtyEight.Com reports the median worker earned $17.09 an hour in May 2014 — or $35,547 for a typical full-time job.

FiveThirtyEight.Com -- Middle-Class Jobs Are Still Lagging (March 26, 2015 by Ben Casselman)

"As has been true for much of the nearly six-year-old recovery, hiring was strongest at the top and bottom of the pay scale. Overall, jobs at the extremes of the pay distribution — those where median pay falls in the top or bottom 20 percent of all occupations — have surpassed their prerecession peaks. Jobs in the middle 60 percent experienced slower growth and are still deep in negative territory ... Some economists have argued that longer-term forces, particularly automation and outsourcing, are having a polarizing effect on the job market, with high- and low-skilled jobs growing as those in the middle disappear."

Assuming (at very least) that $50,000 a year (before payroll taxes) is a true middle-class wage in 2015, then 72.7% of all wage earners make less than that today. If the middle-class were defined by individuals (not multiple-income households) who had incomes of between $50,000 and $100,000 a year, then less than 20% of all wage earners make a middle-class wage.

Adjusted for inflation, $50,000 a year in 2015 has the same buying power as $15,465 did in 1979.

Again, adjusted for inflation, $50,000 a year in 2015 has the same buying power as $27,841 did in 1990 — when the median wage was $14,498 a year ("median" meaning, 50% of all wage earners earned less, and 50% earned more). Today $14,498 a year would be worth what $8,072 was in 1990.

Below is wage data from the Special Security Administration showing the median wage reported over a 24 year period from 1990 to 2013 (below that is a chart).

Year

Number of Wage Earners

Annual Median Wage*

Adjusted for 2015 dollars

Number reporting more than $5 million

1990 127.5 million $14,498 ($26,036) 739
1991 126.2 million $15,075 ($25,979) 635
1992 127.1 million $15,610 ($26,115) 1,234
1993 128.7 million $15,690 ($25,486) 918
1994 130.5 million $16,118 ($25,528) 712
1995 134.2 million $16,650 ($25,643) 1,010
1996 136.5 million $17,403 ($26,034) 1,493
1997 139.3 million $18,277 ($26,729) 2,410
1998 141.7 million $19,157 ($27,586) 3,400
1999 145.0 million $20,102 ($28,321) 5,109
2000 148.1 million $20,957 ($28,566) 6,458
2001 148.2 million $21,767 ($28,849) 5,027
2002 148.0 million $22,152 ($28,902) 3,892
2003 147.7 million $22,576 ($28,799) 3,977
2004 149.4 million $23,355 ($29,020) 5,685
2005 151.6 million $23,962 ($28,798) 6,644
2006 153.8 million $24,891 ($28,980) 7,598
2007 155.5 million $25,737 ($29,135) 9,317
2008 155.4 million $26,514 ($28,905) 7,750
2008 150.9 million $26,261 ($28,731) 5,307
2010 150.3 million $26,363 ($28,377) 6,704
2011 151.3 million $26,965 ($28,137) 7,082
2012 153.6 million $27,519 ($28,133) 8,982
2013 155.7 million $28,031 ($28,243) 7,757
* 50% of all wage earners earn more, 50% earn less.

As you can see, in real wages, 50% of all wage earners in the U.S. make less today that they did in 1999.

From the Century Foundation by Mike Cassidy on March 27, 2015: When Your Occupation Is Poverty:

A quarter of America’s workers are working full-time, year-round in occupations where they cannot expect to earn enough to keep a family of four above poverty. That’s just one troubling takeaway of the latest Occupational Employment Statistics (OES) report ... Released just once annually, it provides detailed estimates of employment and wages ... One finding should stand above the rest: the less-skilled segment of the job market is not a pretty place ... It’s not a question of being poor, it’s a question of by how much. All of the occupations on the list have annual median wages that fall at or below the poverty level for a family of four ($24,250) ... America’s most common occupations are also are among its worst paying ... 25 percent of the workforce (33.3 million people) have professions where median annual wages are below the poverty line for a family of four ... For the 45 million Americans who work in the nation’s lowest-paying occupations—a third of the workforce, wages are so low that, even if their spouse was also employed 30 hours a week in the same occupation, the two of them together still would not make enough money to keep themselves and two children above twice the poverty line.

Lee Kuan Yew, the first prime minister of Singapore (who recently died at age 91), made the economy his first priority in 1959. Back then, Singapore was a swamp, and even had to import its drinking water from Malaysia. Lee raised the per capita income of Singapore from $500 a year to some $55,182 a year today. Its average annual growth rate has averaged 7 percent since the 1970s.

By comparison, almost 73% of all wage earners in the U.S. make less than $50,000 a year (what a middle-class wage is in 2015).

Economists refer to "job polarization" of the labor force when middle-class jobs (requiring a moderate level of skills) appear to disappear relative to those at the bottom (requiring few skills) and to those at the top (requiring greater skill levels).

We're always hearing about the growth of good-paying high-skilled jobs at the top. But when you compare those to the decline in middle-class jobs, and to the growth of low-paying jobs, it doesn't look all that great

BELOW: Job Polarization Visualized

Declining middle-class jobs

Now compare the graphic above with the increase of those "not in the labor force" as the population has been increasing. That doesn't look so great either.

BELOW: Those "not in the labor force" visualized with the same job polarization animation above.

The labor force

Offshoring, technology, automation, robots — there just aren't enough jobs for everyone; especially those that pay a "living" or middle-class wage. And fter most of the middle-class jobs disappear, then the number of low-paying jobs also begins to shrink as a share of the labor force — when more offshoring, technology, automation and robots displace domestic workers — when more and more people are left out of job market. READ: When Human Labor Becomes Obsolete

Confusion about per capita income, median household income and the median wage

The "per capita" income in the U.S. is about $53,042 (less than Singapore's). "Per capita" means the "average" (not the "median"), so it is very misleading as it can be very skewed by higher-income earners at the very top. (Just as when the Bureau of Labor Statistics reports the "average" wage".)

Sentier Research showed the annual "median household income" to be $54,010 (about the same as the "per capita" income) — but this also includes dual/multiple income earners per household. If you divide the "median household income" by 2, it is $27,005 — slightly less than the last reported "median wage" of $28,031 (where have earn less, and half earn more).

In America, it now takes two people to pay the rent.

Saturday, March 28, 2015

Did the Medicare Doc Fix just get Fixed?

( * Editors Note: I'll just cut to the chase. Almost everybody on Medicare will see their monthly premiums go up to pay the doctors. The "fix" was in for the doctors and healthcare industry.)

The House overwhelmingly approved sweeping changes to the Medicare program (voting 392 to 37) which would establish a new formula for paying doctors and increasing premiums for Medicare beneficiaries.

The John Boehner-Nancy Pelosi measure would replace a 1997 formula that linked doctor pay to economic growth with a new one that is more focused on "quality of care and performance" by rewarding them for higher-quality work, rather than on the volume of their services.

According to Forbes (who isn't happy with the plan):

"Medicare payments to doctors would rise by 0.5% in each of the next four years—a rate that is likely to be well below inflation. Then, payments would be frozen for the next six years. After that, physicians would get modest annual increases again. After 2019, doctors would receive financial incentives to participate in two alternative payment systems that would tie their compensation to performance. Potentially, this could improve the quality of care for seniors. That, in turn, could reduce their acute health episodes and hospitalizations and might even save Medicare money."

To help offset the costs of the new Medicare bill, it would also require means-testing of Medicare beneficiaries so higher income people pay higher premiums for coverage of doctors’ services and prescription drugs. Seniors with incomes at or below $85,0000 currently pay $104.90 per month in Part B premiums, and higher income seniors pay between $146.90 and $335.70, depending on their income.

According to TIME, under the plan, Medicare recipients with annual incomes of between $133,000 and $160,000 would see their Medicare Part B and Part D premiums increase from 50 to 65 percent; and recipients with annual incomes between $160,000 and $214,000 would pay 75 percent rather than 65 percent. The premium hikes would begin in 2018, and more beneficiaries could be income-tested starting in 2020. (TIME noted that Congress should have also had Medicare negotiate better drug prices with pharmaceutical companies; and tighten up reimbursements to Medicare Advantage plans.)

Robert Moffit at the Heritage Foundation said this increase in premiums on upper-income individuals would only affect about 6 percent of the Medicare population.

Most people pay the Part B premium of $104.90 each month — but this will go for everyone on Medicare. Under current law, enrollee premiums are set to cover 25 percent of Medicare Part B spending, so some of the doc fix’s increased costs will be allocated to them automatically. A freeze in physician fees is already baked into the monthly Part B premium for this year, but the doc fix could result in an increase in premiums going forward.

The new bill would also make permanent another program that subsidizes Part B premiums for some people with low incomes (individual monthly income is limited to $1,197 and a married couple's monthly income is limited to $1,613).

Here's the bigger question: If a Medicare beneficiary isn't a high-income earner, and doesn't qualify for a subsidy as a low-income individual , will this "doc fix" increase monthly premiums over and beyond what any future annual Social Security COLA might pay, resulting in a lower monthly benefit for them to live on? (Poor people on disability are already facing a 20% cut in benefits by the end of next year — about as much as those uppity doctors had faced.)

And then there's Medigap. According to Reuters:

Many Medicare enrollees buy private Medigap policies that supplement their government-funded coverage (average annual cost: $2,166, according to Kaiser). The policies typically cover the deductible in Part B (outpatient services), which is $147 this year, and put a cap on out-of-pocket hospitalization costs. Under the bipartisan plan, Medigap plans would no longer cover the annual Part B deductible for new enrollees, starting in 2020, so seniors would have to pay it themselves. Current Medigap policyholders and new enrollees up to 2020 would be protected.

The Congressional Budget Office said the measure's costs totaled $214 billion over the next decade, and about two-thirds of the costs would be added to the deficit — estimated to be $141 billion. (Conservative Republicans were concerned because the bill was not totally paid for — just like the wars in the Middle-East.)

The legislation was designed to spare Medicare doctors a 21-percent pay cut effective this coming April 1st under the existing payment formula. If the Senate does not act until mid-April, doctors might still be able to avoid pay cuts because Medicare doctors' claims generally take at least 14 days to be paid. Such a reduction would almost surely prompt some doctors to accept fewer Medicare patients.

Wall Street analysts said it would help healthcare services companies whose revenues depend on government Medicare reimbursements. Brian Tanquilut, an analyst at Jefferies bank, noted that this bill could help the stock prices of hospital companies, such as Community Health Systems, HCA Holdings Inc and Tenet Healthcare. (So healthcare companies and well-to-do doctors would benefit, while Medicare rates go up on the disabled and elderly.)

The new legislation also includes a two-year extension of the Children's Health Insurance Program (CHIP) for low-income children and a two-year extension of funding for community health centers. However, some Senate Democrats have expressed concern about anti-abortion language in the bill and their desire for four years, not two, of CHIP funding.

The Senate, who is also expected to pass it, may not act until it returns from a two-week vacation (yes, they're already on vacation — can you believe it!) 

Obama is also expected to sign off on the new bill that will raise Medicare premiums (before the GOP turns it into a block grant or voucher program).

Thursday, March 26, 2015

The GOP's Bloody Budget Axe

Unlike politically incorrect journalists in the mainstream media (including Fox News), one can't accurately report on the GOP's proposed bloody budget cuts — and then, just to appear non-partisan, say it's "Congress" who's proposing the cuts — when it's the Republicans within Congress who are the ones proposing all these bloody budget cuts.

OK — maybe "bloody" might have been an unfair adjective to use. So instead, let's use the word barbaric, bitter, brutal, brutish, callous, cold-blooded, cold-hearted, cruel, harsh, inhuman, immoral, grievous, harrowing, heartless, merciless, painful, pitiless, remorseless, ruthless, sadistic, savage, severe, traumatic, unkind or just plain vicious. There's no other way to sugar-coat the facts.

President Obama, recently remarking on the GOP's new budget proposals, said: "The budget that [the House Republicans] are putting forward and the theories they’re putting forward are a path to prosperity for those who have already prospered".

As the New York Times had observed, "Obama cast Republicans as naysayers clinging to the idea of tax cuts for the wealthy financed by slashing programs for everyone else. Obama said that they were doubling down on trickle-down economics while pretending to care about the middle-class." So finally, at least the President of the United States is no longer being politically incorrect (after years of playing nice and trying to "compromise" with Republicans).

But first, one question needs to be asked: Why do the Republicans always insist on passing legislation that they know Obama will always veto, rather than attempting to draft more palatable and bipartisan proposals — something that actually has a chance of passing — rather than grid-locking all government functions? Is it in the hope that something else (like an abortion amendment) might slip through the cracks when the Democrats aren't paying attention or caught napping?

The same can be said for both of the GOP's budget proposals. Currently, the House Budget Committee has 22 Republicans and 14 Democrats; while the Senate Budget Committee has 12 Republicans and 10 Democrats (including one Independent). According to the Center on Budget and Policy Priorities, the budgets recently adopted by both GOP dominated committees cut more than $3 trillion over ten years (2016-2025) from programs that serve people of limited means. These deep reductions amount to 69 percent of the cuts to non-defense spending in both the House and Senate plans.

Each budget plan derives more than two-thirds of its non-defense budget cuts from programs for people with low or modest incomes, even though these programs constitute less than one-quarter of federal program costs. Moreover, spending on these programs is already scheduled to decline as a share of the economy between now and 2025.

The Simpson-Bowles plan was already draconian, but the new Republican plans are even more radical; and as usual, impose their most severe cuts on people on the lower rungs of the economic ladder. (In contrast, here is the Democrats' newest proposed budget — and here is what the Progressive caucus had earlier proposed.

Politico reports that House Republican leaders are exploring a procedure that would allow for votes on both their budgets — and whichever gets the most votes, that one would be adopted as the party’s fiscal blueprint. (Read more at Roll Call about the GOP's political infighting on issues within their two partially-conflicting budget proposals.)

Infrastructure and Defense

As one commenter at Mark Thoma's blog noted: "What they did increase, instead of cutting, is our absurdly overblown defense spending. It should be turned around — with all the cuts in defense, and a slight increase in non-defense — as we desperately need to invest in infrastructure." Which, by the way, is currently at its historically lowest level. With low interest rates, what better time in invest in the country? Not to mention, what a great job creator it would be if we did as FDR had done.

The Center for Public Integrity reports that America still remains the top arms seller to the World (no surprise there.) Although the Pentagon’s budget has decreased in recent years, the Nation reports that had followed enormous growth in the post-9/11 decade — as much as 40% in real terms between 2001 and 2012. The White House's new budget request is supposed to take into account the end of two costly wars, yet even that still exceeds the cap called for by sequestration — and that base budget is only part of what we’re spending overall on American war-making.

According to Roll Call, the Budget Committee did not vote (as defense hawks had wanted) on an amendment that added more money to the Overseas Contingency Operations fund. So House Armed Services Committee Republicans have threatened to withhold their support for the budget if they don’t get additional dollars for the Pentagon. And if the 36 Republicans on the committee band together to vote against the budget, the measure would almost certainly fail. (No Democrat is expected to vote for the GOP budget.)

Unlike Social Security, the Department of Defense (with multimillion-dollar executive salaries, outsourcing and bogus parts) is rampant with waste, fraud and abuse. Whereas, a report by the nonpartisan Government Accountability Office found that only about 0.4 percent of disability beneficiaries were likely receiving improper payments. Another report by Social Security's inspector general came to the same conclusion.

As it is now, the Department of Defense budget is already so big that the Pentagon cannot keep track of where all our money goes. In a largely unnoticed admission the day before Sept. 11, 2001, former Defense Secretary Donald Rumsfeld said he couldn’t account for $2.3 trillion in transactions. Senator Bernie Sanders (the Independent from Vermont and the ranking member on the Senate budget committee) recently got an amendment passed which requires a full audit of the Pentagon.

Medicare

Medicare has served our country’s retirees well for 50 years and the rate of health care spending is now slowing after decades of uncontrolled growth. The GOP budget puts those gains at risk and the needs of the privileged over the middle-class.

House Speaker John Boehner and Minority Leader Nancy Pelosi have been negotiating a long-term deal to resolve issues with Medicare funding. Currently, Medicare legislation requires a series of short term adjustments to the Sustainable Growth Rate (SGR), also known as "the Doc Fix", that prevents funding cuts to doctors. Richard Fiesta, the Executive Director for the Alliance for Retired Americans, said that, "We are monitoring the deal closely, as we have concerns that this agreement could put a significant burden on current beneficiaries."

According media reports, this deal would remove the SGR formula that determines changes in compensation, and replace it with a new payment system. Preliminary reports also indicate that beneficiaries with incomes higher than $133,000 would pay higher premiums and Medigap plans with first dollar coverage would incur a deductible.

Roll Call reports: The "doc fix" proposal has been championed by the speaker [John Boehner] as a long-overdue first step to reining in entitlement costs. A deal to come up with a more reliable Medicare payment formula for doctors had seemed in question for quite a while ... It looks like Congress is aiming to ditch the SGR and pay for it (some of it at least) by making wealthier seniors pay more for Medicare and by imposing small deductibles on Medigap plans ... The proposal sets a precedent for Democrats by not getting tax raises with any changes to Medicare or Social Security ... Senate Minority Leader Harry Reid thinks the SGR agreement “stinks.” Either way, Congress needs to come up with something before March 31, when the current SGR patch expires and Medicare payments to doctors would be reduced 21 percent.

Social Security

Richard Fiesta (of the Alliance) issued a statement saying the House Republican Budget for FY2016 contains cuts to Medicare beneficiaries and threatens Social Security. "The budget plan put forward by House Republicans is a frontal assault on the needs of seniors, persons with disabilities and working Americans. It would privatize critical aspects of Medicare, gut Medicaid and drastically reduce support for persons with disabilities. It also signals that the Republican leadership is interested in going after Social Security, which keeps 22 million older Americans out of poverty. It breaks promises to seniors regarding benefits they have earned over decades of work."

We’ve seen these tactics before — commissions to recommend so-called "reforms" and attempts to pit disabled workers against retired workers. If Republicans were truly concerned about Social Security’s future they would be working to expand benefits for beneficiaries and improve the program’s finances by lifting the earnings cap on Social Security contributions.

Alliance President Barbara Easterling also commented on these developments. "We can and must expand Social Security benefits and extend the financial health of the system." (Here's one of several petitions telling Congress to expand Social Security -- not cut it.)

Senator Bernie Sanders (I-Vermont) introduced legislation that would expand Social Security benefits by about $65 a month for most recipients. The bill also increases cost-of-living adjustments for Social Security recipients in line with the CPI-E and provides a minimum Social Security benefit for retirees.

Sanders' plan would also significantly improve Social Security’s financing by eliminating the cap on Social Security contributions. It would also expand the system's revenue base to include high-income households' unearned income. The Social Security Expansion Act would subject all income over $250,000 to the payroll tax. The tax is currently capped at $118,500 (less than congressional salaries). It would also subject unearned household income above $250,000 to a 6.2 percent tax. (NOTE: 98.9% of all wage earners make less than this.)

"Social Security is the most successful government program in our nation's history. Through good times and bad, Social Security has paid out every benefit owed to every eligible American," Sanders said in a statement. "The most effective way to strengthen Social Security for the future is to eliminate the cap on the payroll tax on all income above $250,000 so millionaires and billionaires pay the same share as everyone else."

Social Security is currently expected to pay out full benefits until 2033, after which it will be able to pay approximately 75 percent of all benefits. Sanders estimates his legislation would be able to extend Social Security through 2060. He says, "At a time when over half of the American people have less than $10,000 in savings and senior poverty is increasing, we should not be talking about cutting Social Security benefits. We should be talking about expanding benefits to make sure that every American can retire with dignity."

Rep. John Larson’s (D-CT) also introduced a bill to expand Social Security benefits. This legislation would also provide- larger cost of living increases for retirees and disabled workers and raise the income cap on Social Security taxes to $400,000. (NOTE: 99.6% of all wage earners make less than this.)

SNAP (Food Stamps)

According to the Huffington Post, the Republicans proposed budget could kick 11 million people off food stamps. The document didn't specify how much it would reduce funding for the Supplemental Nutrition Assistance Program — however— during a hearing, committee staff revealed the cut would be $125 billion over 10 years (about 34 percent of program funding). According to the Center on Budget and Policy Priorities, if the savings were achieved by reducing enrollment, States would need to kick 11-12 million people off the program. Another way to save $125 billion over a decade would be to chop everyone's monthly benefits by $55.

As of June last year, 46.5 million persons were participating in SNAP — and about 9% go to households with senior citizens (about 4 million). USDA: FACT vs. FICTION on SNAP.

Also from the Huffington Post: House Republican Budget Whacks Food Stamps And Medicaid: "In addition to repealing Obamacare, it reprises many of the safety net cuts Rep. Paul Ryan (R-Wis.) proposed in previous years. In his budget blueprint, Rep. Tom Price (R-Ga.), who took over for Ryan as chairman of the House Budget Committee this year, seeks to balance federal spending over 10 years by cutting assistance to the poor while boosting the defense budget ... The proposal would turn funding for Medicaid and the Supplemental Nutrition Assistance Program, informally known as food stamps, into "block grants" ... The second way in which Price proposes cuts to SNAP and Medicaid is through numerical reductions in both programs' budgets ... It calls for $1 trillion less in mandatory spending outside of health and retirement programs — a category in which SNAP is the largest program ... Ryan's budget last year called for SNAP cuts of $137 billion."

Taxes

Raising taxes is out of the question. The new GOP tax plan is being described as the Bush tax cuts on steroids. In a newsletter from the Roosevelt Institute they write: "House Republicans claim their new budget plan will help the middle class by (surprise) cutting taxes for the rich, but as The Roosevelt Institute’s Tim Price notes, the IMF and Standard & Poor’s agree that a progressive approach to reducing inequality is the key to economic growth." As Talking Points Memo explains:

The new House budget collapses the tax code into two income brackets of 10 and 25 percent; and it repeals the Alternative Minimum Tax. The benefits would accrue disproportionately to high-income households and corporations.

The budget also calls for steep cuts to domestic programs such as food stamps and Pell Grants, more state control over Medicaid, higher defense spending and a call to balance revenues and spending within 10 years.

The budget keeps Ryan's "premium support" plan to convert Medicare into a private-public hybrid after a decade in which seniors would get a subsidy to buy a private insurance plan or stay in traditional Medicare. The budget repeals Obamacare in its entirety [but replaces it with nothing — or with a so-called "patient–centered health care plan".]

The GOP budget does not propose any changes to Social Security or Medicare benefits for the next decade, despite the party's warnings that the programs are going bankrupt and need to be reformed. But the budget sets the stage for a showdown next year on Social Security. Mirroring a new House rule adopted in January, the budget prohibits a "reallocation" from the Social Security retirement program to replenish funds for the Disability Insurance trust fund, which goes in the red in 2016.

The budget cuts taxes for the rich and big corporations, increases military spending, and doesn't fix the shortfall for disability. The parts of the budget it does cut is in domestic discretionary spending, which mostly assists the poor and working class.

As was noted in a comment at The Hill, the very wealthy own most of the stocks; and stocks produce the most capital gains, so the wealthy pay the most in capital gains taxes. Obamacare added a 3.8% sur-tax to the capital gains tax rate to expand Medicaid for the unemployed and very poor, the working poor, and the lower-middle-class. That might be the biggest reason why the GOP wants to repeal Obamacare — so that the very rich don't have to pay for the healthcare of the very poor.

But why not also tax billionaires on their capital gains for Social Security, rather than just have all that extra unused cash stuffed under their mattresses (or in offshore banks) doing no one, or humanity in general, any good at all. (It only serves to perpetuate multi-millionaire trust-fund kids 100 years into the future, and nothing else.)

Accounting Gimmicks and Obamacare

According to Roll Call, the House Republicans claim the budget achieves balance by 2024. It does so, however, by repealing Obamacare, something no Congress is likely to do any time soon. And in their 10-year projection, Republicans account for roughly $2 trillion of the $5.5 trillion overall in cost-cutting by trashing the health care law. Most of the rest of the savings — more than $2 trillion — would come from reducing growth costs associated with Medicare, Medicaid and the Supplemental Nutrition Assistance Program.

As Bloomberg reports, part of the GOP's plan is to repeal Obamacare, but still keep the revenue that was used to expand Medicaid for use elsewhere. And from the Huffington Post: Republicans Admit to Guessing on the Budget:

The [GOP] budget plan for 2016 says it achieves balance in 10 years entirely through making cuts, including repealing the Affordable Care Act, turning Medicaid into a block grant program run by states and chopping $759 billion from non-military spending programs, on top of cutting more than $1 trillion from nutrition assistance and other welfare programs. But the blueprint is entirely silent on two key questions related to taxes — and at a press conference Tuesday, [House Budget Committee Chairman] Tom Price (R-Georgia) admitted that there are no actual estimates related to either. The first question is how to replace the taxes that are currently slated to be raised through Obamacare — taxes that are expected to lower deficits, according to the Congressional Budget Office. And the second question is how the GOP would pay for making permanent some $900 billion in tax cuts that are due to expire. When asked how his budget deals with the lost revenue, Price did not point to any data, but insisted that the lower burden on taxpayers would spur more growth and therefore bring in more revenue."

Oh really? Maybe we should take another look at Kansas. It seems those tax cuts didn't work out very well after all.

Robert (aka "The Angry Bear") writes: "In his widely read book, What's the Matter with Kansas, Thomas Frank asks why lower middle-class people in middle America vote for Republicans against their own self interest. I wonder why wealthy investors also vote for Republicans against their self interest. It should be clear that rich investors have done poorly when the president is named Bush, and very well when Clinton or Obama were if office. In general the rich get richer even faster when a Democrat is president."

The GOP's Basic Principals

Are the Republicans REALLY for the middle-class, the working-class, the lower-class and the poor? From Senator Bernie Sanders —> Republicans Vote against raising Minimum Wage: (On the Senate Budget Committee, all 12 Republicans voted against it and all 10 Democrats voted for it). Millions of Americans are working longer hours for lower wages. In his newsletter it says , "Believe it or not, median family income, adjusted for inflation has gone down by nearly $5,000 since 1999. A way to raise wages for millions of Americans would be to increase the $7.25 federal minimum wage to at least $10.10 an hour. To Bernie, no one in America who works full time should be living in poverty. But Republicans voted against his amendment." (Bernie isn't politically incorrect either.)

And are the Republicans REALLY "patriotic" and "pro-democracy"? Again, from Senator Bernie Sanders —> Republicans Vote 12-10 Against Campaign Reform: (Again, all 12 Republicans voted against it and all 10 Democrats voted for it). Bernie proposed a way to undo the disastrous Supreme Court ruling in Citizens United that lets millionaires and billionaires spend unlimited sums on campaigns. Unless the disastrous ruling is changed, he told other senators on the committee, "You’re going to be paid-employees of the billionaire class." He called instead for public funding of elections, like America once had — before we had The Rise of the Plutocrats.

But in all fairness, the reality is, even the Democrats won’t reform election laws. They'll vote for reform now, when they know they’ll lose with only a minority, just to make themselves look good. They could have reformed campaign laws in 2009/2010 — as well as reformed the tax code (and fixed a host of other current issues).

Another commenter at Mark Thoma's blog wrote of the new GOP budget: "This is an immoral piece of proposed legislation. The wealthy in the United States are doing just fine, thank you, and don't need another gratuitous tax cut. Especially given the fact that it wouldn't do a thing to stimulate the U.S. economy — all the right-wing rhetoric to the contrary. The United States is a very wealthy country. We can afford to feed the hungry and help the down-trodden. In fact, if we truly were a Judeo-Christian country, we would be morally obligated to do so. Of course, most conservatives are phony Christians who care not a whit for the poor and broken. Shame on them." Odd that Rep. Paul Ryan's hero (Ayn Rand) was an atheist.

Other comments included "Slashing Medicaid, gutting Obamacare, and privatizing Medicare — the Republican plan to reducing poverty is to let them all die" and "Starving the poor and working classes to feed the already overstuffed rich has always been the conservative agenda." So basically, the GOP budget is everything we've come to expect from the Grand Ole Party — the same ole, same ole: Feed the rich and starve the poor.

Even though half the members of Congress are already millionaires, Senator Dean Heller (R-Nevada) introduced a bill called No Budget, No Pay to ensure that if Congress fails to pass a budget, it won’t get paid. Big frigging deal! Members of Congress (with just their government salaries alone) earn in 9 short weeks what 50% of all wage earners in the U.S. make all year long (and they have much better benefits too!)

With Hillary Clinton as the only possible Democratic contender in 2016 for President, and with our current GOP-dominated Congress, she might be our only hope. Because with the current batch of Republican hopefuls for President, may God help us all if one of THEM were ever elected.

How much blood do they already have on their hands? Expect much more if the GOP's bloody budget cuts are ever passed.

Friday, March 20, 2015

The Robots are Coming! The Robots are Coming!

I don't believe that (in my lifetime at least) a robot will displace the bartenders at our local bars. But that's not to say that one day (soon after I'm gone) it couldn't happen. They say the Apollo computers that got our first man to the moon in 1969 had less computing power than our cell phones do today. But since that time, technology has incrementally been displacing a lot of middle-wage workers, and leaving a lot of low-paying jobs in their wake.

Robert Reich, the former secretary of labor, makes an interesting analogy: "Imagine a small box – let’s call it an iEverything – capable of producing everything you could possibly desire, a modern day Aladdin’s lamp. You simply tell it what you want, and – presto! – the object of your desire arrives at your feet. The iEverything also does whatever you want. It gives you a massage, fetches you your slippers, does your laundry and folds and irons it. The iEverything will be the best machine ever invented. The only problem is, no one will be able to buy it. That’s because no one will have any means of earning money, since the iEverything will do it all."

He also says, "It’s now possible to sell a new product to hundreds of millions of people without needing many, if any, workers to produce or distribute it ... The ratio of producers to customers continues to plummet ... New technologies aren’t just labor-replacing, they’re also knowledge-replacing ... When more and more can be done by fewer and fewer people, the profits go to an ever-smaller circle of executives and owner-investors ... That means most of us will have less and less money to buy the dazzling array of products and services spawned by blockbuster technologies — because those same technologies will be supplanting our jobs and driving down our pay ... A future of almost unlimited production by a handful, for consumption by whoever can afford it, is a recipe for economic and social collapse."

Maybe one day iRobots will also build themselves...
iRobot

From a recent VOX study on Robots: "We see a more nuanced picture when we break down employment (and the wage bill) by skill groups. Robots appear to reduce the hours and the wage bill shares of low-skilled workers, and to a lesser extent also of middle skilled workers. They have no significant effect on the employment of high-skilled workers." (No robotization without representation! — "Luddites weren't wrong about losing their jobs, they were just wrong about the economy losing jobs in aggregate." ~ Dietrich Vollrath)

But can we all be high-skilled workers? Can we all even afford to go to college? And if so, are we all smart enough to attend a school of higher learning? Can we all acquire a Ph.D in some STEM skill? Will only the very highly-skilled workers be able to obtain a job that pays a living wage?

Can we all be an automation engineer? When Human Labor becomes Obsolete: "An automation engineer might be one of the safest jobs of the future — designing software for robots with artificial intelligence and bots — to put everyone else out of work." (Maybe one day the iRobots with replace automation engineers too — building and programming themselves.)

This is what's now happening with lower- and middle-skilled workers: Foxconn, a Taiwanese company operating in China that manufactures electronic devices for American companies (Apple, etc.), is looking to replace its one million workers with robots. Evidently, first Americans were paid too much, now the Chinese are. And eventually, so will those in Cambodia and Vietnam. As of 2013 Nike has 777 factories in 43 countries employing 1,009,496 workers. Just in Vietnam alone Nike has 71 factories.

Other than other Asian countries (such as Vietnam and Cambodia), will the next round of offshoring go to Africa? In his post, What Path for Development in Africa -- and Elsewhere? Tim Taylor writes: "The issue isn't that manufacturing itself is going away, but that industrial robots are reaching the point where setting up a high-tech highly automated manufacturing plant is looking better and better compared to setting up a plant that relies heavily on low-wage human labor ... Many of Africa's workers are ending up in the service sector, like workers in countries all around the world. But at least so far, the services sector has not served as the primary basis for a growth miracle in any country."

Dean Baker: "The data indicate that we are seeing a slowdown in technology replacing labor (which should allow for rising living standards) rather than the speedup in the robot story."

My comment for Dean Baker: We now may have a zero sum situation, where domestic workers (displaced by technology and forced into lower-paying jobs) can no longer afford the goods being produced by the robots. The job creators are putting out more product with less overhead, but their previous employees (now working at places such as McDonald's or Wal-Mart) can no longer afford to buy their widgets. So the job creators are forever looking for more "emerging markets" to sell their products.

First, they enable them as "consumers" with jobs offshored from the US (to give them a paycheck), then they sell their stuff to them. These new consumers, in turn, pay taxes to their government; whereas, our workers (with reduced wages) are paying less than they would have.

Take China for example. Look at their GDP and infrastructure spending compared to ours over the last 30 years. They now have 500 million in their middle-class, and that's expected to rise to 630 million by the year 2022. But if robots come to dominate the low- and middle-skill job market, China will also most likely see a decline in their middle-class as well — the way the U.S. first did. (Maybe the iEverything will one day be made by iRobots in China.)

It was reported by some of the "older" cocktail waitresses at the Golden Nugget that, back in the 1980's, Las Vegas hotel/casino owner Steve Wynn once installed a prototype machine for dispensing drinks in one of the service bars. At the time, it was a total disaster, so the machine was removed and the idea was scrapped. But technology has come a long way since then, and if it were possible and cost-efficient today, there's no doubt that service bartenders would be replaced with machines.

And in the same way IT workers were displaced with H-1B workers and offshoring for lower wages, bartenders would also be looking for new jobs at places like McDonald's and Wal-Mart — until such a time when even those jobs can also be replaced by automation (the same way some cashiers had lost jobs to the self-check-out machines — or the way manufacturing workers lost their jobs to offhoring.)

Where the jobs are.

Dancing with Robots: "Most Americans enjoy the new products and services that are fruits of technological advances. But technological change has also created tremendous dislocations in labor markets, especially the elimination of routine cognitive and routine manual tasks that provided work for generations of high school graduates. These changes will continue in the foreseeable future, increasing the importance of providing all American children and youth with foundational skills needed to prepare for jobs in well-paying expanding occupations. [Such as Ph.Ds in STEM skills?] The extent to which the country makes progress in accomplishing this will determine to a large extent whether the American dream of upward socioeconomic mobility is part of the nation’s future and not just part of its past."

If all the new technology is only economically benefiting those at the very top, and only benefiting those at at bottom as end-users (if they can even afford to buy a iRobot or an iPhone or an iEverything), then a basic income will one day be needed by the masses so that they can sustain themselves. Even if the entire labor force had a Ph.D., there would not be an equal number of jobs that required a Ph.D. — and we'd only end up with a lot of people with Ph.D.s working at McDonald's and Wal-Mart. And even if all those jobs were full-time (with benefits paying a decent middle-class wage), McDonald's and Wal-Mart doesn't need 155 million employees — and we won't need that many iEverythings.

The "job creators" will always do everything possible to eliminate jobs (and/or lower wages), to lower their overhead and fatten their profit margins. Multinational corporations have no duty to domestic workers of any nation, because corporate profits have no ethical, patriotic and moral bounds — or boundaries.

My related post: Robots? Meet the Real Job Killers

Thursday, March 19, 2015

Funky Media Hucksters: How does one "Re-enter" the Work Force?

[* Editors note: This could be considered "Part Two" or an "update" to a previous post I did on this subject.)

Bill Anderson, chief economist of Nevada's Department of Employment says: "We are starting to see more people re-enter the labor force” — and that's the reason why the Las Vegas unemployment rate jumped UP from 7.0 to 7.5 percent.

Nevada Governor Brian Sandoval also said the increase in the unemployment rate was "a reflection of more Nevadans re-entering the workforce and seeking suitable employment" — and that employers are "regaining confidence, and are steadily adding jobs to the economy".

How does one determine that more people "re-entered" the labor market ...

Monday, March 16, 2015

Non-Union and Anti-Union Workers Beware!

* Editor's Note: This is a political commentary that doesn't mention a certain political party by name, because I was accused of being too partisan. So the only time a political party is ever mentioned in this particular post is when it was already quoted previously by a different source. This way, I leave up to you, the reader, to be partisan.

For decades the top 0.01% (and their political allies) have been winning the war on working-class Americans (meaning, about 92.2% of the labor force). One particular political party always wants to cut government agencies and programs that protect workers' health, safety and welfare — such as workers' wages, workers' pensions, workers' voting rights and workers' labor unions (like they do with their so-called "Right to Work" laws).

Tuesday, March 10, 2015

Infrastructure Spending at Historically Lowest Level

Speaking to a packed room at the National Press Club on Monday, Senator Bernie Sanders (I-Vermont) detailed a $1 trillion plan to rebuild the country’s crumbling infrastructure, and in the process, create 13 million good-paying jobs. [VIDEO]

Larry Summers at the Wall Street Journal: Spending on Our Crumbling Infrastructure (March 10, 2015)

Larry Summers recently said something startling: “At this moment the share of public investment in GDP, adjusting for depreciation, so that’s net share, is zero. Zero. We’re not net investing at all, nor is Western Europe,” he told a Princeton University audience ... Net federal public investment spending, both defense and non-defense, in 2013 (the latest year for which data are available) works out to zero as a percentage of gross domestic product, according to the Bureau of Economic Analysis’s National Income and Product Accounts tables. Non-defense investment spending, which was nearly 1% of GDP in the mid-1960s–and hasn’t come close to that since–was about $9.8 billion in 2013, or a paltry 0.06% of GDP.

Mr. Summers wasn’t exaggerating.

Monday, March 9, 2015

Forced Out of the Labor Market

The highest-paid talking heads on the big cable news channels have been misreporting to millions of gainfully employed Americans that the labor force participation rate has been declining because: “People are leaving the labor force because they think they can’t find a job.”

Not true at all. This is a myth that needs to be debunked.

New Poll Confirms: Fox News Sucks

USA Today (March 9, 2015)

20% said they trusted Fox 'a great deal' while 35% said "somewhat."

Sunday, March 8, 2015

Excess Profits Funneled to CEO Pay Packages

Corporate earnings, in many cases, are taxed lower than executive pay packages — which are also tax deductible as "employee wages". It's a win-win situation for the CEOs and other boardroom members, because they get paid with stock-options, which are taxed as "capital gains" — which is much lower than the top marginal rate for regular hourly wages and salaries.