The Future of Social Security

If you don’t know how OASI works, please read my first article in this series, How Social Security Works.

It should be common knowledge by now that Social Security has a massive surplus. This money is borrowed by the government as one of the largest parts of our government debt, accounting for over $2 trillion and is paid an interest rate which is about the same as inflation.

This happens because the Federal Government has received more money than it has paid out to retirees over the last 40 years due to the technology revolution we are in.

This is not going to last. Social Security will soon get as much from tax revenue as it pays out to retirees due to being an aging country, and it will never run a surplus again. The surplus in 2020 was only $2 billion, or $6 per person.

The Social Security Trust Fund is going to be fully depleted by 2037 unless we make some really drastic changes.

I don’t plan on retiring (unless if I get very lucky) until 2057.

As you see, this is a problem.

There are realistically 7 ways we can solve this problem, and I am going to go through the pros and cons of each.

Raise taxes

The easiest way to solve this problem without changing the way Social Security works is to raise taxes.

We can remove the cap on Social Security Wages, but this will be impossible to do politically because only 15% of the taxes you pay on income above $75,000 annual income counts for benefits. It also won’t solve the problem. Have fun.

We can increase taxes on the middle class. The problem is that someone who makes $50,000 per year is already paying an effective tax rate of 12.8% for retirement benefits which only add up to 25% of their salary, which is not enough to live on.  Increasing taxes on the median household, without increasing their benefits, for a program which already doesn’t pay enough for them to survive in retirement to a level which will save our current system is political Kryptonite.

Have fun.

Adjust spending

We can move Federal Spending from other places!

You can try to convince Republicans to switch money from the Department of Defense to pay for OASI. Have fun.

Or we can move money from Medicare/Medicaid and education assistance to pay for a program which only pays for 1/4 of people’s pre-retirement income.

Have fun with that.

Issue more bonds

Since the United States has its own currency we can just issue more Federal Debt to cover the Social Security system. This could have major impacts on the value of the United States Dollar given the scope of the problem. It’s not a wise solution.

The other option would mean higher taxes for Millennials when we are older, defeating the purpose. Paying higher taxes in the future to cover a program which is designed for our retirement but doesn’t pay enough to cover basic living expenses.

Have fun with that.

Reduce benefits

We can gradually reduce benefits on retirees until benefits are almost nothing. This will be the biggest fuck you to Millennials imaginable. Any politician who makes a real attempt to do this to a point where it will actually help will be voted out by my generation for ruining our future.

This is not possible to do.

Superannuation

We can allow people to get out of the system and give people the option to do a system like Australia or Singapore. Australians are the richest people in the world with their current system. This will mean that Millennials will get something for retirement, and not have to pay tax rates of 15% or 20% of our income (which will cut into our ability to save for retirement) to only get a retirement income which will be barely enough to pay our property tax or rent without covering our food. It will also mean fewer of us will need forms of welfare in retirement, saving a significant amount of money for state governments.

This could actually work.

Republicans sometimes talk about this solution, and have done it for decades. But even though they had opportunities to do this from 2003-2007 and from 2017-2019 they have never proposed a serious solution to it, instead giving massive tax breaks to millionaires as a precursor to defund investments in the United States. They have never been serious about this solution.

Foreign Workers

Have fun convincing Republicans to have hordes of foreign workers coming into the United States to save welfare.

As soon as Republicans get power again, this program will end, meaning it won’t save the current system.

Invest the Social Security Trust Fund

We can invest the Social Security Trust Fund into municipal bonds and the stock market so it can grow. This will at least postpone the point where we have to make more decisions in order to allow millennials to retire comfortably.

If we did this 30 years ago, this post would never have been written, and we could cancel the payroll tax today and pay out the beneficiaries for today’s seniors without ever touching the general fund.

Unfortunately neither party is serious about actually protecting the retirement of Americans given their actions. If your employer doesn’t offer a 401k you are more or less on your own. You can choose to do a tax deferred IRA, which is a lot better than nothing, but will force you to work until you are 65 unless you make enough money to have another fund on top of that to save for early retirement or work in one of a few professions like fire fighters who can retire at 55.

It still doesn’t address the issue of how OASI only pays for 25% of pre-retirement income however, and just maintains the current system where many Social Security retirees need  welfare in order to survive.

 

Millennials like myself need to know that when we turn 65 we will be able to retire comfortably.

The longer we wait to solve this problem, the more expensive it will be.

We need a solution.

We need it soon.

Vote for Joe

I cast my primary vote for Elizabeth Warren because I believe she had the best combination of strategy and progressive ideals, significantly more than any other candidate in the race. I voted for her despite her not really having a chance of winning because I wanted her to have as much influence at forming the platform as possible.

Because I believe in progressive ideals I am going to vote for Joe Biden. He probably would have been the  third or fourth candidate if I had been able to rank the primary, but we are looking at a situation where over 200,000 Americans have died from an epidemic we could have prevented, Trump coddles dictators, insults liberal leaders around the world, empowers domestic terrorists who threaten our civil servants, and he almost took healthcare away from millions of Americans. He has quite literally been endorsed by the Taliban.

I am going to vote for as many progressives on the ballot as I can, and I am going to vote for the man who is endorsed by Noam Chomsky, Julia Gillard, Barack Obama, Bernie Sanders, Elizabeth Warren, and practically every non-fascist organization and public figure in the United States and the world.

I am going to vote for the man who has fought for mass transit for half a century, authored the Violence Against Women’s Act, and against all odds as Vice President passed the largest health care reform in the history of the United States.

I am going to vote for Joe Biden, and I hope you will as well.

Rule of Man

This is a short post because this is an extremely simply issue.

We have finally received extremely rudimentary details on Trump’s taxes from a leak given to the New York Times. They have not released or leaked the full tax returns yet.

The tax returns claim that Trump gave his daughter Ivanka over $700,000 in consulting “fees”. These fees should have been taxed as income when she received them if she received them as a sole proprietor, or they should have been taxed under Federal Corporation Tax if she received them under a corporation of any type.

A former Federal Prosecutor has claimed that this leak has enough details to give probable cause of a gross crime being committed, and if Trump has indeed committed a gross crime, that is an impeachable offense under the Constitution of the United States.

Senators Murray and Cantwell, Representative Denny Heck, Speaker Pelosi, you are my representatives in the United States Congress and the third person in to the Presidency. It is your constitutional duty to create a Congressional tribunal to get Trump’s taxes since he probably committed a gross crime, and if he has indeed committed a gross crime, it is your Constitutional duty to start a Congressional hearing into the taxes of Donald J. Trump and if he has indeed broken United States law, you have no choice but to impeach him.

If you do not, than we no longer have rule of law.

It’s just that simple.

May Justice Live Forever

The death of Ruth Bader Ginsburg yesterday is an event which will significantly impact the future of American politics for the rest of our history.  The Roberts Court has seen multiple 5-4 decisions which have been extremely decisive for the future of our country. The timing of this vacancy just before an election which will certainly be historic as well as extremely significant, and there is precedence of courts interfering with elections with Bush v. Gore and numerous cases about voter discrimination over the last 10 years such as Shelby County v. Holder which required the revision of states which required preclearance under the Voting Rights Act.

Composition of the Supreme Court

There are currently 3 remaining liberal justices and 5 conservative justices on the Supreme Court. John Roberts has become the decisive swing vote after Anthony Kennedy’s resignation two years ago, and Kavanaugh and Gorsuch have been more moderate than I expected, but they are definitely on the conservative side of the court. Fivethirtyeight has good research on this issue.

A majority of justices on the Supreme Court have been appointed by Republicans since 1969 when Richard Nixon appointed Warren Burger and Harry Blackmun. This chart makes it very clear why we have so many 5-4 decisions right now in the Supreme Court, and how close we came to having a majority of Supreme Court justices being appointed by Democrats in 2016, the first time that could have happened without expanding the court since 1968.

Issues I anticipate will get attention

The Supreme Court will have cases on a very wide variety of issues over the next decade, just like every other decade in American history. Particularly I am concerned about their current desire to stop abortion, the possibility they will bring gay marriage back up, and the absolute guarantee that they will rule that the Affordable Care Act does not follow the commerce clause and is unconstitutional. They will invalidate voting rights laws, and defend gerrymandering. This will solidify Republican power and they will defend it.

This is a guarantee given the results of Rucho v. Common Cause.

They are not going to be moderate, and they are not going to play nice like Nancy Pelosi.

The 2 Rules of Republican Party Politics

The Republicans are not being contradictory in appointing another Supreme Court justice, but if you think it is contradictory that is because you are looking at it from a justice lens, as most Democrats have a destructive habit of doing. We expect everybody looks through the world with our own philosophy, which is damaging to society. The Republicans did not appoint Merrick Garland because it would have set them back decades in their crusade against voting rights, women’s rights, and concentrating power further in the hands of the (on average) old white men who bankroll their party. We see this with decisions to limit access to voting, but only in majority minority precincts, their crusade against birth control which is part of their very obvious quest to turn America into a plutocratic theocracy, and their adherence to Objectivism as proposed by Ayn Rand. The Republican mindset follows two rules:

  1. Might makes right.
  2. If people are not doing well, than that is a moral failure and it is their own fault.

That’s really all there is to it. You can fit every Republican policy into one of these two axioms.

The Republicans have complete power today. They control the Senate and the Presidency. They have the power to appoint a Supreme Court Justice, and because they believe might makes right, they are going to use it and we will have 6 Republican appointed justices on the Supreme Court.

Options going forward

I am expecting that we will live in a Republican dominated Supreme Court for a while. I highly doubt the Democrats are actually going to pack the Supreme Court. The Supreme Court has been stable at 9 justices since 1940, and even though the stakes of the Court were particularly high in 2010 following Citizens United v. FEC Democratic Party leadership under President Obama, Chairman Kaine, and Speaker Pelosi was absolutely unwilling to modify the filibuster to pass the public option.

The Democrats have sat by and watched as States have passed many illegal voter discrimination laws, choosing not to bring them to court when there was a chance that they could have been overturned by the Supreme Court. This cost them the 2016 election. Since RBG died yesterday, it has also cost them the Supreme Court for the foreseeable future.

This is the party which stood by as a majority of state legislatures were gerrymandered, as a majority of states passed restrictive illegal voting laws, as they gave employers the ability to enforce their own religious beliefs on their employee’s health options, and now are committing crimes against humanity in our immigration prisons as a gift from mainstream respectable “play nice” Democrats.

A LOT of people are now saying that the Democrats are going to do an about face and increase the Supreme Court to 10 or 11 seats when Joe Biden becomes President and get the first liberal majority in 52 years.

It is not impossible, but given the level of voter disenfranchisement in our country today, I think it is extremely unlikely that the Democrats will change their losing strategy of the last 50 years.

There are now two probable options for the election this November:

  1. Donald Trump wins the Electoral College like he did in 2016.
  2. There is a long drawn out series of court battles if Joe Biden wins.

Those are our options.

This is why I voted for Elizabeth Warren in the primary. I believe her pragmatic progressivism would have brought states to court for violating Federal law, and led us towards an America where we could see real progress.

Instead we will have Joe Biden who was Vice President during the 6 years where Democrats controlled the Department of Justice and chose not to bring states to court as they violated Federal law in passing voter discrimination laws.

I am still voting for Joe Biden, and you should too. I would rather have a strategy free spineless wimp who wants everyone to play nice than someone who aspires to be a dictator. I highly HIGHLY doubt that he is going to do his Constitutional duty and uphold the Constitution of the United States by bringing states to court under the precedence of McCulloch v. Maryland, because that is what he did as Vice President.

Our only realistic option is to keep the Presidency for the next twenty years until both Clarence Thomas and Samuel Alito have passed away, and then we can have a 5-4 court.

I want to be wrong.

But I wasn’t wrong about global warming.

I wasn’t wrong about carbon taxes.

I wasn’t wrong that the probability of one liberal justice would die before 2021.

I wasn’t wrong that Trump would play dirty.

I was not wrong that #jillnothill gave the Republicans 6 seats on the Supreme Court.

I want to be wrong.

Joe Biden, please break your precedent and prove me wrong.

Democratic vs Republican Trifectas

Does your vote matter? Aren’t the parties the same? Does Democracy work?

Let’s investigate this.

I’m going to start the clock in 1933. There are a few reasons for this. The biggest reason is that President Franklin Delano Roosevelt pushed the Democratic Party towards its modern platform significantly. It would take another 62 years for the party factions to really be finalized for reasons we will get to.

First Democratic Trifecta under Roosevelt, 1933-1947 (1-14)

  • New Deal
  • Social Security
  • Justices who would decide Brown v. Board of Education were nominated in this time period.

Second Democratic Trifecta under Truman, 1949-1953 (15-18)

  • Marshall Plan
  • Korean War
  • Racial integration of military and federal agencies
  • 2 Justices who would late decide Brown v. Board

First Republican Trifecta under Eisenhower, 1953-1955 (1-2)

  • Nuclear proliferation
  • Interstate Highways
  • McCarthyism
  • Earl Warren who presided over Brown v. Board of Education

Third Democratic Trifecta under Kennedy and Johnson, 1961-1969 (19-26)

  • Civil Rights Act of 1964
  • Voting Rights Act
  • Civil Rights Act of 1968

Fourth Democratic Trifecta under Carter, 1977-1981 (27-31)

  • Camp David Accords
  • Panama Canal Treaties
  • Continued Stagflation

Fifth Democratic Trifecta under Clinton, 1993-1995 (32-33)

  • Motor Voter
  • Don’t Ask Don’t Tell (improvement over what came before)
  • Brady Handgun Violence
  • NAFTA
  • Violence Against Women Act
  • Federal Assault Weapons Ban

Second Republican Trifecta under Bush, 2003-2007 (3-6)

  • Iraq War
  • Partial birth abortion ban
  • Laci and Conner’s Law
  • Central American Free Trade Agreement
  • PATRIOT ACT Improvement and Reauthorization Act
  • Tax cuts

Sixth Democratic Trifecta under Obama, 2009-2011 (34-35)

  • Affordable Care Act
  • Lilly Ledbetter Fair Pay Act
  • Dodd-Frank
  • Don’t Ask, Don’t Tell repeal
  • Increase Pell Grant
  • Students borrow directly from the government
  • Easier access to student loans

Third Republican Trifecta, 2017-2019 (7-8)

  • Tax reform

When we look at the history of the 9 trifectas we can see that when Democrats tend to pass laws which target access to health care, reducing inequality, and fighting racism when they have trifectas. Republicans have only had a couple, where they tend to increase militarization, start wars, and cut taxes for the wealthy.

I believe these are all major issues.

History teaches us there is a very big difference between the parties.

Remember to vote in November.

The Mercantilist Consensus

I watched Joe Biden’s speech to his nomination to be the Democratic Candidate when it was done, and the first thing I thought was how similar he was to Trump and Sanders in one aspect, which is his views on foreign trade. He made a brief comment on how he would work to save American jobs by hiring American companies only.

This is a sign of a policy which has almost uniquely dominated American international foreign relations since independence, which is that of Mercantilism.

Mercantilism is a theory of economic thought which rests on a few major assumptions:

  • The world economy is a zero sum game.
  • In order to grow our economy we need to aim to increase exports and reduce imports.
  • Maintaining a positive trade balance is important.
  • Imports of goods is a threat to national security.

There are many, many problems with these 4 main assumptions of Mercantilism, and they do not hold up under strict scrutiny when studied by economists. There is almost near unanimous agreement among economists after centuries of research that tariffs are not worth it, and the benefits of trade far exceed the costs. There is near universal understanding of this among people who study economists as show in this Forbes article.

A few things to understand… every country has tariffs. The question here becomes the level of  tariffs each country has in reality. The World Trade Organization

The second important thing to understand with tariffs is how they impact economic growth and inequality. The Congressional Budget Office estimates that the tariffs in the 2018 tax bill Trump signed reduced American GDP in 2020 by 0.3 percent. This of course is significantly increased by coronavirus, but the impact of tariffs on economic growth is very real.

This is significant in particular when compared with changes in income taxes, particularly for high income earners, which have small or negative impacts, in other words, insignificant overall.

Also, there are many articles which will try to convince you that either American consumers will pay the tariff, or that foreign countries will pay the tariff, the reality of course, as know from our tax wedge is that both American consumers and foreign producers will pay the tariff, how much depends of course on the elasticities of the supply and demand of the good being taxed.

Supply and Demand

I am clearly going to get a lot of use out of that image I made earlier this month.

In short, most things people think they know about tariffs are indeed wrong.

 

The End of Tourism

How We Got Here

In 1930 Mohammed bin Awad bin Laden formed the Saudi Binladin Group. He quickly grew to one of the most powerful people in the country with close ties to the Saudi government. The Saudi Government is led by a government following the philosophies of Wahabbism.

In 1942 the United States government seized the assets of Prescott Sheldon Bush under the terms of the Trading with the Enemy Act. Mr. Bush was trading with the Nazi government and his family was under pressure by two former slaves from Auschwitz for damages in 2004. He never served a single day in prison for profiting from his trade with the Nazis.

In 1952 Prescott Bush was elected to be the Senator of Connecticut as a member of the Republican Party.

In 1967 his son, George H.W. Bush was elected to the US House of Representatives from Texas’s 7th district.

In 1971 George H.W. Bush became the United States Ambassador to the United Nations.

On 20 January 1981 George H.W. Bush became the Vice President of the United States. As Vice President and President the Reagan/Bush administration supported far right militias such as the Islamic Unity of Afghanistan Mujahideen (a paramilitary group) and Contras in Nicaragua against communists. One member of the Mujahideen was al Qaeda, led by the Saudi Osama bin Laden.

On 17 January 1995 George W. Bush became the Governor of Texas.

On 20 January 2001 George W. Bush became the President of the United States.

On 11 September 2001 al Qaeda bombed the World Trade Center, Pentagon, and attempted to bomb the United States Capital.

On 21 August 2004 the National Commission on Terrorist Attacks Upon the United States released its recommendations in response to the September 11th Attacks. This included recommendations for travel visas for foreign nationals from every country except Canada, Palau, Micronesia, and the Marshall Islands in what has become known as the Electronic System for Travel Authorization (Chapter 12), and one thing which was missing were any significant reactions to the Saudi Government’s continual funding of terrorist activities by an ongoing refusal to prosecute their citizens who fund terrorism abroad. Their refusal to enforce their laws about financing terrorism is hard to distinguish from being a State Sponsor of Terrorism when measured by impact.

Now, I don’t know about you, but if you punish Peter because Paul committed a crime, with my degree in political science I call this a GROSS MISCARRIAGE OF JUSTICE. That is exactly what the ESTA is in my opinion. Member States of the European Union have all proven time and time again that they are willing to prosecute violent extremists of every ideology. They have strong social safety nets, excellent education systems, and there has never once been an attack on American soil by a citizen of a member state of the European Union. Perhaps the most egregious section of this document is this claim:

Since the international struggle against Islamist terrorism is not internal, those provisions do not formally apply,but they are commonly accepted as basic standards for humane treatment.

The 9/11 Commission report is poorly researched and doesn’t serve the purpose of reducing terrorism around the world. It fully served as an agenda to validate the far right values of the Bush Family which they have held since at least the 1930s.

In short, if the goal of the ESTA is to prevent terrorist attacks, the 9/11 Commission Report does not provide any evidence about how German tourists are at all connected with the additional requirements they have put on these tourists.

The ESTA was implemented on January 12, 2009, 8 days until George W. Bush left office.

New Travel Visas between Free Countries are Bigger than America

Several other countries have built their own security apparatuses. Australia was the first to implement such a system in 1996. Canada announced their intention to build a similar system on 10 November 2016 under extreme pressure from the government of the United States. New Zealand has implemented a similar policy last year, which is expected to have a negative impact on their economy. The European Union implemented a similar system in 2018. Japan is starting a rollout of a similar system, I expect it will be expanded to include all countries in the near future. South Korea is also planning the implementation of their own ETA in 2021.

The only countries which are wealthy (at least $20,000 GDP per capita) and have a high level of press freedom (Press Freedom Index under 40) and a low corruption score (Corruption Perceptions Index above 60) which have true visa free travel today and plan on keeping it are Ireland, Israel, Taiwan, and the United Kingdom.

The reason for this in most cases is the election of right wing governments. With the exception of Australia, Canada, and New Zealand, all of the other countries which have rolled out these policies have done so after their right wing parties have gained power.

Here is a map of countries which are rated as low corruption and high incomes (including all European Union member states):

If we shade the countries which have true visa free travel, thee are only 4 countries in the world today which fit this description.

So what’s the point

According to the CBC,

It’s supposed to help catch people who might pose a security risk or who might stay in Canada longer than is legal, since these travellers don’t go through the formal vetting process required by those who need to get a visa.

This is pretty much the same reason in every country (with the exception in the Canadian case where the main reason was American bullying). In reality, I cannot find a single case where somebody from one of these free and developed countries has committed a serious crime in one of the other countries implementing these schemes. The reality is that most terrorist attacks (which the 9/11 commission report is claiming these will protect us from) are committed by people close to where they live, and hold citizenship in the country they commit the attack in.

If we are trying to stop terrorist attacks, which are mostly done by people close to where they live, implementing visas on our allies will not make us safer.

The governments of the world which have implemented these visas over the last 30 years need to do a thorough study into the impact of such policies. If they cannot prove that these visas are increasing safety, the policies need to be scrapped because they are expensive, ineffective, and bad for the world.

More on Open Border policies around the world, Part Two

The Trump administration is currently building a border fence in Whatcom County, Washington where I lived for most of the last decade.

In order to put this in perspective, first let’s look at a few indicators. I am using a few of my favorites, the Democracy Index from the Economist Intelligence Unit, Press Freedom Index by Reporters Without Borders, and the Corruption Perceptions Index by Transparency International.

Press Freedom Index
Corruption Perceptions Index

This makes it pretty clear that there are several areas which do very well in terms of average freedom, and these also tend to correlate with each other.

Here is a current map of countries in the world which have open border treaties:

Current open borders
Open borders

If we were to filter out only the freest countries in the world, so those that are in the top thirtieth percentile for press freedom and corruption which have a closed border we find only one  border which isn’t open, and that is the border between the United States and Canada. Out of 23 such borders in the world which qualify.

I created a viability index, which multiplies corruption, ease of doing business, press freedom, and homicide rates together in order to get a rough metric to understand the country pairs which are the most likely to have an open border. The United States/Canada border scored as the 4th most likely in the world out of closed borders to adopt an open border.  Our score was hurt most by the homicide rate in the United States. The three pairs ahead of us are Croatia and Slovenia, Ghana and Burkina Faso, and Bulgaria and Greece. Two of these pairs are  going to be open through the Schengen Area in the near future. Ghana and Burkina Faso have significantly worse corruption than the other pairs in the list.

Using a Support Vector Machine using cross validation, I can predict whether a border is open or closed with 77.5% accuracy.

One question with extremely important consequences for everyone in both the United States and Canada is which direction this goes. It is pretty obvious that most of the countries which have opened their borders with their neighbors were already very developed before they opened them, which means the correlation almost always points from higher political development in neighboring countries leads to open borders.

In order to test this, we can look at the cases of open border areas in the order of age:

  • The oldest open border in the world is the Common Travel Area between the United Kingdom and the Republic of Ireland. It was formed as part of a compromise because of the tensions caused by the division of Ireland.
  • Treaty of Friendship between India and Bhutan in 1949.
  • Treaty of Peace and Friendship between India and Nepal in 1950.
  • Nordic Passport Union was signed in 1952.
  • The Gulf Cooperation Council in 1981 between Saudi Arabia, Oman, the United Arab Emirates, Kuwait, and Bahrain. Qatar used to be a member.
  • Schengen Agreement in Europe in 1995.
  • Union State between Russia and Belarus in 1996.
  • East African Community in 2000
  • Central America in 2006
  • Andean Community in 2007
  • CARICOM in 2009

Of these oldest open border schemes, we have most which preserved pre-existing open borders between these countries which shared a colonial and cultural past, and the Schengen Area which is in the region of the world with the most highly developed countries which border each other as a cluster. There are no other open land borders in the world.

So, what is really important to understand about this, is that on a global scale, the United States/Canada border is an outlier. The following graphs should make this very clear (blue means open border, red means controlled border):

GDP per capita vs. Corruption Perceptions Index
GDP per capita vs Democracy Score (Economist Intelligence Unit)
Better vs. worse Press Freedom Index between two bordering countries
Press Freedom Index vs GDP per capita
Lower Press Freedom score vs Lower GDP per capita among bordering countries
Lower Corruption vs Lower GDP per capita among bordering countries
Higher homicide rate vs Lower GDP per capita among bordering countries

What is so striking about these graphs is I don’t need to point out which pair is the United States and Canada.

In the graphs which look at the relationship between press freedom, corruption, and democratization between neighboring countries, there is always one red dot which stands out. That is the United States and Canada. By any metric, the United States and Canada are unique in the world in how we do not have an open border given the political economic realities of our countries.

This heavily implies that building a fence between our fences makes absolutely no sense since there is no other border in the world like ours which is not a free flowing border.

How Social Security Works

Social Security Old Age and Survivors Insurance is a program which every American who makes wages pays into every year of their life. Social Security takes 12.4% out of every paycheck in the country, for the pinky promise that you will receive some benefits when you retire.

There are a lot of myths on how Social Security, works, so let’s break down the biggest myths one by one.

Your employer does not pay half

Many financial advisors will tell you your employer pays half. This is not true because math. When studying tax policy, one of the first things you will learn is how a tax wedge works.

Supply and Demand

This graph shows what happens with any tax, not just Social Security.

  • P stands for Price
    • PS is the price the Supplier will pay
    • PC is the price the Consumer will pay
    • PE is the price there would have been if no tax had been levied.
  • Q stands for Quantity
    • QE is the quantity which would have been traded if no tax had been levied.
    • QT is the quantity which was sold because of the tax
  • T stands for Tax
    • TS is the tax paid by the supplier
    • TC is the tax paid by the consumer
  • DWL stands for deadweight loss, which is the lost economic welfare due to the tax.

From this we can learn several important lessons:

  1. The tax paid by the supplier and the tax paid by the consumer will never be the same.
  2. Every tax will reduce the quantity demanded of the good or service being taxed.
  3. Both supplier and consumer is in effect paying the tax, no matter who writes the check to the government.

In the case of labor, the worker is the supplier and the employer is the consumer. An easy way to remember this is that in any transaction the supplier will be paid, and the consumer will pay.

Calculus teaches us that when we have a function with a limit which approaches a value it will never actually hit that value, just like that mythical supply and demand graph where their slopes are the inverse of each other.

This is why the claim that employers pay half of Social Security taxes is a complete lie and because of Calculus it literally never happens.

My taxes do not go to my benefits

Your taxes do not go directly to your benefits. The system is somewhat byzantine, and the easiest way to explain it is to explain how an IRA works as a baseline, because it is a much simpler system.

In an IRA, you invest money into an investment plan. This will most likely be a mixture of stocks and bonds, which will likely grow because of interest until you retire. That money is legally yours, and when you retire you will withdraw an amount which will ideally not touch the principal, leaving inheritance for your children. IRAs are generally tax deferred, which means you can earn interest on money which otherwise would have been taxed, but the tradeoff is that when you withdraw the entire amount is taxed with special rules. But, the most important thing to understand is that every dollar you put into your IRA counts. Any money left over will be distributed according to your will, or if you don’t have a will by your State’s inheritance laws, which is generally your spouse and then your children.

Social Security is a much more complicated system. It is fully explained in this government document.

  1. Calculate the number of computation years.
    1. Generally 35. Can be changed by Congress.
  2. Wage Indexing of Earnings
    1. Basically calculates the inflation of the average annual wage from the year that person worked versus the index year which is two years before today’s date.
    2. Multiply that number by that person’s wages of each year, unless if they made more than the maximum creditable, in which case you multiply by that number which changes annually.
  3. Computing the Average Indexed Monthly Earnings
    1. The highest 35 years of indexed earnings are used to calculate your benefit. This is divided by 420 months.
  4. Computing the Primary Insurance Amount
    1. for the first $700 of AIME (in 2019) multiply by 0.9
    2. Multiply all money made between $700 and $1500 AIME by 0.32
    3. Multiply all money made between $1500 and $6000 by 0.15
    4. These bend points only apply to people born in 1957. For everyone else, their bend points are different.
  5. Computation of Monthly Benefit
    1. Add up the three values calculated in step 4.
  6. Early or Delayed Retirement Benefit changes
    1. Multiply the number calculated by Step 5 by the number required for early or delayed retirement.

Congratulations, you now know how to calculate your OASI Benefit! (assuming you don’t have spousal benefits as well)

By this calculation, here are some examples, for people who retired on their 62nd birthday in 2019:

  • $25000 per year:
    • $727 per month
    • 34% of salary
  • $50,000 per year
    • $1051 per month
    • 25% of salary
  • $100,000 per year
    • $1699 per month
    • 20% of salary

Source: Benefit Calculator
It can be very confusing for those who are new to it. All of these seemingly arbitrary numbers can also be changed by Congress at any time, in any direction, for any reason.

My taxes go to my grandparents

Your taxes do not go into some fund to save for your retirement. That’s how an IRA works. Your taxes go to pay for this year’s retirement and any money left over then is borrowed by the Federal government to pay for other programs. Nothing is actually saved for you. That’s how it works in Singapore and Australia.

The purpose of publishing this now is so people will understand how Social Security works since Donald Trump is talking about it in the news a lot right now.

 

Also, you still have to pay your Social Security taxes in April.

2021 Vice President

Joe Biden has said he has already picked a Vice President and that she is a woman. We don’t know who she is yet, but if we look at the history of Democratic Vice Presidents, we should be able to see a pattern of who successful Vice Presidential picks have been. I’m starting the clock in 1932, as the beginning of the Modern Democratic Party. This page from Wikipedia includes all the information we need.

Franklin Delano Roosevelt

Franklin Delano Roosevelt was the sitting governor of New York. He had 3 vice presidents during his time in office. His first one was John Nance Garner from Texas, who helped him carry the South. His second was Henry A. Wallace who was from Iowa, and his third was Harry S Truman from Missouri. All three offset his New York background with more conservative less rural backgrounds then he had.

Harry S Truman

President Harry Truman

Harry S Truman was from Missouri, first a local judge, then a US Senator, and then the Vice President. He selected Alben W. Barkley as his vice president who was from neighboring Kentucky.

Adlai Stevenson

Adlai Stevenson was from Illinois, and  both of his Vice Presidential picks were from the South. Eisenhower was a very powerful candidate given his strong middle of the road track record and military service.

John F. Kennedy

Kennedy followed the same strategy as FDR, being a liberal New England Democrat from Boston, Massachusetts, he selected Lyndon B. Johnson who was a powerful liberal Southern Senator from Texas. Even though he was from Texas, Johnson was quite liberal and he was of course very successful.

Lyndon Baines Johnson

Johnson followed the same strategy again, selecting Hubert Humphrey of Minnesota as his vice Presidential candidate in 1964. Humphrey complimented Johnson’s liberal views, and got a good geographic spread to his ticket.

Hubert Humphrey

Humphrey selected Edmund Muskie of Maine. This was the first all northern ticket of the modern Democratic Party. They were absolutely creamed in the election.

George McGovern

George McGovern of South Dakota ran with Sargent Shriver of Maryland in 1972. They received a total of 17 votes in the Electoral College.

Jimmy Carter

After two tickets with essentially all northern tickets, Governor Jimmy Carter of Georgia ran with Walter Mondale of Minnesota twice. He won the first election, but lost the second time against Reagan who had a ticket with George HW Bush of Texas.

Walter Mondale

https://upload.wikimedia.org/wikipedia/commons/6/6c/Vice_President_Mondale_1977_closeup.jpg

Former Vice President Walter Mondale of Minnesota ran another all northern ticket, with Geraldine Ferraro from New York. They got a total of 13 electoral college votes.

Michael Dukakis

https://upload.wikimedia.org/wikipedia/commons/b/bb/Governor_Dukakis_speaks_at_the_1976_Democratic_National_Convention_%28cropped%29.jpg
Michael Dukakis of Massachusetts ran with Lloyd Bentsen of Texas. They received 111 votes, but Bush won with a majority of the popular vote.

Bill Clinton

https://upload.wikimedia.org/wikipedia/commons/d/d3/Bill_Clinton.jpg

Bill Clinton is the only modern Democratic President to win with an all southern ticket, and he did it with a minority plurality (fewer than 50% of the votes but still more than any other single candidate) of the vote both times. Although they won the Presidency, the Clinton Presidency is not notable for any major achievements which fall in line with the Democratic platform before or after his Presidency, but he still was able to win. I have already written a thought piece about the importance of his Presidency.

Al Gore

https://upload.wikimedia.org/wikipedia/commons/thumb/c/c5/Al_Gore%2C_Vice_President_of_the_United_States%2C_official_portrait_1994.jpg/819px-Al_Gore%2C_Vice_President_of_the_United_States%2C_official_portrait_1994.jpg

Al Gore is a very unique Presidential ticket. Al Gore was a relative liberal from Tennessee running with a conservative Democrat from Connecticut, Joe Lieberman. They won the popular vote, but lost the electoral college because of the final vote count in Florida… but that is still disputed to this day.

John Kerry

File:John Kerry official portrait.jpgJohn Kerry is a fairly unique combination because he ran as a relative moderate form Massachusetts with John Edwards from North Carolina.

Barack Obama

Barack Obama returned to the tried and true model of running as a relative progressive from the North (this time from Illinois) with a relative moderate from a former Slave State, Joe Biden of Delaware. They won in a landslide majority twice with this combination.

Hillary Clinton

Hillary Clinton is a unique candidate, she was born in Illinois, but spent most of her career in Arkansas, where she was obviously first lady, but was the Senator from New York. So is modern America, where fewer people stay in one state their whole lives which Hillary Clinton represents. Her running mate Tim Kaine is from Virginia, and one of the least qualified candidates she could have possibly picked (he was the Chair of the DNC during the 2010 blow out). Tim Kaine was born in Minnesota, so they were very similar in the way how they were both born in Northern States but lived most of their lives in Southern States.

So, in summary, the successful tickets have the following pairs:

won? President VP Count
no South South 1
popular, no electoral South South 1
popular, no electoral North North 1
yes North North 1
no North North 2
yes South North 2
yes South South 3
no North South 5
yes North South 6

There is no significant correlation between the location of the President and Vice President and whether they win or not.

So what our analysis shows us is that the  region the Vice President comes from doesn’t seem to matter in whether the President wins or not.

The final potential variable we can look at is the existing job of the Presidential and Vice Presidential candidates. Since 1933, 13 of the Vice Presidential candidates have been Senators. The last time the Democratic Vice Presidential candidate was not either a Senator or a sitting Vice President was Geraldine Ferraro in 1984. The last successful candidate for Vice President who was neither a sitting Vice President or Senator was Henry A. Wallace in 1940. Joe Biden is almost guaranteed to pick a Senator as his Vice Presidential candidate.

He has said he will pick a woman for our next Vice Presidential candidate. I assume the candidate will be younger than 80. The potential candidates then are as follows:

  1. Kyrsten Sinema
  2. Kamala Harris
  3. Mazie Hirono
  4. Tammy Duckworth
  5. Elizabeth Warren
  6. Debbie Stabenow
  7. Amy Klobuchar
  8. Tina Smith
  9. Catherine Cortez Masto
  10. Jacky Rosen
  11. Jeanne Shaheen
  12. Maggie Hassan
  13. Kirsten Gillibrand
  14. Patty Murray
  15. Maria Cantweell
  16. Tammy Baldwin

If  Biden wants to do the best pick he can, he is going to want to have a candidate who is relatively progressive compared to him. Elizabeth Warren, Kamala Harris, Mazie Hirono, and Kristen Gillibrand are the three most progressive  senators according to Govtrack. However, in terms of public opinion as well as actual ideology, Kamala Harris has a strong cop narrative floating around which she has done a bad job responding to, and Hirono and Gillibrand are less widely known. For this reason, if Biden wants a progressive Vice Presidential pick, who will offset his moderate image with a progressive image which is reflected in actual policy, I believe Elizabeth Warren is his obvious choice to be the next Vice President of the United States.