WSJ says pay inequality is bankrupting the system

[cal04]

by Jerome a Paris
http://www.dailykos.com/story/2009/7/21/755822/-WSJ-says-pay-inequality-is-bankrupting-the-system

Pay of Top Earners Erodes Social Security

Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data -- without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries.

The pay of employees who receive more than the Social Security wage base -- now $106,800 -- increased by 78%, or nearly $1 trillion, over the past decade, exceeding the 61% increase for other workers, according to the analysis. In the five years ending in 2007, earnings for American workers rose 24%, half the 48% gain for the top-paid. The result: The top-paid represent 33% of the total, up from 28% in 2002.(...)

Social Security Administration actuaries estimate removing the earnings ceiling could eliminate the trust fund's deficit altogether for the next 75 years, or nearly eliminate it if credit toward benefits was provided for the additional taxable earnings.

There is a specific US issue here that Social Security contributions are subject to a cap (a profoundly regressive rule), but you can find similar mechanisms in each country (in France, you have the bouclier fiscal, which caps the marginal tax rate and has the same effect) and the conclusion is that major chunks of public deficits - and of future social benefits "holes" - that we are fearmongered into worrying about could be completely eliminated by taking care of such incredibly unfair loophooles that favor the rich.

And it needs to be underlined that increasing inequality, and massively boosted incomes at the top mean that an ever larger chunk of incomes and GDP escape taxation (or social contributions), thus worsening the deficits of governments, pensions and healthcare systems.

Thankfully, that also points to an easy solution to all of these "problems": as they were created by lower taxes on the rich, they can be solved by higher taxes on the rich.

link
Pay of Top Earners Erodes Social Security
http://online.wsj.com/article/SB124813343694466841.html

[tabatha]

1. Inequality is what killed South Africa.

[gratuitous]

2. Those fucking socialists at the Wall Street Journal

Somebody had to say it.

[Mythsaje]

3. When the WSJ starts saying stuff like this

its time the Repugs started paying attention.

[hfojvt]

11. see below, it was DKos saying much of it

Of course, I couldn't see what the WSJ said since I don't subscribe to them. The link to WSJ only had a preview of the article. But the DKos diary does not put those remarks in quotes.

[ljm2002]

4. It is really astonishing to see this at the WSJ...

...how cool. Maybe now this issue will start to get some traction?

Ah, well, you know the saying: Hope springs eternal... :-)

[sutz12]

5. Wow....pretty liberal for the WSJ

:spray:

[sinkingfeeling]

7. Ditto!

[hfojvt]

9. except the 2nd half of the OP comes from DKos

I didn't think it would be printed in the WSJ.

[DJ13]

6. exceeding the 61% increase for other workers

Everyone who is now making 61% more in the same job as they were 10 years ago raise your hand......

[hfojvt]

12. well I am making 88% more as a part-time janitor

Not from the same employer though. I made $7.15 an hour in 1998 and make abou $13.47 in 2009. Plus benefits now that I didn't have then. On the other hand, my wages in the seven years I have worked the exact same job have only gone up by 26% in the seven years. I wonder if they include 'total compensation' in their figures. Thus, the rest of my wage increase would be in the form of ever increasing health insurance costs. Surprisingly, those only went up by 4% this year from $1030.03 per month to $1072.19. Although for some reason the part that I have to pay went up by 9.7% from 257.72 per month to $282.83 per month. Boy, something is rotten there. Of the $42 a month in premium increase 60% of it got passed to me.

[sutz12]

15. You're assuming we have a job or something.

:shrug:

[redqueen]

8. Wow, can't get anything past the WSJ!

Well, not after the first 28 years or so, at least!

[BlueIris]

10. Another one for the 'No Shit' files.

But good for the WSJ for owning up to it.

[Deja Q]

13. The same one that has articles intimidating American workers by saying "because Indians and Chinese

are happy to take those jobs"?

Of course, the article only reflects the writer and not necessarily the WSJ either.

I read the article half a year or more ago at the doctor's office. Next time I'll take down proper bibliographical notes.

[Orsino]

14. It's a march toward feudalism, certainly...

...a trend the WSJ has generally applauded.

[endarkenment]

16. SS runs a surplus and pays a capped benefit.

There is no reason to increase the funds going into SS at all. Increasing the SS revenue will simply allow more SS money to be used to hide annual deficits.

When the WSJ writes about SS, assume they are at a minimum being less than honest.

[Wednesdays]

17. K&R

:kick:

[applegrove]

18. Middle class people who live in inequal countries have to hire guards and

build huge fences around their property to stop violence and kidnappings. What is the GOP position on fences and private security? How about corrupt law enforcement cause that comes with inequality too.

What set the USA and Canada apart from the rest of the world was that we had systems of laws and honest policemen who protected property and enforced laws. Once you have inequality the people on the lower half of the scale don't make enough money to avoid taking bribes and that is how it all degenerates. Records mean shit at that point too because you do not fund government enough to protect the record keepers. Then it is mayhem. Inequality never worked in Latin America and it will not work in the USA. Oh a few people will get really rich. But that is all. And that is pretty much what it is all about in the GOP today. Though most people who vote for the GOP don't know that that is what they are voting for.