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Constituent Asks Paul Ryan To Raise The Tax Cap On Social Security: Why Do I Pay As Much As Alex Rodriguez?

ThinkProgress filed this report from a townhall in Racine, Wisconsin

Alex Rodriguez may not be in the World Series, but he's paying low payroll taxes.

House Budget Committee Chairman Paul Ryan (R) faced questions on numerous issues from townhall attendees in Racine today, but his most ardent challenges came from constituents urging him to raise taxes on the wealthy and corporations.

One of the tax issues involved Social Security, which is paid for by a payroll tax that is levied on yearly wages up to $106,800. One constituent stood and asked why he pays the payroll tax on everything that he earns, but New York Yankees third basemen Alex Rodriguez — who made $32 million in 2011 — is only taxed on his first $106,000. “Why can’t you take the cap off” the payroll tax, the man asked.

Ryan responded by saying that he is “not unsympathetic to that idea,” but then proceeded to mislead the crowd, telling it that raising the Social Security payroll tax cap wouldn’t dramatically extend the program’s lifespan:

ATTENDEE: Last year i worked 52 weeks out of the year trying to support my family. They took Social Security and Medicare out of every one of my paychecks. What I don’t understand is why a baseball player for the New York Yankees can make $22 million a year and they only take a little bit out of his first paycheck. Why can’t you take the cap off of Social Security?

RYAN: I am not unsympathetic at all to that idea. Here’s the one issue that raises concern in my mind. If it’s just the guy who’s making that kind of a salary, that’s one thing. But the problem is it’s a self-employed tax as well. […] When you run the numbers…it gets you about six years of solvency in a 75-year problem. The problem is it doesn’t get you that much savings. I think the better way to go to get savings in Social Security is to stop subsidizing the rich. … If you could just do the salaried person and not get the self-employed person, that’d be one thing, but it wouldn’t be that much money at the end of the day.

Watch it:

Ryan’s numbers, while popular among Republicans, are wrong. According to the Congressional Research Service, eliminating the tax cap would create a surplus for the program while ensuring its solvency for another 75 years, not six, as Ryan claimed.

Unfortunately, Republican intransigence when it comes to any tax increase prevents lawmakers from shoring up the program’s future, even while multimillionaires like Rodriguez continue to have an extremely low percentage of their income covered by the payroll tax.

Gov. Malloy Supports Occupy Wall Street: ‘There’s A Gigantic Frustration’ That ‘The Poor Continued To Get Poorer’

Gov. Dan Malloy (D-CT)

The Occupy Wall Street protests have been going on for more than a month now, and support from elected officials for the protesters has slowly trickled in. “I support the message to the establishment,” said House Minority Leader Nancy Pelosi (D-CA). “Change has to happen. We cannot continue in a way that does not — that is not relevant to their lives.” “The protesters are giving voice to a more broad-based frustration about how our financial system works,” President Obama added.

And some state leaders have offered support to the movement as well. Gov. Peter Shumlin (D-VT) said, “while I don’t agree with all of the positions taken by the protesters, I applaud their courage, commitment, and focus on the gulf between the wealthiest and the rest of us. The issues they are raising are critically important to our national dialogue about economic priorities.” ThinkProgress today spoke with Gov. Dan Malloy (D-CT), who also supported the protesters:

Listen, there’s a gigantic frustration and Occupy Wall Street or occupy anything is bunch of people who are feeling frustrated and in some cases feeling frustrated about different things. So this is not a unified movement with the exception of it being based on frustration, and that frustration is brought about for lots of reasons, not the least of which is the most prolonged recession in recent American history, during which time, somehow and someway the rich continued to get richer and the poor continued to get poorer.

Watch it:

Malloy said he has visited one of the protests in Connecticut. Earlier this month, he said at an economic summit that “we live in a country where infrastructure is failing us on a daily basis and other states are vastly exceeding our level of investment. There are many reasons for people to be frustrated in our economy.”

The Only Idea For Addressing Income Inequality In Cantor’s Non-Speech: Don’t Say Mean Things About Rich People

House Majority Leader Eric Cantor (R-VA) was supposed to deliver a speech on income inequality at the University of Pennsylvania today, but canceled when he realized that the public would be allowed to attend the speech (which, according to Penn, had been the case all along). The Daily Pennylvanian instead released his prepared remarks.

Income inequality in the country is currently as high as it’s been since the Great Depression. The richest 1 percent of Americans make nearly one quarter of the national income, and the 400 richest Americans have more wealth than the bottom 50 percent combined. Since 1979, “the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled.” And the trends are only getting worse.

With all that to grapple with, Cantor’s speech quite literally has no policy proposals in it at all. In fact, the closest he comes to presenting an actual idea is a plea not to say mean things about rich people or ask them to pay their fair share in taxes:

There are politicians and others who want to demonize people that have earned success in certain sectors of our society. They claim that these people have now made enough, and haven’t paid their fair share. But, pitting Americans against one another tends to deflate the aspirational spirit of our people and fade the American dream. I believe that the most successful among us are positioned to use their talents to help grow our economy and give everyone a hand up the ladder and the dignity of a job. We should encourage them to extend their creativity and generosity to helping build the community infrastructure that provides a hand up and a fair shot to those less fortunate. [...]

Instead of talking about a fair share or spending time trying to push those at the top down, elected leaders in Washington should be trying to ensure that everyone has a fair shot and the opportunity to earn success up the ladder. The goal shouldn’t be for everyone to meet in the middle of the ladder. We should want all people to be moving up and no one to be pulled down. How do we do that? It cannot simply be about wealth redistribution. You don’t just take from the guy at the top to give to the guy at the bottom and expect our problems to be solved.

Cantor also mentions that lawmakers should embrace “a Steve Jobs Plan,” under which “those who are successful not only create good jobs and services that make our lives better, they also give back and help everyone move just a little bit further up the ladder and everybody wins.” But that’s it. No actual ideas of any kind. Cantor’s entire speech is a story about his grandmother and a plea to not raise taxes on the wealthy.

Last weekend, Cantor said on Fox News that the proper way to address income inequality is to simply rely on the already wealthy. Anyone hoping that his speech today would provide some concrete policy proposals would have been left disappointed, if he had actually delivered it. Just in case Cantor wants to try it again sometime, here are some actual ideas for reducing income inequality.

How Ohio’s Anti-Labor Law Reduces Pay For U.S. Soldiers Who Become Teachers

On Nov. 8, Ohioans will vote on Issue 2, a referendum on Gov. John Kasich’s (R-OH) wildly unpopular anti-worker measure Senate Bill 5. Most of the rancor against the law stems from it’s unfair elimination of public employees’ rights to collective bargain over health coverage and working conditions.

But the bill is more than an attack on teachers, police officers, and firefighters. It’s an attack on veterans, too. As the American Independent reports, Ohio law before SB5 ensured veterans who become teachers had a level playing field by allowing them to count their active duty service towards tenure. SB 5 eliminated that provision:

Currently, veterans hired as public school teachers in Ohio can count every eight consecutive months of active duty military service towards one year of tenure in the classroom, for up to a maximum of five years. Doing so provides a minor bump in salary for veterans that go into the education field.

For some veterans, it can amount to up to $2,000 in annual salary, according to Roberts. The extra pay is designed to encourage veterans to enter the field and, for those who do, to level the playing field with their colleagues that had the opportunity to gain experience while servicemembers were active.

“They missed out on going into that career field because they were serving their country at that point. That’s really what it’s all about,” said [We Are Ohio's Zack] Roberts. “Veterans Preference is really about nothing more than giving a veteran an equal opportunity.”

If SB5 is not repealed, that provision of existing Ohio law would be removed.

The law also jeopardizes National Guard or Reserves members who are public employees because, without union collective bargaining rights, “those teachers, firefighters and police officers deployed overseas could have to worry about their families transitioning to a new health-care plan.” Before SB5, unions could ensure that soldiers could return to the exact position that they left. Under SB5, that may disappear too.

Ohio is home to nearly 1 million veterans. That is why one Iraq and Afghanistan War veteran Paul Worley decided to campaign against the law. “We want veterans working these public sector jobs because they know what self-sacrifice is,” he said. “They’ve seen things and done things and had training that the average citizen hasn’t.” Ohio’s laws should promote — not devalue — those skills.

Special Topic

CHART: How Income Inequality Skyrocketed And The 1 Percent Profited From The Decline Of Unions

This evening, House Majority Leader Eric Cantor (R-VA) will give a speech at the University of Pennsylvania’s Wharton School of Business about how to address income inequality, likely trying to capitalize on the 99 Percent Movement he once derided as unruly “mobs.” Although exactly what policies Cantor will suggest to deal with this social problem are unknown, it’s unlikely that he will touch on one of the chief drivers of American income inequality: the decline of unions. (UPDATE: Cantor canceled his speech after learning it would be open to the public.)

As CAP’s David Madland and Nick Bunker show in the following chart, the middle class’s share of national income has steadily declined as the percentage of the population in labor unions has fallen. At the same time, the top 1 percent’s share of national income has exploded:

Strong unions have traditionally been the free-market solution to income inequality, allowing people to get higher salaries without government intervention. Unionization has allowed middle class and working-class Americans to have the ability to bargain for stronger wages and benefits and a larger share of national income. Highly-unionized countries tend to have far less income inequality.

Sweden, where 85-90 percent of the population is unionized, is both a prosperous country and one of the most economically equal societies — and that’s in a nation that doesn’t even have a national minimum wage.

If Cantor really wants to address income inequality, he could endorse legislation similar to the Employee Free Choice Act, which would break down barriers that have been erected to American union membership.

NEWS FLASH

Cantor Cancels Income Inequality Speech After Learning It Will Be Open To The Public. | House Majority Leader Eric Cantor (R-VA) has abruptly canceled a speech planned for this afternoon at the University of Pennsylvania that was meant to lay out the GOP’s plans to address income inequality. While the university gave no reason for the cancellation, CNN is reporting that Cantor canceled after the university decided to make the speech open to the public. Cantor had signed up for a “selected audience.” The speech was seen as a response to the 99 Percent movement, and Occupy Philadelphia had organized a march from City Hall to the school. The march will still go on, as one of the the messages was that he refused to meet with his constituents to talk about jobs.

Cain’s ‘Opportunity Zones’ Plan For The Poor: Give Up Worker Protections And Move To The Inner City

Former pizza magnate and 2012 GOP presidential candidate Herman Cain, when asked about the multiple analyses showing that his 999 tax plan would hammer the poor, simply asserts that those numbers are wrong, alluding to his campaign’s own analysis of the plan (which does not actually include a distributional breakdown). When the heat on Cain got even more intense, he explained that he has a secret plan to protect low-income Americans from 999, but he just hadn’t told anybody about it. “We’ve already made provisions for that, but I just haven’t told the public and my opponents about it yet,” he said on Wednesday.

Today, finally, Cain released the latest tweak of his plan — the creation of what he calls “opportunity zones.” According to Cain, these will be special zones placed in inner cities, and those who work or live in the zones will receive deductions from 999 (which otherwise wipes out all of the traditional tax deductions, including the Earned Income Tax credit, child deduction and the mortgage interest deduction). Evidently believing that all economic analysts are also mind readers, Cain said today that those who criticized his plan simply didn’t read it:

Now, the opportunity zone feature has been in our analysis all along. But just like I accused some of my opponents the other night of not having read the plan, we now have proof they didn’t read it. If their staffs had done the proper job and read it all the way through, they would have discovered what I’m about to share with you.

Watch it:

Two days after admitting that this facet of his plan was secret, Cain now claims that those criticizing his plan “didn’t read it.” In Cain’s original 999 document there is indeed one line saying, “features a platform to launch properly structured Empowerment Zones to renew our inner cities.” Shockingly enough, independent analysts didn’t work out that this meant a bunch of specific business deductions.

And, of course, there’s a catch — in order to qualify for zone status, a jurisdiction will have to abolish important worker protections like the minimum wage:

Cain hopes to encourage growth in impoverished areas by further lowering the tax burden of residents. But for a jurisdiction to qualify, it would have to adopt a number of conservative policies that may seem unpalatable to liberals, including eliminating the minimum wage, instituting school vouchers, and declaring the area “right-to-work” – or non-union.

Cain, quite literally, only grants deductions to those who are willing to move into these inner city zones where his tax breaks magically apply, and in exchange they have to forego basic economic protections. Everyone else is out of luck.

Cain also laid out his supposed plan to protect low-income Americans from getting slammed by his trio of taxes, saying that those beneath the poverty line would be exempt from his nine percent personal income tax. Leaving aside that he’s still walloping families who are barely above the poverty line with a huge tax increase, those below the poverty line will still be stuck paying a nine percent sales tax, when their current tax rate is closer to 2 percent, if they have federal income tax liability at all.

Finally, Cain claims that the plan would be revenue neutral, and his analysis does indeed show revenue neutrality (if you trust the numbers). However, his analysis clearly states, “We assume no exemptions, deductions or credits” (except for a passing mention of poverty exemptions), whilst Cain laid out a whole host of opportunity zone deductions today. So is 999 now going to create deficits or will he have to morph it into 12-12-12 or 15-15-15 in order to make his numbers add up?

NEWS FLASH

Study: Foreclosures Are Causing Depression, Worsening Health Outcomes | The nation’s foreclosure crisis is leading Americans to depression and worsening health problems, a new study from researchers at the University of Maryland has found. One in five people in default on their mortgages have serious symptoms of depression and “about one-third have seen their finances so crimped that they cannot afford to fill prescriptions and get enough to eat, which worsen health problems,” the report concluded. The findings seem to confirm similar research out of Princeton, which identified “a direct correlation between foreclosure rates and the health of residents in Arizona, California, Florida and New Jersey.”

Mark Pryor Touts Need For Education And First Responder Funding, But Then Votes Against Obama’s Plan To Provide It

Last night, the Senate voted on one piece of President Obama’s jobs bill — $35 billion in funding for states to protect the jobs of teachers and first responders who might be laid off due to budget constraints. The measure failed to overcome a filibuster by a 50-50 vote. Sens. Ben Nelson (D-NE) and Joe Lieberman (I-CT), who voted against Obama’s entire jobs bill when it was put up for a vote earlier this month, voted against this more targeted measure. Sen. Mark Pryor (D-AR) also broke ranks to join Nelson and Lieberman in voting against the bill last night.

It’s rather difficult to understand Pryor’s position. On his Senate website, the Arkansas senator touts his own “Six point solution to job creation” — a nine-page PDF document which touts the need for education funding. In a section titled “Preparing tomorrow’s job-generators to compete (and win),” Pryor’s jobs plan claims that it ensures “that Arkansans have the right education and training…because a competitive workforce is vital to growing the economy.” That appears to be empty rhetoric from Pryor, given that he just voted against a bill that would have provided over $275 million to support over 4,000 jobs for Arkansas’ educators.

The bill last night also would have provided funding for “the creation of additional jobs for, law enforcement officers and other first responders.” Again, Pryor has a very recent history of promoting the need for funding first responders because, as he said, “firefighters put their lives on the line to protect their communities” and therefore need federal funds to “do their jobs efficiently and effectively.”

So why did Pryor vote to defeat funding for education and first responders that he purportedly supports? It might have something to do with the fact that bill imposes a surtax on millionaires. In the past, Pryor has voted against such efforts. And yet, just last month, his office expressed this concern: “It is maddening that hundreds of millionaires pay virtually no federal income taxes, and this should change.”

What is truly maddening is trying to understand why Pryor can’t vote in a way that is consistent with his rhetoric.

Gov. Rick Scott Aide Admits That Scott’s Corporate Tax Cut Won’t Create Jobs

Florida Gov. Rick Scott (R) started out as the jobs candidate, promising to create 700,000 jobs “on top of” the jobs added from Florida’s normal growth. He then revised that plan down to just “700,000″ before recently declaring, “I don’t have to create any jobs.”

Scott’s need to divorce himself from his own job-creation promises is not surprising, since many of his policies have actually killed job growth. While admitting that his preference is to cut “people,” Scott has directed his focus toward corporate tax cuts rather than job creation. In fact, his legislative affairs director Jon Costello publicly admitted as much. Asked about the value of Scott’s most recent corporate tax break, Costello admitted “quite frankly” that the tax breaks might not be enough for a company to hire even one person:

Rep. Evan Jenne, D-Dania Beach, asked Costello of the governor’s plan would require that companies create jobs in exchange for the new tax breaks.

“The last thing we would want to do is just have a CEO pocket the money and just say ‘Thanks for the cash,’” Jenne said during a meeting of the House Economic Affairs Committee .

“Quite frankly, depending on the size and scope of the company, their savings and tax breaks might not be enough to bring a new person on,” Costello answered. “But it might be enough to buy a new piece of equipment or do something that injects money back into the economy.”

In a state with 10.7 unemployment rate, Scott chose to kill a high-speed rail project that would’ve created 71,000 jobs, boasted about laying off 15,000 government employees, and plans to reject funds from Obama’s new jobs plan that would create more than 60,000 jobs.

Instead, he champions corporate tax breaks that even his own administration says likely won’t work. We’ve noted before how it is exceedingly unlikely that Scott’s corporate tax cut — particularly his original plan to eliminate the corporate tax entirely — would create any jobs.

Asked point blank whether Scott is “backtracking” from his promise to create at least 700,000 jobs, Costello admitted, “it’s a very difficult question.” Given his policy choices, the answer actually seems pretty obvious.

Econ 101: October 21, 2011

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • Senate Republicans — joined by three Democrats — voted last night to filibuster the administration’s plan to provide $35 billion in aid to states to prevent layoffs. [Washington Post]
  • The Senate yesterday finally confirmed John Bryson to be Commerce Secretary. [Reuters]
  • European Union leaders “have put off crucial decisions on how to stop a sovereign debt meltdown in their currency zone.” [Reuters]
  • The ratings agency Standard & Poor’s said that it “will likely lower the credit standing of five European nations, including top-rated France, by one or two notches if the region slips into recession.” [CNBC]
  • The poverty rate rose “in almost all U.S. states and cities in 2010, despite the end of the longest and deepest economic downturn since the Great Depression the year before.” [Reuters]
  • The Federal Reserve is “starting to build a case for a new program of buying mortgage-backed securities to boost the ailing economy.” [Wall Street Journal]
  • The Tea Party looks to take over Michigan’s higher education board. [Inside Higher Ed]
  • Congressional leaders are becoming more involved with the fiscal super-committee “amid growing concern the panel’s members could be deadlocked.” [Wall Street Journal]
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